MULTIPLE-CHOICE QUESTIONS WITH ANSWERS RELATED TO

LAW OF AGENCY

Which of the following best defines the ‘Law of Agency’?
a. The relationship between two parties where one party acts on behalf of the other.
b. A legal contract between a landlord and a tenant.
c. The rules governing corporate mergers.
d. None of the above.

Answer: a. The relationship between two parties where one party acts on behalf of the other.

In agency law, what is the principal?
a. The agent’s assistant.
b. The person who acts on behalf of another.
c. The company’s shareholders.
d. The property owned by an individual.

Answer: b. The person who acts on behalf of another.

Which of the following is NOT a type of authority an agent may possess in an agency relationship?
a. Express authority.
b. Implied authority.
c. Apparent authority.
d. Arbitrary authority.

Answer: d. Arbitrary authority.

What type of agency relationship arises when an agent is given the power to perform specific acts on behalf of the principal?
a. Universal agency.
b. General agency.
c. Special agency.
d. Limited agency.

Answer: c. Special agency.

In agency law, what does ‘ratification’ refer to?
a. The termination of an agency relationship.
b. The act of a principal approving an agent’s unauthorized act.
c. The process of hiring a new agent.
d. None of the above.

Answer: b. The act of a principal approving an agent’s unauthorized act.

Which type of authority is directly given to an agent through oral or written instructions by the principal?
a. Implied authority.
b. Apparent authority.
c. Express authority.
d. Ostensible authority.

Answer: c. Express authority.

What is the term for an agent’s ability to bind a principal through actions that are reasonably necessary to carry out express authority?
a. Ratification.
b. Implied authority.
c. Ostensible authority.
d. Apparent authority.

Answer: b. Implied authority.

When does apparent authority typically arise in an agency relationship?
a. When the principal is absent.
b. When the agent is inexperienced.
c. When the principal miscommunicates with the agent.
d. When the principal creates a perception of the agent’s authority to a third party.

Answer: d. When the principal creates a perception of the agent’s authority to a third party.

Which of the following is NOT a fiduciary duty owed by an agent to the principal?
a. Duty of loyalty.
b. Duty of obedience.
c. Duty of confidentiality.
d. Duty of competition.

Answer: d. Duty of competition.

Under what circumstances might an agency relationship be terminated?
a. Death of the principal or agent.
b. Expiration of the agreed-upon term.
c. Mutual agreement between principal and agent.
d. All of the above.

Answer: d. All of the above.

What type of authority is derived from the actions, statements, or circumstances the principal allows or permits the agent to have?
a. Implied authority.
b. Express authority.
c. Ostensible authority.
d. Apparent authority.

Answer: d. Apparent authority.

In agency law, what is a ‘disclosed principal’?
a. A principal whose identity is unknown to the third party.
b. A principal whose existence is concealed from the agent.
c. A principal whose identity is known to the third party.
d. A principal who directly intervenes in every transaction.

Answer: c. A principal whose identity is known to the third party.

When an agent exceeds their authority, and the principal accepts the unauthorized act, it’s known as:
a. Ratification.
b. Termination by operation of law.
c. Breach of contract.
d. None of the above.

Answer: a. Ratification.

Which party is bound by the actions of an agent acting within their actual authority?
a. The agent.
b. The principal.
c. The third party.
d. Both the principal and the agent.

Answer: b. The principal.

What doctrine holds that a principal is liable for the authorized contracts made by an agent on their behalf?
a. Respondeat superior.
b. Vicarious liability.
c. Authorized agency.
d. Principal liability.

Answer: b. Vicarious liability.

In agency law, what is the agent’s obligation to act in the best interest of the principal?
a. Duty of loyalty.
b. Duty of compensation.
c. Duty of performance.
d. Duty of obedience.

Answer: a. Duty of loyalty.

What type of agency relationship gives an agent the authority to act on behalf of the principal in all matters?
a. Special agency.
b. General agency.
c. Limited agency.
d. Ostensible agency.

