MULTIPLE CHOICE.

Choose the one alternative that best completes the

statement or answers the question.
1) An agent is a party who ________. 1) _______
A) receives the services of another for remuneration
B) directs a worker under an express or implied contract of employment
C) agrees to act on behalf of another
D) employs another person to act on his or her behalf

2) A party who employs another person to act on his or her behalf is

known as a(n) ________. 2) _______
A) agent B) independent contractor
C) employee D) principal

3) A(n) ________ is a fiduciary relationship which results from the

manifestation of consent by one person to another that the other shall
act in his behalf and subject to his control, and consent by the other so
to act. 3) _______

A) assignment B) accommodation C) agency D) garnishment

4) Martin, who wants to sell a house he owns, authorizes his concierge,

Wilhelm, to find a potential buyer, and finalize a deal above a
stipulated price. Wilhelm contracts Chris, a real estate broker, and
instructs him to only find a potential buyer and send them over to
Wilhelm for the sale. Martin then contracts ReNowait Goodhouses, a home
improvement company to renovate the house. ReNowait completes its work
and Martin pays them. Chris then searches for a suitable buyer and finds
one in George. George buys the house and Chris is paid for his services.
Who performs the role of the agent in this land sale transaction? 4)
_______

A) Wilhelm B) Chris C) Martin D) George

5) Greg, who wants to sell a car he owns, authorizes his concierge,

Walter, to find a potential buyer, and finalize a deal above a stipulated
price. Walter contracts Jacob, an independent car sales broker, and
instructs him to only find a potential buyer and send them over to Walter
for the sale. Greg then contracts CarWreckers, an automobile modification
company to renovate his car. CarWreckers completes its work and Greg pays
them. Jacob then searches for a suitable buyer and finds one in Carl.
Carl buys the car and Jacob is paid for his services. Who is the
principal during the car sale transaction? 5) _______

A) Greg B) CarWreckers C) Walter D) Carl

6) Martin, who wants to sell a house he owns, authorizes his concierge,

Wilhelm, to find a potential buyer, and finalize a deal above a
stipulated price. Wilhelm contracts Chris, a real estate broker, and
instructs him to only find a potential buyer and send them over to
Wilhelm for the sale. Martin then contracts ReNowait Goodhouses, a home
improvement company to renovate the house. ReNowait completes its work
and Martin pays them. Chris then searches for a suitable buyer and finds
one in George. George buys the house and Chris is paid for his services.
What sort of commercial relationship exists between Martin and Wilhelm?
6) _______

A) principal-agent relationship B) agent-agent relationship

C) employer-employee relationship D) agent-independent contractor
relationship

7) A(n) ________ is a relationship formed when an employer hires an

employee and gives that employee authority to act and enter into
contracts on his or her behalf. 7) _______

A) principal-agent relationship B) employer-employee relationship

C) agent-agent relationship D) agent-independent contractor
relationship

8) Which of the following types of relationship exists when a person

hires another person to perform some form of physical service but does
not authorize that person to enter in to contracts on his or her behalf?
8) _______

A) principal-third party relationship B) employer-employee

relationship
C) employer-agent relationship D) principal-agent relationship

9) Which of the following is true of an employer-employee relationship?

9) _______
A) An employee has implied power of attorney towards the principal.
B) An employee has authority to act on behalf of the principal.
C) An employee is hired to perform a physical task or service.
D) An employee can enter into contracts on behalf of the employer.

10) Martin, who wants to sell a house he owns, authorizes his concierge,
Wilhelm, to find a potential buyer, and finalize a deal above a
stipulated price. Wilhelm contracts Chris, a real estate broker, and
instructs him to only find a potential buyer and send them over to
Wilhelm for the sale. Martin then contracts ReNowait Goodhouses, a home
improvement company to renovate the house. ReNowait completes its work
and Martin pays them. Chris then searches for a suitable buyer and finds
one in George. George buys the house and Chris is paid for his services.
What role does ReNowait Goodhouses perform? 10) ______

A) trustee B) agent
C) principal D) independent contractor

11) If a person employs an architect to design the layout of his or her

own home, it would constitute a(n) ________ relationship. 11) ______

A) principal-agent B) agent-independent contractor

C) employer-employee D) principal-independent contractor

ESSAY. Write your answer in the space provided or on a separate sheet of

paper.
12) Who is an independent contractor?
MULTIPLE CHOICE. Choose the one alternative that best completes the
statement or answers the question.
13) Marlon intends to sell a piece of real estate he owns and contracts
Nita, a real estate broker, to make the sale. In the contract, Marlon
authorizes Nita to make the sale at or above a minimum price he wants and
the date by which he wants the sale to be completed. The contract also
stipulates that Marlon will not hire another broker to sell that piece of
land until the contract period expires. Nita finds a suitable buyer,
makes the sale in time, and is paid by Marlon for her services. Which of
the following types of agency existed between Marlon and Nita? 13)
______

A) express agency B) apparent agency

C) implied agency D) agency by ratification

14) An agency that occurs when a principal and an agent categorically

agree to enter into an agency agreement with each other is known as a(n)
________. 14) ______

A) agency by ratification B) apparent agency

C) implied agency D) express agency

15) A power of attorney is an example of a(n) ________ agreement.

