Agency Law Definition: A Comprehensive Guide for Juris Doctor Students

Question 1

In agency law, why is a principal liable for their agent's actions when the agent acts within their authority and on the principal's behalf?

Accepted Answer

The principal has the authority to control the agent's conduct.

Answer

The agent is always considered an employee of the principal.

Answer

The principal is obligated to supervise the agent's activities.

Answer

The principal is required to reimburse the agent for any losses incurred due to the agency relationship.

Question 2

Which of the following is NOT an essential element for the creation of an agency relationship?

Accepted Answer

Non-delegable duty

Answer

Mutual consent

Answer

Capacity

Answer

Lawful purpose

Question 3

A principal is generally liable for the torts committed by their agent:

Accepted Answer

Only if the tort was committed within the scope of the agent's authority

Answer

Only if the principal knew or should have known about the potential for the tort to be committed

Answer

Regardless of whether the tort was committed within the scope of the agent's authority or not

Answer

Only if the principal expressly authorized the tort

Question 4

Which of the following is NOT a characteristic of a disclosed agency?

Accepted Answer

The principal is liable for the agent's debts

Answer

The principal's identity is known to third parties

Answer

The agent has the authority to bind the principal to contracts

Answer

The principal is liable for the agent's torts committed within the scope of their employment

Question 5

In a general agency, the agent has the authority to:

Accepted Answer

Perform all acts that the principal could perform

Answer

Perform only those acts that are specifically authorized by the principal

Answer

Perform only those acts that are necessary to achieve the purpose of the agency

Answer

Perform only those acts that are customary in the industry

Question 6

A subagent is:

Accepted Answer

An agent appointed by the principal to assist the original agent

Answer

An agent appointed by the agent to assist the principal

Answer

An agent appointed by a third party to represent the principal

Answer

An agent appointed by the principal to represent a third party

Question 7

What is a fundamental requirement for an agency relationship to exist?

Accepted Answer

The agent's authority to act for the principal

Answer

A written contract between the principal and the agent

Answer

Payment from the principal to the agent

Question 8

Which of the following is NOT a characteristic of an express agency?

Accepted Answer

Must be created by written agreement

Answer

Created by clear and specific words, spoken or written

Answer

May be oral or written

Answer

Implied from the conduct of the parties

Question 9

What is the legal principle that holds a principal liable for the authorized acts of an agent?

Accepted Answer

Respondeat superior

Answer

Ultra vires

Answer

Estoppel

Answer

Quantum meruit

Question 10

What is the role of a subagent in an agency relationship?

Accepted Answer

Appointed by the agent to assist in fulfilling their duties, but ultimately accountable to the principal

Answer

Appointed by the principal to supervise the agent

Answer

Has no role in the agency relationship between the principal and the agent

Answer

Acts independently of both the principal and the agent

Question 11

Which of the following statements accurately describes the duty of care owed by an agent?

Accepted Answer

An agent's duty of care may vary depending on the circumstances and the nature of the agency relationship.

Answer

An agent is only required to exercise the same level of care as a layperson.

Answer

An agent is held to a higher standard of care than a non-agent.

Answer

An agent is never liable for negligence.

Question 12

Which of the following is an essential element for the establishment of an agency relationship?

Accepted Answer

Mutual agreement between the parties

Answer

Adequate compensation

Answer

Written contract

Answer

Prior acquaintance of the parties

Question 13

An essential element of agency creation is **not**:

Accepted Answer

Formal written agreement

Answer

Intent to create an agency relationship

Answer

Capacity to enter into a contract

Answer

Specific purpose to be accomplished

Question 14

An agency created for a specific purpose terminates when:

Accepted Answer

The purpose is achieved

Answer

The principal dies

Answer

The agent becomes incapacitated

Answer

The principal assigns the agency to another

Question 15

An express agency is characterized by:

Accepted Answer

Creation by written or oral agreement

Answer

Implication from the parties' conduct

Answer

Necessity or estoppel

Answer

Inherent revocability at will

Question 16

An undisclosed agent:

Accepted Answer

Contracts in their own name without disclosing the principal

Answer

Contracts on behalf of a named principal

Answer

Acts with the principal's consent but without their knowledge

Answer

Has no authority to act on behalf of a principal

Question 17

A subagent is:

Accepted Answer

An agent appointed by an agent

Answer

An independent contractor hired by an agent

Answer

A principal who delegates their authority to another

Answer

An unauthorized person who acts on behalf of an agent

Question 18

Which of the following is NOT an essential element in establishing an agency relationship?

Accepted Answer

Consideration or payment for the agent's services

Answer

Mutual agreement between principal and agent

Answer

Capacity and competency of the parties involved

Answer

Lawful purpose for the agency

Question 19

Which of the following is a type of express agency created through a written document?

