Bar Exam (Uniform) Quiz: Agency Formation
20 questions · exam conditions
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Agency FormationQuestion 1 of 20

A corporation entered into a written agreement with a software developer to create a new inventory management program. The agreement specified the required features, the delivery date, and a fixed payment of $50,000. The agreement stated the developer was an 'independent contractor.' The developer used her own computer, set her own work schedule, and had complete discretion over the coding language and methods used, as long as the final program met the specified requirements. The corporation did not supervise her daily work.

Did the agreement create an agency relationship between the corporation and the developer? Select one.

Yes, because the developer was working to create a program for the corporation's benefit.
Yes, because the agreement specified the required features, which constituted control over the outcome of the work.
No, because the agreement explicitly labeled the developer as an independent contractor.
No, because the corporation lacked the right to control the manner and means of the developer's performance.
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Bar Exam (Uniform) Quiz

Bar Exam (Uniform) Quiz: Agency Formation

Practice Agency Formation in Bar Exam (Uniform) with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Agency Formation, giving you a quick way to practice the rules, question types, and explanations that matter most for Bar Exam (Uniform).

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

A corporation entered into a written agreement with a software developer to create a new inventory management program. The agreement specified the required features, the delivery date, and a fixed payment of $50,000. The agreement stated the developer was an 'independent contractor.' The developer used her own computer, set her own work schedule, and had complete discretion over the coding language and methods used, as long as the final program met the specified requirements. The corporation did not supervise her daily work.

Did the agreement create an agency relationship between the corporation and the developer? Select one.

  1. Yes, because the developer was working to create a program for the corporation's benefit.
  2. Yes, because the agreement specified the required features, which constituted control over the outcome of the work.
  3. No, because the agreement explicitly labeled the developer as an independent contractor.
  4. No, because the corporation lacked the right to control the manner and means of the developer's performance. (correct answer)
Explanation: The correct answer is D. The defining element of an agency relationship is the principal's right to control the agent's actions. Here, the corporation controlled the result of the work (the program's features) but not the manner and means of its performance. The developer controlled her own hours, equipment, and methods. This indicates an independent contractor relationship, not an agency relationship. While the parties' label is relevant, it is not dispositive; the degree of control is the key factor.

Question 2

You are advising a general contractor. The contractor regularly purchases lumber from a specific supplier. For a recent project, the contractor sent the supplier a set of detailed specifications for custom-milled beams, including precise dimensions, wood type, and finishing requirements. The supplier manufactured the beams according to these specifications. The contractor did not oversee the supplier's manufacturing process, employee management, or choice of tools.

Did the contractor's provision of detailed specifications create an agency relationship, making the supplier the contractor's agent for manufacturing the beams? Select one.

  1. Yes, because the supplier was acting to fulfill the contractor's specific needs and was subject to his control regarding the final product.
  2. Yes, because a buyer-supplier relationship becomes an agency when the specifications are highly detailed.
  3. No, because the relationship is one of a buyer and seller of goods, and the specifications merely defined the goods to be sold. (correct answer)
  4. No, because the supplier was paid a price for the goods rather than a fee or commission for its services.
Explanation: The correct answer is C. A buyer does not become a principal merely by providing detailed specifications for goods to a supplier. This is a characteristic of a standard buyer-seller relationship governed by contract law (UCC Article 2). The critical element of control for agency is missing; the contractor controlled the what (the product) but not the how (the manufacturing process). The supplier was not acting 'on behalf of' the contractor but was fulfilling its own contractual obligation to sell goods.

Question 3

Two friends, a chef and a manager, decided to open a restaurant together. They did not have a written agreement, but they jointly leased a commercial space, opened a joint bank account for the business, and shared in the work of setting up the restaurant. They agreed to split any profits or losses equally. The chef, without consulting the manager, ordered $5,000 worth of kitchen equipment from a supplier on credit, telling the supplier the equipment was for 'our new restaurant.'

Based on these facts, what is the strongest basis for concluding that the chef was an agent with authority to bind the manager to the equipment contract? Select one.

