BUL5810 FINAL EXAM QUESTIONS
AND CORRECT ANSWERS.
attorney in fact - Answer A power of attorney is a formal manifestation that states an agent's
authority. The agent is known as the:
durable power of attorney - Answer A(n) __________ is a written instrument that expresses
the principal's intention that the agent's authority will not be affected by the principal's
subsequent incapacity or that the agent's authority will become effective upon the principal's
subsequent authority.
contract or agreement. - Answer Agency is a consensual relationship that the principal and
agent may form by:
Yes, and she is liable to the principal for any amounts that the purchaser doesn't pay - Answer
Is the agent subject to liability to her principal for breach of the duty of obedience if she sells
the principal's product on credit in violation of explicit instructions?
The death of the principal. - Answer Which of the following will terminate a valid durable
power of attorney after the principal is incapacitated?
Duty to act in good faith and with loyalty. - Answer Which of the following is a major duty,
which the agent owes to the principal
An agent has a duty not to acquire any financial or material benefits in connection with
transactions conducted on behalf of the principal. - Answer If the agent is authorized to sell
certain property of her principal for $1,000 and sells it for $1,500. Which of the following is the
best description of her violation if she keeps the money?
the agent rendered authorized services. - Answer A principal has a duty to compensate his or
her agent if:
self-dealing. - Answer All of the following are contractual duties owed by a principal to an
agent, except:
both acts of the parties and by operation of law - Answer An agent's authority can terminate
by:
The vendors are reasonable in doing business with the agent until they are notified of the
termination of the agency. - Answer The owner of a business with a buyer terminates an
,agency without giving notice of the termination to vendors who have dealt with the agent. Is it
reasonable for the vendors to expect that the agent still has the authority to make contracts
that will bind the business?
Morry has the power to terminate the agency. - Answer Baxter agrees with Morry to enter
into the management of a new apartment building. Morry appoints Baxter as his manager for
one year. During the course of the construction, Baxter decides to use funds specified for the
construction of a garage that Baxter alone has been interested in completing. Morry is very
angry on learning of Baxters' actions and terminates the agency. Baxter insists that the agency
cannot be terminated in this manner. Is Baxter correct?
Belle can sign a durable power of attorney with specific power to make decisions on her behalf.
- Answer Belle was seriously ill and feared that she might lapse into a coma or somehow
become unable to speak or act for herself in her medical emergency. She is aware that agents
ordinarily lose their authority to act for principals who become mentally disabled. She
nevertheless desires to have her husband Alan make medical decisions and speak on her behalf.
She is particularly concerned about existing on life support in a persistent and incurable
vegetative state. Is there any action that she might take to enable Alan to act for her?
Duty of Good Conduct - Answer Fred is Wilma's agent. Wilma is in the cake baking business.
Without Wilma's knowledge, Fred began going to different civic events and publicly, yet falsely,
criticizing the quality of cakes produced by Wilma's competitors. Several attendees at the events
remarked that they would never shop in Wilma's business again due to Fred's behavior. Which
duty has Fred violated?
All of these answers are correct. - Answer Fred is Wilma's agent. Fred has violated his
fiduciary duty to Wilma, and Wilma sues him. What type of action may Wilma bring against
Fred, depending on the facts of the breach?
Fred has violated his duty not to self-deal with Wilma. - Answer Wilma employs Fred to
purchase her a site suitable for her new cake business. Fred owns the perfect location and sells
it to Wilma for a fair price, but does not tell Wilma that he had own the land. Which statement
is correct?
Good faith and utmost loyalty to the principal - Answer Wilma wishes to hire an agent.
Though she believes that she can trust someone, based upon their reputation, she wants to
know what the legal obligations are of an agent as a fiduciary. Which of the following is a legal
obligation a fiduciary owes to the principal?
No, Barney, as Betty's agent, renounced his agency and ended the relationship. - Answer
Barney is Betty's gratuitous agent. One day, Barney tells Betty: "I'm through with you. I'm no
longer your agent." After the statement, is Barney Betty's agent?
, The death of his father. - Answer George holds a valid durable power of attorney for his
father, who is incapacitated. Which of the following events will terminate the durable power of
attorney.
When Eddie renders authorized services. - Answer Mary is Eddie's principal. When does Mary
owe Eddie a duty of compensation?
The court examined whether Argovitz, as an agent for Sims, violated his fiduciary duty to Sims in
contract negotiations. - Answer When the court ruled on Detroit Lions, Inc. v. Argovitz what
issue did the court address?
Whether a principal can revoke a valid durable power of attorney after she loses contractual
capacity. - Answer A case in the chapter, Gaddy v. Douglass, brought what issue before the
court?
whether McDonald's was vicariously liable for injuries caused at a franchised restaurant
(operated by 3K). - Answer The issue before the court in the Miller v. McDonald's Corporation
case, was:
title to the goods is passed. - Answer A "sale" of goods happens when:
The sale of oranges to be picked from a 10-acre grove. - Answer Which of the following
transactions is governed by Article 2 of the UCC?
the international sale of goods. - Answer The CISG applies to:
good faith - Answer The Code defines __________ as "honesty in fact in the conduct or
transaction concerned."
