Business Law Multiple Choice Questions

1. A contract made by a minor is generally considered

(A) Valid

(B) Void

(C) Voidable

(D) Enforceable

2. The main purpose of business law is to

(A) Increase profits

(B) Regulate human conduct in business

(C) Promote government revenue

(D) Support advertising

3. An agreement enforceable by law is called a

(A) Proposal

(B) Promise

(C) Consideration

(D) Contract

4. The person who makes an offer is known as

(A) Acceptor

(B) Offeror

(C) Agent

(D) Partner

5. Consideration must move at the desire of

(A) Anyone

(B) The promisee

(C) A third party

(D) The promisor

6. Which of the following is NOT an essential element of a valid contract?

(A) Intention to create legal relations

(B) Lawful consideration

(C) Offer and acceptance

(D) Illegal object

7. A contract without consideration is

(A) Valid

(B) Voidable

(C) Void

(D) Legal

8. A contract made under coercion is

(A) Valid

(B) Void

(C) Illegal

(D) Voidable

9. A breach of contract means

(A) Performing the contract

(B) Failure to perform contractual obligations

(C) Cancelling the contract mutually

(D) Renewing a contract

10. Which term refers to using false statements to persuade another party?

(A) Coercion

(B) Fraud

(C) Undue influence

(D) Misrepresentation

11. The law governing partnership is usually called

(A) Partnership Act

(B) Company Law

(C) Sale of Goods Act

(D) Contract Act

12. A partner who contributes only capital and does not take part in management is

(A) Active partner

(B) Nominal partner

(C) Limited partner

(D) General partner

13. A company is created under

(A) Civil Law

(B) Company Law

(C) Contract Law

(D) Criminal Law

14. The liability of shareholders in a company is

(A) Unlimited

(B) Joint and several

(C) Limited

(D) Vicarious

15. A prospectus is issued by a

(A) Partnership firm

(B) Private company

(C) Public company

(D) Proprietorship

16. The document that defines the scope of a company’s activities is

(A) Memorandum of Association

(B) Articles of Association

(C) Certificate of Incorporation

(D) Share certificate

17. A negotiable instrument does NOT include

(A) Promissory note

(B) Cheque

(C) Invoice

(D) Bill of exchange

18. A cheque becomes stale after

(A) 3 months

(B) 1 month

(C) 6 months

(D) 12 months

19. The transfer of ownership in goods under the Sale of Goods Act is called

(A) Agreement

(B) Hire

(C) Sale

(D) Lease

20. A contract of indemnity involves

(A) Guaranteeing a debt

(B) Compensation for loss

(C) Sale of goods

(D) Transfer of property

21. An agent acts on behalf of the

(A) Principal

(B) Government

(C) Customer

(D) Court

22. The term “caveat emptor” means

(A) Let the seller beware

(B) Let the agent beware

(C) Let the buyer beware

(D) Let the court decide

23. A contract becomes void when

(A) It is fully performed

(B) Both parties agree

(C) It is lawful

(D) It is impossible to perform

24. A minor can act as

(A) An agent

(B) A principal

(C) A partner

(D) A guarantor

25. When goods are delivered on approval, the sale is completed when the buyer

(A) Returns the goods

(B) Accepts the goods

(C) Rejects the goods

(D) Damages the goods

26. The relationship between partners is based on

(A) Custom

(B) Tort

(C) Contract

(D) Gift

27. A person who reconstitutes a firm without forming a new one is dealing with

(A) Dissolution

(B) Winding up

(C) Reconstitution

(D) Registration

28. The penalty for dishonor of cheque is covered under

(A) Negotiable Instruments law

(B) Company Act

(C) Partnership Act

(D) Sale of Goods Act

29. In business law, “voidable” means

(A) Enforceable until avoided

(B) Never enforceable

(C) Illegal

(D) Always valid

30. Agency can be created by

(A) Fraud only

(B) Accident

(C) Operation of law

(D) Anonymous consent