  1. The chef and manager formed a general partnership, and each partner is an agent of the partnership for carrying on its business. (correct answer)
  2. The chef was a gratuitous agent acting for the manager's benefit.
  3. The manager's consent to the agency was implied by his allowing the chef to work on setting up the restaurant.
  4. The manager and chef were in a joint venture, which is distinct from an agency relationship.
Explanation: The correct answer is A. The facts describe the formation of a general partnership: an association of two or more persons to carry on as co-owners a business for profit. A key feature of a partnership is that each partner is an agent of the partnership for the purpose of its business. The chef's act of ordering equipment was in the ordinary course of the restaurant business, thus binding the partnership and, by extension, the manager. This is the most specific and accurate description of the agency relationship created.

Question 4

A property owner listed his house for sale with a real estate broker under an exclusive listing agreement. The agreement authorized the broker to market the property and solicit offers. A potential buyer made an offer directly to the owner. The owner accepted the offer and sold the house without any direct involvement from the broker in the final transaction.

Did the owner's act of selling the house himself terminate the agency relationship that was created by the listing agreement? Select one.

  1. Yes, because the purpose of the agency was accomplished when the house was sold. (correct answer)
  2. Yes, because the owner's actions were an implicit revocation of the broker's authority.
  3. No, because the agency relationship continues until the agreement's expiration date, even if the house is sold.
  4. No, because an exclusive listing agreement creates an agency coupled with an interest, which is irrevocable.
Explanation: The correct answer is A. When the specific purpose of an agency relationship is accomplished, the agency terminates by operation of law. Here, the purpose was to sell the house, and once sold, that purpose is fulfilled. While certain post-termination obligations (like the duty to pay commission) may continue, the agency relationship itself ends when its purpose is accomplished. The sale terminated the agency regardless of whether the broker was directly involved in the final transaction.

Question 5

A 17-year-old musical prodigy, who was legally a minor in the jurisdiction, hired a 30-year-old manager to book concert venues on her behalf. The prodigy and the manager signed a detailed written agreement. The manager then entered into a contract with a concert hall for a performance.

Was a legally recognized agency relationship created between the prodigy and the manager? Select one.

  1. No, because a minor lacks the legal capacity to appoint an agent.
  2. No, because the manager, as an adult, cannot be subject to the control of a minor.
  3. Yes, because the agent had contractual capacity, which is all that is required.
  4. Yes, but the agency agreement and any contracts made by the agent are voidable by the minor principal. (correct answer)
Explanation: The correct answer is D. A person must have contractual capacity to be a principal. Because a minor's contracts are generally voidable, the agency agreement a minor enters into is also voidable by the minor. The agency relationship is validly formed, but the minor has the power to disaffirm it. The agent does not need to have contractual capacity, but the principal does. Therefore, a valid but voidable agency was created.

Question 6

An individual was named as the executor in her father's will. After the father died and the will was admitted to probate, the court formally appointed her as the executor of the estate. In her capacity as executor, she hired a real estate agent to sell a house owned by the estate.

In the relationship between the executor and the real estate agent, who is the principal? Select one.

  1. The executor, because she is the one who hired and controls the agent.
  2. The estate, because the executor is acting in a representative capacity for the benefit of the estate. (correct answer)
  3. The father, because he created the power in his will.
  4. The court, because it appointed the executor and oversees the probate process.
Explanation: The correct answer is B. An executor is a fiduciary who acts on behalf of the estate. While the executor is the one who manifests assent to create the agency relationship with the real estate agent, she does so in her capacity as a representative of the estate. The estate is the legal entity for whose benefit the agent is acting. Therefore, the estate is the principal.

Question 7

A national pizza franchisor provides all its franchisees with detailed manuals covering recipes, branding, store layout, and staff uniforms. The franchise agreement gives the franchisor the right to terminate the franchise for failure to adhere to these standards. However, the agreement expressly states that the franchisee is an independent contractor responsible for all operational decisions, including hiring, firing, setting wages, and daily financial management.

