Introductory Business Law CLEP Prep Practice Exam

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Prepare for the Introductory Business Law CLEP Exam with our comprehensive quiz, designed to cover essential legal concepts and practices. Study effectively and boost your chances of success!

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What is a formal contract?

  1. A contract that is written and signed by both parties

  2. A contract that is written but not signed by both parties

  3. A contract that is verbal only

  4. A contract that is entered into without consideration

The correct answer is: A contract that is written and signed by both parties

A formal contract is a legal document that outlines an agreement between two or more parties in a written and signed form. This ensures that all parties are aware of and agree to the terms and conditions of the contract. Option B is incorrect because a contract must be signed by all parties involved to be considered formal. Option C is incorrect because a verbal contract is not considered formal and can be difficult to enforce. Option D is incorrect because a contract must have consideration, or something of value being exchanged, to be considered valid and formal.

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