California Future Business Leaders of America

Your Future Is Our Business


  • Business Law

    Category: Objective Test
    Type: Individual 

    ELIGIBILITY: The participant may not have previously competed in this event at the national level.

    SECTION: Each local chapter may enter three (3) members. (refer to Objective Test Guidelines for more information on number of members)

    STATE: A mimimum of the top six (6) places from the section competition will represent their section at the State Leadership Conference. (Refer to Objective Test Guidelines for more information regarding competitors qualified for SLC.)

    NATIONAL: The top four(4) places in the state competition will represent California at the National Leadership Conference. NOTE: Some SLC top-10 competitors will become eligible for the national conference as a result of drops. Make sure you get early approval from your parents to attend the National Conference so you will be in a position to say "yes" to your adviser if you are "bumped up".

    Overview: 60-minute test administered during the conference.

    Objective Test Competencies: Legal Systems; Contracts and Sales; Business Organization; Property Laws; Agency and Employment Laws; Negotiable Instruments; Insurance Secured Transactions, Bankruptcy; Consumer Protection and Product/Personal Liability; Computer Law; Domestic and Private Law

    Skills: This event provides recognition for FBLA members who are familiar with specific legal areas that most commonly affect personal and business relationships.

    GUIDELINES (It is highly recommended that competitors read all guidelines)
    Objective Test
    General (All Events)
    General Competitive Events Tips
    Objective Event Tips


    Sample Practice Materials
    Sample Practice PDF #1
    Sample Practice PDF #2

    FBLA Format Guide
    Format Guide PDF

    Website Resources
    American Bar Association - Business Law Today, Online Resources
    Law for Business or Personal
    Law Check
    Law Guru
    Legal Definitions & Legal Terms Defined
    Legal Information Institute
    SBA - Business Law & Regulations
    USA Laws and Regulations - General Reference Resources

