LSTD 2106 PRACTICE EXAM 3 QUESTIONS WITH
VERIFIED ANSWERS
In an agency relationship, the ________________ authorizes the __________ to
provide services or accomplish some task on behalf of the _______________and under
the ________________ charge. - Answers - principal, agent, principal, principal
In an agency relationship, the status of an agent is determined by the ____between
principal and agent. - Answers - working relationship
The first step in creating an agency relationship is for the ___________ to manifest an
____________ to form an agency. - Answers - principal, offer
When a third party is completely unaware that an agency relationship exists and
believes that the agent is acting on her own behalf in entering a contract, this is called
an ______________. - Answers - undisclosed agency
In an undisclosed agency relationship, the _______ is fully liable to perform the
contract. - Answers - agent
In the case of the death of a principal, the agency relationship terminates by
_________. - Answers - operation of law
_____ arises either when the parties in an agency relationship expressly agree to create
the relationship or when the authority is implied based on custom or course of past
dealings. - Answers - actual authority
An agent's duty of accounting includes all of the following except - Answers -
intermingling the principal's funds or property with the agent's own accounts or
possessions.
The _____ is the centerpiece of a fiduciary relationship between an agent and a
principal because the agent is obliged to advance the principal's interest over her own
interest. - Answers - duty of loyalty
In which of the following cases does Aaron, a principal, have a duty to reimburse Sarah,
an agent? - Answers - When the expenses incurred by Sarah result from payments
made by her for Aaron's benefit, for which she mistakenly assumes that she had the
authority.
, ConElectric Inc. is a consumer electronics company. Paul is a procurement officer who
acts as an agent for ConElectric to procure components from suppliers. ConElectric has
recently terminated Paul's contract but has not informed the suppliers. Paul pretends to
still be working for ConElectric, collects the components from the suppliers, and
absconds without paying. In the context of termination of the agency relationship, which
of the following statements is most likely to be true? - Answers - ConElectric is liable to
the suppliers for Paul's actions because it did not notify the suppliers about his
termination.
Agents owe a fiduciary duty to ______________. - Answers - principals
An __________ is not considered an employee and has no legal protections of
employees such as minimum-wage and overtime-compensation laws. - Answers -
independent contractor agent
In an agency relationship, a principal does not have a duty to reimburse or indemnify
the agent if the payments made or expenses incurred were... - Answers - (1) outside the
agent's actual authority, (2) from losses resulting from the agent's negligence
(3) from losses resulting from the agent's intentional tort or an illegal act.
Termination by the principal is known as _____________. - Answers - revocation
When the agent initiates the termination, it is known as ______________. - Answers -
renunciation
Under the ____ just obey all instructions of the principal, even if the principal's
instruction may be considered illegal. - Answers - duty of obedience
A(n) _____ is in control of an agency relationship because he or she defines the tasks
and objectives of the relationship. - Answers - principal
Mike hires Tom, a general contractor, to renovate his apartment while he is away on
vacation. Mike expects Tom to have completed the work by the time he gets back in
three weeks. Tom's team needs asphalt roof shingles to install a new roof but Tom does
not have a regular supplier. Assuming he has the authority in Mike's absence, Tom
signs a sales contract on behalf of Mike to obtain the shingles from a third party. The
contract allows Mike to make the payment for the shingles over the course of the next
three months. When Mike returns, Tom informs him about this contract. Mike neither
ratifies nor repudiates the contract. Based on this scenario, which of the following
statements is most likely to be true? - Answers - Mike is bound to honor the contract
because he did not ratify or repudiate it but reaped its benefits.
Ricardo is employed as a van driver by Fast Track, a courier service. Which of the
following is a court most likely to consider a detour under the ambit of respondeat
superior? - Answers - If Ricardo injures a pedestrian when he stops along his usual
route to buy lunch on a working day.
VERIFIED ANSWERS
In an agency relationship, the ________________ authorizes the __________ to
provide services or accomplish some task on behalf of the _______________and under
the ________________ charge. - Answers - principal, agent, principal, principal
In an agency relationship, the status of an agent is determined by the ____between
principal and agent. - Answers - working relationship
The first step in creating an agency relationship is for the ___________ to manifest an
____________ to form an agency. - Answers - principal, offer
When a third party is completely unaware that an agency relationship exists and
believes that the agent is acting on her own behalf in entering a contract, this is called
an ______________. - Answers - undisclosed agency
In an undisclosed agency relationship, the _______ is fully liable to perform the
contract. - Answers - agent
In the case of the death of a principal, the agency relationship terminates by
_________. - Answers - operation of law
_____ arises either when the parties in an agency relationship expressly agree to create
the relationship or when the authority is implied based on custom or course of past
dealings. - Answers - actual authority
An agent's duty of accounting includes all of the following except - Answers -
intermingling the principal's funds or property with the agent's own accounts or
possessions.
The _____ is the centerpiece of a fiduciary relationship between an agent and a
principal because the agent is obliged to advance the principal's interest over her own
interest. - Answers - duty of loyalty
In which of the following cases does Aaron, a principal, have a duty to reimburse Sarah,
an agent? - Answers - When the expenses incurred by Sarah result from payments
made by her for Aaron's benefit, for which she mistakenly assumes that she had the
authority.
, ConElectric Inc. is a consumer electronics company. Paul is a procurement officer who
acts as an agent for ConElectric to procure components from suppliers. ConElectric has
recently terminated Paul's contract but has not informed the suppliers. Paul pretends to
still be working for ConElectric, collects the components from the suppliers, and
absconds without paying. In the context of termination of the agency relationship, which
of the following statements is most likely to be true? - Answers - ConElectric is liable to
the suppliers for Paul's actions because it did not notify the suppliers about his
termination.
Agents owe a fiduciary duty to ______________. - Answers - principals
An __________ is not considered an employee and has no legal protections of
employees such as minimum-wage and overtime-compensation laws. - Answers -
independent contractor agent
In an agency relationship, a principal does not have a duty to reimburse or indemnify
the agent if the payments made or expenses incurred were... - Answers - (1) outside the
agent's actual authority, (2) from losses resulting from the agent's negligence
(3) from losses resulting from the agent's intentional tort or an illegal act.
Termination by the principal is known as _____________. - Answers - revocation
When the agent initiates the termination, it is known as ______________. - Answers -
renunciation
Under the ____ just obey all instructions of the principal, even if the principal's
instruction may be considered illegal. - Answers - duty of obedience
A(n) _____ is in control of an agency relationship because he or she defines the tasks
and objectives of the relationship. - Answers - principal
Mike hires Tom, a general contractor, to renovate his apartment while he is away on
vacation. Mike expects Tom to have completed the work by the time he gets back in
three weeks. Tom's team needs asphalt roof shingles to install a new roof but Tom does
not have a regular supplier. Assuming he has the authority in Mike's absence, Tom
signs a sales contract on behalf of Mike to obtain the shingles from a third party. The
contract allows Mike to make the payment for the shingles over the course of the next
three months. When Mike returns, Tom informs him about this contract. Mike neither
ratifies nor repudiates the contract. Based on this scenario, which of the following
statements is most likely to be true? - Answers - Mike is bound to honor the contract
because he did not ratify or repudiate it but reaped its benefits.
Ricardo is employed as a van driver by Fast Track, a courier service. Which of the
following is a court most likely to consider a detour under the ambit of respondeat
superior? - Answers - If Ricardo injures a pedestrian when he stops along his usual
route to buy lunch on a working day.
