Schriefer Exam 3 study guide questions
well answered to pass
Each one of the following is a way to form an agency relationship, EXCEPT:
Estoppel
Ratification
Waiver
Appointment - correct answer ✔✔Waiver
Wilma had her home on the market for several months. She finally found a buyer for the home
but was scheduled to be out of town on the day of the closing. Instead of rescheduling the
closing, she executed a limited power of attorney authorizing her friend, Fred, to finalize the
real estate sale in her absence. This is an example of what type of agency?
Scope
Ratification
Estoppel
Appointment - correct answer ✔✔Appointment
Tim owns a jewelry store and allows his friend Stephanie to sell some of her handcrafted
necklaces from his store. Although Stephanie is not an employee of Tim, customers believe she
does work for him given her constant presence in the store and the manner in which Tim treats
her. This arrange could result in the creation of an agency by:
Appointment
Ratification
Estoppel
,Power of attorney - correct answer ✔✔Estoppel
George is an agent for ABC Insurance Company. ABC allows George to bind property coverage
up to $500,000. One day, George wrote a $1,000,000 property policy for one of his customers.
The customer subsequently suffered a total loss to the property and submitted a claim to ABC
seeking payment of the $1,000,000 coverage limit. Which one of the following statements
concerning this scenario is correct?
ABC can refuse to accept George's actions and deny the claim.
ABC can pay only $500,000 since that was the limit of George's actual binding authority.
ABC will be required to pay the entire $1,000,000 loss due to the doctrine of ratification.
The insurance policy will be automatically void. - correct answer ✔✔ABC can refuse to accept
George's actions and deny the claim.
Which of the following statements concerning an agent's authority is/are true?
I. Agents must generally act within the scope and limitations of the authority specifically
granted them by the principal.
II. If an agent acts outside of that authority, the principal cannot be bound to a third party by
the agent's actions. - correct answer ✔✔I only
Which one of the following statements regarding agent authority is true?
Apparent authority is actual authority an insurance company gives its agents.
Express authority is implicitly granted to an agent based on common practices and the conduct
of the principal.
, Implied authority is the power of the agent to act for a principal that is represented to a third
party.
Courts review the goals of the agency in determining the scope of express authority. - correct
answer ✔✔Courts review the goals of the agency in determining the scope of express authority.
Travis purchased insurance from Anna, who marketed herself as an agent of ABC Insurance
Company. ABC is aware Anna uses the ABC logo on all of her marketing materials and even has
an ABC Insurance sign attached to the front of her office building. ABC does not ask or demand
Anna cease from using the ABC logo in any of her advertising or marketing efforts. ABC will have
to honor any claim Travis may present based upon what theory of agency?
-Actual authority
-Apparent authority
-Express authority
-Implied authority - correct answer ✔✔Apparent Authority
Each one of the following is an implied fiduciary duty an agent owes a principal, EXCEPT
Accounting
Information
Obedience
Ordinary care - correct answer ✔✔Ordinary care
Which of the following statements regarding the duties owed by agents and principals to each
other is true?
I. The principal's duties owed to an agent include compensation, reimbursement of expenses,
indemnification for losses, and employment for an agreed period of time.
well answered to pass
Each one of the following is a way to form an agency relationship, EXCEPT:
Estoppel
Ratification
Waiver
Appointment - correct answer ✔✔Waiver
Wilma had her home on the market for several months. She finally found a buyer for the home
but was scheduled to be out of town on the day of the closing. Instead of rescheduling the
closing, she executed a limited power of attorney authorizing her friend, Fred, to finalize the
real estate sale in her absence. This is an example of what type of agency?
Scope
Ratification
Estoppel
Appointment - correct answer ✔✔Appointment
Tim owns a jewelry store and allows his friend Stephanie to sell some of her handcrafted
necklaces from his store. Although Stephanie is not an employee of Tim, customers believe she
does work for him given her constant presence in the store and the manner in which Tim treats
her. This arrange could result in the creation of an agency by:
Appointment
Ratification
Estoppel
,Power of attorney - correct answer ✔✔Estoppel
George is an agent for ABC Insurance Company. ABC allows George to bind property coverage
up to $500,000. One day, George wrote a $1,000,000 property policy for one of his customers.
The customer subsequently suffered a total loss to the property and submitted a claim to ABC
seeking payment of the $1,000,000 coverage limit. Which one of the following statements
concerning this scenario is correct?
ABC can refuse to accept George's actions and deny the claim.
ABC can pay only $500,000 since that was the limit of George's actual binding authority.
ABC will be required to pay the entire $1,000,000 loss due to the doctrine of ratification.
The insurance policy will be automatically void. - correct answer ✔✔ABC can refuse to accept
George's actions and deny the claim.
Which of the following statements concerning an agent's authority is/are true?
I. Agents must generally act within the scope and limitations of the authority specifically
granted them by the principal.
II. If an agent acts outside of that authority, the principal cannot be bound to a third party by
the agent's actions. - correct answer ✔✔I only
Which one of the following statements regarding agent authority is true?
Apparent authority is actual authority an insurance company gives its agents.
Express authority is implicitly granted to an agent based on common practices and the conduct
of the principal.
, Implied authority is the power of the agent to act for a principal that is represented to a third
party.
Courts review the goals of the agency in determining the scope of express authority. - correct
answer ✔✔Courts review the goals of the agency in determining the scope of express authority.
Travis purchased insurance from Anna, who marketed herself as an agent of ABC Insurance
Company. ABC is aware Anna uses the ABC logo on all of her marketing materials and even has
an ABC Insurance sign attached to the front of her office building. ABC does not ask or demand
Anna cease from using the ABC logo in any of her advertising or marketing efforts. ABC will have
to honor any claim Travis may present based upon what theory of agency?
-Actual authority
-Apparent authority
-Express authority
-Implied authority - correct answer ✔✔Apparent Authority
Each one of the following is an implied fiduciary duty an agent owes a principal, EXCEPT
Accounting
Information
Obedience
Ordinary care - correct answer ✔✔Ordinary care
Which of the following statements regarding the duties owed by agents and principals to each
other is true?
I. The principal's duties owed to an agent include compensation, reimbursement of expenses,
indemnification for losses, and employment for an agreed period of time.
