Business Law II BA 304-01: N/A
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Chapter 37 - Agency - Review

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1) Through agency, one person can make contracts at numerous places with many different parties at the same time.

2) An agent is authorized to make contracts for, and is under the control of, the principal.

3) The employer of an independent contractor does not have control over the performance of the work by the independent contractor.

4) A party working for and under the control of another and authorized to enter into contracts for that other person or entity is called an agent.

5) An agent has the power to contract on behalf of a principal.

6) An employee generally does not have the power to contract on behalf of the employer.

7) An independent contractor controls work performed by the independent contractor.

8) A person may select as an agent an alien, a minor, or a corporation.

9) When an agent is authorized to transact all activities in a particular business, that agent is a general agent.

10) The usual method of creating an agency is by express authorization.

11) An agent acting under a power of attorney is referred to as an attorney-in-fact

12) The scope of an agent's authority may be determined from the express words of the principal, words or deeds of the principal, and customs of the trade or business.

13) If a principal is a minor and the agent is an adult, the agent can only create a voidable contract on behalf of the principal.

14) An agency may be created to perform almost any act that a principal could lawfully do.

15) An agency may be created to perform almost any act that a principal could lawfully do.

16) The term apparent authority is used when an appearance of authority has been created by a principal, but actual authority does not exist.

17) A principal may ratify an unauthorized contract of an agent.

18) The intention to ratify an unauthorized act may be expressed by words or conduct.

19) For ratification to occur, the agent must have purported to act on behalf of, or as agent for, an identified principal.

20) The burden of proving the existence of an agency relationship rests on the person who seeks to benefit by such proof.

21) A person has apparent authority when a third person is told by the principal that such a person has the authority to act on behalf of the principal, and the third person relies on the principal's statement.

22) The term apparent authority is used when there is only the appearance of authority and that appearance of authority was created by the principal.

23) Initially, ratification is a question of intention.

24) John's son was not his agent but contracted to purchase a computer in the name of John. When John learned of this, John sternly rebuked his son but continued to use the computer for several weeks. After losing interest in the computer, John offered to return it, saying that the purchase was unauthorized. John ratified the purchase by John's conduct.

25) If an agent conceals a material fact, the ratification of the principal that is made in ignorance of such fact is not binding.

26) An agent's implied authority to perform any act reasonably necessary to execute express authority is called incidental authority.

27) When the principal's words or conduct leads a third person to reasonably believe that a party is authorized to act as his or her agent but this is not true, and the third person relies on that appearance, this creates a case of apparent authority.

28) A third person dealing with an agent should determine the extent of the agent's authority by asking the principal.

29) An agent's duty of loyalty to the principal is breached by the agent accepting a secret gift from a third person in connection with the agency, the agent acting as agent for both parties to a transaction without disclosure, or the agent aiding a principal's competitors.

30) An agent is under a duty to obey all lawful instructions given by the principal.

31) The UDPAA provides for a power of attorney in the event of disability. The Uniform Durable Power of Attorney Act (UDPAA) changes the general rule that insanity of a principal terminates an agent's authority to act for the principal.

32) A person who has knowledge of a limitation on an agent's authority cannot disregard that limitation.

33) In performing agency duties, the agent must exercise the care that a reasonably prudent person would show under the same circumstances.

34) An agency coupled with an interest is an exception to the general rule regarding termination of the agency and the agent cannot be discharged or fired before the expiration of the interest.

35) If a principal terminates an agency without giving notice of the termination to third persons, the agent may retain the power to make contracts that will bind the principal and third persons.

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