Business Law
Core concepts
Business law questions test agency, contracts, and business entity formation. For agency, know actual authority (express or implied), apparent authority (third-party reasonable belief based on principal's manifestations), and ratification. For contracts, know offer, acceptance, consideration, and the Statute of Frauds (sale of goods over $500, land, suretyship, marriage, one-year performance). UCC Article 2 governs goods; common law governs services.
Entities
Know the difference between a general partnership (joint and several liability), limited partnership (limited partners not liable beyond investment), LLC (members generally not personally liable), and corporation (shareholders shielded). Formation formalities and the consequences of failing them are frequent test items.
Traps
Questions often test whether an agent had authority when the principal did not communicate directly, or whether a contract modification needs consideration. Watch for the merchant's firm offer rule (UCC) and the mirror image rule at common law. Also distinguish void, voidable, and unenforceable contracts.
Worked rule of thumb
Under UCC, a merchant's signed written offer to buy or sell goods that gives assurance it will be held open is irrevocable for the stated time (or a reasonable time, up to three months) without consideration. Example: a signed 60-day offer to sell widgets is binding for 60 days even without payment.
Key points
- Agency: actual (express/implied) vs. apparent authority.
- Statute of Frauds categories: land, goods >$500, suretyship, one year, marriage.
- UCC Article 2 governs goods; common law governs services.
- General partnership: joint and several liability.
- Merchant's firm offer is irrevocable without consideration (up to 3 months).