03. STUDY MANUAL questions on Agency.

Question 1

T/F: a valid agency relationship can be created by law.

Answer 1

TRUE

An agency of necessity is so created.

Question 2

T/F: a valid agency relationship can be created by ratification.

Answer 2

TRUE

Question 3

T/F: a valid agency relationship can be created by consent between the parties.

Answer 3

TRUE

Question 4

T/F: a valid agency relationship can be created by the agent holding themselves out as agent.

Answer 4

FALSE

‘holding out’ only exists where the PRINCIPAL holds someone out as agent.

Question 5

The (agent / principal) has a duty not to retain benefit from the relationship.

Answer 5

agent

Question 6

The (agent / principal) has a duty to pay agreed remuneration, even if no benefit has been derived from the relationship.

Answer 6

principal

Question 7

The (principal / agent / both) have duties of confidentiality.

Answer 7

both

Question 8

The purchasing manager of a building firm, whithout having express permission to make a particular purchase, nevertheless has the … authority to make a contract for the purchase of timer on behalf of her employer.

Answer 8

implied

Question 9

Agency.

Answer 9

The relationship which exists wereby a party is brought into contract with third parties by another acting on their behalf.

Question 10

The relationship which exists wereby a party is brought into contract with third parties by another acting on their behalf.

Answer 10

Agency.

Question 11

Identify the four ways in which an agency can arise.

Answer 11

Mutual consent (express or implied).
Ratification.
Operation of law (agency of necessity).
Agency by estoppel (holding out by the principal).

Question 12

T/F: a principal may, in certain circumstances, ratify the acts of an agent, which have retrospective effect.

Answer 12

TRUE

Question 13

Ostensible authority.

Answer 13

The authority which the principal represents to other persons they have given to the agent.

Question 14

The authority which the principal represents to other persons they have given to the agent.

Answer 14

Ostensible authority.

Question 15

T/F: an agent may disobey the instructions of the principal if they believe disobedience to be in the best interests of the principal.

Answer 15

FALSE

Question 16

The three types of authority that an agent might have.

Answer 16

Actual Express.
Actual Implied.
Ostensible or Apparent.

Question 17

T/F: provided an agent has authority and is known to be an agent, they can never have any personal liability under the contract and only the princpial can be liable.

Answer 17

FALSE

A contrary intention may be express or implied.

Question 18

Creation of agency: C* E R N

Answer 18

consent

Question 19

Creation of agency: C E* R N

Answer 19

estoppel

Question 20

Creation of agency: C E R N*

Answer 20

necessity

Question 21

Creation of agency: C E R* N

Answer 21

ratification

Question 22

Three types of authority: AE* AI OA

Answer 22

actual express

Question 23

Three types of authority: AE AI* OA

Answer 23

actual implied (incidental and usual)

Question 24

Three types of authority: AE AI OA*

Answer 24

ostensible or apparent

Question 25

T/F: A person properly appointed to a position has the actual implied usual authority of that position.

Answer 25

TRUE

Question 26

A person NOT properly appointed to a position but behaving as if they were, unchallenged, will potentially be deemed to be acting with ...

Answer 26

ostensible or apparent authoritiy 'unchallenged' being the key word

Question 27

T/F: When an agent enters into a contract with a third party on behalf of the principal, the agent must have full contractual capacity.

Answer 27

FALSE only the principal need have full contractual capacity

Question 28

T/F: An agent must be appointed in writing.

Answer 28

FALSE

Question 29

Modern methods of communication make an agency ...

Answer 29

of necessity unlikely to be deemed to exist.

Question 30

T/F: A principal can ratify, even though they had no legal capacity at the time the contract was made, provided they have full legal capacity at the time of any purported ratification.

Answer 30

FALSE a principal must have legal capacity at BOTH at the time the contract was made AND at the time of ratification.

Question 31

T/F: A principal can ratify even if the agent had no authority at all to enter into the contract?

Answer 31

TRUE ratification creates a valid agency relationship

Question 32

T/F: The relationship between a principal and their agent is a fiduciary one.

Answer 32

TRUE

Question 33

The relationship between a principal and their agent is a ... one.

Answer 33

fiduciary

Question 34

T/F: An agent only owes duties to a principal to the extent that such duties have been negotiated and included in the contract between them.

Answer 34

FALSE there are also duties under common law and statute due to their fiduciary relationship A C P O S P C and I R L

Question 35

T/F: A person authorised to sell a car also has authority to advertise the car for sale.

Answer 35

TRUE such authority is incidental to express authority

Question 36

T/F: A person authorised to sell a car 'for £10,000' also has authority to reduce the price.

Answer 36

FALSE

Question 37

A partner doing work outside the normal business of the firm, unchallenged by their fellow partners, ...

Answer 37

will be deemed to have ostensible/apparent authority

Question 38

A third party believing an agent to be acting on their own account ...

Answer 38

may choose to sue the agent or the principal

Question 39

If a third party believes an agent to be acting on their own account, the 'unknown principal' ...

Answer 39

has the primary right to sue the third party

Question 40

If a third party believes an agent to be acting on their own account, the agent ...

Answer 40

has a right to sue the third party, but this is subordinate to the principal's

Question 41

If a third party believes an agent to be acting on their own account, the third party ...

Answer 41

may choose to sue either the principal or the third party

Question 42

T/F: If an 'agent' acts without authority the 'principal' has no liablity to the third party.

Answer 42

TRUE

Question 43

T/F: If an 'agent' acts without authority the third party has no claim against the 'principal.'

Answer 43

TRUE

Question 44

If an 'agent' acts without authority the third party has a claim for ...

Answer 44

the tort of deceit

Question 45

If an 'agent' acts without authority the principal has a claim for ...

Answer 45

breach of warranty of authority