Bar Exam (Uniform) Quiz: Authority Types

You represent a client who owns a construction company. The company fired a project manager for poor performance. The company immediately deactivated the manager's email and building access but failed to collect his company-branded truck and business cards. A week later, the former manager, using the truck and cards, went to a long-time lumber supplier. He placed a large order for materials on the company's credit account, stating it was for a new project. The supplier, who had dealt with the manager for years and was unaware of his termination, filled the order.

What is your client's strongest argument for not being liable for the lumber order? Select one.

A farmer hired a ranch hand to manage his cattle operation. The employment contract expressly authorized the ranch hand to purchase feed and veterinary supplies. One day, a severe and unexpected blizzard struck. The cattle were in a remote pasture, and the ranch hand realized they would likely freeze without immediate shelter. Unable to contact the farmer, the ranch hand contracted with a local construction company to erect a temporary emergency shelter, costing $8,000. This action was not mentioned in his employment contract.

Is the farmer liable for the $8,000 cost of the shelter? Select one.

The president of a small, closely-held corporation, without consulting the other two shareholders/directors, signed a contract to sell the building that housed the company's entire operations. The corporate charter requires unanimous director approval for the sale of substantially all corporate assets. The buyer, a sophisticated real estate investor, knew the seller was a corporation and that the seller's business operated out of the building but did not inquire about the president's authority to make the sale.

What is the strongest basis for the corporation to void the sale contract? Select one.

A woman gave her friend a specific power of attorney, properly executed and in writing, authorizing him to sell her vintage car for a price "no less than $50,000." The friend, while negotiating with a potential buyer, was offered $48,000 in cash. The friend accepted, believing the certainty of the cash sale was better for the woman than holding out for a higher, uncertain price. He signed the bill of sale as "[Friend's Name], as agent for [Woman's Name]." The buyer was not shown the power of attorney document but knew the friend was acting as an agent.

Is the woman bound by the contract to sell the car for $48,000? Select one.

A client, the sole proprietor of a custom furniture business, authorized her lead carpenter to purchase a specific type of rare hardwood from a supplier. She instructed him, "Buy the lumber, but do not agree to any long-term supply contracts." The carpenter went to the supplier and purchased the wood. The supplier then offered a 10% discount on all future orders if the business would sign a one-year exclusive supply agreement. Believing it was a good deal, the carpenter signed the agreement on behalf of the business. The supplier was unaware of the owner's specific instructions.

On what basis would the supplier have the strongest argument to enforce the one-year exclusive supply agreement? Select one.

The president of a small, closely-held corporation, without consulting the other two shareholders/directors, signed a contract to sell the building that housed the company's entire operations. The corporate charter requires unanimous director approval for the sale of substantially all corporate assets. The buyer, a sophisticated real estate investor, knew the seller was a corporation and that the seller's business operated out of the building but did not inquire about the president's authority to make the sale.

What is the strongest basis for the corporation to void the sale contract? Select one.

A chef owned a restaurant and employed a purchasing agent to buy fresh produce daily. The chef told the agent, "Only buy organic produce from Green Farms." For a year, the agent did so. One day, Green Farms had a fire and could not make its delivery. To ensure the restaurant could open for dinner, the agent purchased produce of similar quality and price from a different supplier, Quality Produce. The chef was angry about the purchase and refused to pay the invoice from Quality Produce.

Is the chef liable to Quality Produce for the cost of the produce? Select one.

You are advising a client who runs a small publishing house. The house's chief editor, whose job is to acquire manuscripts, attended a writers' conference. At the conference, she signed a contract with a famous author, promising a $500,000 advance. The editor's employment agreement, which the author has never seen, caps her authority to offer advances at $100,000. However, the publishing house's website and marketing materials describe the chief editor as having "full authority to acquire and contract for our next bestseller."

What is the most likely reason the publishing house would be bound by the $500,000 contract? Select one.

The board of directors of a manufacturing company passed a resolution authorizing its CEO to "negotiate and execute all contracts necessary for the acquisition of a new warehouse facility in the city." The CEO located a suitable warehouse and signed a purchase contract. As part of the deal, to secure favorable terms, the CEO also signed a separate five-year agreement with the seller's logistics company to handle all shipping from that new facility. The board was unaware of this secondary agreement.

Is the manufacturing company likely bound by the five-year logistics agreement? Select one.

A partner in a general partnership that operates an accounting firm signed a contract to purchase a high-performance sports car in the partnership's name. The partnership agreement requires a majority vote for any asset purchase over $25,000 that is not in the ordinary course of business. The car cost $150,000. The car dealership's owner knew the purchaser was a partner in the firm but did not inquire about the purpose of the car or the partner's specific authority.

Is the partnership likely liable for the contract to purchase the sports car? Select one.

