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ANSWERS-CH35 - reasonable appearance of authority may...

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CHAPTER 35 THE AGENCY RELATIONSHIP ANSWERS TO CHAPTER 35 True-False Multiple Choice 1. T 2. T 3. F 4. T 5. T 6. T 7. F 8. F 9. F 10. F 11. F 12. T 13. F 14. F 15. T 16. d 17. c 18. a 19. d 20. c 21. d 22. c 23. a 24. b 25. a 26. d 27. e Short Essay 28. A subagent is an agent of an agent, a person appointed by an agent to perform tasks for the agent on behalf of his principal. When an agent appoints a subagent, the agent becomes a principal with respect to the subagent. 29. No sharp line divides the two, but the impost important factor is that a principal has the right to control the physical details of the employee’s work. Independent contractors generally contract to product some result and determine how that result will be accomplished. Answers to Student Study Guide and Workbook Questions 58
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30. This liability may result because the former agent may still have apparent authority when dealing with third parties who are unaware of the termination of the agency relationship. Although any form of termination cuts off actual authority, the
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Unformatted text preview: reasonable appearance of authority may remain. To minimize the danger of being held liable on this basis, the principal should give third parties notice. For third parties who have previously dealt with the agent, a direct actual notification is necessary. For other parties, constructive notification such as a suitable and suitably-placed newspaper ad generally suffices. Of course, apparent authority ends when the agency terminates by the principal's death or loss of capacity, or by impossibility; and the circumstances of the termination also may negate apparent authority. But why rely on this? 31. Authority is critical to agency's function of stimulating trade and commerce because it is the concept that enables an agent to legally bind his principal. This, of course, enables principals to greatly increase the number of transactions they can complete. Answers to Student Study Guide and Workbook Questions 59...
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