Business Law, Final Exam Questions With Accurate Answers
Specific Performance - correct answer -Equitable Remedy: Orders the party that breached the contract
to perform the acts promised in it. Usually awarded in cases in which the subject matter is unique, such
as contracts involving land, heirlooms, and paintings.
Mitigation of Damages - correct answer -The law places a duty on the innocent, non-breaching party, to
make reasonable efforts to avoid or reduce damages.
Liquidated Damages - correct answer -Damages that parties to a contract agree in advance should be
paid if the contract is breached.
Nominal Damages - correct answer -An award given to the non-breaching party even if no financial loss
resulted from the breach of contract. Usually something small, like $1.
Injunction - correct answer -A court order that prohibits a person from doing a certain act. Available in
contract actions only in limited circumstances.
Automatic Stay - correct answer -The suspension of certain legal actions by creditors against a debtor or
the debtor's property. Applies to collection efforts to secured and unsecured creditors, is designed to
prevent a scramble for the debtor's assets in a variety of court proceedings
Fraudulent Transfer - correct answer -A transfer of a debtor's property or an obligation incurred by a
debtor within two years of the filing of a petition where (1) the debtor had actual intent to hinder, delay
or defraud a creditor or (2) the debtor received less than a reasonable equivalent value.
Trustee - correct answer -One of these need to be appointed to be the legal representative of the
debtor's estate in bankruptcy. In a Chapter 11, one may be appointed upon a showing of fraud,
dishonesty, incompetence, or gross mismanagement of affairs.
Homestead Exemption - correct answer -Equity in a debtor's home that the debtor is permitted to
retain. $21,625.
Domestic Support Obligation - correct answer -Cannot be discharged (court order that relieves a debtor
of the legal liability to pay his debts that were not paid in the bankruptcy proceedings) in bankruptcy.
Applies to alimony, maintenance, and child support payments resulting from a divorce decree or
separation agreement.
Involuntary Petition - correct answer -Petition that is filed by the creditor and places the debtor into
bankruptcy.
Payment to Unsecured Creditors - correct answer -The claims of secured creditors to the debtor's
nonexempt property have priority over the claims of unsecured creditors.
Bankruptcy Courts - correct answer -Special federal courts that hear and decide bankruptcy cases.
, Attorney Certification - correct answer -For bankruptcy, the person who represents the client need to
certify the accuracy of the information contained in the bankruptcy petition and the schedules.
Pre and Post Petition Counseling - correct answer -New provision that requires an individual filing for
bankruptcy to receive this to get their shit straight.
Mean's Test - correct answer -A calculation that establishes a bright line test to determine whether the
debtor has sufficient disposable income to pay pre petition debts out of post petition income. Applies to
debtors whose family income exceeds the state's median income.
Chapter 7 - correct answer -Bankruptcy for liquidation. Changed in 2005 to prevent abusive filing.
Chapter 13 - correct answer -Type of bankruptcy meant for adjustment of debts. Only for individuals
with regular income (someone with stable enough income to make payments for this plan).
Chapter 11 - correct answer -Bankruptcy meant for reorganizing a debtor's financial affairs under the
supervision of the bankruptcy court. Debtors that file for this sometimes have collective bargaining
agreements with labor unions that require the payment of agreed upon wages and other benefits.
Express Agency - correct answer -Agency that occurs when a principal and an agent expressly agree to
enter into an agency agreement with each other. Contracts can be either oral or written unless the
Statutes of Frauds stipulates that they must be written
Dual Agency - correct answer -Occurs when an agent acts for two or more different principals in the
same transaction. Generally prohibited unless all parties agree on it.
Principal - correct answer -A party who employs another person to act on his or her behalf.
Agent - correct answer -A party who agrees to act on behalf of another.
Agency - correct answer -Relationship between the principal and the agent.
Agency Law - correct answer -The large body of common law that is a mixture of contract law and tort
law.
Independent Contractor - correct answer -Principals sometimes hire these people, who are outsiders, to
perform certain tasks on their behalf. Not controlled.
Fiduciary Duties - correct answer -An agent owes this thing a duty not to act adversely to the interests of
the principal. If this duty is breached the agent is liable to the principal.
Apparent Authority - correct answer -Agency that arises when a principal creates the appearance of an
agency that in actuality does not exist. Authority created when the principal leads a third party to
believe that the agent has authority. Principal and third party are bound to the contract.
Agency Coupled With Interest - correct answer -A special type of agency that is created for the agent's
benefit and that the principal cannot revoke.
