MGMT 254 FINAL EXAM PURDUE QUESTIONS WITH
VERIFIED ACCURATE ANSWERS
principal - Answers - -one who is ultimately the party of the contract
-often don't have time to complete all acts
-can be: LLCs, corporations, partnerships, people
agent - Answers - -one who acts on principal's behalf
-must have contractual capacity
-must have legal purpose
law of agency - Answers - Principal -> agent -> third party
example of law of agency - Answers - real estate:
want to sell your house, hire real estate agent to deal with third parties
agency contracts - Answers - -sometimes the agency relationship is based on a contract
-can be expressed or implied
-the contract appoints an agent by the principal
-"employer" must have legal capacity but agent doesn't have to
-no consideration required
employment relationships - Answers - -master/servant
-principal/agent
-principal/independent contractor
master/servant relationship (employer/employee) - Answers - right to:
-hire, suspend, or dismiss
-to have particular person do work
principal/agent relationship - Answers - -owner delegates authority to agent to manage
business
ex. car salesmen/(buyer)
-express/implied
-agent can sign on behalf of principal
principal/independent contractor relationship - Answers - -profession or trade
-uses own place and equipment/tools
-payment of wages to own employees
-payment to contractor done with no taxes withheld
-1099 (no taxes withheld) vs W2 (taxes withheld by employer)
, power of attorney (general) - Answers - gives someone the authority to act as their
agent to do things on their behalf
-attorney in fact
ex. parent/child
lawyer/client
art dealer/artist
trustee/benefactor
agency by ratification - Answers - -agency exceeds both actual and apparent authority
-principal is not bound but still may ratify:
---by intentionally expressing the ratification
---inadvertently by principal taking a benefit under the agreement
agents duties - Answers - duty of:
-performance
-obedience
-notification
-accountability
-loyalty
duty of performance - Answers - -must be legal
-must be cautious and use skill
-failure to perform (BREACH)
duty of obedience - Answers - -obey all lawful instructions of principal
duty of notification - Answers - -maintain information of all transactions
-keep principal informed (try to)
duty of accountability - Answers - -maintain accounting of all transactions undertaken on
behalf of principal
duty of loyalty - Answers - -an agent owe a fiduciary duty not to act adversely to the
interests of the principal
(follow the principals wishes)
NO DUAL AGENCY
-cannot meet a duty of loyalty of 2 parties w/ conflicting interest
usurping opportunity - Answers - agent cannot usurp (take advantage of) an opportunity
self dealing - Answers - prohibited from undisclosed self-dealing w/ principal
misuse of confidential information - Answers - can't disclose or use private info outside
of agency relationships
VERIFIED ACCURATE ANSWERS
principal - Answers - -one who is ultimately the party of the contract
-often don't have time to complete all acts
-can be: LLCs, corporations, partnerships, people
agent - Answers - -one who acts on principal's behalf
-must have contractual capacity
-must have legal purpose
law of agency - Answers - Principal -> agent -> third party
example of law of agency - Answers - real estate:
want to sell your house, hire real estate agent to deal with third parties
agency contracts - Answers - -sometimes the agency relationship is based on a contract
-can be expressed or implied
-the contract appoints an agent by the principal
-"employer" must have legal capacity but agent doesn't have to
-no consideration required
employment relationships - Answers - -master/servant
-principal/agent
-principal/independent contractor
master/servant relationship (employer/employee) - Answers - right to:
-hire, suspend, or dismiss
-to have particular person do work
principal/agent relationship - Answers - -owner delegates authority to agent to manage
business
ex. car salesmen/(buyer)
-express/implied
-agent can sign on behalf of principal
principal/independent contractor relationship - Answers - -profession or trade
-uses own place and equipment/tools
-payment of wages to own employees
-payment to contractor done with no taxes withheld
-1099 (no taxes withheld) vs W2 (taxes withheld by employer)
, power of attorney (general) - Answers - gives someone the authority to act as their
agent to do things on their behalf
-attorney in fact
ex. parent/child
lawyer/client
art dealer/artist
trustee/benefactor
agency by ratification - Answers - -agency exceeds both actual and apparent authority
-principal is not bound but still may ratify:
---by intentionally expressing the ratification
---inadvertently by principal taking a benefit under the agreement
agents duties - Answers - duty of:
-performance
-obedience
-notification
-accountability
-loyalty
duty of performance - Answers - -must be legal
-must be cautious and use skill
-failure to perform (BREACH)
duty of obedience - Answers - -obey all lawful instructions of principal
duty of notification - Answers - -maintain information of all transactions
-keep principal informed (try to)
duty of accountability - Answers - -maintain accounting of all transactions undertaken on
behalf of principal
duty of loyalty - Answers - -an agent owe a fiduciary duty not to act adversely to the
interests of the principal
(follow the principals wishes)
NO DUAL AGENCY
-cannot meet a duty of loyalty of 2 parties w/ conflicting interest
usurping opportunity - Answers - agent cannot usurp (take advantage of) an opportunity
self dealing - Answers - prohibited from undisclosed self-dealing w/ principal
misuse of confidential information - Answers - can't disclose or use private info outside
of agency relationships
