Agency Termination: Comprehensive Guide for Juris Doctor Students

Question 1

Under what circumstance can a principal terminate an agency that is coupled with an interest?

Accepted Answer

If the principal's estate is insolvent

Answer

If the agent has no further duties to perform

Answer

If the interest is revocable

Question 2

Which of the following is NOT a legal basis for agency termination through operation of law?

Accepted Answer

Mutual withdrawal of the parties

Answer

Death or incompetence of the principal

Answer

Completion of the agency's purpose

Answer

Change in the agent's legal capacity

Question 3

Which of the following is NOT a distinguishing characteristic of an agency relationship?

Accepted Answer

The agent is considered an independent contractor

Answer

The principal has the right to control the agent's actions

Answer

The agent is required to account for all funds received

Answer

The principal is liable for the authorized acts of the agent

Question 4

What is the fundamental difference between actual agency and apparent agency?

Accepted Answer

Actual agency is created by the agreement of the principal and agent, while apparent agency arises from the principal's conduct or words.

Answer

Apparent agency is created by agreement, while actual agency arises from conduct or words.

Answer

There is no distinction between actual and apparent agency.

Question 5

Which situation exemplifies the termination of an agency relationship by operation of law?

Accepted Answer

The agent becomes mentally incompetent, hindering their ability to perform their duties.

Answer

The principal revokes the agent's authority.

Answer

The agent breaches the agency agreement.

Question 6

Which of the following is NOT a valid method for terminating an agency relationship?

Accepted Answer

Act of a third party

Answer

Mutual agreement

Answer

Act of the principal

Answer

Operation of law

Question 7

When is an agency relationship considered irrevocable?

Accepted Answer

When the agency is coupled with an interest

Answer

When the agency is created by a written contract

Answer

When the agency is created for a fixed period of time

Answer

When the principal agrees not to revoke it

Question 8

What is the primary fiduciary duty of an agent to their principal?

Accepted Answer

To act in the best interests of the principal

Answer

To obey the principal's instructions

Answer

To disclose all material information to the principal

Answer

To account for all funds received on the principal's behalf

Question 9

What is the primary legal remedy for a breach of agency contract by the agent?

Accepted Answer

Damages

Answer

Specific performance

Answer

Injunction

Answer

Rescission

Question 10

What are the potential legal consequences for a principal who fails to provide adequate notice when terminating an agency relationship?

Accepted Answer

The principal may be liable for damages due to breach of contract.

Answer

The agency relationship is automatically terminated.

Answer

The agent is released from all obligations under the agency agreement.

Question 11

Which of the following is NOT a potential consequence of improper termination of an agency relationship in the United States?

Accepted Answer

Criminal prosecution

Answer

Liability for breach of contract

Answer

Loss of agency fees

Answer

Punitive damages

Question 12

Which of the following is NOT a right of an agent under United States law?

Accepted Answer

Right to delegate

Answer

Right to compensation

Answer

Right to reimbursement

Answer

Right to indemnification

Question 13

An agency relationship that is created for an indefinite period of time under United States law can be terminated by:

Accepted Answer

Any of the above

Answer

Revocation by the principal

Answer

Renunciation by the agent

Answer

Mutual consent

Question 14

Which of the following factors is NOT considered when determining whether an agency relationship exists under United States law?

Accepted Answer

Duration of the relationship

Answer

Control over the agent's work

Answer

Payment of compensation

Answer

Intent of the parties

Question 15

Which of the following is NOT a valid method of terminating an agency relationship?

Accepted Answer

Death of the agent's attorney

Answer

Act of the parties

Answer

Operation of law

Answer

Breach of contract

Question 16

An agency relationship that is created for a specific purpose will typically terminate:

Accepted Answer

Upon the accomplishment of that purpose

Answer

When the principal dies

Answer

When the agent becomes incapacitated

Answer

When the agent breaches the agreement

Question 17

Upon termination of an agency relationship, which of the following is a right of the agent?

Accepted Answer

To receive compensation for services rendered

Answer

To receive a percentage of the principal's future profits

Answer

To have the agency relationship reinstated

Answer

To continue acting as an agent for the principal

Question 18

Which of the following is NOT an obligation of a principal upon termination of an agency relationship?

