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100+ Free NCA Business Organizations Practice Questions

NCA Business Organizations (Business Associations) Examination practice questions are available now; exam metadata is being verified.

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Which statement about the perpetual existence of a corporation is correct?

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2026 Statistics

Key Facts: NCA Business Organizations Exam

$500 CAD

Fee Per NCA Exam (plus taxes)

Federation of Law Societies of Canada (2025-2026)

3 hours

Maximum Exam Duration

National Committee on Accreditation

Open-book

Exam Format (fact-based, written)

National Committee on Accreditation

50%

Passing Grade (pass/fail)

National Committee on Accreditation

s. 122 / 239 / 241

Key CBCA Sections (duties, derivative action, oppression)

Canada Business Corporations Act

100+

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OpenExamPrep question bank

The NCA Business Organizations exam (officially titled 'Business Organizations,' sometimes called Business Associations) is a substantive law subject the National Committee on Accreditation commonly assigns to internationally trained lawyers seeking to qualify in a Canadian common-law province. Administered by the NCA under the Federation of Law Societies of Canada, it is open-book, fact-based, and up to three hours, with short-answer, essay, and problem questions graded pass/fail (50%). The content covers agency (actual and apparent authority, ratification), partnerships under the Partnership Acts (liability, fiduciary duties, dissolution, limited partnerships and LLPs), the corporation as a separate legal entity (Salomon v Salomon) and piercing the corporate veil, incorporation under the CBCA, directors' and officers' duties (s. 122 fiduciary duty and duty of care, Peoples v Wise, BCE Inc v 1976 Debentureholders, the business judgment rule), shareholder remedies (the oppression remedy s. 241, the derivative action s. 239, dissent and appraisal), share capital and financing, corporate liability, and the indoor management rule (Royal British Bank v Turquand). The exam fee is $500 CAD plus taxes. This free OpenExamPrep bank provides 100 multiple-choice knowledge-prep questions on that content; note the real exam uses written answers, not multiple choice.

