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94. Jan hires Duncan to act as her agent in acquiring some property for the development of a new subdivision she is
planning that will be an elegant planned community. Jan instructs Duncan that he is not to say he is working for her
or, for that matter, that he is working for anyone. If Duncan enters into a contract for land for Jan that is the parcel
she wanted:
a. Duncan only is liable on the contract for the purchase of the land.
b. Jan can never be held liable for the land because Duncan acted in his name.
c. both Jan and Duncan are liable on the contract for the purchase of land.
d. it is fraud to conceal the identity of a party to a contract.
e. none of the above
95. Which of the following is not an independent contractor relationship?
a. one between a corporation and its outside legal counsel
b. one between a corporation and its vice president/general counsel
c. one between a lawn service company and a homeowner
d. All of the above are independent contractor relationships.
96. In a partially disclosed principal relationship, who is liable to the third party on a contract within the agent’s
authority?
a. principal
b. agent
c. both a and b
d. none of the above
97. In a partially disclosed principal relationship, who is liable to the third party on a contract outside the agent’s
authority?
a. principal
b. agent
c. both a and b
d. none of the above
98. Which of the following terminates apparent authority?
a. firing an employee
b. an employee quitting
c. an employee retiring
d. none of the above
99. Which of the following types of agency relationships would have to be evidenced by a record to be valid?
a. A power of attorney to close on a land transaction.
b. A power of attorney to close on the sale of a golf cart for $4,000.
c. A power of attorney to sign a six-month lease.
d. All of the above must be evidenced by a record for the agent to have authority.
100. Ellen Fishman was hired by Attics, Inc., a company that does attic refurbishments and redesigns, to evaluate attics,
provide homeowners with estimates, and, hopefully, sign them up with contracts for their attics. Ellen provided an
estimate of $11,000 to the Kornbluths for a redesign of their attic. Because she was new at the job, Ellen forgot the
demolition costs in the estimate. However, the Kornbluths signed a contract Ellen presented and put down a 10%
deposit of $1,100. Attics, Inc.’s president has refused to do the attic for anything less than $15,000, what the
estimate should have been. The Kornbluths have no experience with remodeling and had only one other estimate
for the refurbishment, which was $12,500.
a. Attics, Inc. need not perform the refurbishment because Ellen did not have authority for the bid or contract.
b. Attics, Inc. must perform the refurbishment for $11,000 because Ellen had authority to enter into the
contract.
c. Attics, Inc. need not perform the contract for $11,000 because Ellen made a mistake.
d. none of the above
101. Ellen Fishman was hired by Attics, Inc., a company that does attic refurbishments and redesigns, to evaluate
attics,provide homeowners with estimates, and, hopefully, sign them up with contracts for their attics. Ellen provided
an estimate of $11,000 to the Kornbluths for a redesign of their attic. Because she was new at the job, Ellen forgot
the demolition costs in the estimate. However, the Kornbluths signed a contract Ellen presented and put down a
10% deposit of $1100. Attics, Inc.’s president has refused to do the attic for anything less than $15,000, what the
estimate should have been. The Kornbluths have no experience with remodeling and had only one other estimate
for the refurbishment, which was $12,500. Attics, Inc. terminated Ellen. However, Ellen still had all the materials,
books, contract forms, and her card from Attics, Inc. Ellen went out and got three homeowners to sign contracts
for refurbishments for prices ranging from $15,000 to $22,000. Attics, Inc.:
a. need not perform any of the contracts because Ellen lacked authority.
b. need not perform any of the contracts because the termination ended all of Ellen’s authority.
c. must perform on the contracts because Ellen had lingering apparent authority.
