Chapter 7

Question 1

How are principal-agent relationships generally created?

Answer 1

Through an employee agreement in the form of a contract.

Question 2

The most important factor in determining whether a sales associate is an employee or an independent contractor is

Answer 2

The employment contract

Question 3

Self-employed independent contractors over whom the principal has no control and no responsibility, and who are employed because of their specific expertise, are generally known as

Answer 3

Professional Agents

Question 4

What rights do principals or agents have to cancel an agency?

Answer 4

The power but not the right to cancel the agency.