Chapter 4 Self-test questions

. Which one of the following is not a method of creating a relationship of agency?

Agency arising due to estoppel

Agency by frustration

Agency by agreement

Agency by operation of law

Agency by ratification

. A relationship of agency cannot be created unless both agent and principal so consent.

True

False

. An agent who lacks capacity to enter into a transaction cannot enter into such a transaction on his principal's behalf.

True

False

. Which of the following statements are correct? Please select all that apply.

Generally, a contract entered into with a mentally incapacitated person will not be binding.

A person is presumed to have mental capacity, unless the contrary is established.

An incapacitated principal will not be bound to a third party if the principal was incapacitated at the time that he represented the agent's authority.

Where a person enters into a contract of agency with a mentally incapacitated person, then the contract of agency will be binding, unless the other party knew of the incapacity.

. Which one of the following statements is incorrect?

An agent can only negotiate contracts on behalf of his principal if his appointment was created via a contract.

If an agent is appointed to execute a deed on behalf of the principal, then the agent will usually need to be appointed by deed.

Generally, the law does not impose any formalities upon those who wish to create an agency relationship.

If an agent is engaged to create an interest in land, he must be authorized to do so in writing.

. Where no contract of agency exists, then the agent will be known as a ______ agent.

. Where the act of an agent is ratified by his principal, then the agent is deemed to have authority to engage in that act from the time of ratification onwards.

True

False

. There are numerous limitations and conditions regarding when agency by ratification can arise. Which one of the following is not a valid limitation or condition?

Only the principal may ratify the actions of the purported agent.

An act that is void in law cannot be ratified.

Ratification must take place within a reasonable time.

The agent must purport to act as agent for a disclosed principal.

The principal must have a choice whether or not to ratify.

The principal must exist at the time that the agent purported to act as agent.

In order to ratify, the agent must have contractual capacity to enter into the contract on the date that he entered into the contract on the principal's behalf.

Ratification will not take place if it would unfairly prejudice a third party.

. Identify the requirements needed for agency of necessity to arise. Please select all that apply.

The actions of the agent must be necessary for the benefit of the principal.

The principal must consent to the actions undertaken by the agent.

It must not be reasonably practicable for the agent to communicate with the principal.

The agent's actions must be reasonable and prudent.

The principal must be competent at the time of the agent's actions.

. Which one of the following is not a situation where statute imposes a relationship of agency upon the parties?

Every partner in a firm is deemed to be an agent of the firm, and of the other partners.

A director of a company is an agent of the company

The administrator of a company is an agent of the company

The receiver of a company is an agent of the company.

In certain consumer credit agreements, the person negotiating for the debtor will be acting as an agent of the creditor

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