d. both a and b
102. Ellen Fishman was hired by Attics, Inc., a company that does attic refurbishments and redesigns, to evaluate
attics,provide homeowners with estimates, and, hopefully, sign them up with contracts for their attics. Ellen provided
an estimate of $11,000 to the Kornbluths for a redesign of their attic. Because she was new at the job, Ellen forgot
the demolition costs in the estimate. However, the Kornbluths signed a contract Ellen presented and put down a
10% deposit of $1100. Attics, Inc.’s president has refused to do the attic for anything less than $15,000, what the
estimate should have been. The Kornbluths have no experience with remodeling and had only one other estimate
for the refurbishment, which was $12,500. Attics, Inc. terminated Ellen. However, Ellen still had all the materials,
books, contract forms, and her card from Attics, Inc. Ellen went out and got three homeowners to sign contracts
for refurbishments for prices ranging from $15,000 to $22,000. If Attics, Inc. performed the contracts Ellen
negotiated, it would:
a. need to take steps to terminate Ellen’s implied authority.
b. need to take steps to terminate Ellen’s apparent authority.
c. need not take any further steps because Ellen’s authority was terminated and it was just ratifying the
contracts.
d. none of the above
103. What is another term for an agency by estoppel?
a. implied agency authority
b. apparent agency authority
c. authority by custom
d. none of the above
104. Brian Weyland was an agent for Clothes Horse, Inc., a clothing manufacturer. Weyland’s job was to find new
designs and bring them to Clothes Horse for production. Weyland found a new style in women’s tops that he felt
would be a top seller. Weyland obtained licenses from the designer and began producing the tops through a
company of his own, Wey-Out Designs. Weyland:
a. is free to compete because he was an independent contractor.
b. has breached his duty of loyalty to Clothes Horse.
c. has done nothing wrong as long as he obtained the proper licenses.
d. both a and c
105. James Schoenberger interviewed for a position with the Chicago Transit Authority (CTA). He talked with the
person who would ultimately be his supervisor, Zu Christian, and was offered a salary of $19,300. Under CTA
procedures, only the Placement Department could give final salary figures. When Placement's figure for
Schoenberger was computed, it was lower, and Schoenberger sued for the higher figure. CTA claimed Zu Christian
had no authority to offer a particular salary. Discuss the legal issues in the case from both CTA's and
Schoenberger's perspectives.
106. Appendagez, Inc. is a Massachusetts corporation that manufactures jeans, tops, and sweaters under a line called
faded glory. Mr. Segal had been one of their salespeople. During a trade show, he signed orders with several
stores, but Appendagez did not ship because Segal was not their agent. Segal did, however, still have his display
samples and order forms. Is Appendagez required to fill the orders?
107. Novosel was an employee of Nationwide Insurance and had refused to engage in political lobbying efforts for
Nationwide. Novosel was terminated. Discuss Novosel's rights.
108. Discuss the requirements for ending an agency relationship.
109. What is the difference between implied authority and apparent authority?
110. Berth Ness signed a promissory note for the purchase of real estate in Arizona. Only his name appeared on the
note. Berth had acted as an agent for several corporations and Louise Ness in the past. Upon default, the payee of
the note brought suit to collect from the corporations and Louise. They claim Berth was not acting as their agent in
the transaction and they are, therefore, not liable. Who is correct?
111. Discuss the basic requirements for a non-compete agreement.
112. Discuss why the peer review procedure is successful in some companies.
113. As you contemplate the purchase of a computer that has been a store demonstrator, the manager of the store says,
"Look, take it. If it turns out to have problems, I'll take it back." Would the store manager have the authority to
make this promise?
114. Elizabeth Drake worked as a nanny for Kimba and Zeus Baird and cared for their 3 children each day from 8 AM
until 5:30 PM. At 10:00 AM each day, Elizabeth drove the Bairds' 3-year-old daughter to pre-school. On the way to
the pre-school last Tuesday, Elizabeth failed to stop at a stop sign and struck a UPS truck. Could UPS make a
claim against the Bairds?
