Chapter 32 Study Guide Quiz

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Question #1

Whether a worker is an employee or an independent contractor has no effect on the employer’s liability for the worker’s actions.

A False

B True

Question #2

Through agents, a principal can conduct only one business operation at a time.

A False

B True

Question #3

The term fiduciary is at the heart of agency law.

A True

B False

Question #4

The agent has the right to be compensated, to be reimbursed and indemnified, and to have a safe working environment.

A False

B True

Question #5

If work is usually done under the employer’s direction, this indicates independent-contractor status.

A True

B False

Question #6

Generally, the law assumes that the principal is aware of any information acquired by the agent that is relevant to the agency.

A True

B False

Question #7

Even during emergency situations, when the principal cannot be consulted, the agent may not deviate from the principal’s instructions without violating the duty of obedience.

A True

B False

Question #8

Anything that an agent obtains by virtue of the employment or agency relationship is his or hers to keep.

A False

B True

Question #9

Any copyrighted work created by an employee within the scope of his or her employment at the request of the employer is a “work for hire.”

A False

B True

Question #10

An agency by estoppel arises when the principal’s actions have created the appearance of an agency that does not in fact exist.

A True

B False

Question #11

An agency agreement can be implied by conduct.

A False

B True

Question #12

A principal has a duty to cooperate with the agent and to assist the agent in performing his or her duties.

A True

B False

Question #13

Rosario is a chef and caterer who hires out on a per-project basis to companies with on-location work sites, as well as to hosts of banquets, corporate meetings, concerts, weddings, and other events. In this capacity, Rosario is

A a principal.

B an employee.

C an independent contractor.

D an agent.

Question #14

Rondi holds herself out as possessing special accounting skills. As an agent, she must exercise the degree of skill or care expected of

A an average, unskilled person.

B a reasonable person.

C a person having those skills.

D the principal.

Question #15

Lorena is appointed as an agent for Milled Grains, Inc. The agency agreement is silent as to the level of sales that Lorena is expected to achieve. She must

A maintain the level Milled Grains attained before Lorena became an agent.

B attain the level that Lorena achieved with her previous employer.

C use reasonable diligence and skill in selling.

D achieve nothing because the agreement says nothing on the issue.

Question #16

Investment Holdings Corporation hires Jerilyn, a business appraiser, to locate investment possibilities for Investment Holdings. Jerilyn learns of a salsa and hot sauce manufacturing company available for a reasonable price, but neglects to tell Investment Holdings. Most likely, Jerilyn

A breached the agent’s fiduciary duties to the principal.

B did nothing wrong.

C assumed that the information was confidential.

D failed to take advantage of a business opportunity.

Question #17

Insurance Sales Corporation hires Jeremy to act as its agent. Insurance Sales’s right not to perform a contract entered into by Jeremy, if he breaches their agency agreement, is the right of

A termination.

B indemnification.

C nullification.

D avoidance.

Question #18

Home Enterprises employs Itzak to buy property for a possible residential development. Itzak secretly buys some of the property and sells it to Home Enterprises at a profit. Itzak has breached

A the duty of notification.

B the duty of loyalty.

C the duty of accounting.

D no duty.

Question #19

Global Games Corporation employs Hyacinth as an agent. Global Games gives her an exclusive territory in which to sell its products. Global Games cannot compete with her in that territory under the duty of

A reimbursement.

B indemnification.

C compensation.

D cooperation.

Question #20

A Neon’s principal.

B Neon’s employee only.

C an independent contractor.

D Neon’s employee and agent.

Question #21

Fact Pattern 32-1B
Margo works as an administrator and receptionist in Neon’s Garage Door Store. Neon withholds federal taxes from Margo’s pay, and controls the methods and details of the performance of her work. Margo is not authorized to modify the prices or other terms of a sale at the store. Omar installs Neon’s Garage Door products at the buyers’ locations.
Neon authorizes Omar to sell garage door upgrades and accessories at the buyers’ locations at prices that Omar negotiates with those buyers. With respect to sales at those locations, Omar is

A an independent contractor.

B Neon’s principal.

C Neon’s employee only.

D Neon’s employee and agent.

Question #22

Elaine owns the Fabric & Yarn store. Goldie is a salesperson in the store. When Goldie makes a sale to Heather, the sale is binding on

A Goldie.

B Fabric & Yarn only—and only if Elaine is present at the sale.

C no one.

D Elaine.

Question #23

Donato is Equipment Repair Service Company’s chief executive officer. On Equipment Repair’s behalf, Donato solicits business, hires and fires workers, and handles finances. Equipment Repair pays Donato varying amounts, depending on his “needs.” Donato is most likely

A an employer.

B an employee.

C a principal.

D an independent contractor.

Question #24

Bernard is an expert on exotic flowers. Custom Floral Arrangements, Inc., hires Bernard to order exotic flowers for its arrangements. Bernard does not examine the quality of the flowers he orders on behalf of Custom Floral. Bernard has breached

A the duty of notification.

B the duty of loyalty.

C no duty.

D the duty of performance.

Question #25

Bailey is an agent for Culinary Delites Company. In the course of Bailey’s performance for Culinary Delites, she pays Drivers’ Repair Service for certain vehicle maintenance and repair work. Bailey’s right to obtain the amount of the payments from Culinary Delites arises under the principal’s duty of

A avoidance.

B indemnification.

C reimbursement.

D cooperation.

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Chapter 32 Study Guide Quiz

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