Does the franchise agreement, by itself, create an agency relationship between the franchisor and the franchisee regarding the franchisee's day-to-day operations? Select one.

  1. Yes, because the franchisor's detailed manuals and quality standards constitute sufficient control over the franchisee's business.
  2. Yes, because the franchisee sells the franchisor's products for the franchisor's ultimate financial benefit.
  3. No, because the controls exercised by the franchisor are aimed at protecting its brand and maintaining product uniformity, not at controlling daily business management. (correct answer)
  4. No, because the agreement contains a clause disclaiming an agency relationship, and this clause is dispositive.
Explanation: The correct answer is C. In a franchise context, an agency relationship arises only if the franchisor has the right to control the day-to-day performance of the franchisee's business, not just the brand standards. The controls described—recipes, logos, uniforms—are for product uniformity and brand protection. Since the franchisee retains control over daily operations like employment and financial management, the requisite level of control for an agency relationship is lacking.

Question 8

A father told his adult son, 'If you paint my garage this weekend, I'll give you my old lawnmower.' The son replied, 'I'm not sure if I'll have time.' That Saturday, the father saw the son at the house with painting supplies. The father said, 'Great! The key to the garage is on the hook.' The son proceeded to paint the garage.

At what point, if any, was an agency relationship formed for the purpose of painting the garage? Select one.

  1. No agency was formed; this was a contractual offer for a unilateral contract, not an agency. (correct answer)
  2. It was formed when the father made the initial offer to the son.
  3. It was formed when the son showed up with painting supplies and the father provided the key.
  4. It was only formed after the son completed the painting.
Explanation: The correct answer is A. This scenario describes the formation of a unilateral contract, not an agency relationship. An agent acts on behalf of a principal and is subject to the principal's control. Here, the son is not acting on his father's behalf to interact with third parties or represent his father's interests. He is performing a service for his father in exchange for consideration (the lawnmower). He is a service provider in a contractual relationship, not an agent.

Question 9

The president of a local charity orally asked a volunteer to organize a fundraising bake sale. The president instructed the volunteer on the date, time, and location, and gave her a budget of $100 for supplies. The president told the volunteer, 'Just use your judgment on what kinds of goods to sell.' The volunteer agreed.

Was an agency relationship created between the charity and the volunteer? Select one.

  1. No, because the volunteer was not a paid employee of the charity.
  2. No, because the president delegated too much discretion to the volunteer regarding the goods to be sold.
  3. Yes, because the volunteer consented to act on behalf of the charity and was subject to its control regarding the event's core details. (correct answer)
  4. Yes, but only for the purpose of spending the $100 budget, not for the overall organization of the sale.
Explanation: The correct answer is C. An agency relationship was formed. The volunteer (agent) consented to act on behalf of the charity (principal) and was subject to its control. The charity, through its president, controlled the fundamental aspects of the task (date, time, location, budget). Granting the agent discretion in carrying out the task (choosing the baked goods) does not defeat the existence of control or the agency relationship. The fact that the agent is an unpaid volunteer is irrelevant, as consideration is not required.

Question 10

A homeowner, preparing for a month-long trip, asked her neighbor to 'keep an eye on the house.' The homeowner gave the neighbor a key for emergencies. While the homeowner was away, a severe storm caused a tree branch to crash through a window. Water began to flood the living room. Unable to reach the homeowner, the neighbor called a 24-hour emergency repair service. The neighbor authorized the service to board up the window and prevent further water damage, presenting himself as acting for the homeowner.

Did an agency relationship exist between the homeowner and the neighbor for the purpose of hiring the repair service? Select one.

