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 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.