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Exam 15: Law of Agency

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Question 21

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Which statement is a true statement? Agency agreements

A) may only be terminated by notice given,or by the death,insanity,bankruptcy of either principal or agent.
B) are agreements of utmost good faith on the part of the agent.
C) if arising other than through operation of law or by necessity,must be in writing to be valid.
D) would not include,by definition,Powers of Attorney.

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Question 22

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Certain high-technology components may not be exported to nations on the Export Controls List.The export broker for a manufacturer of such components could be held liable for any loss to the manufacturer as a result of incorrectly classifying prohibited components on the export approval applications.

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Question 23

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Where "Jane Doe per John Doe" appears executed on a signature line,Jane Doe is the agent.

Where an agent enters a contract,not under seal,without disclosing he or she is an agent,the other contracting party

The law of agency has its roots in all of tort,contract,quasi-contract,and the law of equity.

Explain the nature of the agency relationship in light of the principles of contract law.

Without Ted's knowledge,Phil,who frequently purchased lumber on Ted's behalf,purchased a large quantity of plywood from Chris as agent for Ted.Phil later advised Ted of the purchase.If Ted had died before the contract was negotiated by Phil,the purchase agreement would be unenforceable,because the principal did not exist at the time when the agreement was made.

How may an agency arise?

Agents may expose themselves to personal liability on a contract by entering into an agreement with a third party

The most common form of agency by necessity is the relationship between a real estate agent and his or her principal.

Describe the various duties owed by agents to their principals,and illustrate the consequences of breaching these duties by giving examples.

Which parties are bound by the contract arising from a properly fulfilled agency?

Linda,a real estate broker,listed a house and property for sale at $145,000 having told the vendor,Ann,that this would leave some "bargaining room" above its true value of $140 000.She set about finding a purchaser and eventually met Steven.When Steven was shown a copy of the listing and appeared interested,Linda closed the sale by advising Steven that Ann was asking too much,and to offer only $140 000 for the property.The transaction went forward to a natural conclusion at $140 000.Discuss where Linda's responsibilities lay,and any outcome should Ann and Steven ever "compare notes."

An agent was engaged by a developer to arrange financing and obtained a favourable arrangement from a local lending institution.The lender gave the agent a fee for bringing in such a large account.The agent must disclose this fee to his principal.

Jim was engaged by Nick as his agent to purchase a parcel of land for him.Jim approached the owner of the land,and offered to sell the land for him as his agent if he would pay a commission on the sale.The owner agreed,and the sale was arranged with Nick.Without disclosing details of the transaction,Jim collected a commission on the sale from both Nick and the landowner.Jim acted in breach of his duty to act in good faith when he obtained commissions from both parties.

Certain high-technology components may not be exported to nations on the Export Controls List.The export broker for a manufacturer of such components could be held liable for any loss to the manufacturer as a result of recording incorrect part numbers on government export approval applications which the manufacturer reviews and signs.

It will only be on rare occasions that individuals who are principals will find themselves in a position of having to ratify contracts made by their agents.

Adrienne hired an agent to sell a quantity of furniture that she owned.She instructed the agent to sell the furniture without disclosing her identity as owner.The agent eventually sold the furniture to Simple.Adrienne then decided not to deliver the furniture.Simple could sue both the agent and Adrienne,if he discovered her identity,since he knew the agent was acting as an agent only.

Adrienne hired an agent to sell a quantity of furniture that she owned.She instructed the agent to sell the furniture without disclosing her identity as owner.The agent eventually sold the furniture to Simple.Adrienne then decided not to deliver the furniture.If the agent indicated that he was acting as the agent for an undisclosed principal,when Adrienne refused to deliver the furniture,Simple would be obliged to elect to sue either the agent or Adrienne,if he discovered her identity.

Newsome Enterprises Ltd.hired Joe as its purchasing agent.Joe was given the authority to purchase up to $20 000 inventory.He discovered inventory at 50% off the normal cost so purchased $15,000.Is Newsome Enterprises Ltd.bound by Joe's agreement?