  1. Yes, because the homeowner's request and the subsequent emergency created an implied agreement for the neighbor to act on her behalf to protect her property. (correct answer)
  2. No, because the homeowner's request to 'keep an eye on the house' was too vague to manifest assent to the neighbor acting as her agent.
  3. No, because an agency relationship requires an express agreement, and the neighbor was not explicitly authorized to incur expenses on the homeowner's behalf.
  4. Yes, but only because the neighbor's actions were later ratified when the homeowner learned of them and did not object.
Explanation: The correct answer is A. An agency relationship is formed when there is (1) assent by both parties, (2) the agent acts for the principal's benefit, and (3) the agent is subject to the principal's control. Assent can be implied from the circumstances. The homeowner's request and provision of a key, combined with the unforeseen emergency that threatened her property, created an implied agency relationship where the neighbor had the authority to take reasonable steps to protect the property on the homeowner's behalf.

Question 11

An elderly woman gave her nephew a written, durable power of attorney that authorized him to manage her financial affairs, including paying bills and making investments. The document stated it was effective immediately. For the first two years, the woman continued to manage her own affairs and the nephew took no action. After the woman suffered a stroke and became incapacitated, the nephew began using the power of attorney to pay her medical bills from her bank account.

When was the agency relationship between the woman and her nephew formed? Select one.

  1. It was formed when the woman signed the durable power of attorney. (correct answer)
  2. It was formed only when the nephew first acted on her behalf after her incapacitation.
  3. It was never formed because the nephew did not act on it for two years, constituting a lapse of the offer to be an agent.
  4. It was never formed because an agent cannot act for a principal who has become incapacitated.
Explanation: The correct answer is A. An agency relationship is formed upon the manifestation of assent by both parties. The woman manifested her assent by signing the power of attorney, which named the nephew as her agent. The nephew's assent can be inferred from his acceptance of the role, even if he does not act immediately. The power of attorney explicitly stated it was effective immediately, creating the agency at that moment, regardless of when the nephew first exercised his authority.

Question 12

A corporation's board of directors authorized its CEO, by a formal resolution, to hire an outside consulting firm to restructure a department. The CEO was given full authority to select the firm and negotiate the terms. The CEO hired a firm and, in the course of the project, authorized the lead consultant at the firm to make binding purchasing decisions for new equipment up to $10,000 on the corporation's behalf.

Was an agency relationship created between the corporation and the lead consultant? Select one.

  1. No, because the corporation only had a contractual relationship with the consulting firm, not the individual consultant.
  2. No, because only the board of directors, not the CEO, had the power to appoint agents for the corporation.
  3. Yes, because the CEO, as an agent of the corporation, had the authority to appoint a subagent to carry out tasks within the scope of her own authority. (correct answer)
  4. Yes, because the lead consultant was acting for the corporation's benefit.
Explanation: The correct answer is C. The lead consultant is a subagent. A principal (corporation) can be bound by the actions of a subagent if the agent (CEO) who appointed the subagent had actual or apparent authority to do so. Here, the board gave the CEO broad authority to hire a firm to restructure, which would foreseeably include authorizing individuals within that firm to perform necessary tasks. This created an agency relationship between the corporation and the consultant for the specified acts.

Question 13

You are representing a client who owns a small art gallery. A local artist, without any prior discussion with your client, left a painting at the gallery with a note that said, 'Please sell this for me for $2,000. You can keep a 20% commission.' Your client was busy and left the painting in a back room for two weeks without responding to the artist. A customer who wandered into the back room saw the painting and offered to buy it. Your client is unsure if she has the authority to sell it.

Was an agency relationship formed between the artist and your client when the artist left the painting at the gallery? Select one.

  1. Yes, because the client's failure to reject the artist's offer constituted acceptance by silence.
  2. No, because the client did not manifest assent to act as the artist's agent. (correct answer)
  3. Yes, because the artist manifested a clear intent to create an agency relationship for his benefit.
  4. No, because an agreement to sell goods for a commission must be in writing to be enforceable.
Explanation: The correct answer is B. Formation of an agency relationship requires the assent of both the principal and the agent. Here, the artist (the prospective principal) manifested assent, but the gallery owner (the prospective agent) did not. Silence generally does not constitute acceptance or assent, especially when there is no prior relationship or duty to speak. The client's inaction did not create an agency relationship.

