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Exam 31: Agency Formation and Duties

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Question 41

True/False

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All employment laws apply to independent contractors.

A) True
B) False

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verified

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Question 42

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An agency relationship does not exist outside employer-employee relationships.

A) True
B) False

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Question 43

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Louis, a certified public accountant and an investor, and Maria, an in?surance salesperson and a realtor, may create an agency relationship for

A principal has a duty to cooperate with the agent.

An agency relationship may be created for any illegal purpose.

A principal owes an agent a duty of ratification.

An agency relationship can be formed without consideration.

Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial's owners. With respect to binding Prudent Financial to contracts, Ozzy is

Jim agrees to act on Kit's behalf, subject to Kit's control, and Kit trusts Jim to so act. This describes a relationship between

Jody is an agent for Kwik Credit Company (KCC) . In the course of Jody's performance for KCC, Jody pays Leo for certain auto maintenance and repair services. Jody's right to obtain the amount of those payments from KCC arises under the principal's duty of

An agent must use reasonable diligence and skill in acting on be?half of his or her principal.

An agency relationship may be created for any legal purpose.

An employee may not act in the capacity of an agent.

A licensed professional can employ an unlicensed agent to perform pro?fessional actions.

Fact Pattern 31-1A Janet and Julie work at ABC Interiors. Janet is a designer who works with cli?ents of ABC on interior design projects. ABC closely supervises all of its design?ers, and dictates their work schedules. Julie works part-time in the evenings cleaning the offices. -Refer to Fact Pattern 31-1A. Julie is ABC's

A fiduciary relationship involves trust and confidence.

Delicious Coffee Company hires Elton to sell Delicious's products in a certain area. Delicious agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The key factor in whether Elton is Delicious's employee is

Genetic Seed Company hires Howie to work on Genetic's shipping dock, accepting deliveries and dealing with other companies' drivers. With respect to Genetic, Howie is most likely

Fact Pattern 31-1B Liz and Molly work as clerks in Nia's Dress Shop. Nia withholds federal taxes from their pay, and controls the methods and details of the performance of their work. Liz and Molly are not au?thorized to modify the prices or other terms of a sale at the shop. -Refer to Fact Pattern 31-1B. At the shop, Liz and Molly are

Principal Resources Corporation contracts with Quality Construction to build an addition to Principal's corporate office building. Quality contracts with Rite Supply Company for materials for the addition but refuses to pick up the materials. Meanwhile, Principal hires Skye, a certified public accountant, to work in its cost-accounting division as an employee, with no authority to hire or supervise others. Skye asks Theo, an outside experienced accountant, to advise her on certain accounting procedures but fails to pay Theo for the service. Principal also contracts with Uma, a salesperson, to solicit orders for its products in a designated territory. Uma obtains an order from Verity Industries, Inc., which is assured the order will be filled soon. But Uma does not follow through with the paperwork and fails to submit the order to Principal. Verity suffers a loss. Rite Supply, Theo, and Verity Industries claim Principal is liable under agency law. Discuss fully whether an agency relationship was created by Principal with Quality Construction, Skye, or Uma.