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BUS9 topics297 practice questions

NextGen Bar Exam Business Associations.

Agency, partnerships, corporations and LLCs, fiduciary duties, and veil-piercing.

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All 9 topics in Business Associations

Scope-aligned

★ marks the 4 topics NCBE flags at memorize level — know these cold; the rest lean on provided materials and reasoning.

  1. 01

    Agency & Authority★

    Creation of agency; actual and apparent authority to bind the principal; the agent's duties of care and loyalty; the agent's liability to third parties on disclosed, partially disclosed, and undisclosed principal contracts; and termination.

    Free
  2. 02

    Vicarious Liability★

    Respondeat superior and a principal's vicarious liability for an agent's acts, joint-venture liability, and the distinction between employees and independent contractors.

  3. 03

    Partnerships

    Formation, management, and control of general partnerships: de facto treatment of improperly formed entities, general partners' authority, partnership agreements, partners by estoppel, and dissolution.

  4. 04

    Corporations & LLCs: Formation

    Formation of corporations and LLCs: incorporation documents, bylaws, and shareholder agreements; LLC certificates of organization and operating agreements; de facto corporations and corporation by estoppel.

  5. 05

    Promoters

    Corporate promoters: personal liability for pre-organization contracts, fiduciary duties owed to the corporation to be formed, and adoption, ratification, novation, and release.

  6. 06

    Management & Control

    Management and control of corporations and LLCs: powers and rights of shareholders, directors, and officers; authority of LLC members and managers under default statutory rules and permitted private ordering.

  7. 07

    Fiduciary Duties★

    Fiduciary duties of care and loyalty owed by general partners, corporate officers and directors, and LLC members and managers, including the business judgment rule.

  8. 08

    Shareholder & Member Litigation

    Direct and derivative litigation — identifying who is suing whom and the requirements that distinguish the two forms of action.

  9. 09

    Liability & Veil-Piercing★

    Liability rules for general partners (RUPA 1997), corporate officers and directors (MBCA 2016), and LLC members and managers (ULLCA 2013), plus piercing the veil of limited liability.

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4 sample BUS questions

Real questions from the Business Associations bank, with the full explanation. The paid bank covers all 9 topics and difficulty levels.

A retiree is leaving for a three-month cruise and asks her neighbor, a college student, to sell her vintage motorcycle while she is away. She says, "List it, show it to buyers, and sign the bill of sale for anything over $8,000." The neighbor agrees but refuses any payment, saying he is glad to help. Nothing is put in writing. While the retiree is at sea, the neighbor negotiates with an interested buyer and signs a bill of sale for $9,200 in the retiree's name.

Which fact best supports the conclusion that an agency relationship existed between the retiree and the neighbor?

  1. The neighbor, rather than the retiree, was the one who physically signed the bill of sale.
  2. The retiree asked the neighbor to act on her behalf and under her direction, and he agreed. Correct
  3. The motorcycle ultimately sold for more than the $8,000 minimum the retiree had specified.
  4. The arrangement between the retiree and the neighbor was never put into a written contract.
Why: Agency arises from four elements: the principal's manifestation of assent, action on the principal's behalf, the principal's right of control, and the agent's consent. The retiree asked the neighbor to sell her motorcycle for her, on her terms, and he agreed — so all four are present, making B correct. A describes how the neighbor performed the task; signing in the principal's name is a consequence of agency, not its source. C is irrelevant to formation: the sale price bears on whether the neighbor stayed within his authority, not on whether an agency arose. D states a true fact but draws the wrong inference — agency needs no writing and no consideration, so the absence of a written contract does not defeat it. The gratuitous, informal nature of the deal is fully consistent with agency.

A 16-year-old works weekends at an art gallery owned by a collector. The collector, who is fully competent, authorizes the teenager to negotiate and accept offers on paintings up to $5,000 while the collector attends an out-of-state fair. The teenager agrees. A visitor offers $4,500 for a landscape, and the teenager accepts on the gallery's behalf and takes a deposit. The collector later refuses to honor the sale, arguing that a minor cannot form a binding contract and therefore could not bind the gallery.

Is the collector's argument that the teenager's age prevents the gallery from being bound correct?

