East Mississippi Community College

ECON 2123

Chapter 37-AGENCY

TRUE/FALSE

1)By virtue of an agency, one person can make contracts at numerous places with many different parties at the same time.

2. An agent is authorized to make contracts for, and is under the control of, the principal.

3. Agency is a relationship by which the principal is authorized to act on behalf of an agent in negotiating and making contracts with third persons.

4. An agent is distinguished from an ordinary employee in that employees are hired to represent the employer in dealings with third persons.

5. The employer of an independent contractor does not have control over the performance of the work by the independent contractor.

6. A “right to control” test determines whether an individual is an agent, an employee, or an independent contractor.

7. A special agent is authorized by the principal to transact all affairs in connection with a particular type of business or trade or to transact all business at a certain place.

8. A special agent is authorized by the principal to do all acts that can be delegated lawfully to a representative.

9. An agency may be created to perform almost any act that a principal could lawfully do.

10. An agency may arise by appointment, conduct, ratification, or operation of law.

11. A written authorization of agency is called a power of attorney.

12. An agency contract may be created by the oral appointment of an agent.

13. The term apparent authority is used when an appearance of authority has been created by a principal, but actual authority does not exist.

14. A principal may ratify an unauthorized contract of an agent.

15. The intention to ratify an unauthorized act may be expressed by words or conduct.

16. For a principal to ratify the actions of an agent, all that is necessary is that the principal express the intention to ratify.

17. A principal may ratify an action taken by an agent that the principal would not have been capable of authorizing at the time that the action was taken.

18. For ratification to occur, the agent must have purported to act on behalf of, or as agent for, the identified principal.

19. When the principal ratifies the act of the unauthorized person, such ratification does not release the unauthorized person from liability, since he or she acted without authority.

20. The burden of proving the existence of an agency relationship rests on the person who seeks to benefit by such proof.

21. An agent's duties must be expressly stated in the agency agreement and may not be implied from the principal's words or conduct.