Law 2 - Business Law
Chp. 34 - Liability to 3rd Parties Quiz and Answers
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1. Andy tells Employee Earl to go pick up a shipment of goods from his warehouse across town with the company truck. Earl notices the truck is nearly out of gas, and fills up the tank. What kind of authority does Earl have to take the company truck?

a. express
b. implied
c. apparent
d. none of the above

2. Andy tells Employee Earl to go pick up a shipment of goods from his warehouse across town with the company truck. Earl notices the truck is nearly out of gas, and fills up the tank. What kind of authority does Earl have to buy the gas?

a. express
b. implied
c. apparent
d. none of the above

3. Herbie is sent by his boss to an x-rated store on an errand. Herbie enters the store and says, "I need one of those for my boss. Oh, yeah, and some extra feathers and batteries." The clerk says, "Who is your boss?" Herbie replies, "I can't say. We'll just call him Mr. X." What kind of a principal is Herbie's boss?

a. disclosed
b. partially disclosed
c. undisclosed
d. none of the above

4. Which of the following must occur before a principal has officially ratified an unauthorized act of an agent?

a. The principal becomes aware of all material facts.
b. The principal has capacity to ratify the act at the time of ratification.
c. both A and B
d. none of the above

5. Paul Principal tells Andy Agent, "You can sign repair contracts on my fleet vehicles for up to $1,000, but not for more." Paul sends Andy to a mechanic with a company car. Paul calls the mechanic and says, "My agent is coming, he'll sign any contracts necessary." The mechanic tells Andy the repairs will cost $2,000, and Andy signs an authorization for the job. What kind of authority did Andy have to sign this contract?

a. express
b. implied
c. apparent
d. none of the above

6. Corby, who wants a really fast car he can haul all his buddies around in, goes to a Chevrolet dealer and asks a representative about convertible Z28 Camaros. The salesman assures him that the back seat is, "Roomy, seats three adults with room to spare." Corby orders the car, and when it arrives he finds out he can't fit a cantaloupe comfortably into the back seat. Who may be liable if a court finds this amounts to fraudulent misrepresentation?

a. the Chevrolet Representative
b. chevrolet
c. both A and B
d. none of the above

7. Fran is pretending to be Phil's agent. She goes into a store and orders 100 fax machines for Phil. The store believes in good faith that she is making a legitimate order. Who will be responsible for paying for the fax machines?

a. Fran
b. Phil
c. both Fran and Phil
d. neither Fran nor Phil

8. Tonya orders Jeff to bash her skating rival Nancy on the knee with a baton. He does so, but she still wins a silver medal. Who can be held liable for the tort of battery?

a. Tonya
b. Jeff
c. both Tonya and Jeff
d. neither Tonya nor Jeff

9. Which of these factors make it more likely that a principal will be held vicariously liable for an agent's act?

a. The employee derived a benefit from the action leading to a tort.
b. The employee was operating a company vehicle when he committed tort.
c. The employee committed a crime.
d. all of the above

10. Respondeat superior is to vicarious liability as referee is to __________.

a. athlete
b. penalty
c. football
d. zebra

11. Herbie is sent by his boss to an x-rated store on an errand. Herbie enters the store and says, "I need one of those for my boss. Oh, yeah, and some extra feathers and batteries." The clerk says, "Who is your boss?" Herbie replies, "I can't say. We'll just call him Mr. X." In most states, who can the store hold liable for payment in this transaction?

a. Herbie
b. The boss
c. both A and B
d. none of the above

12. What is the greatest distance an employee may be from his office when committing a tort and still expose his boss to liability under respondeat superior?

a. 100 miles
b. the border of the office's home state
c. a reasonable distance
d. There is no limit.

13. Al needs to dig a ditch, but all his workers are out on other assignments. He calls Frank, who runs another construction business in town, and asks if he can "borrow" some employees, for a fee. Frank agrees, and brings five men out to the job site. Frank supervises the job himself. If one of the workers commits a tort while digging by negligently rupturing a water main, who can be held responsible?

a. Al
b. Frank
c. both A and B
d. none of the above

14. Don hired KaPow, Inc., to do some blasting on his construction site. Based on all factors, they are an independent contractor. If one of the blasts injures a bystander, will Don be held liable?

a. yes, if he had control over the operation
b. yes, no matter what
c. no, if he did not have control over the operation
d. None of the above is a true statement.

15. For which of the following crimes committed by an agent is the principal most likely to be held liable?

a. murder
b. arson
c. violating sanitation statutes
d. theft

16. Which of the following will terminate an agency arrangement?

a. The agent is eaten by a velociraptor.
b. The principal is eaten by a velociraptor.
c. both A and B
d. none of the above

17. Carrie agrees to be Christine's agent until December 31. Which of the following statements is accurate?

a. The arrangement may be extended into next year, at Carrie's option.
b. The agreement may be extended into next year, at Christine's option.
c. The agreement may be extended into next year, but only if both agree.
d. The agreement may not be extended past December 31.

18. Al Agent, with the knowledge of Paul Principal, hires some workers to assist him in carrying out his job. He hires Phil to answer phones, Margo to set up a computer network and database, and Fred to clean his office. For which of these sub-agents is Phil responsible?

a. Margo
b. Phil
c. Fred
d. both B and C

19. Carrie hires Christine to be her agent. The two do not discuss how long the relationship will last. When will it end?

a. immediately
b. in one year
c. after a reasonable time
d. never

20. Mel hires Stan to be his agent specifically to sell his car. The two do not discuss how long the relationship will last. When will the relationship end, if the car is sold?

a. immediately upon the sale of the car
b. after one year
c. after a reasonable time
d. never

21. Joel hires Sam to be his agent. Which of these parties may terminate their agency relationship at any time?

a. Joel
b. Sam
c. Both Joel and Sam
d. Neither Joel nor Sam

22. John hires Ann and Bill independently to sell his house. Ann makes the sale. When do these two agency relationships end?

a. Ann's ends immediately, and Bill's ends immediately.
b. Ann's ends immediately, and Bill's ends after a reasonable time.
c. Ann's ends after a reasonable time, and Bill's ends immediately.
d. Ann's ends after a reasonable time, and Bill's ends after a reasonable time.

23. Melissa pawns a ring for $100. She signs a letter giving the pawn shop power to sell the ring as her agent if she does not repay the $100 within 30 days. May Melissa terminate this agency relationship?

a. yes, after a reasonable time
b. yes, at any time
c. yes, after 30 days
d. no

24. Al was Bob's agent, and the two have decided to terminate their relationship. Who must Bob notify personally, to ensure that Al does not continue to have apparent authority to sign contracts for him?

a. all businesses is his state
b. all businesses with which he (Bob) interacts
c. all businesses with which Al has interacted
d. no one

25. Al is Bob's agent. Which of the following will likely terminate the relationship as a matter of law?

a. Al's bankruptcy
b. Bob's bankruptcy
c. both A and B
d. none of the above