  1. Yes, because a minor lacks the legal capacity needed to enter a contract on another's behalf.
  2. Yes, because the collector was outside the state when the teenager accepted the offer.
  3. No, because a principal with capacity may act through an agent who has only minimal capacity. Correct
  4. No, because the collector ratified the sale by accepting the visitor's deposit.
Why: The principal must have capacity to do the act the agent performs, but the agent needs only minimal capacity — so a minor can serve as an agent. The competent collector authorized the teenager to sell within a set limit, and the teenager did exactly that, so the gallery is bound, making C correct. A states the trap backwards: the minor's own contractual incapacity is irrelevant because the minor is not contracting for himself, only exercising the principal's capacity. B invents a geography rule; the principal's location has no bearing on the agent's authority. D reaches the right result for the wrong reason — the collector never knowingly accepted the deposit as his own after learning the facts, so there was no ratification; the sale binds because valid actual authority existed all along.

A small the state coffee roaster hires a manager and tells her in a signed memo, "You may purchase green coffee beans on the company's credit for up to $10,000 per order." The manager places an order with a supplier for $7,500 of beans, signing on the roaster's behalf. The roaster receives the beans but, facing a cash shortage, refuses to pay, claiming the manager had no power to commit the company because the owner never personally approved this particular order.

Did the manager have actual authority to bind the roaster to the $7,500 order?

  1. Yes, because the roaster's written instruction expressly authorized purchases within that limit. Correct
  2. Yes, because the manager reasonably appeared to the supplier to run the roaster's operations.
  3. No, because the owner did not personally approve this specific purchase order beforehand.
  4. No, because express authority must be renewed in writing for each individual order placed.
Why: Express actual authority exists when the principal's own words tell the agent she may act. The signed memo authorized bean purchases up to $10,000 per order, and a $7,500 order falls squarely within that grant, so the manager had actual authority and the roaster is bound (A). B describes apparent authority — how things looked to the supplier — which is a different route and unnecessary here because actual authority plainly existed. C misunderstands express authority: a standing instruction covers every order within its terms, so no order-by-order sign-off is required. D invents a renewal requirement; authority granted for purchases "up to $10,000 per order" continues to govern repeated orders until it is revoked. The manager acted within the four corners of her written authority.

A regional bank seats an employee at a desk labeled "Loan Officer" in its the state branch and lists her on its website as authorized to approve consumer loans. A customer applies for a $15,000 auto loan, and the loan officer signs a commitment letter on the bank's letterhead approving it. Unknown to the customer, the branch had internally capped this officer's approvals at $10,000 that week. The bank now refuses to fund the loan, pointing to the internal cap.

On what basis is the bank most likely bound to honor the loan commitment?

  1. The loan officer expressly told the customer that she had authority to approve the loan.
  2. The customer relied on the loan officer's own statement that the loan had been approved.
  3. The bank and the customer had a prior course of dealing on several similar consumer loans.
  4. The bank held the officer out in a role customers reasonably trust to approve such loans. Correct
Why: Apparent authority arises when a third party reasonably believes the agent is authorized and that belief is traceable to the principal's own manifestations — here the bank's acts of seating the employee as a "Loan Officer" and advertising her authority online. Those manifestations, not the officer's words, make the customer's belief reasonable, so the bank is bound (D). A rests on the agent's own statement, which cannot by itself create apparent authority; the manifestation must come from the principal. B likewise relies on the officer's assurance rather than anything the bank communicated. C invents a prior course of dealing the facts do not supply, and none is needed. The secret internal cap does not shrink the apparent authority the bank created by holding the officer out in that role.
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Common questions

Business Associations FAQs

Agency, partnerships, corporations and LLCs, fiduciary duties, and veil-piercing. The published content scope breaks it into 9 topics, examined through both MCQ formats plus integrated question sets and performance tasks.
9. Our notes are mapped one-to-one against NCBE's published content scope, and starred topics mark what NCBE flags at memorize level.
Active recall beats re-reading. Read the notes once, then practice exam-format questions in mixed order, then revisit weak topics. Our weak-area tracker surfaces the topics dragging your accuracy down.
Yes. The free diagnostic quiz is open to everyone, free accounts get the first topic of every subject — notes included — plus 5 premium questions a day. The full BUS bank (297 questions today) is unlocked with a one-time purchase and covered by the 14-day money-back guarantee.
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