Chapter 29

Question 1

The large body of common law that governs agency; a mixture of contract law and tort law.

Answer 1

agency law

Question 2

the principal-agent relationship

Answer 2

agency

Question 3

A party who employs another person to act on his or her behalf.

Answer 3

principal

Question 4

A party who agrees to act on behalf of another

Answer 4

agent

Question 5

A relationship formed when an employer hires an employee and gives that employee authority to act and enter into contracts on the employer’s behalf.

Answer 5

principal-agent relationship

Question 6

A relationship that results when an employer hires an employee to ­perform some task or service but the employee has not been authorized to enter into contracts on behalf of the employer.

Answer 6

employer–employee relationship

Question 7

The relationship between a principal and an independent contractor who is not an employee of the principal but who has been employed by the principal to perform a certain task on behalf of the principal.

Answer 7

principal–independent ­contractor relationship

Question 8

An agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other.

Answer 8

express agency

Question 9

An express agency agreement that is often used to give an agent the power to sign legal documents on behalf of the principal

Answer 9

power of attorney

Question 10

A power of attorney in which a principal confers broad powers on the agent to act in any matters on the principal’s behalf.

Answer 10

general power of attorney

Question 11

A power of attorney in which a principal confers powers on an agent to act in specified matters on the principal’s behalf.

Answer 11

special power of attorney

Question 12

An agency that occurs when a principal and an agent do not expressly create an agency, but it is inferred from the conduct of the parties

Answer 12

implied agency

Question 13

An agency that occurs when (1) a person misrepresents him- or herself as another’s agent when in fact he or she is not and (2) the purported principal ratifies the unauthorized act.

Answer 13

agency by ratification

Question 14

Agency that arises when a principal creates the appearance of an agency that does not exist.

Answer 14

apparent agency (agency by estoppel)

Question 15

A duty that a principal owes to pay an agreed-on amount to the agent either upon the completion of the agency or at some other mutually agreeable time.

Answer 15

duty to compensate

Question 16

Unless otherwise agreed, the principal owes a duty to reimburse the agent for expenses incurred by the agent on behalf of the principal.

Answer 16

duty to reimburse

Question 17

A principal owes a duty to indemnify the agent for any losses the agent suffers because of the principal’s conduct.

Answer 17

duty to indemnify

Question 18

Unless otherwise agreed, the principal owes a duty to cooperate with and assist the agent in the performance of the agent’s duties and the accomplishment of the agency.

Answer 18

duty to cooperate

Question 19

An agent’s duty to a principal that includes (1) performing the lawful duties expressed in the contract and (2) meeting the standards of reasonable care, skill, and diligence implicit in all contracts.

Answer 19

duty to peform

Question 20

An agent owes a duty to notify the principal of important information concerning the agency.

Answer 20

duty to notify

Question 21

Information that is learned by an agent that is attributed to the principal.

Answer 21

imputed knowledge

Question 22

A duty that an agent owes to maintain an accurate accounting of all transactions undertaken on the principal’s behalf.

Answer 22

duty to account (duty of accountability)

Question 23

A situation in which the parties to an agency contract terminate their contract by mutual agreement or when a previously agreed on event occurs.

Answer 23

termination of an agency by an act of the parties

Question 24

A situation in which an agency terminates because an unusual change in circumstances has occurred that would lead the agent to believe that the principal’s original instructions should no longer be valid.

Answer 24

termination of an agency by an unusual change of circumstances

Question 25

A situation in which an agency terminates because a situation arises that makes the fulfillment of the agency impossible.

Answer 25

termination of an agency by impossibility of performance

Question 26

A situation in which an agency terminates because of the occurrence of legally specified events

Answer 26

termination of an agency by operation of law

Question 27

The termination of an agency contract in violation of the terms of the agency contract. The nonbreaching party may recover damages from the breaching party.

Answer 27

wrongful termination