Business Law FBLA UPDATED ACTUAL Exam 2026/2027
PRACTICE QUESTIONS WITH STEP-BY-STEP ANSWERS
• accord and satisfaction . CORRECT ANSWER: A legal way to settle contractual
disputes by which one party agrees to accept less than the amount due as full payment
• actual authority . CORRECT ANSWER: The real power a principal gives to an agent
• actual notice . CORRECT ANSWER: A formal notice given directly to a party, usually
using certified mail with a receipt
• adhesion contract . CORRECT ANSWER: A take-it-or-leave-it offer made by a party
who holds most of the power in a bargaining session
• administrative law . CORRECT ANSWER: The body of rules created by government
agencies
• adultery . CORRECT ANSWER: When one spouse has sexual relations with
someone outside of marriage
• affinity . CORRECT ANSWER: Related by marriage
• agency . CORRECT ANSWER: A type of working relationship in which one person
represents another person in a business transaction with a third party
• agency by estoppel . CORRECT ANSWER: When the principal's actions lead the
third party to believe that the agent is working for the principal
• agent . CORRECT ANSWER: The person who has been authorized to do the work
• agent's agent . CORRECT ANSWER: An agent who is appointed by another agent
without the principal's authority to do so
• alimony . CORRECT ANSWER: An allowance for support paid to one person by the
former spouse in a divorce
• alternative dispute resolution (ADR) . CORRECT ANSWER: Parties try to resolve
disagreements outside of the usual court system, by mediation, arbitration, conciliation,
and negotiation
• annual percentage rate (APR) . CORRECT ANSWER: The true interest rate of a loan
• annulment . CORRECT ANSWER: A declaration by the court that a marriage was
never valid
,• apparent authority . CORRECT ANSWER: Authority that a third party believes an
agent has while acting on behalf of the principal
• appellate court . CORRECT ANSWER: The U.S. courts of appeals in the federal
system; hears appeals and reviews cases from the lower courts
• arraignment . CORRECT ANSWER: A formal hearing during which the defendant is
read the indictment or information and is asked to plead guilty or not guilty
• arrest . CORRECT ANSWER: Occurs when a person is legally deprived of his or her
freedom
• articles of incorporation . CORRECT ANSWER: A legal document filed with the state
to establish a corporation
• assault . CORRECT ANSWER: Attempt to commit a battery
• asset acquisition . CORRECT ANSWER: When one corporation agrees to purchase
the assets, such as property, buildings, and equipment, of a second corporation
• assignment . CORRECT ANSWER: The transfer of a right under contract
• assumption of risk . CORRECT ANSWER: A defense against negligence that is
raised when the plaintiff knew of the risk and still took the chance of being injured
• bail . CORRECT ANSWER: Money or other property that is left with the court to
assure that a person who has been arrested, but released, will return to trial
• bailment . CORRECT ANSWER: The transfer of possession and control of personal
property to another with the intent that the same property will be returned later
• bankruptcy . CORRECT ANSWER: The legal process by which a debtor can make a
fresh start through the sale of assets to pay off creditors
• battery . CORRECT ANSWER: The unlawful touching of another person
• beneficiary . CORRECT ANSWER: The person named in an insurance policy to
receive the proceeds of the policy
• bigamy . CORRECT ANSWER: The illegal act of having two spouses at the same
time
• bilateral contract . CORRECT ANSWER: A contract that contains two promises: one
party promises to do something in exchange for the other's promise to do something
else
, • bill of sale . CORRECT ANSWER: Formal evidence of ownership
• breach of contract . CORRECT ANSWER: When one party to a contract fails to
perform the duties spelled out by the contract
• burglary . CORRECT ANSWER: Breaking and entering a house or other structure to
commit a felony
• capacity . CORRECT ANSWER: The legal ability to enter into a contract
• carrier . CORRECT ANSWER: A business that transports persons, goods, or both
• certificate of incorporation . CORRECT ANSWER: A corporation's official
authorization to do business in a state
• Chapter 11 bankruptcy . CORRECT ANSWER: A type of bankruptcy that allows
businesses to reorganize their financial affairs and still remain in business
• Chapter 12 bankruptcy . CORRECT ANSWER: A form of bankruptcy that lets family
farmers and fishing businesses create a plan for debt repayment that allows them to
keep their operations running
• Chapter 13 bankruptcy . CORRECT ANSWER: A form of bankruptcy that permits
individual debtors to reorganize their debts and develop payment plans
• Chapter 7 bankruptcy . CORRECT ANSWER: A type of bankruptcy that allows
individual debtors to discharge all their debts and make a fresh start; ordinary
bankruptcy
• collateral . CORRECT ANSWER: The property that is offered as a security interest
• collective bargaining . CORRECT ANSWER: A process in which union and
management representatives get together to work out issues such as wages, working
conditions, and hiring and firing policies
• Commerce Clause . CORRECT ANSWER: A statement in Article I of the Constitution
giving Congress the power to regulate commerce among the states
• common carrier . CORRECT ANSWER: A carrier that is compensated for providing
transportation to the general public
• common law . CORRECT ANSWER: A set of laws made by the courts that provide a
series of consistent rules that later courts must follow
• common-law marriage . CORRECT ANSWER: An informal type of marriage created