Accepted Answer

Written contract

Answer

Oral agreement

Answer

Implied consent

Answer

Ratification

Question 20

Which of the following is NOT a type of implied agency?

Accepted Answer

Agency by ratification

Answer

Agency by estoppel

Answer

Agency by necessity

Answer

Agency by operation of law

Question 21

Which of the following is a characteristic of a general agent?

Accepted Answer

Authority to act in all matters related to the principal's business

Answer

Authority limited to a specific task or transaction

Answer

Appointed for a specific period of time

Answer

Appointed without the principal's knowledge or consent

Question 22

Which of the following is not an essential element for establishing an agency relationship?

Accepted Answer

A formal written contract

Answer

Mutual consent between the principal and the agent

Answer

A lawful purpose for the agency

Answer

The principal's control over the agent's actions

Question 23

A general agent possesses:

Accepted Answer

Broad authority to act on behalf of the principal in all business matters

Answer

Authority limited to specific tasks as authorized by the principal

Answer

Authority to act in matters directly related to the principal's business

Answer

No authority to act on the principal's behalf

Question 24

Which of the following is not a recognized type of agency relationship?

Accepted Answer

Exclusive agency

Answer

General agency

Answer

Special agency

Answer

Limited agency

Question 25

Define an agency relationship.

Accepted Answer

A legal relationship where one person (the agent) acts on behalf of another person (the principal).

Answer

A contractual agreement between two parties to perform a specific task.

Answer

A hierarchical relationship where one person (the superior) has authority over another person (the subordinate).

Question 26

Which agent category has the broadest scope of authority?

Accepted Answer

Universal agent

Answer

General agent

Answer

Special agent

Question 27

Which agency type grants the agent the broadest authority to act on the principal's behalf?

Accepted Answer

General agency

Answer

Special agency

Answer

Apparent agency

Question 28

Which of the following is a potential liability of a principal?

Accepted Answer

Being held liable for the torts of the agent

Answer

Losing ownership of property used by the agent

Answer

Being required to pay the agent's salary

Answer

Having to personally perform the duties of the agent

Question 29

An agent owes the following duties to the principal, EXCEPT:

Accepted Answer

To engage in illegal conduct

Answer

To account for all funds received

Answer

To act with reasonable care and diligence

Question 30

An undisclosed principal is:

Accepted Answer

A principal whose existence is unknown to the third party

Answer

A principal who does not participate in the agency relationship

Answer

A principal who is not liable for the acts of the agent

Question 31

Which of the following is NOT an essential element of an agency relationship?

Accepted Answer

Consideration

Answer

Legal capacity of the agent

Answer

Consent of the parties

Answer

Lawful subject matter

Question 32

A principal is liable for the torts of an agent if:

Accepted Answer

The agent was acting within the scope of their authority and the tort was foreseeable

Answer

The agent was acting fraudulently

Answer

The principal was negligent in selecting the agent

Question 33

An agency relationship is a:

Accepted Answer

Fiduciary relationship

Answer

Property relationship

Answer

None of the above

Answer

Contractual relationship

Question 34

An apparent authority:

Accepted Answer

Arises from the principal's conduct or words that lead a third party to reasonably believe the agent has authority to act on the principal's behalf

Answer

None of the above

Answer

Cannot be revoked by the principal

Answer

Is always express

Question 35

Which of the following is NOT a necessary element for creating an agency relationship?

Accepted Answer

A formal written agreement

Answer

The principal's reliance on the agent's actions

Answer

Consent from both the principal and the agent

Answer

The agent's authority to act on the principal's behalf

Question 36

What is the primary duty an agent owes to their principal?

Accepted Answer

Loyalty and obedience

Answer

Accountability

Answer

Due care

Answer

Confidentiality

Question 37

Which of the following is a right an agent has within an agency relationship?

Accepted Answer

To be reimbursed for expenses incurred while acting on behalf of the principal

Answer

To delegate their authority to a subagent

Answer

To terminate the agency relationship at will

Question 38

What legal principle holds a principal liable for their agent's actions?

Accepted Answer

Respondeat superior

Answer

Quantum meruit

Answer

Caveat emptor

Answer

Ultra vires

Question 39

Which statement about agency authority is true?

Accepted Answer

Agency authority can be expressed explicitly or implied by the principal's actions.

Answer

Agency authority can be transferred to third parties.

Answer

Agency authority must always be documented in writing.

Answer

Agency authority can only be granted directly by the principal.

Question 40

What is the key difference between an actual agent and an apparent agent?