Question 14

A corporation entered into a written agreement with a software developer to create a new inventory management program. The agreement specified the required features, the delivery date, and a fixed payment of $50,000. The agreement stated the developer was an 'independent contractor.' The developer used her own computer, set her own work schedule, and had complete discretion over the coding language and methods used, as long as the final program met the specified requirements. The corporation did not supervise her daily work.

Did the agreement create an agency relationship between the corporation and the developer? Select one.

  1. Yes, because the developer was working to create a program for the corporation's benefit.
  2. Yes, because the agreement specified the required features, which constituted control over the outcome of the work.
  3. No, because the agreement explicitly labeled the developer as an independent contractor.
  4. No, because the corporation lacked the right to control the manner and means of the developer's performance. (correct answer)
Explanation: The correct answer is D. The defining element of an agency relationship is the principal's right to control the agent's actions. Here, the corporation controlled the result of the work (the program's features) but not the manner and means of its performance. The developer controlled her own hours, equipment, and methods. This indicates an independent contractor relationship, not an agency relationship. While the parties' label is relevant, it is not dispositive; the degree of control is the key factor.

Question 15

The owner of a food truck orally authorized her friend to purchase a new generator for the truck, specifying the maximum price and the required wattage. The owner said, 'I also need you to sign a one-year lease on my behalf for a parking spot at the downtown food truck park.' The friend agreed. The jurisdiction's statute of frauds requires that any contract that cannot be performed within one year, including a one-year lease, must be in writing.

Assuming the jurisdiction follows the 'equal dignities' rule, was an agency relationship validly formed that empowered the friend to sign the one-year lease? Select one.

  1. Yes, because the agency was created by an oral agreement, which is generally sufficient for formation.
  2. No, because the underlying lease contract is subject to the statute of frauds, so the agent's authority must be in writing. (correct answer)
  3. Yes, because the statute of frauds applies to the lease itself, not to the agency agreement authorizing it.
  4. No, because the friend was not compensated and a gratuitous agent cannot be authorized to enter into contracts for the principal.
Explanation: The correct answer is B. The 'equal dignities' rule, a corollary to the statute of frauds, requires that an agent's authorization must be in writing if the contract the agent is to enter into on the principal's behalf is itself subject to the statute of frauds. Since a one-year lease must be in writing, the agency authorization to sign that lease must also be in writing. The oral authorization was insufficient to create an agency for this specific purpose.

Question 16

A landlord owned an apartment building but lived in another state. He hired a property management company to handle all aspects of the building's operation. The written agreement designated the company as the landlord's 'exclusive agent' to lease units, collect rent, and arrange for maintenance. The company had its own employees, including a building manager who worked on-site.

In the context of leasing an apartment to a new tenant, what is the relationship between the landlord and the property management company? Select one.

  1. The company is an independent contractor, not an agent, because it is a separate business entity.
  2. The company is the landlord's agent, because it has been given authority to act on the landlord's behalf in transactions with third parties. (correct answer)
  3. The company is a bailee, because it has possession and control of the landlord's property.
  4. The company is a trustee, because it is managing the property for the landlord's financial benefit.
Explanation: The correct answer is B. The property management company is the landlord's agent. The company has assented to act on the landlord's behalf (leasing units, collecting rent) and is subject to his control as defined by the management agreement. The fact that an agent is a separate business entity or might also be characterized as an independent contractor for other purposes (like tort liability) does not negate the existence of an agency relationship for the purposes of transacting with third parties like tenants.

Question 17

A landlord owned an apartment building but lived in another state. He hired a property management company to handle all aspects of the building's operation. The written agreement designated the company as the landlord's 'exclusive agent' to lease units, collect rent, and arrange for maintenance. The company had its own employees, including a building manager who worked on-site.

In the context of leasing an apartment to a new tenant, what is the relationship between the landlord and the property management company? Select one.

