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While an agent owes duties to a principal, the principal owes no duties to an agent.

A) True
B) False

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Which of the following types of agency exists when a third party reasonably believes, on the basis of a principal's actions, that an agency relationship exists between the principal and another individual?


A) Express
B) Implied
C) Acknowledged
D) Perceived
E) Apparent

F) C) and D)
G) A) and E)

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Which of the following is false regarding the employer-employee relationship?


A) The employee is subject to the control of the employer.
B) Generally, all employees are considered to be agents of the employer.
C) Employees who are not legally authorized to enter into contracts binding their employer are considered agents.
D) Employees not legally authorized to interact with third parties are considered agents.
E) Independent contractors fall under the employer-employee relationship.

F) A) and D)
G) B) and D)

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What is the duty of accounting an agent owes to a principal, and how would an agent satisfy that duty? Specify what actions an agent must take in regards to accounts of a principal.

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Under the duty of accounting, the agent ...

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Which of the following is a term for a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking?


A) An employee
B) An independent contractor
C) An authorized contractor
D) A task-specific contractor
E) A partial contractor

F) A) and B)
G) A) and C)

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A gratuitous agent is one who acts without consideration.

A) True
B) False

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Which of the following may an agent demand if the agent believes that he or she is not being properly compensated?


A) Specific performance
B) Accounting performance
C) An accounting
D) A contractual documentation
E) A contractual audit

F) B) and D)
G) B) and C)

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Actual notice of agency termination may never by given orally.

A) True
B) False

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Which of the following holds the principal-employer liable for any harm caused by the agent-employee during the time that the agent-employee is working for the principal?


A) Vicarious liability
B) Responsible liability
C) Comparative liability
D) Contributory liability
E) Applied liability

F) A) and E)
G) B) and E)

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Reference - Lakeside Property. Ronnie agreed to act as the agent of Sue in finding a piece of lakeside property for her at a good price and also in obtaining a loan for her with which to purchase the property. She agreed to pay him $500 for doing so. To assist Ronnie in his duties, Sue disclosed to Ronnie confidential information about her finances and debts. Ronnie decided that he needed help and paid Rick $300 to look for property for Sue. Bruce told Ronnie about a great deal on a piece of lakeside property that Bruce had for sale. In fact, the deal was so good that Ronnie purchased the property for himself. When Sue found out about the property Ronnie bought for himself, she complained to Ronnie. He defended himself on the basis that he was not actually working for Sue when he found out about the deal. At the time, he was playing golf with Bruce. He also told Sue that he had hired Rick for $300 to assist him and that he could not be held liable because he had turned the job over to Rick. He asked Sue for reimbursement of that amount. Sue fired Ronnie threatening to sue him. Ronnie told Sue that he would counterclaim for the $300 owed to Rick. Only after he was fired, Ronnie disclosed to a number of parties information regarding Sue's spending habits which he thought were excessive. Which of the following is the most likely result if Ronnie sues Sue for the $300 paid to Rick?


A) Ronnie will lose.
B) Ronnie will win only if he can establish that he had express permission from Sue to assign the duties.
C) Ronnie will win only if he can establish that he had either express or implied permission from Sue to assign the duties.
D) Ronnie will win only if he can establish that he had either express, implied, or assumed permission from Sue to assign the duties.
E) Ronnie will lose only if Sue can establish that Rick is incompetent to deal in real estate.

F) B) and D)
G) All of the above

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The principal may terminate an agency coupled with an interest.

A) True
B) False

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Which of the following is false regarding the relationship between a principal and an independent contractor?


A) An independent contractor is not an employee of the principal.
B) The principal does not control the details of the independent contractor's performance.
C) An individual who hires an independent contractor cannot be held liable for the independent contractor's tortious actions under the doctrine of respondeat superior.
D) A principal is not liable for actions engaged in by the independent contractor, even extremely dangerous ones.
E) If an independent contractor commits a crime without the authorization of the principal, the principal is not liable for the agent's crime.

F) A) and B)
G) All of the above

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By which of the following means may an agency relationship be terminated?


A) Fulfillment of purpose
B) Occurrence of a specific event
C) Revocation of authority
D) Fulfillment of purpose, occurrence of a specific event, and by revocation of authority
E) Fulfillment of purpose and occurrence of a specific event, but not revocation of authority.

