Chapter 7 Common Law of Agency Questions and Answers Already Passed

Chapter 7 Common Law of Agency Questions and Answers Already Passed Which of the following definitions most closely defines agency A. . A relationship between an agent and a principal whereby the agent is subject to the control of the principal. B. A legal relationship by agreement of an agent and a principal whereby the principal is governed by the agent's decisions because of the agent's abilities. C. An agreement creating ownership in a property. D. An agreement creating possession of property. A. A relationship between an agent and a principal whereby the agent is subject to the control of the principal. Which of the following statements about the creation of a customary agency relationship is true? A. Some action or conduct by the principal is necessary to create the relationship. B. An agency relationship creates obligations for the agency only. C. The creation of an agency relationship requires that agents have the same obligations to third parties as to their principals. D. All of the above statements are true. A. Some action or conduct by the principal is necessary to create the relationship. The personal interest of the agent in the usual situation should be A. Secondary to those of the principal. B. Secondary to those of third parties. C. Primary to that of the client. D. Primary to that of third parties. A. Secondary to those of the principal. A person becomes an agent of a principal when A. Employment begins as evidenced by an employment contract. B. A contract to lease signed by a qualified buyer is obtained. C. An appointment is made to secure a listing. D. A sign is erected on the property. A. Employment begins as evidenced by an employment contract Agent Orange is engaged by prospective Purchaser Lemon to find a suitable property. Agent Orange locates a property owned by Owner Apple and a contract for sale between Apple and Lemon results. Lemon pays Orange a fee. A. Apple is the principal and Orange is the agent. B. Lemon is the principal and Orange is the agent. C. Both Apple and Lemon are principals of Agent Orange. D. There is no agency in this situation. B. Lemon is the principal and Orange is the agent. A fiduciary is A. A gift of real estate by will or last testament. B. The liquidation of a financial obligation on an installment basis. C. One who occupies a position of trust. D. The interest of value which an owner has in real estate over and above the mortgage against it. C. One who occupies a position of trust. When sub-agents perform acts, their agents are A. Not responsible since they did not perform the acts themselves. B. Responsible only if they know about the accts of their sub-agents. C. Fully responsible for their acts. D. None of the above. C. Fully responsible for their acts. An agent's trust or escrow account is used A. For the deposit of earnest money only. B. In lieu of a general account. C. For the deposit of money belonging to others that comes into the possession of the agent. D. To compensate the agent for expenditures. C. For the deposit of money belonging to others that comes into the possession of the agent. Commingling may by defined as agents taking A. Earned commissions out of the deposit money. B. The deposit money in cash. C. Deposited trust funds and mixing them with their personal accounts. D. Clients to lunch. C. Deposited trust funds and mixing them with their personal accounts. Funds deposited in a trust account which will ultimately belong to the agent A. Cannot be used by the agent until the sale is consummated or terminated. B. May be transferred to the agent's business account if one of the parties to the contract has agreed in writing. C. Both A and B. D. Neither A nor B. A. Cannot be used by the agent until the sale is consummated or terminated. With regard to dealings with third parties, an agent owes them A. Nothing. B. The duty of honesty, integrity, and fairness. C. Both A and B. D. Neither A nor B. B. The duty of honesty, integrity, and fairness. An agent who has no authority warrants to a third party that an agency authority exists. In the event of loss caused by breach of contract, the third party may A. Hold the agent liable. B. Have no recourse. C. Hole the actual agent responsible. D. Hole the principal liable. A. Hold the agent liable. A real estate agent representing more than one party in a transaction may A. Collect commission from all parties involved. B. Collect a commission from only one party. C. Collect commissions from all parties if all parties are made aware of the fact. D. None of the above. C. Collect commissions from all parties if all parties are made aware of the fact. As independent contractors, agents are A. Unsalaried and free to establish B. Salaried and free to establish their own schedules. C. Salaried and subject to the principal's supervision. D. Unsalaried but not subject to the principal's supervision. A. Unsalaried and free to establish Which of the following would be exempt from the requirement for licensing? A. An attorney at law acting in that capacity for a client. B. The owner of the property being leased. C. An executor acting under the direction of a court. D. All of the above. D. All of the above The most important factor in determining whether a sales associate is an employee or an independent contractor is A. The employer's control. B. The employment contract. C. The amount of money earned. D. Whether the associate has a separate office. B. The employment contract. The doctrine that holds that the principal is responsible for the action of agents and sub-agents is A. Borrowed creditability. B. Del credere. C. Respondeat superior. D. Inferior complexity. C. Respondeat superior Self-employed independent contractors over whom the principal has no control and no responsibility, and who are employed because of their specific expertise, are generally known as A. Agents del credere. B. Respondeat superior. C. Professional agents. D. Borrowed big shots. C. Professional agents If a principal no longer wishes to be represented by an agent, the principal may A. Subordinate the listing. B. Cancel the employment contract without further liability to the agent. C. Revoke the agency agreement, but may be subject to court action for breach. D. Assign the employment contract to another principal with similar property. C. Revoke the agency agreement, but may be subject to court action for breach. If either the agent of the principal is declared insane, the agency is automatically terminated by A. An act of God. B. Operation of law. C. Acts of the parties. D. Completion of the objective. B. Operation of law Agents or principals usually have A. The right but not the power to cancel the agency. B. The power but not the right to cancel the agency. C. Both the right and the power to cancel the agency. D. Neither the right nor the power to cancel the agency. B. The power but not the right to cancel the agency The primary function of agency is to A. Have someone do for another what that person can not legally do himself. B. Have someone do for another what that person can legally do for himself. C. Have someone do for another what the OREC Code and Rules makes illegal for a licensee. D. Have someone do for another what is prohibited by municipal ordinances. B. Have someone do for another what that person can legally do for himself. An undisclosed principal is A. One who has no employment agreement with an agent. B. One who has employment agreements with two or more agents. C. One who is represented by an agent, but does not wish identity disclosed to third parties. D. One who is employed by an agent, but does not wish the agent's identity disclosed to third parties. C. One who is represented by an agent, but does not wish identity disclosed to third parties. When the agent is working for an undisclosed principal A. The agent is not liable for the contract with a third party. B. The agent is liable for the contract with a third party. C. The principal cannot be held liable for a contract with a third party. D. No one in the transaction may be held liable. B. The agent is liable for the contract with a third party The agent's express authority may be given to him/her by the principal A. Orally. B. In writing, C. The principal's conduct. D. Any of the above. D. Any of the above Death of the principal will A. Terminate the agency relationship. B. Have no effect on the agency relationship. C. Delay the purpose of the agency due to the probate procedure. D. If the principal has a will, it will have no effect on the agency relationship. A. Terminate the agency relationship The legal relationship wherein one person, called "the agent," will act for and be subject to the control of another person, called the "principal," is a(n) A. Agency. B. Option. C. Limitation. D. Trust. A. Agency