All of these are correct. - Answer A merchant is defined as a person who:
a practice regularly observed and followed in a place, vocation, or trade. - Answer The
definition of "usage of trade" includes:
The Code denies or limits enforcement of an unconscionable contract for the sale of goods. -
Answer Which of the following is true regarding unconscionability under the Code?
the offeror is bound to hold open an offer for a specified amount of time. - Answer An
"option" is defined as a contract by which:
AND CORRECT ANSWERS.
attorney in fact - Answer A power of attorney is a formal manifestation that states an agent's
authority. The agent is known as the:
durable power of attorney - Answer A(n) __________ is a written instrument that expresses
the principal's intention that the agent's authority will not be affected by the principal's
subsequent incapacity or that the agent's authority will become effective upon the principal's
subsequent authority.
contract or agreement. - Answer Agency is a consensual relationship that the principal and
agent may form by:
Yes, and she is liable to the principal for any amounts that the purchaser doesn't pay - Answer
Is the agent subject to liability to her principal for breach of the duty of obedience if she sells
the principal's product on credit in violation of explicit instructions?
The death of the principal. - Answer Which of the following will terminate a valid durable
power of attorney after the principal is incapacitated?
Duty to act in good faith and with loyalty. - Answer Which of the following is a major duty,
which the agent owes to the principal
An agent has a duty not to acquire any financial or material benefits in connection with
transactions conducted on behalf of the principal. - Answer If the agent is authorized to sell
certain property of her principal for $1,000 and sells it for $1,500. Which of the following is the
best description of her violation if she keeps the money?
the agent rendered authorized services. - Answer A principal has a duty to compensate his or
her agent if:
self-dealing. - Answer All of the following are contractual duties owed by a principal to an
agent, except:
both acts of the parties and by operation of law - Answer An agent's authority can terminate
by:
The vendors are reasonable in doing business with the agent until they are notified of the
termination of the agency. - Answer The owner of a business with a buyer terminates an
,agency without giving notice of the termination to vendors who have dealt with the agent. Is it
reasonable for the vendors to expect that the agent still has the authority to make contracts
that will bind the business?
Morry has the power to terminate the agency. - Answer Baxter agrees with Morry to enter
into the management of a new apartment building. Morry appoints Baxter as his manager for
one year. During the course of the construction, Baxter decides to use funds specified for the
construction of a garage that Baxter alone has been interested in completing. Morry is very
angry on learning of Baxters' actions and terminates the agency. Baxter insists that the agency
cannot be terminated in this manner. Is Baxter correct?
Belle can sign a durable power of attorney with specific power to make decisions on her behalf.
- Answer Belle was seriously ill and feared that she might lapse into a coma or somehow
become unable to speak or act for herself in her medical emergency. She is aware that agents
ordinarily lose their authority to act for principals who become mentally disabled. She
nevertheless desires to have her husband Alan make medical decisions and speak on her behalf.
She is particularly concerned about existing on life support in a persistent and incurable
vegetative state. Is there any action that she might take to enable Alan to act for her?
Duty of Good Conduct - Answer Fred is Wilma's agent. Wilma is in the cake baking business.
Without Wilma's knowledge, Fred began going to different civic events and publicly, yet falsely,
criticizing the quality of cakes produced by Wilma's competitors. Several attendees at the events
remarked that they would never shop in Wilma's business again due to Fred's behavior. Which
duty has Fred violated?
All of these answers are correct. - Answer Fred is Wilma's agent. Fred has violated his
fiduciary duty to Wilma, and Wilma sues him. What type of action may Wilma bring against
Fred, depending on the facts of the breach?
Fred has violated his duty not to self-deal with Wilma. - Answer Wilma employs Fred to
purchase her a site suitable for her new cake business. Fred owns the perfect location and sells
it to Wilma for a fair price, but does not tell Wilma that he had own the land. Which statement
is correct?
Good faith and utmost loyalty to the principal - Answer Wilma wishes to hire an agent.
Though she believes that she can trust someone, based upon their reputation, she wants to
know what the legal obligations are of an agent as a fiduciary. Which of the following is a legal
obligation a fiduciary owes to the principal?
No, Barney, as Betty's agent, renounced his agency and ended the relationship. - Answer
Barney is Betty's gratuitous agent. One day, Barney tells Betty: "I'm through with you. I'm no
longer your agent." After the statement, is Barney Betty's agent?
, The death of his father. - Answer George holds a valid durable power of attorney for his
father, who is incapacitated. Which of the following events will terminate the durable power of
attorney.
When Eddie renders authorized services. - Answer Mary is Eddie's principal. When does Mary
owe Eddie a duty of compensation?
The court examined whether Argovitz, as an agent for Sims, violated his fiduciary duty to Sims in
contract negotiations. - Answer When the court ruled on Detroit Lions, Inc. v. Argovitz what
issue did the court address?
Whether a principal can revoke a valid durable power of attorney after she loses contractual
capacity. - Answer A case in the chapter, Gaddy v. Douglass, brought what issue before the
court?
whether McDonald's was vicariously liable for injuries caused at a franchised restaurant
(operated by 3K). - Answer The issue before the court in the Miller v. McDonald's Corporation
case, was:
title to the goods is passed. - Answer A "sale" of goods happens when:
The sale of oranges to be picked from a 10-acre grove. - Answer Which of the following
transactions is governed by Article 2 of the UCC?
the international sale of goods. - Answer The CISG applies to:
good faith - Answer The Code defines __________ as "honesty in fact in the conduct or
transaction concerned."
All of these are correct. - Answer A merchant is defined as a person who:
a practice regularly observed and followed in a place, vocation, or trade. - Answer The
definition of "usage of trade" includes:
The Code denies or limits enforcement of an unconscionable contract for the sale of goods. -
Answer Which of the following is true regarding unconscionability under the Code?
the offeror is bound to hold open an offer for a specified amount of time. - Answer An
"option" is defined as a contract by which:
