East Mississippi Community College

ECON 2123

Chapter 38-THIRD PERSONS IN AGENCY

TRUE/FALSE

1)The liability of an agent to a third person depends on the existence of authority and the manner of executing the contract.

2. If an agent makes a properly authorized contract with a third person on behalf of a disclosed principal, the agent has no personal liability on the contract.

3. Even after there is an effective ratification, the original action of an agent still is treated as unauthorized.

4. When a person purports to act as an agent for a principal, an implied warranty arises that such person has authority to do so.

5. If an agent's act causes loss to the third person, that third person may generally hold the agent liable for the loss.

6. An agent's liability as a party to a contract with a third person is affected little by the degree of disclosure of the principal.

7. A third person dealing with the agent of a disclosed principal ordinarily intends to make a contract with the principal, not the agent.

8. In the partially disclosed principal situation, the agent is considered a party to the contract.

9. Agent's may intentionally make themselves liable on contracts with third persons.

10. If the principal is not disclosed, the agent is necessarily the other contracting party and is bound to the contract.

11. An agent should never sign a contract using "by" or "per" and then his or her name.

12. Parol evidence is allowed to show whether an agent has signed in a representative or an individual capacity.

13. If an agent commits a crime, the agent's liability will depend on the agency relationship.

14. Agents are themselves liable for harm caused third persons by the agents' fraudulent, intentional, or negligent acts.

15. A principal may be liable to a third person for an agent's unauthorized contracts.

16. In a simple contract made by an authorized agent on behalf of a disclosed principal, the third person may sue either the agent or the principal in the event of a breach.

17. Subject to certain limitations, a third person, on learning of the existence of an undisclosed principal, may sue the principal.

18. The liability of a buyer for the purchase price of goods is terminated by the fact that the buyer gave the buyer’s agent the purchase price to remit to the seller.

19. When a third person makes payment to an authorized agent, such payment is deemed made to the principal as of the time when the agent remits the payment to the principal.

20. A principal is not bound by statements made by an agent during the transaction of business that is within the scope of the agent's authority.

21. The principal is bound by knowledge but not by notice of any fact that is acquired by an agent while acting within the scope of actual or apparent authority.