15) ______
A) implied agency B) agency by ratification
C) express agency D) apparent agency

16) Taylor gives a power of attorney to his twin brother Corey,

permitting Corey to make all decisions on his behalf while he is abroad.
Per the terms of the power of attorney, Corey is allowed make decisions
to buy or sell stocks on Taylor's behalf, sell Taylor's real estate if he
deems it to be in Taylor's best interest, pursue or defend lawsuits on
Taylor's behalf, and make all other relevant decisions for Taylor. What
kind of power of attorney would confer such powers to Corey? 16)
______

A) a general power of attorney B) an implied power of attorney

C) a special power of attorney D) a limited power of attorney

17) An agency that occurs when a principal and an agent do not expressly
create an agency but is inferred from the conduct of the parties is known
as a(n) ________. 17) ______

A) apparent agency B) agency coupled with an interest

C) agency by ratification D) implied agency

18) Marcus employs a real estate broker, Dean, to sell his house. Dean's
express powers are to advertise and market the house for sale, show the
house to prospective buyers, and accept offers from them. He is not
allowed to seal a deal without Marcus' consent. Marcus goes away on a
month-long trip where he cannot be contacted. During this time, a short
circuit in the house causes a power outage. Dean uses his authority to
hire an electrician to repair the circuits and restore electricity in the
house. Marcus then comes back and pays Dean for the repairs. What is the
nature of the agency that Dean used to fix the problem in the house?
18) ______

A) power of attorney B) agency by ratification

C) implied agency D) express agency

19) Frank Hannigan sees a grand piano that his musician friend Scott
Kristoff had been looking for in an antique store. Frank enters into a
contract to purchase the grand piano from the antique seller and signs
the contract, "Frank Hannigan, agent for Scott Kristoff." But because
Frank is not Scott's agent, Scott is not bound by the contract. If Scott
decides to accept the contract, what kind of agency would be created?
19) ______

A) implied agency B) power of attorney

C) agency by ratification D) express agency

20) An agency by ratification occurs when the principal ________.

20) ______
A) accepts an authorized act created by an authorized agent
B) accepts an act carried out under the implied authority of an agent
C) accepts an unauthorized act created by an unauthorized agent
D) creates the appearance of an agency that in actuality does not exist

21) Which of the following describes an agency by estoppel? 21)

______
A) an agency that arises when a principal ratifies a contract created by
an unauthorized agent
B) an agency that arises when a principal creates the appearance of an
agency that in actuality does not exist
C) an agency created when a principal and an agent expressly agree to
enter into an agency agreement
D) an agency that is not expressly stated but is implied and inferred in
the conduct of the parties

22) Which of the following is true of an apparent agency? 22) ______

A) The actions of an apparent agent create an apparent agency.
B) The principal is bound to the contracts entered into by an apparent
agent.
C) The authority of an apparent agent is implied from the conduct of the
parties.
D) The third-party is not bound to a contract created by an apparent
agent.

23) The ________ is principal's duty to cover the agent for any losses
the agent suffers because of the principal's conduct. 23) ______

A) duty to compensate B) duty to reimburse

C) duty to indemnify D) duty to cooperate

24) Which of the following is true of a direct notice of termination?

24) ______
A) It is given to all persons with whom an agent dealt.
B) It is only executed after the death of either the agent or the
principal.
C) It can only be given orally.
D) It is only applicable in employer-employee relationships.

25) Which of the following would lead to the termination of an agency by

operation of law? 25) ______
A) the loss of a required qualification
B) a change in the law
C) the death of either the principal or agent
D) the loss or destruction of the subject matter of the agency

1) C

2) D

3) C

4) A

5) A

6) A

7) A

8) B

9) C

10) D

11) D

12) Principals often employ outsiders, persons and businesses that are
not employees to perform certain tasks on their behalf. These persons and
businesses are called independent contractors. Independent contractors
operate their own business or profession. The arrangement creates a
principal independent contractor relationship. A principal can authorize
an independent contractor to enter into contracts. Principals are bound
by the authorized contracts of their independent contractors.

13) A

14) D

15) C

16) A

17) D
18) C

19) C

20) C

21) B

22) B

23) C

24) A

25) C