Law - Ch-7(Agency) Ch-8(Partnerships)

Which of the following statements regarding agency is TRUE?

• 1. The principal is an extension of the agent

• 1. An agent usually acts independently from the principal

• 1. A principal is not able to ratify an agent’s actions retrospectively

• 1. The agent usually has no liability to a third party

Which of the following is “authority by holding out”?

• 1. Apparent authority

• 1. Implied authority

• 1. Express authority

Which of the following is NOT a key element to agency by necessity?

• 1. No practical way of getting hold of the principal

• 1. An emergency situation

• 1. The explicit prior consent of the principal

• 1. Action is required to protect the principal’s interests

Which of the following is NOT a duty owed by an agent to the principal?

• 1. To exercise due care and skill

• 1. To act in good faith for the benefit of the principal

• 1. To avoid conflicts of interest

• 1. To avoid profiting from acting as an agent

What name is given to the right of an agent who has not been paid to retain the principal’s goods?

• 1. Agency by necessity

• 1. Lien

• 1. Authorised delegation

• 1. Agency by estoppel

Which of the following conditions is necessary in order for a principal to be able to ratify a contract entered into by an agent?

• 1. The principal need only have contractual capacity when the contract is ratified

• 1. The principal need only have contractual capacity when the contract was entered into

• 1. The agent must have contractual capacity when the contract was entered into

• 1. The principal must have contractual capacity when the contract was entered into and when it is ratified

Barry is managing director of Soap Co. He enters into a contract to buy some property on behalf of the company.

What is the legal position?

• 1. The contract is invalid and must be ratified by the members

• 1. The contract is valid as Barry has implied authority to act in this way

• 1. The contract is invalid as Barry has not acted out of necessity

• 1. The contract is invalid as the contract must be by deed

Benskin retired from the firm of Cropper & Co in 20X2 yet still wanted to be involved in some capacity. Cropper & Co continued to allow Benskin to negotiate contracts even though he had no appointed authority to enter into contracts on behalf of the company.

On what basis could Cropper & Co be liable as a principal for contracts made in 20X3 on behalf of Cropper & Co by Benskin?

• 1. By agency of necessity

• 1. By ratification by implication

• 1. Only if he expressly authorises them

• 1. By apparent authority (by estoppel)

Arthur entered into a contract with Ted without disclosing that he was acting as an agent on the instructions of Patricia.

What right does Ted have?

• 1. Ted may sue Arthur only, as he had no knowledge that he was an agent

• 1. Ted may sue Patricia only, because Arthur was in fact an agent

• 1. Ted may sue Patricia or Arthur, since Arthur was acting as an agent for an undisclosed principal

• 1. Ted may sue Patricia and Arthur, since Patricia and Arthur are treated as principals

Even in cases where there are no express words, authority may still arise through _____.

Which words correctly complete this sentence?

• 1. Agreement by conduct

• 1. Implied actual authority

• 1. Authorised authority

• 1. Unspoken agreement