Accepted Answer

To continue paying the agent's salary

Answer

To indemnify the agent for liabilities incurred

Answer

To compensate the agent for services rendered

Answer

To reimburse the agent for expenses incurred

Question 19

Which of the following is a situation where an agency relationship may be terminated by breach of contract?

Accepted Answer

When the agent fails to fulfill the duties required by the contract

Answer

When the agent becomes mentally incompetent

Answer

When the principal becomes bankrupt

Question 20

Which of the following is NOT a method of terminating an agency relationship by act of the parties?

Accepted Answer

Bankruptcy of the principal

Answer

Mutual agreement

Answer

Renunciation by the agent

Answer

Revocation by the principal

Question 21

When is an agency relationship terminated by operation of law?

Accepted Answer

When the purpose of the agency becomes impossible to achieve

Answer

When the agent breaches the agency contract

Answer

When the parties mutually agree to terminate the relationship

Answer

When the principal revokes the agent's authority

Question 22

Which of the following statements about the termination of an agency relationship is accurate?

Accepted Answer

The agent's duty to account for the principal's property continues after termination

Answer

The agent is released from all obligations to the principal upon termination

Answer

The principal's liability for the agent's acts automatically ends upon termination

Question 23

Which of the following is NOT a method of terminating an agency relationship through actions taken by the principal or agent?

Accepted Answer

Death of the principal

Answer

The principal and agent mutually agreeing to end the agency relationship.

Answer

The agent notifying the principal that they are quitting.

Question 24

What is the typical consequence of an agent breaching the agency contract?

Accepted Answer

The agency relationship is terminated.

Answer

The breach has no effect on the agency relationship.

Answer

A new agency relationship is automatically created.

Answer

The agency relationship is temporarily suspended.

Question 25

Upon termination of an agency, what is the agent's primary legal duty?

Accepted Answer

Take reasonable steps to finalize any unfinished agency business.

Answer

Destroy all records related to the agency.

Answer

File a lawsuit against the principal for breach of contract.

Answer

Immediately seek out a new principal.

Question 26

Which of the following is NOT a typical legal consequence of an agency being terminated?

Accepted Answer

The agent is automatically released from all potential liability to the principal.

Answer

The principal is generally released from future liability to the agent.

Answer

The legal relationship between the principal and agent is dissolved.

Question 27

What is the key distinction between termination and suspension of an agency relationship?

Accepted Answer

Termination permanently ends the agency relationship, while suspension temporarily halts the agent's authority.

Answer

Suspension permanently ends the agency relationship, while termination temporarily halts the agent's authority.

Question 28

Which of the following can revive a previously terminated agency relationship?

Accepted Answer

The principal and agent mutually agree to reinstate the agency.

Answer

The agent passes away.

Answer

The principal loses the capacity to contract.

Answer

A certain period of time passes after the termination.

Question 29

Which of the following is **not** a method for terminating an agency relationship?

Accepted Answer

By unilateral declaration of the agent

Answer

By operation of law

Answer

By mutual agreement of the principal and agent

Question 30

An agency relationship can be terminated by operation of law in all of the following situations **except**:

Accepted Answer

The agent's refusal to follow the principal's instructions.

Answer

The bankruptcy of the principal.

Answer

The death of either the principal or the agent.

Question 31

A principal's right to terminate an agency relationship may be limited by:

Accepted Answer

A contract between the principal and agent.

Answer

The agent's personal opinion on the matter.

Answer

The agent's financial situation.

Answer

The agent's willingness to continue working.

Question 32

An agency relationship may be terminated by breach of contract. Which of the following scenarios would likely constitute a breach by the agent?

Accepted Answer

The agent secretly acts for a competitor of the principal.

Answer

The agent diligently pursues the principal's interests.

Answer

The agent informs the principal of a potential conflict of interest.

Question 33

In general, a principal's notice of termination to third parties is required to protect the principal from:

Accepted Answer

Liability for the agent's actions after termination.

Answer

The agent's right to continue performing the agency duties.

Answer

The agent's right to continued compensation.

Question 34

A principal is obligated to compensate an agent for services rendered:

Accepted Answer

Even if the agency relationship is terminated before the agent completes the task.

Answer

Only if the agent can prove they were successful.

Answer

Only if the agent completes the task as agreed.

