BUS 206
Business Law I
MIDTERM READINESS EXAM
GUIDE
Q&S
©2024/2025
,1. Question: Which of the following is NOT an essential
element of a valid contract?
a) Offer
b) Consideration
c) Intention to create legal relations
d) Timing of performance
Answer: d) Timing of performance
Rationale: While timing can be a factor in performance,
it is not an essential element of a valid contract. The
essential elements are offer, acceptance, consideration,
and intention to create legal relations.
2. Question: What type of business entity limits the
personal liability of its owners?
a) Sole proprietorship
b) General partnership
c) Corporation
d) Limited liability company (LLC)
Answer: c) Corporation
Rationale: Both corporations and LLCs protect owners
from personal liability for business debts, unlike sole
proprietorships and general partnerships.
3. Question: In tort law, which doctrine holds an employer
liable for the negligent acts of employees performed within
the scope of employment?
a) Res ipsa loquitur
b) Vicarious liability
c) Strict liability
©2024/2025
, d) Contributory negligence
Answer: b) Vicarious liability
Rationale: Vicarious liability is a legal doctrine that
assigns liability to an employer for the negligent acts of its
employees during the course of their employment.
4. Question: An invitation to treat is best defined as:
a) A formal offer to enter into a contract
b) Preliminary negotiations before a contract is formed
c) The final acceptance of contract terms
d) A contract that is binding from the moment of
acceptance
Answer: b) Preliminary negotiations before a contract
is formed
Rationale: An invitation to treat is not an offer but a
signal that one party is willing to negotiate and may lead to
an agreement.
5. Question: Which of the following is considered an
unfair trade practice?
a) Price fixing
b) Product warranty
c) Consumer advertising
d) Offering discounts
Answer: a) Price fixing
Rationale: Price fixing is illegal as it restricts
competition and is considered an unfair trade practice that
contravenes antitrust laws.
### Fill-in-the-Blank Questions
©2024/2025
Business Law I
MIDTERM READINESS EXAM
GUIDE
Q&S
©2024/2025
,1. Question: Which of the following is NOT an essential
element of a valid contract?
a) Offer
b) Consideration
c) Intention to create legal relations
d) Timing of performance
Answer: d) Timing of performance
Rationale: While timing can be a factor in performance,
it is not an essential element of a valid contract. The
essential elements are offer, acceptance, consideration,
and intention to create legal relations.
2. Question: What type of business entity limits the
personal liability of its owners?
a) Sole proprietorship
b) General partnership
c) Corporation
d) Limited liability company (LLC)
Answer: c) Corporation
Rationale: Both corporations and LLCs protect owners
from personal liability for business debts, unlike sole
proprietorships and general partnerships.
3. Question: In tort law, which doctrine holds an employer
liable for the negligent acts of employees performed within
the scope of employment?
a) Res ipsa loquitur
b) Vicarious liability
c) Strict liability
©2024/2025
, d) Contributory negligence
Answer: b) Vicarious liability
Rationale: Vicarious liability is a legal doctrine that
assigns liability to an employer for the negligent acts of its
employees during the course of their employment.
4. Question: An invitation to treat is best defined as:
a) A formal offer to enter into a contract
b) Preliminary negotiations before a contract is formed
c) The final acceptance of contract terms
d) A contract that is binding from the moment of
acceptance
Answer: b) Preliminary negotiations before a contract
is formed
Rationale: An invitation to treat is not an offer but a
signal that one party is willing to negotiate and may lead to
an agreement.
5. Question: Which of the following is considered an
unfair trade practice?
a) Price fixing
b) Product warranty
c) Consumer advertising
d) Offering discounts
Answer: a) Price fixing
Rationale: Price fixing is illegal as it restricts
competition and is considered an unfair trade practice that
contravenes antitrust laws.
### Fill-in-the-Blank Questions
©2024/2025