You represent a client who owns a construction company. The company fired a project manager for poor performance. The company immediately deactivated the manager's email and building access but failed to collect his company-branded truck and business cards. A week later, the former manager, using the truck and cards, went to a long-time lumber supplier. He placed a large order for materials on the company's credit account, stating it was for a new project. The supplier, who had dealt with the manager for years and was unaware of his termination, filled the order.

What is your client's strongest argument for not being liable for the lumber order? Select one.

A real estate developer hired an agent to acquire several parcels of land for a new project. The agency agreement was in writing and specified that the agent was authorized to offer up to $200,000 per acre. The agent approached a landowner and, during negotiations, falsely stated, "The developer has authorized me to go as high as $250,000 per acre, so my offer of $230,000 is a great deal for you." The landowner, relying on this statement, accepted the $230,000 offer. The developer had made no representations of any kind directly to the landowner.

Is the developer legally obligated to purchase the land for $230,000 per acre? Select one.

A farmer hired a ranch hand to manage his cattle operation. The employment contract expressly authorized the ranch hand to purchase feed and veterinary supplies. One day, a severe and unexpected blizzard struck. The cattle were in a remote pasture, and the ranch hand realized they would likely freeze without immediate shelter. Unable to contact the farmer, the ranch hand contracted with a local construction company to erect a temporary emergency shelter, costing $8,000. This action was not mentioned in his employment contract.

Is the farmer liable for the $8,000 cost of the shelter? Select one.

You are advising a client who runs a small publishing house. The house's chief editor, whose job is to acquire manuscripts, attended a writers' conference. At the conference, she signed a contract with a famous author, promising a $500,000 advance. The editor's employment agreement, which the author has never seen, caps her authority to offer advances at $100,000. However, the publishing house's website and marketing materials describe the chief editor as having "full authority to acquire and contract for our next bestseller."

What is the most likely reason the publishing house would be bound by the $500,000 contract? Select one.

A woman gave her friend a specific power of attorney, properly executed and in writing, authorizing him to sell her vintage car for a price "no less than $50,000." The friend, while negotiating with a potential buyer, was offered $48,000 in cash. The friend accepted, believing the certainty of the cash sale was better for the woman than holding out for a higher, uncertain price. He signed the bill of sale as "[Friend's Name], as agent for [Woman's Name]." The buyer was not shown the power of attorney document but knew the friend was acting as an agent.

Is the woman bound by the contract to sell the car for $48,000? Select one.

Your client retained an attorney to represent her in a personal injury lawsuit. The client specifically instructed the attorney, "Do not accept any settlement offer under $50,000 without my final approval." During a pretrial conference with opposing counsel and the judge, the attorney received an offer of $45,000. Believing it was the best possible outcome, the attorney accepted the offer on the record, stating, "My client has authorized me to accept this amount." Opposing counsel had no knowledge of the specific limitation on the attorney's authority.

Is your client likely bound by the $45,000 settlement? Select one.

You are representing a client, a grain supplier. Your client was approached by a man who claimed to be the purchasing agent for a large farming cooperative. The man provided a business card with the co-op's logo and his title. He negotiated and signed a large purchase order on behalf of the co-op. In fact, the man had never been employed by the co-op; he had simply printed fake business cards. The co-op had no knowledge of the man or his actions until your client sent an invoice.

Is the farming cooperative liable for the purchase order? Select one.

A client, the sole proprietor of a custom furniture business, authorized her lead carpenter to purchase a specific type of rare hardwood from a supplier. She instructed him, "Buy the lumber, but do not agree to any long-term supply contracts." The carpenter went to the supplier and purchased the wood. The supplier then offered a 10% discount on all future orders if the business would sign a one-year exclusive supply agreement. Believing it was a good deal, the carpenter signed the agreement on behalf of the business. The supplier was unaware of the owner's specific instructions.

On what basis would the supplier have the strongest argument to enforce the one-year exclusive supply agreement? Select one.

The owner of an art gallery told her assistant to sell a specific painting, instructing him, "Don't sell it for less than $10,000." Later that day, the owner discovered the painting was a rare work by a famous artist and was worth at least $100,000. She immediately called the assistant's cell phone and left a voicemail, "Do not sell the painting! I've learned it's very valuable. Pull it from the floor immediately." The assistant's phone was off, and he did not receive the message. An hour later, he sold the painting to a collector for $11,000.

At the moment the assistant sold the painting, what was the status of his authority? Select one.

You are representing a client, a grain supplier. Your client was approached by a man who claimed to be the purchasing agent for a large farming cooperative. The man provided a business card with the co-op's logo and his title. He negotiated and signed a large purchase order on behalf of the co-op. In fact, the man had never been employed by the co-op; he had simply printed fake business cards. The co-op had no knowledge of the man or his actions until your client sent an invoice.

Is the farming cooperative liable for the purchase order? Select one.