A principal is not liable on any contract made by the agent


1. A principal is not liable on any contract made by the agent acting outside the scope of his or her authority.

A. True

B. False

2. An agency can terminate once its purpose is achieved

A. True

B. False

3. An agent has a duty to keep and make available to the principal an account of all property and funds received and paid out on behalf of the principal

A. True

B. False

4. An independent contractor is an employee

A. True

B. False

5. For an agent’s implied authority to be effective, aprincipal must ratify it

A. True

B. False

6. Big Drill Oil Company employees one hundred workers. Big Drill must do all of the following except

A. Report any work-related diseases directly to OSHA

B. Pay employees higher wages for working in more dangerous areas

C. Report any employee death due to a work-related incident to OSHA within eight hours

D. Keep occupational injury and illness records for each employee

7. Clerical Workers Union represents the employees of Miracle Medical Research Company. The management of the firm refuses to bargain with the union over the hiring of unnecessary workers. This violates

A. No federal or state law

B. Federal employment discrimination law

C. Federal labor law

D. State right-to-work laws

8. Clive works for Digby Excavation Corporation. While operating a backhoe, Clive will be compen-sated under state worker’s compensation laws only if

A. His injury was intentional

B. His injury was accidental

C. He does not have health insurance

D. He is completely disabled

9. Conrad and Delilah are employees of AgriBio Feed & Seed Corporation. Under the Equal Pay Act of 1963, AgriBio can legitimately pay different wages on the basis of

A. Seniority

B. Gender

C. Job descriptions

D. Substantial equality of skill, effort, and responsibility

10. During a union election campaign, Autowerks Repair, Inc., prohibits on-site solicitations by any party, including Mechanics Union, which is seeking the workers’ unionization. This violates

A. Federal employment discrimination law

B. Feferal elections law

C. Federal labor law

D. No federal law

11. During a union election campaign, Sapphire Blue Finance Company prohibits on-site solicitations by Credit Workers Union, which is seeking the worker’s unionization, while permitting charities to solicit the same workers. This violates

A. Federal labor law

B. Federal elections law

C. No federal law

D. Federal employment discrimination law

12. Employers are not allowed to interfere with employees’ efforts to form or join a union under

A. The fair Labor Standards Act

B. The employment-at-will doctrine

C. The National Labor Relations Act

D. The Civil Rights Act

13. Flynn is a drug addict who has completed a supervised drug-rehabilitation program. Gert used drugs casually in the past. Heath reports to work while under the influence of alcohol. Considered to have a disability under the Americans with Disabilities Act of 1990 is

A. Heath

B. Flynn

C. Gert

D. All of the choices

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Operation Management: A principal is not liable on any contract made by the agent
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