    Legal Systems
    1. Identify ethical character traits: honesty, integrity, compassion, respect, responsibility, citizenship, and justice.
    2. Explain the relationship between law and ethics and why they sometimes conflict.
    3. Explain the differences between local, state and federal government and the powers and limitations of each.
    4. Define statutory law, identify the purpose of statutory law, and describe how a bill becomes a statute under federal law.
    5. Identify ways laws affect individuals, sources of law, constitutional rights and responsibilities of U.S. citizens, and the responsibilities of government.
    6. Distinguish between different types of courts.
    7. Distinguish between the roles of legal professionals (e.g., judges, lawyers, and paralegals).
    8. Identify the elements of criminal, civil, and business law, including trial procedures.
    9. Define crimes such as embezzlement, larceny, robbery, burglary, assault, battery, forgery, white collar, extortion, bribery, conspiracy, etc.; and classify it based on the severity of the punishment
    10. Explain the difference between crimes and torts.
    11. Define “negligence per se” and give examples of circumstances under which it applies.
    12. Define tort of assault, battery, false imprisonment, mental distress, invasion of privacy, defamation of character, trespass to land and personal property, conversion negligence, and strict liability.
    13. Identify crimes that occur in the business environment.
    14. Understand the purpose and uses of a variety of common legal documents.
    15. Recognize situations that call for legal advice.
    16. Possess a working vocabulary of most frequently used legal terms, such as litigation, arbitration, mediation and conciliation, etc.
    17. Explain how disputes can be settled without resort to the courts.
    18. Complete legal documents with notarization as required.
    19. Define environmental law, energy regulation and conservation, and explain the purpose and need.
    Contracts and Sales
    1. Explain the nature and importance of contracts
    2. Identify the elements of a contract (e.g., offer, acceptance, genuine agreement, consideration, capacity, and legality).
    3. List and analyze the steps to creating a legal and binding contract.
    4. Discuss the requirements of an offer and acceptance and how the offer can be terminated/discharged/assigned.
    5. Identify the classifications of contracts: valid, void, voidable, unenforceable, express, implied, oral, and written.
    6. Define consideration and list examples of valid consideration.
    7. Differentiate among the ways that a contract can be disrupted, such as fraud, nondisclosure, misrepresentation, mistake, duress, and undue influence
    8. Explain a minor’s rights regarding contracts.
    9. List contracts that should be in writing under the Statute of Frauds and identify the consequences for failure to comply.
    10. Define breach of contract and name legal remedies available for resolution.
    11. Define sale and explain how the UCC governs the sale of goods.
    12. Distinguish between payment, delivery, and transfer of title of goods.
    13. Explain who may transfer ownership of goods and what is required for the transfer of ownership.
    14. List and define the performance obligations of the seller and buyer in a typical sales transaction.
    Business Organization
    1. Describe the legal forms of business organization and identify their respective advantages/disadvantages.
    2. Describe the types of organizational structures and management levels
    3. Examine the ways businesses can be created including their rights, limitation, and liabilities.
    4. Distinguish between a limited partnership and general partnership.
    5. Differentiate between types of corporations and describe the functions of the board of directors and officers of a corporation.
    6. Identify shareholder rights and explain the nature of the shareholder liability.
    7. Differentiate between types of corporate expansion (e.g. mergers, consolidations, and conglomerates).
    8. Describe the characteristics of a franchise and analyze where it fits in the economic and legal framework.
    9. Define a limited liability company and explain the steps in forming it.
    10. Discuss the role of the S. E. C. and identify potential consequences of violating S. E. C. regulations.
    11. Discuss ways that government regulation and legal issues in businesses have affected each of us
    12. Develop an understanding of a business’s responsibility to know, abide by, and enforce laws and regulations that affect business operations and transactions (anti-trust laws, organized labor, and regulatory agencies).
    13. Identify, apply, and keep current with laws and regulations such as those that affect business practices like financial and accounting records and storage and retention of records.
    14. Identify the legal issues and agencies related to managing a business in the global environment.
    15. Identify trade regulations and unfair trade practices regulated by the Federal Trade Commission
    Property Laws
    1. Discuss the benefits and burdens of ownership of property.
    2. Define real property, personal property, and fixtures and explain why property distinctions are important.
    3. Compare different legal rights and methods of acquiring property and transferring title (e.g., renting, leasing, or purchasing, contract for sale, deed, title search, abstract of title, mortgage, etc.) including the effects of liens.
    4. Describe and distinguish liens, licenses, and easements.
    5. Describe legal aspects of a real estate transaction.
    6. Describe the legal characteristics of a lease.
    7. Define the different types of intellectual property (e.g., patents, copyrights, and trademarks).
    8. Describe the civil and criminal consequences for infringing on the intellectual property rights of another.
    9. Explain the impact of zoning regulations on the use of property.
    10. Explain how a bailment is created and describe the standard of care different bailees are required to exercise over bailed property.
    Agency and Employment Laws
    1. Explain agency relationships and list the ways agency relationships may be created.
    2. Distinguish between an agent and individuals such as independent contractors, real estate brokers, bailees, and trustees.
    3. Identify the duties, scope of authority, responsibilities, and liabilities of agents.
    4. Identify legislation that regulates employee rights (e.g., employment interview, testing, laws affecting minors, and collective bargaining).
    5. Identify legislation that regulates employment conditions and worker benefits (OSHA, workers’ comp., unemployment compensation, etc.).
    6. Identify legislation (e.g., civil rights, right to privacy, and ADA) affecting personnel practices (compensation, promotion, recruitment, selection, termination, and training and development).
    7. Describe legal reason for terminating employees (e.g., employment at will, embezzlement, and violation of company policy).
    8. Analyze contracts and company’s position to assist management in labor contract negotiations and monitor implementation of contract for compliance.
    9. Discuss the impact of immigration relations to the operation of businesses.
    Negotiable Instruments
    1. Explain the essential elements of negotiable instruments, the different types of negotiable instruments, and specify their respective advantages/disadvantages.
    2. Distinguish between primary parties and secondary parties.
    3. Describe presentment for payment and presentment for acceptance.
    4. Compare and contrast the different types of insurance.
    5. Identify laws associated with different types of insurance.
    6. Compare/contrast insurance policies and coverage to determine advantages and disadvantages.
    7. Describe a secured transaction and requirements for creating a valid security interest.
    8. Discuss the different types of mortgages, liens, and their purposes.
    9. Explain the rights of debtors and creditors.
    10. Identify the reasons for bankruptcy laws.
    11. Compare bankruptcy with other alternatives.
    12. Describe the principal features of bankruptcy such as Liquidation and Reorganization of Debts, Chapter 7, 11, 12, and 13 Bankruptcy Codes.
    Insurance Secured Transactions, Bankruptcy
    Consumer Protection and Product/Personal Liability
    1. Identify and state the purpose of legislation that regulates consumer credit, debt collection, privacy, and electronic credit transactions.
    2. Describe laws and agencies that provide consumer protection.
    3. Define common, unfair and deceptive practices such as: bait and switch, usury, identity theft, deceptive service estimates, and fraudulent misrepresentations
    4. Identify the regulatory agencies established to protect consumers against unsafe products and deceptive trade practices.
    5. Explain the concept of strict, absolute, and vicarious liability.
    6. Explain the relationship of business ethics to product service management. (e.g., product packaging, quality assurance, grades and standards, and product promotion).
    7. Apply “truth in advertising” and “government instituted laws” to promotion of a product or service.
    8. Distinguish between implied and express warranties and between full and limited warranties and describe the protection they provide
    Computer Law
    1. Explain ethical and legal behavior of computer law as it relates to computer hacking, software piracy, source code, software license, copyright law, Internet, and e-mail.
    2. Discuss existing laws, jurisdiction considerations, and disputes regarding E-commerce.
    3. Define different types of computer crime and discuss the various types of federal and state statutes designed to combat computer crime.
    4. Discuss various statutes that deal with the effects and use of computer records and privacy matters.
    Domestic and Private Law
    1. Define marriage and explain the rights and obligations that are involved in marriage.
    2. Understand concepts relating to marriage such as age requirements, prenuptial agreements, common law, and types of marriage prohibited by law.
    3. Contrast annulment, divorce, and dissolution proceedings and explain some of the typical grounds for divorce.
    4. Describe the law as it related to the distribution of property in divorce as well as child custody and child and spousal support.
    5. Describe the legal rights and duties of minors and their parents/guardians.
    6. Explain protections provided by estate planning (power of attorney, will, trusts, living will, right to die, etc.)
    7. Identify the requirements of a valid will and indicate the ways a will can be revoked or altered.
    8. Identify the responsibilities of a personal representative, executor, or administrator in the settlement of an estate.


    NBEA Standards
    • Business Law
    • International Business
    Career Clusters
    • Business Management & Administration
    • Law & Public Safety