20 CLEP Introductory Business Law practice questions, with answers and video walkthroughs

Twenty practice questions for CLEP Introductory Business Law, in the real exam's style. Score 16 of 20 here and you are in passing range. Miss more than four, and the pattern of your misses points straight at the topic to review next. Every question below is explained on video, including why the wrong answers trap most test-takers.

When I took CLEP Introductory Business Law for my degree at Thomas Edison State University, the move that mattered was steady practice in the exam's format, with an explanation for every miss. Use these the same way: answer, check, and read why the wrong choices are tempting. For the full plan around them, see the CLEP Introductory Business Law pillar guide.

Watch the full video walkthrough above, then test yourself on the twenty questions below. Each one is explained on the video, including why the wrong answers trap most test-takers.

Questions 1 to 5 (questions 1 to 5)

1. The body of law created by judges' written decisions, rather than by a legislature, is called: Common Law. Common law is law made by judges through their written opinions, with later courts bound by earlier rulings. Statutes come from legislatures, and the common law fills the gaps the statutes leave.

2. The doctrine under which courts follow the rulings of earlier, similar cases is known as: Stare Decisis. Stare decisis is Latin for let the decision stand. It means a court follows the precedent set by earlier cases with similar facts, which is what makes the common law predictable.

3. A lawsuit between two private parties over a broken contract is an example of: Civil Law. Civil law settles disputes between private parties, such as a breach of contract or an injury claim. Criminal law, by contrast, involves the government prosecuting someone for an offense against society.

4. In a civil lawsuit, the party who brings the action by filing the complaint is called the: Plaintiff. The plaintiff is the party who starts a civil suit by filing the complaint. The defendant is the one being sued. A prosecutor brings charges in a criminal case, not a civil one.

5. In most civil cases, the plaintiff must prove the case by: A Preponderance of the Evidence. Civil cases use the preponderance of the evidence standard, meaning more likely than not. The much higher beyond a reasonable doubt standard is reserved for criminal trials, where liberty is at stake.

Questions 6 to 10 (questions 6 to 10)

6. A valid contract requires an offer, acceptance, capacity, legality, and: Consideration. Consideration is the bargained-for exchange, each side giving up something of value. Without it a promise is merely a gift, and most contracts also need no signature, witness, or notary to be valid.

7. A contract entered into by a minor is generally: Voidable at the Minor's Option. A minor lacks full capacity, so the minor may disaffirm, or cancel, the contract. The agreement is voidable at the minor's choice, not automatically void, and the adult party remains bound.

8. Under the mailbox rule, an acceptance sent by mail generally takes effect when it is: Dispatched by the Offeree. The mailbox rule says acceptance is effective the moment it is properly dispatched, such as dropped in the mailbox, not when it arrives. That is why a contract can form before the offeror ever reads it.

9. An offer can generally be terminated by all of the following EXCEPT: The Offeree Starting to Perform Under a Valid Option Contract. Revocation, rejection, and the offeror's death all end an offer. But a paid-for option contract holds the offer open, so the offeree beginning performance under it does not terminate the offer.

10. A contract in which one party agrees not to compete with another may be unenforceable because it violates the requirement that a contract be: Legal. A contract's purpose must be legal. A noncompete that is unreasonably broad can be struck down as an illegal restraint of trade, even when offer, acceptance, and consideration are all present.

Questions 11 to 15 (questions 11 to 15)

11. Under the Statute of Frauds, which contract must generally be in writing to be enforceable? A Contract for the Sale of Land. The Statute of Frauds requires certain contracts to be in writing, including any contract for the sale of land or an interest in real estate. An oral land deal is generally unenforceable in court.

12. When one party fails to perform a major term of a contract without legal excuse, it is called a: Breach of Contract. A breach of contract is a failure to perform a contractual duty when it is due. A material breach, one that defeats the purpose of the deal, lets the other party stop performing and sue for damages.

13. The usual remedy a court awards for a breach of contract is: Money Damages. The standard remedy for breach is money damages meant to put the injured party where performance would have. Specific performance, ordering the actual act, is the exception, used mainly for unique goods or land.

14. A person who is injured by a breach of contract has a duty to: Mitigate, or Take Reasonable Steps to Minimize the Loss. The law imposes a duty to mitigate. The injured party must take reasonable steps to limit the damages, and cannot recover for losses that reasonable effort would have avoided.

15. Specific performance, a court order to actually carry out a contract, is most likely to be granted for a contract involving: A Unique Piece of Real Estate. Specific performance is granted when money damages are inadequate because the subject is unique, such as a particular parcel of land or a one-of-a-kind item. Each piece of real estate is treated as unique.

Questions 16 to 20 (questions 16 to 20)

16. The Uniform Commercial Code governs contracts for the sale of: Goods. Article 2 of the Uniform Commercial Code governs contracts for the sale of goods, meaning movable, tangible items. Sales of land, services, and intangibles fall outside Article 2 and follow the common law.

17. A tort is best described as: A Civil Wrong, Other Than Breach of Contract, for Which the Law Provides a Remedy. A tort is a civil wrong, separate from breach of contract, that causes harm and gives the victim a right to sue. Negligence, where someone fails to use reasonable care, is the most common example.

18. To win a negligence claim, a plaintiff must show duty, breach of that duty, causation, and: Actual Damages or Harm. Negligence requires a duty of care, a breach of it, a causal link, and actual damages. Without real harm there is nothing to compensate, so the negligence claim fails no matter how careless the conduct.

19. In a general partnership, the partners are: Personally Liable for the Partnership's Debts. General partners share unlimited personal liability for the firm's debts, so creditors can reach their personal assets. Limited liability is a feature of corporations and limited liability companies, not general partnerships.

20. A key legal advantage of forming a corporation is that its shareholders generally have: Limited Liability. A corporation is a separate legal entity, so its shareholders enjoy limited liability and normally risk only the amount they invested. Their personal assets stay protected if the corporation is sued or fails.

What to do with your score

The point of twenty questions is not the twenty, it is the pattern. When I scored a practice set, I marked which topic each miss came from, then spent my next session on that topic alone. None of it requires starting over, only tightening the spots that cost you points.

A single twenty-question set is a snapshot, not a study plan. To pass with margin you need volume: enough questions, in the exam's format, with explanations that turn a wrong answer into a correction. That is what Flying Prep's CLEP Introductory Business Law practice is built for: every question explained, with a free trial before you decide.