Business Law and Regulatory Environment
Contracts and business entities
Business law questions test the formation, performance, and enforcement of agreements. A valid contract requires offer, acceptance, consideration, capacity, and legality. Know the difference between express and implied contracts, the statute of frauds (certain contracts must be in writing), and remedies for breach - damages, specific performance, rescission. Understand agency relationships: actual versus apparent authority, fiduciary duties, and liability of principal versus agent.
Entities and liability
Compare sole proprietorships, partnerships, limited liability companies, and corporations on liability, taxation, and control. Corporations provide limited liability but face double taxation unless structured as pass-through entities. Know the roles of directors, officers, and shareholders, and the business judgment rule that protects good-faith decisions.
Regulation and compliance
Familiarize yourself with securities regulation concepts - registration, disclosure, insider trading prohibitions - and employment and consumer-protection basics. Understand the regulatory framework governing financial reporting and audit oversight.
Traps
Watch for: confusing consideration with a gift; assuming an offer is binding before acceptance; mixing apparent authority with actual authority; and forgetting that limited liability does not shield personal fraud. Read fact patterns for who promised what to whom.
Rule of thumb
For any scenario, run the checklist: Was there an offer? Acceptance? Consideration? Capacity? Legality? Writing (if required)? If any element fails, the contract may be void or voidable.