115. Hayley Franken works at Big Burger after school and on weekends. With her heavy course load, her job and being
on the basketball team, Hayley finds that she is simply worn out most of the time. She has said to her manager at
work, " Sometimes I am not even sure how I drive myself home because I want to sleep so much." Hayley worked
a double shift at Big Burger and did not leave until 2 AM, 4 hours beyond her usual quitting time. On the way home,
she apparently dozed off and struck another car head-on and was killed. Her parents are suing Big Burger for
wrongful death. Discuss the liability issues.
116. Discuss the theories for employer liability on accidents caused by employees falling asleep when returning home
from work.
117. Aaron Smith, a junior at Yale, was a counselor at Camp Winipesaukee for the summer of 2007. Several of the
children, ages 8-12 reported to their parents that they had been physically assaulted by Aaron while they were at
camp. The children had signs of bruising and other injuries. The parents brought suit against Camp W, the
corporation that operated the camp for their children’s injuries. Camp W says that it is not liable because (a) it had
no knowledge of the assaults; (b) Aaron had not injured anyone in the past; and (c) what Aaron did was not within
his scope of employment as a camp counselor. Discuss the liability and defense issues in the case.
118. Zaney, Inc. operated Zaney’s Bar and Grill. An officer of the corporation instructed the bartender at Zaney’s to
“maintain order” at the bar. The bartender pulled out a gun and shot a patron because he was making advances to
the girl sitting next to him. Which of the following is correct?
a. Zaney’s Inc. is liable to the patron for the injuries caused by the bartender.
b. Zaney’s is not a principal because it is a corporation.
c. The bartender is not liable for the injuries to the patron because he was working for someone else at the
time.
d. Zaney’s is not liable for the injuries sustained by the patron.
119. Rami Essaid worked for a large computer security firm. As part of his employment agreement, he had been told
about and initialed on his contract a noncompete clause that prevented him from starting his own firm or working
for a competitor in the area of computer security for six months following his termination of employment, for
whatever reason. Rami quit his job and started his own firm that specializes in protecting websites from automated
computer programs, the same type of work that he was doing for his former employer. His former employer has
brought suit to stop Rami from operating his company for six months. Which of the following statements is
correct?
a. The noncompete clause is unenforceable because it inhibits his ability to earn a living.
b. The noncompete clause is unenforceable because it runs for too long a time period.
c. The noncompete clause is unenforceable because noncompete clauses are void.
d. The noncompete clause is enforceable.
120. The IRS is conducting an investigation of the construction industry because contractors routinely classify carpenters,
dry-wallers, and plumbers who work on all of their projects as independent contractors. These craftsmen report for
work on different jobs, but all of the jobs are managed by the same contracting firm. Which of the following will be
most important in determining whether the craftsmen are employees rather than independent contractors?
a. That they bring their own tools.
b. That they determine which jobs they will work on and which they will not.
c. That they are told to report for work on which days and at what time.
d. That they work for other contractors.
121. Jay Housel, an employee at Raytheon Aircraft Services, was injured when his supervisor blasted compressed air
into his backside while he was bending over his toolbox at the plant. Which of the following is correct about
Raytheon’s liability in this case?
a. Raytheon is not responsible for these kinds of intentional acts outside the scope of employment or that
involve misuse of company tools.
b. Raytheon could be responsible if it had knowledge of the supervisor’s prior misconduct.
c. Raytheon is liable for all injuries that occur in the workplace.
d. none of the above
122. Kay of Kay’s Realty was representing Tom Tutone, a well known singer and songwriter, in his purchase of a home
in Jackson Hole. She was to act as the buyer and then subsequently sign the property back over to Tom. The seller
of the home was not to be told that anyone but Kay would hold title to the property. Which of the following
statements is correct?
a. The transaction is illegal because of misrepresentation because information has been withheld from the
seller.
b. The transaction involves an undisclosed principal.
c. The transaction involves a partially disclosed principal.
d. Tom is not liable on the purchase agreements for any homes.
