LOUISIANA BUSINESS AND LAW EXAM
QUESTIONS AND CORRECT ANSWERS
(VERIFIED ANSWERS) PLUS RATIONALES
2026 Q&A | INSTANT DOWNLOAD PDF
1. Which of the following is a primary source of Louisiana law?
A. Common law from England
B. Civil Code
C. Federal statutes only
D. Municipal ordinances outside Louisiana
Rationale: Louisiana is a civil law state; its legal framework is based
primarily on the Civil Code, which derives from the Napoleonic Code.
2. In Louisiana, a partnership is formed:
A. Only by written agreement
B. Automatically when parties share profits
C. When two or more persons associate to carry on a business
, for profit
D. Only through filing with the Secretary of State
Rationale: Louisiana law recognizes partnerships based on intent to
operate a business for profit, regardless of formal filing.
3. The legal principle of "pacta sunt servanda" refers to:
A. Property rights
B. Criminal liability
C. The binding nature of agreements
D. Tort obligations
Rationale: "Pacta sunt servanda" is Latin for "agreements must be
kept," a foundational principle in contract law.
4. In Louisiana, the sale of goods is governed by:
A. Civil Code
B. Louisiana Commercial Laws / Uniform Commercial Code (UCC)
C. Federal Trade Commission regulations
D. Case law only
Rationale: While the Civil Code provides general contract rules, the sale
of goods is specifically governed by Louisiana’s adoption of the UCC.
5. Which of the following best describes limited liability in a
Louisiana LLC?
, A. Members are personally liable for all debts
B. Members are liable only for criminal acts
C. Members are generally not personally liable for company
debts
D. Members share liability equally regardless of investment
Rationale: LLCs provide limited liability, protecting members’ personal
assets from business obligations.
6. In Louisiana, a "novation" is:
A. A type of tort
B. The substitution of a new obligation for an existing one
C. A lease agreement
D. A form of corporate charter
Rationale: Novation replaces an existing obligation with a new one,
extinguishing the old contract.
7. Which type of agency in Louisiana is formed by agreement and
expressed authority?
A. Implied agency
B. Express agency
C. Apparent agency
D. Ratified agency
, Rationale: Express agency arises from a clear agreement between
principal and agent granting authority.
8. Louisiana’s statute of frauds requires certain contracts to be in
writing, including:
A. Oral sales of goods under $500
B. Contracts for the sale of immovable property
C. Employment agreements of less than one year
D. Verbal service contracts
Rationale: Contracts for immovable property (real estate) must be
written to be enforceable under Louisiana law.
9. A Louisiana corporation’s board of directors owes a fiduciary duty
primarily to:
A. Customers
B. Creditors only
C. Shareholders
D. Competitors
Rationale: Directors must act in the best interest of shareholders,
exercising care and loyalty.
10. In Louisiana, a “usufruct” gives:
A. Ownership of land
B. The right to use and enjoy another’s property without owning
QUESTIONS AND CORRECT ANSWERS
(VERIFIED ANSWERS) PLUS RATIONALES
2026 Q&A | INSTANT DOWNLOAD PDF
1. Which of the following is a primary source of Louisiana law?
A. Common law from England
B. Civil Code
C. Federal statutes only
D. Municipal ordinances outside Louisiana
Rationale: Louisiana is a civil law state; its legal framework is based
primarily on the Civil Code, which derives from the Napoleonic Code.
2. In Louisiana, a partnership is formed:
A. Only by written agreement
B. Automatically when parties share profits
C. When two or more persons associate to carry on a business
, for profit
D. Only through filing with the Secretary of State
Rationale: Louisiana law recognizes partnerships based on intent to
operate a business for profit, regardless of formal filing.
3. The legal principle of "pacta sunt servanda" refers to:
A. Property rights
B. Criminal liability
C. The binding nature of agreements
D. Tort obligations
Rationale: "Pacta sunt servanda" is Latin for "agreements must be
kept," a foundational principle in contract law.
4. In Louisiana, the sale of goods is governed by:
A. Civil Code
B. Louisiana Commercial Laws / Uniform Commercial Code (UCC)
C. Federal Trade Commission regulations
D. Case law only
Rationale: While the Civil Code provides general contract rules, the sale
of goods is specifically governed by Louisiana’s adoption of the UCC.
5. Which of the following best describes limited liability in a
Louisiana LLC?
, A. Members are personally liable for all debts
B. Members are liable only for criminal acts
C. Members are generally not personally liable for company
debts
D. Members share liability equally regardless of investment
Rationale: LLCs provide limited liability, protecting members’ personal
assets from business obligations.
6. In Louisiana, a "novation" is:
A. A type of tort
B. The substitution of a new obligation for an existing one
C. A lease agreement
D. A form of corporate charter
Rationale: Novation replaces an existing obligation with a new one,
extinguishing the old contract.
7. Which type of agency in Louisiana is formed by agreement and
expressed authority?
A. Implied agency
B. Express agency
C. Apparent agency
D. Ratified agency
, Rationale: Express agency arises from a clear agreement between
principal and agent granting authority.
8. Louisiana’s statute of frauds requires certain contracts to be in
writing, including:
A. Oral sales of goods under $500
B. Contracts for the sale of immovable property
C. Employment agreements of less than one year
D. Verbal service contracts
Rationale: Contracts for immovable property (real estate) must be
written to be enforceable under Louisiana law.
9. A Louisiana corporation’s board of directors owes a fiduciary duty
primarily to:
A. Customers
B. Creditors only
C. Shareholders
D. Competitors
Rationale: Directors must act in the best interest of shareholders,
exercising care and loyalty.
10. In Louisiana, a “usufruct” gives:
A. Ownership of land
B. The right to use and enjoy another’s property without owning
