Business and Personal Law

Chapter 14: Agency Authority and Termination

Self Check Answers

Section 14.1

1. a relationship based on trust
2. reimbursement: repayment of money spent by agent on behalf of a principal; indemnification: payment for losses suffered by agent due to principal's instructions
3. negligent hiring: proprietor fails to check qualifications; negligent retention: proprietor fails to fire a contractor after learning of incompetence

Section 14.2

1. by operation of law or by acts of the parties
2. when completed, by mutual assent, when agent withdraws or resigns, when the principal discharges the agent
3. third parties who have known of the agency relationship