by the parties themselves
PRACTICE QUESTIONS WITH STEP-BY-STEP ANSWERS
• accord and satisfaction . CORRECT ANSWER: A legal way to settle contractual
disputes by which one party agrees to accept less than the amount due as full payment
• actual authority . CORRECT ANSWER: The real power a principal gives to an agent
• actual notice . CORRECT ANSWER: A formal notice given directly to a party, usually
using certified mail with a receipt
• adhesion contract . CORRECT ANSWER: A take-it-or-leave-it offer made by a party
who holds most of the power in a bargaining session
• administrative law . CORRECT ANSWER: The body of rules created by government
agencies
• adultery . CORRECT ANSWER: When one spouse has sexual relations with
someone outside of marriage
• affinity . CORRECT ANSWER: Related by marriage
• agency . CORRECT ANSWER: A type of working relationship in which one person
represents another person in a business transaction with a third party
• agency by estoppel . CORRECT ANSWER: When the principal's actions lead the
third party to believe that the agent is working for the principal
• agent . CORRECT ANSWER: The person who has been authorized to do the work
• agent's agent . CORRECT ANSWER: An agent who is appointed by another agent
without the principal's authority to do so
• alimony . CORRECT ANSWER: An allowance for support paid to one person by the
former spouse in a divorce
• alternative dispute resolution (ADR) . CORRECT ANSWER: Parties try to resolve
disagreements outside of the usual court system, by mediation, arbitration, conciliation,
and negotiation
• annual percentage rate (APR) . CORRECT ANSWER: The true interest rate of a loan
• annulment . CORRECT ANSWER: A declaration by the court that a marriage was
never valid
,• apparent authority . CORRECT ANSWER: Authority that a third party believes an
agent has while acting on behalf of the principal
• appellate court . CORRECT ANSWER: The U.S. courts of appeals in the federal
system; hears appeals and reviews cases from the lower courts
• arraignment . CORRECT ANSWER: A formal hearing during which the defendant is
read the indictment or information and is asked to plead guilty or not guilty
• arrest . CORRECT ANSWER: Occurs when a person is legally deprived of his or her
freedom
• articles of incorporation . CORRECT ANSWER: A legal document filed with the state
to establish a corporation
• assault . CORRECT ANSWER: Attempt to commit a battery
• asset acquisition . CORRECT ANSWER: When one corporation agrees to purchase
the assets, such as property, buildings, and equipment, of a second corporation
• assignment . CORRECT ANSWER: The transfer of a right under contract
• assumption of risk . CORRECT ANSWER: A defense against negligence that is
raised when the plaintiff knew of the risk and still took the chance of being injured
• bail . CORRECT ANSWER: Money or other property that is left with the court to
assure that a person who has been arrested, but released, will return to trial
• bailment . CORRECT ANSWER: The transfer of possession and control of personal
property to another with the intent that the same property will be returned later
• bankruptcy . CORRECT ANSWER: The legal process by which a debtor can make a
fresh start through the sale of assets to pay off creditors
• battery . CORRECT ANSWER: The unlawful touching of another person
• beneficiary . CORRECT ANSWER: The person named in an insurance policy to
receive the proceeds of the policy
• bigamy . CORRECT ANSWER: The illegal act of having two spouses at the same
time
• bilateral contract . CORRECT ANSWER: A contract that contains two promises: one
party promises to do something in exchange for the other's promise to do something
else
, • bill of sale . CORRECT ANSWER: Formal evidence of ownership
• breach of contract . CORRECT ANSWER: When one party to a contract fails to
perform the duties spelled out by the contract
• burglary . CORRECT ANSWER: Breaking and entering a house or other structure to
commit a felony
• capacity . CORRECT ANSWER: The legal ability to enter into a contract
• carrier . CORRECT ANSWER: A business that transports persons, goods, or both
• certificate of incorporation . CORRECT ANSWER: A corporation's official
authorization to do business in a state
• Chapter 11 bankruptcy . CORRECT ANSWER: A type of bankruptcy that allows
businesses to reorganize their financial affairs and still remain in business
• Chapter 12 bankruptcy . CORRECT ANSWER: A form of bankruptcy that lets family
farmers and fishing businesses create a plan for debt repayment that allows them to
keep their operations running
• Chapter 13 bankruptcy . CORRECT ANSWER: A form of bankruptcy that permits
individual debtors to reorganize their debts and develop payment plans
• Chapter 7 bankruptcy . CORRECT ANSWER: A type of bankruptcy that allows
individual debtors to discharge all their debts and make a fresh start; ordinary
bankruptcy
• collateral . CORRECT ANSWER: The property that is offered as a security interest
• collective bargaining . CORRECT ANSWER: A process in which union and
management representatives get together to work out issues such as wages, working
conditions, and hiring and firing policies
• Commerce Clause . CORRECT ANSWER: A statement in Article I of the Constitution
giving Congress the power to regulate commerce among the states
• common carrier . CORRECT ANSWER: A carrier that is compensated for providing
transportation to the general public
• common law . CORRECT ANSWER: A set of laws made by the courts that provide a
series of consistent rules that later courts must follow
• common-law marriage . CORRECT ANSWER: An informal type of marriage created
by the parties themselves
