CHAPTER 13

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1. An agent is

a person who has permitted another to act on his or her behalf
a person who is authorized to act on behalf of another
a party who does business with a person who acts on behalf of another
a person for whom another acts in dealings with a third party without the third party being aware of his involvement
a person who acts for another without any authority to do so

2. A principal is

a person who has permitted another to act on his or her behalf
a person who is authorized to act on behalf of another
a party who does business with a person who acts on behalf of another
a person for whom another acts in dealings with a third party without the third party being aware of his involvement
a person who acts for another without any authority to do so

3. An undisclosed principal is

a person who has permitted another to act on his or her behalf
a person who is authorized to act on behalf of another
a party who does business with a person who acts on behalf of another
a person for whom another acts in dealings with a third party without the third party being aware of his involvement
a person who acts for another without any authority to do so

4. An outsider is

a person who has permitted another to act on his or her behalf
a person who is authorized to act on behalf of another
a party who does business with a person who acts on behalf of another
a person for whom another acts in dealings with a third party without the third party being aware of his involvement
a person who acts for another without any authority to do so

5. A sales representative in a retail furniture store has

apparent authority to sell the draperies on the store windows
apparent authority to sell the premises
apparent authority to sell the furniture on the display floor
apparent authority to sell the furniture in the manager's office
all of the above

6. A loan officer at a bank branch has an authorized limit of loans up to $20,000. Loans in excess of that amount require approval by the bank's regional office. The loan officer has ______ to make a loan in the amount of $25,000.

no authority
actual authority
apparent authority
conditional authority
estopped authority

7. A loan officer at a bank branch has an authorized limit of loans up to $20,000. Loans in excess of that amount require approval by the bank's regional office. Without seeking approval, the loan officer agrees to provide a loan in the amount of $25,000 to a customer.

the bank is not bound by the loan agreement
the bank is bound, by the principle of agency by estoppel
the bank is bound, by the principle of agency by ratification
the bank is bound, by the principle of agency by appointment
the loans officer is bound, as a party to the loan agreement

8. A loan officer at a bank branch has an authorized limit of loans up to $20,000. Loans in excess of that amount require approval by the bank's regional office. A large sign, visible to all customers as they enter the branch, says, "no staff member in this branch has authority to enter loans of more than $20,000." Without seeking approval, the loan officer agrees to provide a loan in the amount of $25,000 to a customer.

the bank is not bound by the loan agreement
the bank is bound, by the principle of agency by estoppel
the bank is bound, by the principle of agency by ratification
the bank is bound, by the principle of agency by appointment
the loan officer is bound, as a party to the loan agreement

9. A loan officer at a bank branch has an authorized limit of loans up to $20,000. Loans in excess of that amount require approval by the bank's regional office. A large sign, visible to all customers as they enter the branch, says, "no staff member in this branch has authority to enter loans of more than $20,000." Without seeking approval, the loan officer agrees to provide a loan in the amount of $25,000 to a customer. Later, the loan is considered and approved by regional office, and a congratulatory letter is sent to the customer.

the bank is not bound by the loan agreement
the bank is bound, by the principle of agency by estoppel
the bank is bound, by the principle of agency by ratification
the bank is bound, by the principle of agency by appointment
the loans officer is bound, as a party to the loan agreement

10. The single most important characteristic of a relationship in which one of the parties owes a fiduciary duty to the other is that

there is a contract between the parties
one of the parties is liable to the other for a tort
one of the parties is a "professional"
the relationship has existed for a long period of time
the relationship is based on trust