Business Law Flashcards
7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business Law flashcards as text
Which UCC Article governs the sale of goods in the United States?
Answer: Article 2
UCC Article 2 governs contracts for the sale of goods, defining rules for formation, performance, breach, and remedies.
In a Chapter 11 bankruptcy reorganization, who typically continues to manage the business?
Answer: The debtor-in-possession
In Chapter 11, the debtor typically remains in control as a 'debtor-in-possession' and continues operating the business while reorganizing its debts.
A contract clause that sets in advance the damages for breach is enforceable if it is:
Answer: A reasonable estimate of actual damages that are difficult to calculate
Liquidated damages clauses are enforceable when the amount is a reasonable forecast of compensatory damages and actual damages would be difficult to estimate.
Under agency law, which of the following creates an agency relationship?
Answer: Consent of both principal and agent, with agent to act on principal's behalf
An agency relationship is created by mutual consent where the agent agrees to act on the principal's behalf and subject to the principal's control.
Which of the following is an example of a corporation engaging in an 'ultra vires' act?
Answer: Operating a real estate business when the corporation is chartered as a software company
An ultra vires act is one beyond the scope of the corporation's authorized powers as defined in its charter or articles of incorporation.
Which defense to contract enforcement is based on a mutual mistake by both parties about a material fact at the time of contracting?
Answer: Bilateral (mutual) mistake
A bilateral or mutual mistake occurs when both parties share a false belief about a material fact, which may allow rescission of the contract.
A principal ratifies an unauthorized act by an agent. What is the legal effect of ratification?
Answer: The act is treated as if it was originally authorized
Ratification retroactively validates the unauthorized act, treating it as if the principal had originally authorized it at the time it was performed.