Business Law

Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page
break, so be sure that you have seen the entire question and all the answers before choosing an answer.
1. Polly hires Nick to sell her house and gives him power of attorney that authorizes him to do, but the
power of attorney says nothing about price. Polly tells Nick to take nothing less than $200,000. Lola offers
Nick $195,000 for the house, and Nick accepts. Nick violated his duty of
A. account.
B. loyalty.
C. due diligence.
D. obedience.
2. Steve is Jason’s agent, and it’s within Steve’s authority as Jason’s agent to purchase homes on Jason’s
behalf. Steve contracts with Albert to buy Albert’s house for Jason. Steve, however, doesn’t tell Albert that
he’s buying the house on Jason’s behalf or that he’s acting for another individual. Under the terms of the
contract, which of the following statements is true?
A. Only Steve can be held liable.
B. Both Steve and Jason can be held liable.
C. Neither Steve nor Jason can be held liable.
D. Only Jason can be held liable.
3. Shauna creates a website that sells shoes. Meagan chooses shoes, enters her credit card information, and
purchases the shoes. She then receive an e-mail confirming the purchase. The website is programmed to
perform these functions, and Shauna has no personal knowledge of the transaction. Shauna was on
vacation at the time of the transaction and didn’t personally approve it. She returns from vacation, checks
the site, and discovers the transaction. Was a contract created?
A. No, because Shauna never confirmed the purchase.
B. Yes, because agency by necessity applies.
C. Yes, because the computer is an agent for Shauna.
D. No, because the computer isn’t an agent for Shauna.
4. Bob works for the government and belongs to a union. Bob’s union goes on strike. Which of the
following statements is true?
A. The strike is lawful because only government employees can strike.
B. If the strike is lawful, Bob must be a federal employee.
C. The strike is unlawful because only nongovernment employees can strike.
D. If the strike is lawful, Bob must not be a federal employee.
5. Norma has worked for Big Factory for 15 years, has never missed a day of work, and has always been
an excellent worker. One day, without warning, Norma’s supervisor fires her without any explanation.
Norma knows of no reason for the termination. Which of the following statements is true?
A. Norma can’t do anything as long as the reasons were nondiscriminatory.
B. Norma can’t do anything unless she lives in an employment-at-will jurisdiction.
C. Norma may file a bad faith action against Big Factory.
D. Norma may file a bad faith action against her supervisor.
6. Carter wants to impress his boss, Marco. Carter approaches one of Marco’s potential clients and
negotiates a contract with the client on Marco’s behalf. The client agrees and signs the contract. Marco,
however, doesn’t know about Carter’s negotiation. Carter lacks the authority to negotiate on Marco’s
behalf. When Marco finds out, he is so pleased about the contract that he overlooks Carter’s actions and
tells Carter he did an excellent job landing the client. This forms an agency by
A. estoppel.
B. agreement.
C. operation of law.
D. ratification.
7. Sandy works as a clerk in Big Department Store. After she finishes work one day, she heads out to her
car in the parking lot to drive home. There, she sees Petra, someone she detests. Sandy and Petra argue,
and Sandy punches Petra in the nose, causing an injury. Which of the following statements is true?
A. Only Big Department Store is liable for Petra’s injury.
B. Both Sandy and Big Department Store are liable for Petra’s injury.
C. Only Sandy is liable for Petra’s injury.
D. Neither Sandy nor Big Department Store are liable for Petra’s injury.
8. Sam gives Dennis a written power of attorney to sell his house. Though the power of attorney doesn’t
expressly authorize Dennis to do so, Dennis purchases an ad in the newspaper to advertise sale of the
house. The newspaper sends a bill to Sam. If Sam is liable for the bill, it’s most likely based on agency by
A. implication.
B. operation of law.
C. appointment.
D. estoppels.
9. Sally works for Big Tech, Inc. One day, the boss calls her into his office and says, “Women just don’t
get tech. You’re fired.” Sally sues. In the course of the litigation, the company discovers that Sally was
pilfering paper from the company storage, and under the employee handbook, this is grounds for
