LATEST BUSINESS LAW PAST PAPERS (ESSAY + MCQs)
COMPLETE EXAM QUESTIONS AND CORRECT ANSWERS
2026.
1. Which of the following is an essential element of a valid contract?
A. Social agreement
B. Intention to create legal relations
C. Written documentation
D. Witness signatures
Correct Answer: B
Rationale: A valid contract requires intention to create legal relations; social
agreements typically lack this intention, while writing and witnesses are not always
mandatory.
2. An offer can best be described as:
A. A willingness to negotiate
B. A final expression of willingness to contract on specific terms
C. A statement of price
D. A request for information
Correct Answer: B
Rationale: An offer is a definite promise to be bound once accepted; negotiation or
inquiries do not constitute offers.
3. Which of the following terminates an offer?
A. Counteroffer
B. Silence
C. Inquiry
D. Request for clarification
Correct Answer: A
Rationale: A counteroffer rejects and replaces the original offer; silence or inquiries
do not terminate offers.
4. Consideration in contract law refers to:
A. Moral obligation
B. Past benefit
C. Something of value exchanged between parties
D. Written agreement
Correct Answer: C
Rationale: Consideration is the value exchanged; moral obligations and past
consideration are generally insufficient.
,5. Which contract is void from the beginning?
A. Voidable contract
B. Illegal contract
C. Valid contract
D. Executed contract
Correct Answer: B
Rationale: Illegal contracts are void ab initio, unlike voidable contracts which may be
enforced until rescinded.
6. A contract entered into under duress is:
A. Void
B. Voidable
C. Illegal
D. Unenforceable
Correct Answer: B
Rationale: Contracts under duress are voidable at the option of the aggrieved party.
7. Misrepresentation makes a contract:
A. Automatically void
B. Voidable
C. Illegal
D. Enforceable without remedy
Correct Answer: B
Rationale: Misrepresentation allows the innocent party to rescind the contract or seek
damages.
8. Which of the following is not a type of misrepresentation?
A. Fraudulent
B. Negligent
C. Innocent
D. Intentional silence
Correct Answer: D
Rationale: Silence is generally not misrepresentation unless there is a duty to
disclose.
9. The doctrine of privity of contract means:
A. Only courts can enforce contracts
B. Only parties to a contract can sue on it
C. Contracts must be written
D. Contracts require witnesses
Correct Answer: B
Rationale: Only parties involved in a contract have rights and obligations under it.
,10. A minor’s contract is generally:
A. Fully enforceable
B. Void
C. Voidable
D. Illegal
Correct Answer: B
Rationale: Contracts with minors are generally void to protect them from
exploitation.
11. Which remedy aims to restore parties to their original position?
A. Damages
B. Specific performance
C. Rescission
D. Injunction
Correct Answer: C
Rationale: Rescission cancels the contract and restores parties to pre-contract status.
12. Specific performance is:
A. Monetary compensation
B. Court order to perform contractual obligations
C. Termination of contract
D. Criminal penalty
Correct Answer: B
Rationale: It compels a party to fulfill contractual duties, usually when damages are
inadequate.
13. An invitation to treat is:
A. A binding offer
B. A preliminary communication inviting offers
C. A contract
D. A legal obligation
Correct Answer: B
Rationale: Invitations to treat encourage others to make offers, not binding promises.
14. Which case best represents invitation to treat?
A. Auction sale
B. Advertisement
C. Signed agreement
D. Loan contract
, Correct Answer: B
Rationale: Advertisements are generally invitations to treat, not offers.
15. Acceptance must be:
A. Conditional
B. Qualified
C. Absolute and unqualified
D. Delayed
Correct Answer: C
Rationale: Acceptance must match the offer exactly to form a contract.
16. Postal rule applies when:
A. Offer is made
B. Acceptance is posted
C. Contract is signed
D. Payment is made
Correct Answer: B
Rationale: Acceptance is effective once posted, not when received.
17. Capacity to contract excludes:
A. Adults
B. Companies
C. Persons of unsound mind
D. Government entities
Correct Answer: C
Rationale: Persons of unsound mind lack legal capacity to contract.
18. A contract for illegal purpose is:
A. Valid
B. Void
C. Voidable
D. Enforceable
Correct Answer: B
Rationale: Contracts with illegal objectives are void and unenforceable.
