Bcom Bachelor of Commerce Business Law 1

Question 1

Which element distinguishes a bilateral contract from a unilateral contract?

Accepted Answer

In a bilateral contract, both parties exchange promises, whereas a unilateral contract is accepted only by performance

Answer

In a bilateral contract, each party makes a promise to the other, creating mutual obligations from the moment of acceptance. A unilateral contract, by contrast, calls for performance as the sole method of acceptance — the offeree's act, not a return promise, closes the agreement.

Question 2

What is the legal doctrine of 'promissory estoppel' primarily designed to prevent?

Accepted Answer

A promisor from revoking a promise when the promisee has reasonably relied on it to their detriment

Answer

Promissory estoppel (also called detrimental reliance) allows a court to enforce a promise even without consideration when the promisee reasonably relied on that promise and suffered a loss as a result. It prevents injustice by stopping the promisor from backing out after reliance has occurred.

Question 3

Under the 'parol evidence rule', which type of evidence is generally INADMISSIBLE to vary the terms of a fully integrated written contract?

Accepted Answer

Prior oral agreements that contradict the written contract's express terms

Answer

The parol evidence rule bars the introduction of prior or contemporaneous oral statements that would contradict or vary the terms of a complete written contract. Courts treat the written document as the final word. Fraud, conditions precedent, or later modifications are recognized exceptions to this rule.

Question 4

When a court 'pierces the corporate veil', what is the primary legal consequence?

Accepted Answer

Shareholders are held personally liable for the corporation's debts and obligations

Answer

Piercing the corporate veil removes the liability shield that normally separates a corporation from its owners. Courts apply this remedy when shareholders abuse the corporate form — for example, by commingling personal and corporate funds, undercapitalizing the entity, or using the corporation to perpetrate fraud — holding them personally responsible for corporate debts.

Question 5

In agency law, what is the key difference between 'actual authority' and 'apparent authority'?

Accepted Answer

Actual authority is expressly or impliedly granted by the principal to the agent, while apparent authority is created by the principal's representations to third parties who reasonably rely on them

Answer

Actual authority (express or implied) flows directly from the principal's communication to the agent. Apparent authority, by contrast, arises when the principal's words or conduct lead a reasonable third party to believe the agent has authority to act, even if that authority was never actually granted. Both can bind the principal.

Bcom Bachelor of Commerce Practice Test

Bcom Bachelor of Commerce Practice Test

Bcom Bachelor of Commerce Business Law 1