Question 35

Which of the following scenarios most likely represents a situation where an agency relationship would be deemed terminated by operation of law?

Accepted Answer

A principal is declared bankrupt by a court.

Answer

A principal decides to change the terms of the agency agreement.

Answer

An agent refuses to follow the principal's instructions.

Answer

An agent resigns from the agency relationship.

Question 36

A principal who terminates an agency relationship without proper cause may be held liable for:

Accepted Answer

Breach of contract damages.

Answer

Property damage compensation.

Answer

Personal injury damages.

Answer

Criminal charges for fraud.

Question 37

A written agency agreement that specifies the duration of the agency relationship will typically require:

Accepted Answer

Notice of termination before the end of the specified term.

Answer

Mutual consent to extend the term.

Answer

Automatic renewal of the agreement.

Question 38

Which of the following best describes the concept of 'apparent authority' in the context of agency termination?

Accepted Answer

A principal may still be liable for an agent's actions after termination if the agent continues to act as if they still have authority and third parties reasonably believe they do.

Answer

A principal must inform all potential third parties of the termination to avoid liability.

Question 39

Which of the following is NOT a general method of terminating an agency relationship?

Accepted Answer

By agreement of the parties

Answer

By mutual consent

Answer

By operation of law

Answer

By breach of contract

Question 40

An agency agreement specifically states that it will terminate upon the death of the principal. The principal dies before the agency's completion. What happens to the agency relationship?

Accepted Answer

The agency is automatically terminated by operation of law.

Answer

The agent can continue to act on behalf of the principal's estate.

Answer

The agency continues until the agent completes the tasks.

Question 41

Agent A has been appointed by Principal B to sell a piece of property. Principal B suddenly decides to revoke the agency. Which of the following is TRUE?

Accepted Answer

Principal B may be liable for damages if the revocation causes Agent A financial loss.

Answer

Principal B can revoke the agency at any time without any consequences.

Answer

Agent A can continue to act on behalf of Principal B until the property is sold.

Question 42

An agency agreement states that it will terminate upon the completion of a specific project. The project is completed. What happens to the agency?

Accepted Answer

The agency is automatically terminated.

Answer

The agency continues until the agent finds another project.

Answer

The agency terminates only if both parties agree.

Answer

The agency continues until the agent is notified of the completion.

Question 43

An agent breaches the agency agreement by acting in a way that is detrimental to the principal's interests. Which of the following is a potential consequence for the agent?

Accepted Answer

The principal may terminate the agency and sue for damages.

Answer

The principal must continue the agency relationship.

Answer

The agent can continue to act on behalf of the principal.

Question 44

Agent A is appointed by Principal B to negotiate a contract on their behalf. Principal B becomes insolvent. What happens to the agency?

Accepted Answer

The agency is typically terminated due to the principal's insolvency.

Answer

The agency continues as the agent can act on behalf of the principal's creditors.

Answer

The agency continues as the agent can complete the negotiation on their own.

Question 45

Agent A has been given a power of attorney by Principal B, granting broad authority to act on their behalf. Which of the following is NOT a way to terminate this power of attorney?

Accepted Answer

The agent's death automatically terminates the power of attorney.

Answer

The principal revokes the power of attorney in writing.

Answer

The principal becomes incapacitated.

Question 46

An agent and principal agree to terminate their agency relationship by mutual consent. Which of the following is a key factor in determining the legal validity of this termination?

Accepted Answer

The agreement must be clear and unambiguous.

Answer

The agreement must be in writing.

Answer

The agreement must be witnessed.

Answer

The agreement must be filed with the court.

Question 47

An agency agreement is silent on the termination process. The principal decides to terminate the agency relationship without providing the agent with any notice. What is the potential legal consequence for the principal?

Accepted Answer

The principal may be liable for breach of contract, depending on the circumstances.

Answer

The agent is entitled to a full commission even if the agency is terminated early.

Answer

The principal can terminate the agency at any time without any consequences.

Question 48

A principal appoints an agent to sell a specific piece of property. The property is destroyed by a fire before the sale. What happens to the agency?

Accepted Answer

The agency is likely terminated due to the destruction of the subject matter.

Answer

The agent is still obligated to find a buyer for the destroyed property.

Answer

The agency continues as the agent can find a replacement property.