19. Which of the following is a remedy for breach of contract?
A. Arbitration
B. Damages
C. Negotiation
D. Mediation
COMPLETE EXAM QUESTIONS AND CORRECT ANSWERS
2026.
1. Which of the following is an essential element of a valid contract?
A. Social agreement
B. Intention to create legal relations
C. Written documentation
D. Witness signatures
Correct Answer: B
Rationale: A valid contract requires intention to create legal relations; social
agreements typically lack this intention, while writing and witnesses are not always
mandatory.
2. An offer can best be described as:
A. A willingness to negotiate
B. A final expression of willingness to contract on specific terms
C. A statement of price
D. A request for information
Correct Answer: B
Rationale: An offer is a definite promise to be bound once accepted; negotiation or
inquiries do not constitute offers.
3. Which of the following terminates an offer?
A. Counteroffer
B. Silence
C. Inquiry
D. Request for clarification
Correct Answer: A
Rationale: A counteroffer rejects and replaces the original offer; silence or inquiries
do not terminate offers.
4. Consideration in contract law refers to:
A. Moral obligation
B. Past benefit
C. Something of value exchanged between parties
D. Written agreement
Correct Answer: C
Rationale: Consideration is the value exchanged; moral obligations and past
consideration are generally insufficient.
,5. Which contract is void from the beginning?
A. Voidable contract
B. Illegal contract
C. Valid contract
D. Executed contract
Correct Answer: B
Rationale: Illegal contracts are void ab initio, unlike voidable contracts which may be
enforced until rescinded.
6. A contract entered into under duress is:
A. Void
B. Voidable
C. Illegal
D. Unenforceable
Correct Answer: B
Rationale: Contracts under duress are voidable at the option of the aggrieved party.
7. Misrepresentation makes a contract:
A. Automatically void
B. Voidable
C. Illegal
D. Enforceable without remedy
Correct Answer: B
Rationale: Misrepresentation allows the innocent party to rescind the contract or seek
damages.
8. Which of the following is not a type of misrepresentation?
A. Fraudulent
B. Negligent
C. Innocent
D. Intentional silence
Correct Answer: D
Rationale: Silence is generally not misrepresentation unless there is a duty to
disclose.
9. The doctrine of privity of contract means:
A. Only courts can enforce contracts
B. Only parties to a contract can sue on it
C. Contracts must be written
D. Contracts require witnesses
Correct Answer: B
Rationale: Only parties involved in a contract have rights and obligations under it.
,10. A minor’s contract is generally:
A. Fully enforceable
B. Void
C. Voidable
D. Illegal
Correct Answer: B
Rationale: Contracts with minors are generally void to protect them from
exploitation.
11. Which remedy aims to restore parties to their original position?
A. Damages
B. Specific performance
C. Rescission
D. Injunction
Correct Answer: C
Rationale: Rescission cancels the contract and restores parties to pre-contract status.
12. Specific performance is:
A. Monetary compensation
B. Court order to perform contractual obligations
C. Termination of contract
D. Criminal penalty
Correct Answer: B
Rationale: It compels a party to fulfill contractual duties, usually when damages are
inadequate.
13. An invitation to treat is:
A. A binding offer
B. A preliminary communication inviting offers
C. A contract
D. A legal obligation
Correct Answer: B
Rationale: Invitations to treat encourage others to make offers, not binding promises.
14. Which case best represents invitation to treat?
A. Auction sale
B. Advertisement
C. Signed agreement
D. Loan contract
, Correct Answer: B
Rationale: Advertisements are generally invitations to treat, not offers.
15. Acceptance must be:
A. Conditional
B. Qualified
C. Absolute and unqualified
D. Delayed
Correct Answer: C
Rationale: Acceptance must match the offer exactly to form a contract.
16. Postal rule applies when:
A. Offer is made
B. Acceptance is posted
C. Contract is signed
D. Payment is made
Correct Answer: B
Rationale: Acceptance is effective once posted, not when received.
17. Capacity to contract excludes:
A. Adults
B. Companies
C. Persons of unsound mind
D. Government entities
Correct Answer: C
Rationale: Persons of unsound mind lack legal capacity to contract.
18. A contract for illegal purpose is:
A. Valid
B. Void
C. Voidable
D. Enforceable
Correct Answer: B
Rationale: Contracts with illegal objectives are void and unenforceable.
19. Which of the following is a remedy for breach of contract?
A. Arbitration
B. Damages
C. Negotiation
D. Mediation