Specific Performance - correct answer -Equitable Remedy: Orders the party that breached the contract
to perform the acts promised in it. Usually awarded in cases in which the subject matter is unique, such
as contracts involving land, heirlooms, and paintings.
Mitigation of Damages - correct answer -The law places a duty on the innocent, non-breaching party, to
make reasonable efforts to avoid or reduce damages.
Liquidated Damages - correct answer -Damages that parties to a contract agree in advance should be
paid if the contract is breached.
Nominal Damages - correct answer -An award given to the non-breaching party even if no financial loss
resulted from the breach of contract. Usually something small, like $1.
Injunction - correct answer -A court order that prohibits a person from doing a certain act. Available in
contract actions only in limited circumstances.
Automatic Stay - correct answer -The suspension of certain legal actions by creditors against a debtor or
the debtor's property. Applies to collection efforts to secured and unsecured creditors, is designed to
prevent a scramble for the debtor's assets in a variety of court proceedings
Fraudulent Transfer - correct answer -A transfer of a debtor's property or an obligation incurred by a
debtor within two years of the filing of a petition where (1) the debtor had actual intent to hinder, delay
or defraud a creditor or (2) the debtor received less than a reasonable equivalent value.
Trustee - correct answer -One of these need to be appointed to be the legal representative of the
debtor's estate in bankruptcy. In a Chapter 11, one may be appointed upon a showing of fraud,
dishonesty, incompetence, or gross mismanagement of affairs.
Homestead Exemption - correct answer -Equity in a debtor's home that the debtor is permitted to
retain. $21,625.
Domestic Support Obligation - correct answer -Cannot be discharged (court order that relieves a debtor
of the legal liability to pay his debts that were not paid in the bankruptcy proceedings) in bankruptcy.
Applies to alimony, maintenance, and child support payments resulting from a divorce decree or
separation agreement.
Involuntary Petition - correct answer -Petition that is filed by the creditor and places the debtor into
bankruptcy.
Payment to Unsecured Creditors - correct answer -The claims of secured creditors to the debtor's
nonexempt property have priority over the claims of unsecured creditors.
Bankruptcy Courts - correct answer -Special federal courts that hear and decide bankruptcy cases.
, Attorney Certification - correct answer -For bankruptcy, the person who represents the client need to
certify the accuracy of the information contained in the bankruptcy petition and the schedules.
Pre and Post Petition Counseling - correct answer -New provision that requires an individual filing for
bankruptcy to receive this to get their shit straight.
Mean's Test - correct answer -A calculation that establishes a bright line test to determine whether the
debtor has sufficient disposable income to pay pre petition debts out of post petition income. Applies to
debtors whose family income exceeds the state's median income.
Chapter 7 - correct answer -Bankruptcy for liquidation. Changed in 2005 to prevent abusive filing.
Chapter 13 - correct answer -Type of bankruptcy meant for adjustment of debts. Only for individuals
with regular income (someone with stable enough income to make payments for this plan).
Chapter 11 - correct answer -Bankruptcy meant for reorganizing a debtor's financial affairs under the
supervision of the bankruptcy court. Debtors that file for this sometimes have collective bargaining
agreements with labor unions that require the payment of agreed upon wages and other benefits.
Express Agency - correct answer -Agency that occurs when a principal and an agent expressly agree to
enter into an agency agreement with each other. Contracts can be either oral or written unless the
Statutes of Frauds stipulates that they must be written
Dual Agency - correct answer -Occurs when an agent acts for two or more different principals in the
same transaction. Generally prohibited unless all parties agree on it.
Principal - correct answer -A party who employs another person to act on his or her behalf.
Agent - correct answer -A party who agrees to act on behalf of another.
Agency - correct answer -Relationship between the principal and the agent.
Agency Law - correct answer -The large body of common law that is a mixture of contract law and tort
law.
Independent Contractor - correct answer -Principals sometimes hire these people, who are outsiders, to
perform certain tasks on their behalf. Not controlled.
Fiduciary Duties - correct answer -An agent owes this thing a duty not to act adversely to the interests of
the principal. If this duty is breached the agent is liable to the principal.
Apparent Authority - correct answer -Agency that arises when a principal creates the appearance of an
agency that in actuality does not exist. Authority created when the principal leads a third party to
believe that the agent has authority. Principal and third party are bound to the contract.
Agency Coupled With Interest - correct answer -A special type of agency that is created for the agent's
benefit and that the principal cannot revoke.