  1. The company is an independent contractor, not an agent, because it is a separate business entity.
  2. The company is the landlord's agent, because it has been given authority to act on the landlord's behalf in transactions with third parties. (correct answer)
  3. The company is a bailee, because it has possession and control of the landlord's property.
  4. The company is a trustee, because it is managing the property for the landlord's financial benefit.
Explanation: The correct answer is B. The property management company is the landlord's agent. The company has assented to act on the landlord's behalf (leasing units, collecting rent) and is subject to his control as defined by the management agreement. The fact that an agent is a separate business entity or might also be characterized as an independent contractor for other purposes (like tort liability) does not negate the existence of an agency relationship for the purposes of transacting with third parties like tenants.

Question 18

The president of a local charity orally asked a volunteer to organize a fundraising bake sale. The president instructed the volunteer on the date, time, and location, and gave her a budget of $100 for supplies. The president told the volunteer, 'Just use your judgment on what kinds of goods to sell.' The volunteer agreed.

Was an agency relationship created between the charity and the volunteer? Select one.

  1. No, because the volunteer was not a paid employee of the charity.
  2. No, because the president delegated too much discretion to the volunteer regarding the goods to be sold.
  3. Yes, because the volunteer consented to act on behalf of the charity and was subject to its control regarding the event's core details. (correct answer)
  4. Yes, but only for the purpose of spending the $100 budget, not for the overall organization of the sale.
Explanation: The correct answer is C. An agency relationship was formed. The volunteer (agent) consented to act on behalf of the charity (principal) and was subject to its control. The charity, through its president, controlled the fundamental aspects of the task (date, time, location, budget). Granting the agent discretion in carrying out the task (choosing the baked goods) does not defeat the existence of control or the agency relationship. The fact that the agent is an unpaid volunteer is irrelevant, as consideration is not required.

Question 19

A person wanted to buy a specific antique clock at an auction but wished to remain anonymous. He asked a friend to bid on the clock for him. He gave the friend a maximum price to bid and provided the funds. He instructed the friend not to reveal that she was bidding for someone else. The friend agreed and went to the auction.

Did an agency relationship exist between the person and his friend at the time of the auction? Select one.

  1. No, because the principal's identity was undisclosed, which is not permitted in an agency relationship.
  2. No, because the friend was acting in her own name at the auction.
  3. Yes, because the friend was acting on the person's behalf and was subject to his specific instructions regarding the maximum price. (correct answer)
  4. Yes, but only if the friend successfully purchased the clock.
Explanation: The correct answer is C. An agency relationship was formed because the core elements of assent, benefit, and control are present. The friend (agent) agreed to act for the person (principal) and was subject to his control (the maximum bid price). The fact that the principal is undisclosed (his existence is concealed from the third party) does not prevent the formation of an agency relationship between the principal and the agent. It primarily affects the liability of the agent and principal to the third party.

Question 20

A national pizza franchisor provides all its franchisees with detailed manuals covering recipes, branding, store layout, and staff uniforms. The franchise agreement gives the franchisor the right to terminate the franchise for failure to adhere to these standards. However, the agreement expressly states that the franchisee is an independent contractor responsible for all operational decisions, including hiring, firing, setting wages, and daily financial management.

Does the franchise agreement, by itself, create an agency relationship between the franchisor and the franchisee regarding the franchisee's day-to-day operations? Select one.

  1. Yes, because the franchisor's detailed manuals and quality standards constitute sufficient control over the franchisee's business.
  2. Yes, because the franchisee sells the franchisor's products for the franchisor's ultimate financial benefit.
  3. No, because the controls exercised by the franchisor are aimed at protecting its brand and maintaining product uniformity, not at controlling daily business management. (correct answer)
  4. No, because the agreement contains a clause disclaiming an agency relationship, and this clause is dispositive.
Explanation: The correct answer is C. In a franchise context, an agency relationship arises only if the franchisor has the right to control the day-to-day performance of the franchisee's business, not just the brand standards. The controls described—recipes, logos, uniforms—are for product uniformity and brand protection. Since the franchisee retains control over daily operations like employment and financial management, the requisite level of control for an agency relationship is lacking.