Answer: b. General agency.

When might an agency relationship be terminated by operation of law?
a. Bankruptcy of the principal.
b. Insanity of the agent.
c. Death of the principal.
d. All of the above.

Answer: d. All of the above.

Under agency law, what is the duty of an agent to follow the lawful instructions and directions of the principal?
a. Duty of obedience.
b. Duty of diligence.
c. Duty of care.
d. Duty of loyalty.

Answer: a. Duty of obedience.

What is the term for an agent’s act of substituting someone else to perform their duties as an agent?
a. Ratification.
b. Delegation.
c. Subrogation.
d. Abrogation.

Answer: b. Delegation.

What type of authority allows an agent to perform acts that are reasonably necessary to carry out the express authority?
a. Apparent authority.
b. Implied authority.
c. Ostensible authority.
d. Inherent authority.

Answer: b. Implied authority.

In agency law, what does the ‘scope of authority’ refer to?
a. The limits of the principal’s control over the agent.
b. The extent of an agent’s power to act on behalf of the principal.
c. The area where the agent operates.
d. None of the above.

Answer: b. The extent of an agent’s power to act on behalf of the principal.

Which doctrine holds that a principal is responsible for the negligent actions of its agent while the agent is acting within the scope of their employment?
a. Doctrine of respondeat superior.
b. Doctrine of principal liability.
c. Doctrine of agent responsibility.
d. Doctrine of vicarious liability.

Answer: a. Doctrine of respondeat superior.

When might an agency relationship be terminated by the operation of law due to the incapacity of the agent?
a. Mental illness.
b. Physical disability.
c. Death.
d. All of the above.

Answer: d. All of the above.

In agency law, what does ‘undisclosed principal’ mean?
a. A principal whose identity is concealed from the agent.
b. A principal whose existence is unknown to the third party.
c. A principal who intervenes directly in transactions.
d. A principal whose identity is known to the third party.

Answer: b. A principal whose existence is unknown to the third party.

What type of authority arises when the agent’s actions lead a third party to reasonably believe that the agent has authority to act on behalf of the principal?
a. Implied authority.
b. Express authority.
c. Apparent authority.
d. Ostensible authority.

Answer: c. Apparent authority.

Which type of agency relationship typically involves a real estate agent representing a buyer or seller for a specific transaction?
a. Universal agency.
b. Special agency.
c. General agency.
d. Ostensible agency.

Answer: b. Special agency.

What duty requires an agent to act with reasonable care, skill, and diligence when performing their duties?
a. Duty of loyalty.
b. Duty of obedience.
c. Duty of care.
d. Duty of disclosure.

Answer: c. Duty of care.

Under what doctrine is a principal held liable for the actions of an agent even if the principal did not authorize the specific act?
a. Doctrine of respondeat superior.
b. Doctrine of vicarious liability.
c. Doctrine of agent authorization.
d. Doctrine of principal responsibility.

Answer: b. Doctrine of vicarious liability.

When might an agency relationship be terminated by the operation of law due to a change in circumstances?
a. The agent becomes bankrupt.
b. The principal’s business changes ownership.
c. Mutual agreement to terminate.
d. All of the above.

Answer: b. The principal’s business changes ownership.

What term describes a situation where an agent has conflicting duties to two different principals?
a. Dual agency.
b. Multi-agency.
c. Cross-agency.
d. Plural agency.

Answer: a. Dual agency.

Which duty of an agent requires them to keep the principal informed about all relevant information?
a. Duty of loyalty.
b. Duty of disclosure.
c. Duty of obedience.
d. Duty of confidentiality.

Answer: b. Duty of disclosure.

What is the term for a situation where a third party reasonably relies on the agent’s apparent authority, but the agent exceeds their actual authority?
a. Ratification.
b. Estoppel.
c. Breach of contract.
d. None of the above.

Answer: b. Estoppel.