Accepted Answer

Actual agents have actual authority granted by the principal, while apparent agents only have the appearance of authority.

Answer

Actual agents are appointed formally by the principal, while apparent agents are not.

Answer

Actual agents are responsible for their own actions, while apparent agents are not.

Question 41

Which of the following is a valid defense for an agent who breaches their warranty of authority?

Accepted Answer

The principal later ratified (approved) the agent's actions.

Answer

The third party knew the agent lacked the necessary authority.

Answer

The agent acted in good faith, even without proper authority.

Answer

The principal is unable to pay their debts (insolvent).

Question 42

What is the legal term for the relationship between a principal and an agent?

Accepted Answer

Agency

Answer

Partnership

Answer

Trust

Answer

Joint venture

Question 43

A principal grants authority to an agent to enter into contracts on their behalf. This is known as:

Accepted Answer

Express authority

Answer

Apparent authority

Answer

Implied authority

Answer

Ratification

Question 44

An agent, without the principal's consent, purchases a different, more expensive piece of equipment than instructed by the principal. This action could constitute:

Accepted Answer

Breach of fiduciary duty

Answer

Express authority

Answer

Ratification

Answer

Implied authority

Question 45

A real estate agent, who is also the owner of a property, fails to disclose the dual role to a potential buyer. This situation raises concerns about:

Accepted Answer

Conflict of interest

Answer

Ratification

Answer

Express authority

Answer

Implied authority

Question 46

An agent, acting beyond their actual authority, enters into a contract on behalf of their principal. If the principal later approves the contract, this is known as:

Accepted Answer

Ratification

Answer

Statutory authority

Answer

Apparent authority

Question 47

A principal instructs an agent to purchase a specific car. The agent, without consulting the principal, purchases a different model. Generally speaking, the principal:

Accepted Answer

Is not liable for the agent's unauthorized purchase

Answer

Is liable if the agent had apparent authority.

Answer

Is always liable for the agent's actions, regardless of authorization.

Question 48

An agent enters into a contract on behalf of their principal without revealing their agency status. This is referred to as:

Accepted Answer

Undisclosed agency

Answer

Ratification

Answer

Apparent authority

Answer

Implied authority

Question 49

An agent, authorized to sell a property, enters into a contract with a buyer. If the principal changes their mind and decides not to sell, the principal:

Accepted Answer

May be liable for breach of contract due to the agent's actions

Answer

Can only be held liable if the agent had express authority.

Answer

Is not liable because they can revoke the agent's authority at any time.

Question 50

Which of the following is NOT a necessary element for the formation of an agency relationship?

Accepted Answer

Formal written agreement

Answer

Mutual consent

Answer

A lawful purpose

Answer

Capacity of the parties

Question 51

An agency relationship can be created through all of the following EXCEPT:

Accepted Answer

Assumption

Answer

Ratification

Answer

Implied agreement

Answer

Express agreement

Question 52

A principal instructs their agent to buy a specific artwork for a set price. The agent, without permission, purchases the artwork for a higher price. Which statement is TRUE?

Accepted Answer

The principal is not obligated to buy the artwork because the agent acted beyond their authority.

Answer

The principal must buy the artwork since the agent acted in good faith.

Answer

The principal must buy the artwork as long as its value is reasonable.

Question 53

A principal appoints an agent to sell their car. While driving the car to a potential buyer, the agent negligently causes an accident. Who is responsible for the damages?

Accepted Answer

Both the principal and the agent are liable.

Answer

Only the agent is liable.

Answer

Neither the principal nor the agent is liable.

Answer

Only the principal is liable.

Question 54

Which of the following is NOT a duty an agent owes to their principal?

Accepted Answer

Duty to disclose personal information

Answer

Duty of obedience

Answer

Duty of loyalty

Answer

Duty of care

Question 55

A principal can terminate an agency relationship through:

Accepted Answer

All of the above

Answer

Mutual agreement

Answer

Operation of law

Answer

Unilateral revocation by the principal

Question 56

Which scenario would likely terminate an agency relationship by operation of law?

Accepted Answer

The principal files for bankruptcy.

Answer

The principal moves to a different state.

Answer

The agent gets promoted within the company.

Answer

The agent takes a vacation.

Question 57

An agent's ability to bind their principal is determined by:

Accepted Answer

The principal's instructions and the agent's actual or apparent authority.

Answer

The agent's experience and expertise in the field.

Answer

The agent's personal opinion and discretion.

Question 58

Which scenario is an example of apparent authority?

Accepted Answer

A principal allows their agent to use a company credit card, leading a third party to believe the agent has the authority to make purchases on the company's behalf.

Answer

An agent signs a contract with a third party without the principal's knowledge.