F) A) and B)
G) A) and E)

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Which of the following is false regarding law in Iran?


A) The principal must indemnify the agent for expenses or losses incurred not due to the agent's fault, if the agent was acting within the scope of his authority.
B) The duty of loyalty is recognized.
C) An agent is considered a trustee.
D) The principal must compensate the agent for his services if the agent was acting within the scope of his authority.
E) A breach of trust is considered a civil offense, not a criminal offense.

F) B) and C)
G) A) and C)

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Which of the following is true regarding the rights of an employer who is held liable and pays a third party, not because of the employer's negligence, but under the doctrine of respondeat superior based upon negligence of an employee?


A) The employer has no right to receive any reimbursement from the negligent employee.
B) The employer has a right to recover only 50% of any amounts paid from a negligent employee.
C) The employer has a right of indemnification from the negligent employee.
D) The employer can recover 100% of any amounts paid from a negligent employee but only if it can be shown that the employee's negligence was based upon the violation of a statute.
E) The employer can recover 50% of any amounts paid from a negligent employee but only if it can be shown that the employee's negligence was based upon the violation of a statute.

F) B) and C)
G) A) and B)

Correct Answer

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Reference - Lakeside Property. Ronnie agreed to act as the agent of Sue in finding a piece of lakeside property for her at a good price and also in obtaining a loan for her with which to purchase the property. She agreed to pay him $500 for doing so. To assist Ronnie in his duties, Sue disclosed to Ronnie confidential information about her finances and debts. Ronnie decided that he needed help and paid Rick $300 to look for property for Sue. Bruce told Ronnie about a great deal on a piece of lakeside property that Bruce had for sale. In fact, the deal was so good that Ronnie purchased the property for himself. When Sue found out about the property Ronnie bought for himself, she complained to Ronnie. He defended himself on the basis that he was not actually working for Sue when he found out about the deal. At the time, he was playing golf with Bruce. He also told Sue that he had hired Rick for $300 to assist him and that he could not be held liable because he had turned the job over to Rick. He asked Sue for reimbursement of that amount. Sue fired Ronnie threatening to sue him. Ronnie told Sue that he would counterclaim for the $300 owed to Rick. Only after he was fired, Ronnie disclosed to a number of parties information regarding Sue's spending habits which he thought were excessive. Which of the following is the most likely result if Sue sues Ronnie for purchasing the property from Bruce?


A) Sue will lose because Ronnie had the right to act in his own best interest.
B) Sue will lose but only because Ronnie was not involved in work duties when he heard about the property.
C) Sue will lose because Ronnie had validly assigned all duties to Rick.
D) Sue will win.
E) Sue will win only if she can establish that she expressly told Ronnie that he could not assign the contractual duties under the contract.

F) A) and B)
G) A) and C)

Correct Answer

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Under which of the following does a principal give an agent broad authority to sign legal documents on behalf of the principal as opposed to authority for only a specific purpose?


A) A general power of attorney
B) A specific power of attorney
C) A localized power of attorney
D) A broad power of attorney
E) A recognized power or attorney

F) D) and E)
G) A) and E)

Correct Answer

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Which of the following is false regarding the agency relationship?


A) It is a consensual relationship.
B) It may be formed by formal written contracts.
C) It may usually be formed by informal oral agreements.
D) It exists when the principal takes action to ask another individual to act on behalf of the principal.
E) People must be trained in the field involved in order to qualify as agents.

F) B) and E)
G) A) and E)

Correct Answer

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An agent's implied authority is derived from an agent's ____________ authority.


A) Express
B) Apparent
C) Perceived
D) Acknowledged
E) Temporary

F) B) and D)
G) B) and C)

Correct Answer

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Which of the following is true regarding the right of a third party to reject the performance of the principal?


A) The third party may reject the performance of the principal at any time.
B) The third party may never reject the performance of the principal.
C) The third party may reject the performance of the principal if the third party entered into a contract with the agent such that the performance of the agent is required.
D) The third party may reject the performance of the principal if the third party entered into a contract with the agent such that the performance of the agent is required or the third party can establish that the third party had been involved in past litigation with the principal.
E) The third party may reject the performance of the principal if the third party entered into a contract with the agent such that the performance of the agent is required; the third party can establish that the third party had been involved in past litigation with the principal; or the principal owes money to the third party.

F) C) and E)
G) A) and E)

Correct Answer

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