Exam (elaborations)
BUL 5810 PART III - AGENCY TEST
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BUL 5810 PART III - AGENCY TESTA power of attorney is a formal manifestation that states an agent's authority. The
agent is known as the: - ANSWER attorney at fact
A(n) __________ is a written instrument that expresses the principal's intention that
the agent's authority will not be affected by the principal's subsequent incapacity or
that the agent's authority will become effective upon the principal's subsequent
authority. - ANSWER Durable power of attorney
The agency is a consensual relationship that the principal and agent may form by: -
ANSWER contract or relationship
Is the agent subject to liability to her principal for breach of the duty of obedience
if she sells the principal's product on credit in violation of explicit instructions? -
ANSWER Yes, and she is liable to the principal for any amounts that the purchaser
doesn't pay
Which of the following will terminate a valid durable power of attorney after the
principal is incapacitated? - ANSWER The death of the principal
Which of the following is a major duty, which the agent owes to the principal? -
ANSWER Duty to act in good faith and with loyalty
If the agent is authorized to sell certain property of her principal for $1,000 and
sells it for $1,500. Which of the following is the best description of her violation if
she keeps the money? - ANSWER An agent has a duty not to acquire any financial
or material benefits in connection with transactions conducted on behalf of the
principal.
A principal must compensate his or her agent if: - ANSWER the agent rendered
authorized services
All of the following are contractual duties owed by a principal to an agent, except:
-compensation
, -reimbursement
-indemnification
-self-dealing - ANSWER Self-dealing
An agent's authority can terminate by: - ANSWER Both acts of the parties and by
operation of law.
Assume that Dr. Early is a sales representative for Pharzime, as well as for other
pharmaceutical companies. What would be the main factor in determining whether
he was an employee or an independent contractor for Pharzime? - ANSWER The
degree to which Pharzime controls the details of Dr. Early's work.
Assume that Dr. Early is an independent contractor for Pharzime and was calling
on a doctor at the hospital. The hospital wanted to order some Gensol. Dr. Early
sells some pills to the hospital that he was given as samples and keeps the money
for himself. What duty has Dr. Early violated? - ANSWER The duty of loyalty
Assume Dr. Early is an independent contractor for Pharzime and that Pharzime
allows Dr. Early to spend money to take doctors who may be interested in buying
Gensol to lunch and other events to entertain them. Pharzime sends a notice to Dr.
Early that it wants to know how much money has been spent in the past two
months on such activities. Dr. Early must give Pharzime this information based on
his: - ANSWER Duty of Accounting
Assume that Dr. Early is an independent contractor for Pharzime. Dr. Early sells
the hospital 1,000 Gensol tablets. Pharzime does not deliver on time. The hospital
sues Dr. Early for the breach of contract. Dr. Early is found liable for $10,000
worth of damages. Dr. Early will probably be able to recover the $10,000 from
Pharzime, because of the concept of: - ANSWER Indemnification
The owner of a business with a buyer terminates an agency without giving notice of
the termination to vendors who have dealt with the agent. Is it reasonable for the
vendors to expect that the agent still has the authority to make contracts that will
bind the business? - ANSWER The vendors are reasonable in doing business with
the agent until they are notified of the termination of the agency
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