Ch31-TB2-WBL-10e

Ch31-TB2-WBL-10e - Chapter31 AgencyFormationandDuties

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Chapter 31 Agency Formation and Duties N.B.:   TYPE  indicates that a question is new, modified, or unchanged, as  follows. N A question  new  to this edition of the Test Bank. + A question  modified  from the previous edition of the Test Bank, = A question  included  in the previous edition of the Test Bank. TRUE/FALSE QUESTIONS 1. A corporate officer is  not  an agent for the corporation. ANSWER: F PAGE: 636 TYPE: + 2. An agent is authorized to act on behalf of a principal in doing business with  third parties. ANSWER: T PAGE: 636 TYPE: + 3. In a standard principal-agent relationship, the principal has the right to  control the actions of the agent. ANSWER: T PAGE: 636 TYPE: = 4. Employees who deal with third parties are agents of their employers. ANSWER: T PAGE: 636 TYPE: = 5. An employee may  not  act in the capacity of an agent. 59
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60 TEST BANK 2—UNIT SEVEN: AGENCY AND EMPLOYMENT ANSWER: F PAGE: 636 TYPE: + 6. A fiduciary relationship involves civility but not trust. ANSWER: F PAGE: 636 TYPE: N
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CHAPTER 31: AGENCY FORMATION AND DUTIES 61 7. An independent contractor may act in the capacity of an agent. ANSWER: T PAGE: 637 TYPE: + 8. An independent contractor always acts in the capacity of an agent. ANSWER: F PAGE: 637 TYPE: + 9. A minor cannot be appointed as an agent. ANSWER: F PAGE: 641 TYPE: N 10. An agency relationship cannot exist in the absence of a formal agreement. ANSWER: F PAGE: 641 TYPE: N 11. An agency relationship may be created for any legal purpose. ANSWER: T PAGE: 641 TYPE: + 12. A licensed professional can employ an unlicensed agent to perform pro- fessional actions. ANSWER: F PAGE: 641 TYPE: = 13. An agency relationship may be created for any illegal purpose. ANSWER: F PAGE: 641 TYPE: + 14. A principal who causes a third person to believe that another person is the  principal’s agent can be estopped from denying the agency relationship. ANSWER: T PAGE: 642 TYPE: N 15. A principal can ratify an agreement made without authorization on his or  her behalf by one who is not his or her agent. ANSWER: T PAGE: 642 TYPE: + 16. An agency relationship may be created by operation of law when one spouse  purchases certain basic necessaries and charges them to the account of the  other spouse.
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62 TEST BANK 2—UNIT SEVEN: AGENCY AND EMPLOYMENT ANSWER: T PAGE: 642 TYPE: = 17. All agency relationships are based on contract. ANSWER: F PAGE: 642 TYPE: = 18. An agent must notify the principal of all material matters that come to his  or her attention regarding the subject matter of the agency. ANSWER:
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Ch31-TB2-WBL-10e - Chapter31 AgencyFormationandDuties

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