1. In which case is an offer irrevocable?

When the offeree has not made any preparations before accepting the offer

When the offeree has partly acted upon the offer

When the offer is not in the form of an option contract

When the offeree’s response contradicts the offer even minimally

2. What does the mailbox rule, in the context of common law contracts, state?

An offeror cannot revoke his or her offer under any circumstance.

An offeror must receive a written document of acceptance by the offeree in order for an offer to be considered accepted.

An offeree is said to have accepted an offer as soon as he or she dispatches the acceptance

An offeree can use any method of acceptance, even if it has not been specified by the offeror.

3. Which of the following meets the consideration requirement of contracts?

When a promiser pledges to perform a legal duty

When a promisee gives up a legal right

When a promiser gifts a property of high value to someone

When a promisee provides a gift for a favor done in the past

4. When does fraudulent misrepresentation occur in the context of contracts?

When one party to a contract unintentionally fails to notice an error in the express terms of the contract

When one party to a contract knowingly provides only puffing and not facts in the contract

When one party to a contract knowingly distorts a material fact in the contract

When one party to a contract unintentionally conceals one of the facts in the terms of the contract

5. Mr. Sanchez is a 70 year old man with Parkinson’s disease. Jennifer, a full time nurse, has been taking care of him for over four years. Mr. Sanchez depends on Jennifer and considers her to be a trustworthy caregiver. However, Jennifer informs Mr. Sanchez that she can no longer be his caregiver unless he promises to leave his estate to her in his will. Since Mr. Sanchez does not have anyone else to care for him, he accepts this agreement. Under which condition would a court of law allow Mr. Sanchez to void this agreement?

Fraudulent misrepresentation

Slander

Unconscionability

Undue influence

6. Which defense can be used when one party to an agreement threatens violence against another party to the agreement to persuade the latter to modify the agreement?

Fraudulent misrepresentation

Duress

Unconscionability

Undue influence

7. What is true about the statute of frauds for common law contracts?

It mandates that all forms of contract be in writing.

It creates specific formats in which parties are required to write contracts.

It is applicable to contracts that cannot be performed in less than one year.

It is not pertinent to contracts pertaining to the sale of land.

8. According to the statute of frauds, what is one component that is consistently required for a contract to be valid?

A signature of the party against whom the contract is to be enforced

Written evidence of the contract

A prescribed format for the written contract

The signatures of at least three witnesses to the contract

9. To which of the following common law contracts will the statue of frauds best apply?

A license contract of three weeks duration

A sale of goods contract involving an amount of $400

A lease transaction involving an amount of $2500

A supplier contract of six months’ duration

10. Gadgetbug Corp. and Alba Inc. are two companies that have entered into a contract. According to the terms of this contract, if any one party breaches the contract, it will pay the nonbreaching party a fixed amount of $50,000. What type of remedy for contract breaches is best illustrated in the scenario?

Compensatory damages

Consequential damages

Liquidation damages

Restitution

11. In the context of remedies to breach of contract, what is true about compensatory damages?

They essentially cover foreseeable indirect losses.

They are estimated by the two parties who enter into a contract, even before a breach occurs.

They may include the potential profits payable to a nonbreaching party, if the contract had not been breached.

They intend to put a nonbreaching party in a much more advantageous position than it was in before the contract was breached.

12. Identify the type of remedy for contract breaches in which a nonbreaching party also recovers damages for foreseeable indirect losses.

Compensatory damages

Consequential damages

Restitution

Liquidated damages

13. Identify the type of equitable remedy in which a court orders a party to refrain from taking a particular action.

Injunctive relief

Restitution

Reformation

Consequential damages

14. Adrian, who runs a café, has a contract with Mariam, who is a supplier. The contract states that Mariam will provide hundred cartons of cocoa powder to Adrian every week for a set price. However, after making the contract, Mariam realizes that there is an error in it. The price is much lower than had been agreed. Mariam decides to have the terms of contract changed. The court rules that the price term of the contract be revised. What type of remedy is illustrated in the scenario?

Restitution

Consequential damages

Injunctive relief

Reformation

15. What is true about specific performance as an equitable remedy for contract breaches?

It requires the breaching party to pay extra damages for not performing the terms of the contract.

It is the most commonly adopted remedy for most cases involving the sale of goods.

It requires the breaching party to take action to ensure that the promised performance is delivered

It requires the breaching party to also pay damages for indirect losses that the nonbreaching party incurred because of lack of performance.

16. What is true about the formation of a sole proprietorship?

It requires a very high fee during formation.

It is taxed as a separate entity.

It requires no annual filings.

It must operate exclusively at one location

17. Identify the true statement about general partnerships.

They are essentially created by filing a form with the government

They are always formed by parties who have the intention to form a partnership.

They require the partners to assume liability for the debts of the partnership.

They require ownership rights to be sold through public markets

18. Anita and Sameera own a salon together. Anita manages the business and takes management decisions herself. On the other hand, Sameera has only invested capital in the business. According to the agreement, Anita assumes responsibility for all the debts and liabilities of the salon, but Sameera is liable only for the amount that she contributed to the business. What type of business form is illustrated in the scenario, assuming necessary documents are filed with the appropriate jurisdiction?

A limited liability partnership

A general partnership

A sole proprietorship

A corporation

19. Which statement is true in the context of limited liability companies (LLCs)?

The principals of LLCs do not receive any liability protection.

The principals of LLCs can opt for pass through tax treatment.

The principals of LLCs are required to file extensive articles during the formation stage.

The principals of LLCs are not subject to any fiduciary duties of loyalty

20. What is a characteristic of a manager managed limited liability company (LLC)?

All the members participate in business operations.

A person who is not an invested member is selected to manage the business.

Only an appointed member can look after business operations.

All the members have the authority to act on the LLC’s behalf.

21. Which of the following business firms is most likely to be a limited liability partnership (LLP)?

Aries Pharmaceuticals can only be taxed as a separate legal entity.

Red Communications has two owners who assume complete responsibility for all the debts and obligations of the company.

Image Agency is owned and managed by only one individual

Libra Electronics was formed when its owners filed a statement of qualification with the appropriate public official

22. Which of the following statements is true about corporations?

Their formation is governed only by federal statutes

Their obligations are separate from the personal obligations of their principals.

Their structure, functioning, and ownership issues are not governed by any law.

They cannot be sued and are not authorized to file suits.

23. What is one of the characteristics of a typical privately held corporation?

No limit in terms of revenue

Lack of flexibility in internal management

Large numbers of shareholders

Several shareholders that are financial institutions

24. Identify the true statement about corporations.

Public corporations do not have any owners.

Publicly held corporations are not subject to regulation or scrutiny by federal or state agencies

Professional corporations frequently sell ownership interests to the general public.

Alien corporations are formed in the United States by principals from other countries