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Exam 30: Relationship With Third Parties

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Question 31

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Which of the following is true with regard to contractual relations between the principal and a third party?

A) There is no liability on the part of the principal if the agent acts with implied authority.
B) An undisclosed principal and the third party are contractually bound if the agent acts within her actual authority, unless the contract specifies otherwise.
C) A principal cannot be bound if the agent acts without any authority.
D) An unidentified principal is bound only if the agent acts within the scope of actual authority.

E) A) and D)
F) A) and B)

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Question 32

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Sam is George's agent.George decides to fire Sam.Mel is an old customer of George's and he has dealt on credit with Sam for over 20 years.Ellie is a prospective customer that Sam has spoken with on numerous occasions in his capacity as George's agent, and George was aware of the preliminary negotiations.Mel orders goods from Sam after Sam has been fired but Mel has no knowledge of the firing.Later, Sam takes an order from Ellie.Under the Second Restatement, if George does not give notice of the firing, George will:

A) be liable for the contract with Mel.
B) not be liable on the contract with Mel.
C) not be liable on the contract with Ellie.
D) Both (a) and (c) .
E) Both (b) and (c) .

F) C) and D)
G) A) and B)

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Question 33

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Unless otherwise agreed, authority to manage a business would include authority to do all but which one of the following?

A person who undertakes to make a contract on behalf of another person gives an implied warranty that he is in fact authorized to make the contract on behalf of the person he purports to represent.

A person may ratify a prior unauthorized act and may later revoke the ratification.

MATCHING Part VI Matching Match each statement with the correct term below.a.The duty that requires an agent to act in the principal's affairs only as authorized by the principal and to obey all reasonable instructions.b.The requirement that an agent maintain and provide the principal with a true and complete account of money or other property that the agent receives or expends on behalf of the principal.c.A consensual relationship authorizing one party to act for and on behalf of another party.d.A person authorized to act on another's behalf.e.The requirement that an agent act with reasonable care and skill in performing the work for which she is employed.f.Written, formal appointment of an agent.g.The requirement that an agent use reasonable efforts to give the principal information that is relevant to the affairs entrusted to her.h.Person who agrees to do a particular job for another but who is not subject to the other's control.i.A form of liability without fault in which the principal is held vicariously liable for the agent's unauthorized tort.j.Authority that is either express or implied and that depends upon consent manifested by the principal to the agent.k.A principal of whom a third party has no knowledge, because he has no reason to believe the agent is acting for a principal.l.Corporation's act of confirming a contract that was made by a promoter before the corporation was formed.m.Power that is based upon acts or conduct of the principal which manifests to a third party that the agent has power and upon which the third party justifiably relies.n.A principal that a third party knows exists but does not know who it is.o.The confirmation or affirmance by one person of a prior unauthorized act performed by another who is, or purports to be, his agent.p.Power inferred from words or conduct that a principal manifests to an agent. -actual authority

For a ratification to be effective, the principal:

An undisclosed principal may result in which of the following?

If an agent tortiously injures a third party, the third party may not hold the principal personally liable.

In the Parlato v.Equitable Life Assurance Society case, the appeals court held:

Jeff is acting as an agent for Tyler.Tyler's liability if Jeff makes an unauthorized tortious misrepresentation:

MATCHING Part VI Matching Match each statement with the correct term below.a.The duty that requires an agent to act in the principal's affairs only as authorized by the principal and to obey all reasonable instructions.b.The requirement that an agent maintain and provide the principal with a true and complete account of money or other property that the agent receives or expends on behalf of the principal.c.A consensual relationship authorizing one party to act for and on behalf of another party.d.A person authorized to act on another's behalf.e.The requirement that an agent act with reasonable care and skill in performing the work for which she is employed.f.Written, formal appointment of an agent.g.The requirement that an agent use reasonable efforts to give the principal information that is relevant to the affairs entrusted to her.h.Person who agrees to do a particular job for another but who is not subject to the other's control.i.A form of liability without fault in which the principal is held vicariously liable for the agent's unauthorized tort.j.Authority that is either express or implied and that depends upon consent manifested by the principal to the agent.k.A principal of whom a third party has no knowledge, because he has no reason to believe the agent is acting for a principal.l.Corporation's act of confirming a contract that was made by a promoter before the corporation was formed.m.Power that is based upon acts or conduct of the principal which manifests to a third party that the agent has power and upon which the third party justifiably relies.n.A principal that a third party knows exists but does not know who it is.o.The confirmation or affirmance by one person of a prior unauthorized act performed by another who is, or purports to be, his agent.p.Power inferred from words or conduct that a principal manifests to an agent. -apparent authority

Tom is the promoter of a new corporation that has not yet been incorporated.On behalf of the as yet unincorporated business, he enters into a three-year lease agreement for office space and personally signs the lease in his own name.The corporation is liable on the contract, because Tom is its agent.

An agent for an unidentified principal is liable on the contract to the third party no matter whether the particular transaction is authorized or not.

Ratification may relate to acts that have exceeded the authority granted to an agent.

Constructive notice of termination of an agency may not occur by mere publication in a newspaper.

Usually in cases where there is a known principal, the agent has liability for, and rights under, contracts made on behalf of a principal.

A principal who authorizes his agent to commit a tortious act with respect to the property or person of another is not liable for the injury or loss sustained by that person.

Discuss the requirements and effect of ratification of an agent's acts.

If an agent who has actual authority and receives reimbursement does not tell the third party that he is working in an agency capacity, the principal is still bound.