Quiz on Formation of Agency

What is the definition of an agency?

• D. A personal relationship between colleagues

• C. A financial agreement between a company and a client

• B. A legal document between two parties

• A. A contractual relationship between a principal and an agent

According to Section 135, who is considered an agent?

• C. A person who is a minor

• B. A person who owns a business

• D. A person who is not of sound mind

• A. A person employed to do any act for another or to represent another in dealings with third persons

What is the requirement for a principal to appoint an agent?

• A. Must be of the age of majority and sound mind

• B. Must be a minor

• D. Must be a legal expert

• C. Must be of unsound mind

How can an agency be created?

• D. By ratification only

• A. By express appointment, implied appointment, ratification, necessity, or estoppel

• B. By express appointment only

• C. By necessity only

In which situation does agency by ratification occur?

• D. When an agent is not competent

• C. When an agent refuses to act on behalf of the principal

• B. When an agent follows all instructions from the principal

• A. When an agent exceeds his given authority or acts without authority

The followings are the condition for a valid ratification by the principal, EXCEPT...

• A. The contract must be illegal

• B. The agent must act expressly as an agent to the principal at the time of contracting

• C. The principal must have full knowledge of all material facts at the time of ratification

• D. The principal must ratify the whole contract

When does agency by necessity occur?

• D. When an agent is not trustworthy

• A. When an agent needs to act in an emergency to protect the interest of the principal

• B. When an agent acts without any reason

• C. When an agent is on vacation

What is the effect of agency by necessity?

• C. The principal can sue the agent for acting without authority

• A. The agent will be protected from any claim from the principal

• B. The agent will be liable for any loss incurred by the principal

• D. The principal is not bound by any contract made by the agent

When does agency by estoppel occur?

• D. When the principal terminates the agent's authority

• C. When the agent acts without any authority

• A. When the principal induces the 3rd party to believe that someone has authority to act for him

• B. When the agent represents to the 3rd party that he is the principal

What is the requirement for agency by estoppel to occur?

• A. The principal must induce the 3rd party to believe that someone has authority to act for him

• D. The agent must act in bad faith

• B. The agent must inform the 3rd party that he has no authority

• C. The principal must communicate with the agent regularly