1.   David gives Ethel power of attorney. David then has a nervous breakdown and becomes insane. Ethel has the authority to act on David’s behalf


A. if the power of attorney is a durable power of attorney.

B. with regard to personal property but not real property.

C. by necessity.

D. only until Tom regains his sanity.


2.   Phil receives a job offer from Big Tech, Inc., in a letter that states, “If you leave your current position and join us, we will employ you for the next five years as our company expands.” Phil takes the job, and he is fired after six months even though his work was satisfactory. If Phil sues and wins, the most likely reason is


A. the employment at-will doctrine.

B. promissory estoppels.

C. the state’s right-to-work law.

D. express contract.


3.   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. due diligence.

B. loyalty.

C. obedience.

D. account.


4.   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 Jason can be held liable.

B. Only Steve can be held liable.

C. Neither Steve nor Jason can be held liable.

D. Both Steve and Jason can be held liable.


5.   Billy works as a freelance writer for Big Books. Billy works in his own home and has contact with Big Books only to receive and return writing projects. Billy is a/an __________ for Big Books.


A. fiduciary

B. employee

C. independent contractor

D. agent


6.   Irene hires Mark to do work for her. In the course of performing that work, Mark causes injury to a third party. Which of the following statements is true?


A. Irene is liable for the injury whether Mark is an employee or an independent contractor.

B. If Mark is an employee, Irene is liable for the injury.

C. If Mark is an independent contractor, Irene is liable for the injury.

D. Irene isn’t liable for the injury whether Mark is an employee or an independent contractor.


7.   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. Zeke violated his duty of


A. loyalty.

B. account.

C. due diligence.

D. obedience.


8.   Samantha hires Zack, a real estate agent, to sell her home. Samantha then goes sailing. While she is gone, the pipes in her house burst. The agent discovers this, is unable to reach Samantha, and hires a plumber to fix the pipes. The plumber sends the bill to Samantha. If Samantha has to pay, it’s most likely based on agency by


A. necessity.

B. estoppels.

C. implication.

D. appointment.


9.   Bob’s company was found in violation of OSHA. The violation likely relates to


A. racial discrimination.

B. failure to pay overtime.

C. workers’ compensation.

D. workplace safety.


10.   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. implied

B. apparent

C. actual

D. express


11.   Carl, a little person with dwarfism, applies for a job. He is told he won’t be hired because he is a little person. Carl sues, claiming discrimination under the Civil Rights Act. Which of the following statements is true?


A. Unless Carl can show that the height requirement has a disparate impact on short people, he has no claim.

B. Carl has a good claim.

C. Carl has no claim.

D. Unless the employer can show that being of a certain height is a bona fide job qualification, Carl has a good claim.


12.   State right-to-work laws prohibit


A. employees from forming labor unions and bargaining units.

B. closed shops, but not union shops.

C. agreements requiring union membership to get or keep a job.

D. union shops, but not closed shops.


13.   Shauna creates a Web site 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 Web site 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 the computer isn’t an agent for Shauna.

B. No, because Shauna never confirmed the purchase.

C. Yes, because agency by necessity applies.

D. Yes, because the computer is an agent for Shauna.


14.   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. operation of law.

B. implication.

C. estoppels.

D. appointment.


15.   Molly borrowed $5,000 from Larry and, as collateral, gave him jewelry and authority to sell the jewelry if she defaulted. Afterward, Molly had second thoughts and revoked the agency. Which of the following statements is true?


A. Molly can’t terminate the agency unless she claims bankruptcy.

B. Molly can terminate the agency if she paid the loan.

C. Molly can’t terminate the agency unless Larry sold the jewelry.

D. Molly can terminate the agency based on impossibility of performance.


16.   Bob’s company was found in violation of ERISA. The violation likely relates to


A. workers’ compensation.

B. workplace safety.

C. failure to pay overtime.

D. Bob’s pension plan.

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