Introductory Business Law CLEP Prep Practice Exam

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Prepare for the CLEP Business Law Exam with flashcards and multiple-choice questions. Each question comes with hints and explanations to help you succeed. Master the content and pass your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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What is the ability to sue or be sued?

Judicial power
Capacity
Regulatory authority
Corporate governance

The correct answer is: Capacity

Capacity refers to the legal competency of an individual or entity to be able to bring a lawsuit or be the subject of legal action. Option A, judicial power, may seem like a possible answer at first glance, but it actually refers to the power of the court to adjudicate legal disputes. Option C, regulatory authority, refers to the power of a regulatory agency to make and enforce rules and regulations. Option D, corporate governance, is the system of rules, practices, and processes by which a company is directed and controlled. While corporate governance may have implications for legal action, it is not the same as the ability to sue or be sued. The best answer is B, capacity, as it directly relates to the question.