Sample NCA Business Organizations Practice Questions

Try these sample questions to test your NCA Business Organizations exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1P appoints A as a sales manager and tells A privately never to offer discounts above 10%. Without P's knowledge, A offers a 25% discount to a customer who is unaware of the limit, and the customer accepts. Is P bound by the contract?
A.No, because A acted beyond the express limit P set
B.No, because a principal is never bound by an agent's unauthorized acts
C.Yes, because A had apparent authority arising from the position P placed A in
D.Yes, but only if P later ratifies the discount
Explanation: Apparent (ostensible) authority arises from the principal's representation to the third party — here, by holding A out as sales manager. A sales manager of that kind ordinarily can grant discounts, and the customer had no notice of the secret 10% limit, so P is bound notwithstanding the private restriction.
2Which statement best describes 'actual authority' in the law of agency?
A.Authority a third party reasonably believes the agent has based on the principal's conduct
B.Authority a court imposes to prevent unjust enrichment of the principal
C.Authority that arises automatically whenever an agency relationship is created by contract
D.Authority the principal has actually conferred on the agent, whether expressly or by implication
Explanation: Actual authority is the authority the principal genuinely grants the agent, either expressly (by words) or by implication (as reasonably incidental to the express grant or the position). It is determined by the agreement between principal and agent, not by appearances to outsiders.
3An agent enters into a contract purportedly on behalf of a principal but in fact has no authority to do so. The principal later learns of the contract and, with full knowledge, accepts its benefits and treats it as binding. What is the legal effect?
A.The contract remains void because authority cannot be created after the fact
B.The principal has ratified the contract, which is treated as authorized from the outset
C.Only the agent is bound, because ratification requires a fresh signed agreement
D.The third party may rescind because ratification is ineffective against an unauthorized act
Explanation: Ratification allows a principal to adopt an unauthorized contract made on its behalf. Once ratified with full knowledge of the material facts, the contract is treated as if it had been authorized from the moment it was made, binding the principal retroactively.
4Why is the agency relationship generally described as fiduciary?
A.Because the agent owes the principal duties of loyalty and good faith, including avoiding undisclosed conflicts and secret profits
B.Because the agent must always indemnify the principal for any business losses
C.Because the principal guarantees the agent a fixed commission regardless of performance
D.Because the agent and principal are jointly and severally liable to all third parties
Explanation: An agent acts on the principal's behalf and is trusted with the principal's affairs, so the law imposes fiduciary duties of loyalty and good faith. The agent must avoid conflicts of interest, must not make secret profits, and must account to the principal.
5An agent, while acting within the scope of authority and in the ordinary course of the principal's business, negligently injures a third party. Which principle most directly makes the principal liable?
A.The indoor management rule
B.The doctrine of ultra vires
C.Vicarious liability of the principal for torts committed by the agent within the scope of authority
D.The rule in Salomon v Salomon
Explanation: A principal is vicariously liable for the torts of an agent committed within the scope of the agent's authority and in furtherance of the principal's business. This is closely analogous to an employer's liability for an employee acting in the course of employment.
6Under the common law and provincial Partnership Acts, which definition best captures a 'partnership'?
A.A relationship that exists only where the partners have signed a written partnership agreement
B.Any agreement between two or more persons to share the ownership of property
C.A separate legal entity formed by filing articles with a provincial registrar
D.The relation that subsists between persons carrying on a business in common with a view to profit
Explanation: The Partnership Acts define partnership as the relation between persons carrying on a business in common with a view to profit. The three elements are a business, carried on in common, with a profit motive — substance governs, regardless of what the parties call themselves.
7Two people share the net profits of a business. Under the Partnership Act, what is the evidentiary effect of profit-sharing on the question of whether a partnership exists?
A.It conclusively establishes that a partnership exists
B.It is legally irrelevant to whether a partnership exists
C.It is prima facie (presumptive) evidence of partnership, but is not conclusive
D.It establishes a partnership only if the parties also share losses equally
Explanation: The Partnership Act provides that the receipt of a share of the profits of a business is prima facie evidence that the recipient is a partner, but this presumption can be rebutted (for example, where the payment is repayment of a debt, wages, or an annuity). It is not conclusive.
8A partner in a trading partnership, acting in the usual way of the firm's business, buys inventory on credit from a supplier, though the partners had privately agreed that only the managing partner could make such purchases. Is the firm bound to the supplier?
A.No, because the internal restriction limited that partner's authority
B.No, because only the managing partner can bind the firm in any circumstance
C.Yes, because every partner is an agent of the firm for acts done in the usual course of its business
D.Yes, but only if the other partners later ratify the purchase
Explanation: Under the Partnership Act, every partner is an agent of the firm and the other partners for the purpose of the partnership business. An act done in the usual way of carrying on the firm's business binds the firm unless the partner had no authority AND the third party knew of the limitation or did not know the person was a partner.
9In a general partnership, what is the nature of the partners' liability to third parties for the debts and obligations of the firm incurred while they are partners?
A.Each partner is jointly liable (and in many jurisdictions jointly and severally for wrongs) with personal, unlimited exposure
B.Partners have no personal liability; only the firm's assets are at risk
C.Each partner is liable only up to the amount of capital they contributed
D.Liability falls solely on the partner who incurred the particular obligation
Explanation: A defining feature of a general partnership is that partners are personally liable for the firm's debts. The Partnership Act makes partners jointly liable for the firm's debts and obligations and jointly and severally liable for loss or injury caused by a partner's wrongful act in the ordinary course. Liability is unlimited, exposing personal assets.
10A partner secretly diverts a business opportunity that came to her in the course of the partnership to her own personal company, earning a profit. What must she do under the partnership's fiduciary duties?
A.Account to the firm for the profit she made from the opportunity
B.Nothing, because partners are free to compete with the firm
C.Pay only nominal damages, because no actual loss to the firm was proven
D.Disclose the profit but may keep it if she acted in good faith
Explanation: Partners owe each other fiduciary duties of utmost good faith. The Partnership Act requires a partner to account to the firm for any benefit derived without consent from any transaction concerning the partnership or from use of partnership property, name, or business connection. She must disgorge the secret profit.

About the NCA Business Organizations Practice Questions

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