LAW CH. 27 OL QUIZ

T/F: The agency relationship imposes upon both principal and agent certain duties and obligations to third parties
True False

T/F: Discretionary instructions must be carried out to the exact letter
True False

T/F: A principal's money should be deposited in a bank account separate from the agent's account
True False

T/F: Incapacity of the principal does not terminate all agencies
True False

T/F: The contract of agency determines the compensation due an agent
True False

T/F: A principal has the right to terminate the agency at any time
True False

T/F: Destruction of the subject matter usually does not destroy the agency relationship
True False

T/F: Bankruptcy of a principal has not effect in the continuations of an agency
True False

The duty of an agent to promote the principal's interests to the utmost is ____________

a. renunciation

b. boundability

c. bankruptcy

d. loyalty

The duty of an agent to carry out the principal's instructions is called ______________

a. compensation

b. information

c. obedience

d. revocation

Payment to the agent set on a contingent basis is called _____________

a. compensation

b. termination

c. discretionary income

d. revocation

If an agent was negligent in the course of employment and caused injury to a third party:

a. neither the agent nor the principal is liable

b. only the agent is liable

c. both the agent and principal are liable

d. only the principal is liable

The two types of instructions an agent may receive from the principal are _____________

a. good and bad

b. routine and discretionary

c. accounting and managerial

d. colorful and drab

The right of the agent to be reimbursed by the principal for a loss incurred by the agent while carrying out his or her agency duties is the right to _____________

a. power of attorney

b. reimbursement

c. indemnification

d. discretion