II. MULTIPLE CHOICE 1. The Individual Indemnity Insurance company hires Audrey A
ID: 375053 • Letter: I
Question
II. MULTIPLE CHOICE 1. The Individual Indemnity Insurance company hires Audrey Agent to se insurance for it Audrey makes her own hours and drives her own automobile to see prospects. While hurrying to see a customer, Audrey drives a little too fast for the weather conditions and negligently injures a pedestrian. The pedestrian sues Individual Indemnity for his injuries. a· The pedestrian can recover from Individual Indemnity b. Audrey was an independent contractor for whose physical acts Individual Indemnity was not liable. c. Audrey's authority to sell insurance policies means that Individual Indemnity will be liable for policies which Audrey sells on its behalf d. Two of the above are correct, (b) and (c) 12. Ratification by a principal of an unauthorized act may occur by: a. b. c. d. silence that indicates consent. express statements. acceptance of the benefits of the contract. all of the above. When a principal terminates an agent who has dealt with third parties and has collected accounts on the principal's behalf, the principal must give the third parties termination of the agent's authority a. constructive b. actual c. no d. written 13. notice of the 14. Power conferred upon an agent by acts or conduct of the principal that reasonably lead a third known as: party to believe that the agent has such power is a. actual authority b. apparent authority c. implied authority d. constructive authority 15. Sam is a salesman at the Paymart Discount Store. He inadvertently misrepresents the capabilities of a computer which he sells to Thomas. Thomas is upset and sues the Paymart Store. a. Paymart has no liability, because it did not authorize the misrepresentation. b. Paymart has no liability, because Sam's misrepresentation was not a tort c. Paymart is responsible for Sam's unauthorized misrepresentations. d. None of the above. 16. One who contracts with another to do a job but who is not subject to the control of the other is known as: a. agent. b. principal. e. independent contractor d. employee. Apparent authority continues beyond termination, requiring actual notice if a third party is one: a. with whom the agent had previously dealt. b. to whom the agent has been specially accredited c. both a and b d. neither a nor b. Apparent authority never continues beyond termination. 17.Explanation / Answer
11. (b) Agent will have to bear all the charges in order to indemnify the pedestrian. The principle will not be liable as this is the act done by the agent in the personal capacity, neither on the direction of principle nor it was required to complete any tasks of principle.
12. (d) Ratification of any unauthorized act can express or implied.
13. (c) Notice should be in writing, as it will help in documentation and can be presented as evidence when required.
14. (d) Apparent Authority.