In agency law, what is the duty of an agent to act solely for the benefit of the principal in all matters related to the agency relationship?
a. Duty of loyalty.
b. Duty of obedience.
c. Duty of care.
d. Duty of disclosure.

Answer: a. Duty of loyalty.

Under what doctrine can a principal be held liable for the intentional torts committed by an agent within the scope of their employment?
a. Doctrine of respondeat superior.
b. Doctrine of principal liability.
c. Doctrine of agent responsibility.
d. Doctrine of vicarious liability.

Answer: a. Doctrine of respondeat superior.

What type of authority is inherent in the agent’s position or is reasonably necessary to carry out express authority?
a. Apparent authority.
b. Implied authority.
c. Ostensible authority.
d. Inherent authority.

Answer: d. Inherent authority.

What is the term for a situation where a principal is held responsible for the actions of an agent who is not acting within the scope of their employment?
a. Vicarious liability.
b. Imputed liability.
c. Secondary liability.
d. None of the above.

Answer: b. Imputed liability.

Which type of authority is derived from the agent’s actions and conduct, even if not expressly granted by the principal?
a. Express authority.
b. Implied authority.
c. Apparent authority.
d. Ostensible authority.

Answer: b. Implied authority.

Under what circumstances might an agency relationship be terminated by the destruction of the subject matter?
a. The principal’s business is sold.
b. The agent’s incapacity.
c. The subject matter of the agency is destroyed.
d. All of the above.

Answer: c. The subject matter of the agency is destroyed.

What duty of an agent prohibits them from disclosing confidential information about the principal’s affairs?
a. Duty of loyalty.
b. Duty of care.
c. Duty of confidentiality.
d. Duty of obedience.

Answer: c. Duty of confidentiality.

What type of authority allows an agent to perform acts that are reasonably necessary to carry out the express authority?
a. Apparent authority.
b. Implied authority.
c. Ostensible authority.
d. Inherent authority.

Answer: b. Implied authority.

In agency law, what is the term for an agent’s authority to act on behalf of the principal without limitations?
a. General agency.
b. Specific agency.
c. Limited agency.
d. Special agency.

Answer: a. General agency.

What duty requires an agent to act in the principal’s best interest and avoid conflicts of interest?
a. Duty of loyalty.
b. Duty of obedience.
c. Duty of care.
d. Duty of disclosure.

Answer: a. Duty of loyalty.

Under what doctrine can a principal be held responsible for an agent’s misrepresentation made within the scope of their employment?
a. Doctrine of respondeat superior.
b. Doctrine of vicarious liability.
c. Doctrine of principal liability.
d. Doctrine of agent responsibility.

Answer: c. Doctrine of principal liability.

In agency law, what is the term for a situation where a third party does not know the identity of the principal?
a. Undisclosed principal.
b. Secret principal.
c. Unidentified principal.
d. Silent principal.

Answer: a. Undisclosed principal.

What type of agency relationship gives an agent the authority to represent the principal in a specific transaction or matter?
a. Universal agency.
b. General agency.
c. Special agency.
d. Limited agency.

Answer: c. Special agency.

What term describes a situation where a principal accepts the benefits of an unauthorized transaction made by an agent?
a. Ratification.
b. Estoppel.
c. Waiver.
d. None of the above.

Answer: a. Ratification.

In agency law, what is the term for an agent’s ability to bind the principal to a contract?
a. Contractual liability.
b. Vicarious liability.
c. Imputed liability.
d. None of the above.

Answer: b. Vicarious liability.

Under what circumstances might an agency relationship be terminated by the impossibility of performance?
a. Bankruptcy of the principal.
b. Mutual agreement to terminate.
c. Death of the agent.
d. All of the above.

Answer: d. All of the above.

What term describes a situation where a principal is held responsible for the agent’s acts within the scope of their employment, even if those acts were unauthorized?
a. Vicarious liability.
b. Imputed liability.
c. Principal liability.
d. None of the above.

Answer: a. Vicarious liability.