termination. Sally’s discharge is
A. wrongful because the employer intended to fire her based on gender.
B. not wrongful because the employer discovered evidence that justifies the firing.
C. not wrongful because gender is a bona fide job qualification for working in tech.
D. wrongful because evidence can’t be used in a gender discrimination case.
10. Bob’s company was found in violation of ERISA. The violation likely relates to
A. failure to pay overtime.
B. Bob’s pension plan.
C. workers’ compensation.
D. workplace safety.
11. The right to notice of a plant closing or massive layoffs due to sale of a business is derived from the
A. Worker Adjustment and Retraining Notification Act.
B. Employee Retirement Income Security Act.
C. Antitrust Procedures and Penalties Act.
D. Hart-Scott-Rodino Antitrust Act.
12. Ted is a janitor at Big Deal, Inc. One night, Ted is cleaning the boss’s office and sits in the boss’s chair.
At that moment, a salesman walks in, thinks Ted is a manager, and offers to sell Big Deal, Inc., 700
widgets for $100 each. Ted thinks this sounds like a good deal, assumes the boss will be pleased, and signs
the contract as an agent for Big Deal, Inc. The boss discovers this deal the next day and is angry because
widgets cost $27 each. If Big Deal is obligated under the agreement, it’s based on __________ authority.
A. express
B. actual
C. apparent
D. implied
13. Tony tries to start a union at Big Tech, Inc. His employer learns of his attempt to organize a union and
fires him. Big Tech’s actions
A. constitute an unfair labor practice.
B. are permitted if they first give Bob notice forbidding the union.
C. are permitted if the state has adopted right-to-work legislation.
D. are permitted.
14. Lee hires Zeke to sell her house. She tells Zeke to ask for $200,000, but says she will take $175,000.
Zeke’s friend Victor asks Zeke about the house, and Zeke tells him that Lee will take $175,000. Victor
offers $175,000, and Zeke accepts. Zeke violated his duty of
A. obedience.
B. due diligence.
C. account.
D. loyalty.
15. The union at Big Tech goes on strike. The president can petition the attorney general to seek an
injunction stopping the strike for 60 days if the
A. demands of the union are unreasonable.
B. union failed to give 60 days’ notice of its intent to strike.
C. strike would endanger the nation’s health or safety.
D. strike would result in large losses to the company.
16. Anna gives Doris a power of attorney. Doris does business with Big Bank as Anna’s agent. Anna then
revokes the power of attorney. Anna is not liable on any contracts Doris made
End of exam
A. after her agency was terminated.
B. after the date of termination but before notice was received by Big Bank.
C. that weren’t fully performed at the time notice was received by Big Bank.
D. after Big Bank received notice that she was no longer an agent.
17. Jane works for Big Business, Inc., as a sales representative. The boss decides to fire her because she
isn’t a Mets fan. The boss can
A. not fire Jane if she agrees to become a Mets fan.
B. fire Jane.
C. not fire Jane because of the Civil Rights Act of 1964.
D. not fire Jane if here work was satisfactory.
18. State right-to-work laws prohibit
A. closed shops, but not union shops.
B. agreements requiring union membership to get or keep a job.
C. employees from forming labor unions and bargaining units.
D. union shops, but not closed shops.
19. Cara’s boss sends her nude photos of himself. She complains that it’s sexual harassment. The boss says
that it’s not sexual harassment because he didn’t ask her for sexual favors. The boss’s actions
A. constitute sexual harassment because he created a hostile work environment.
B. constitute quid pro quo sexual harassment.
C. don’t constitute sexual harassment because he didn’t ask for sexual favors.
D. don’t constitute sexual harassment because he didn’t create a hostile work environment.
20. Sal hires Antoinette to sell his house and gives her power of attorney that authorizes her to do, but the
power of attorney says nothing about price. Sal tells Antoinette to take nothing less than $200,000. Harry
offers Antoinette $195,000 for the house, and Antoinette accepts. If Sal is bound by the sale contract, the
most likely reason is __________ authority.
A. apparent
B. express
C. actual
D. implied