Chapter 8 “Contracts”

Question 1

What is the definition of a contract?

Answer 1

Promises that are enforceable with predictable consequences for performance failures

Contracts enable buyers and sellers to account for future risks or have confidence in exchanging valuables.

Question 2

True or False: All promises are legal contracts.

Answer 2

False

Question 3

What are the two primary sources of contract law?

Answer 3

• Legislation
• Common Law

Legislation often refers to the Uniform Commercial Code (UCC) for contracts involving goods.

Question 4

Classify contracts according to their types.

Answer 4

• Bilateral contracts
• Unilateral contracts
• Express contracts
• Implied-in-fact contracts
• Implied-in-law or quasi-contracts

Question 5

What type of contract arises from the conduct of the parties rather than from words?

Answer 5

Implied-in-fact contracts

Question 6

What is a quasi-contract?

Answer 6

Judicial remedy to prevent one party from receiving unjust enrichment

Applies when no actual contract exists to cover the dispute.

Question 7

What is the difference between an executed contract and an executory contract?

Answer 7

• Executed contract: Parties have performed their promises
• Executory contract: Parties have not yet performed their agreement

Question 8

What must an offer to contract include?

Answer 8

• A specific promise
• A specific demand
• Definite and specific terms

Question 9

List the ways an offer can be terminated.

Answer 9

• Revocation
• Rejection
• Counteroffer
• Lapse of time
• Subject matter destruction
• Offeror death or insanity
• Subject matter illegality

Question 10

What is required for acceptance of a bilateral contract?

Answer 10

The offeree must make the required promise

Question 11

What does the mirror image rule state?

Answer 11

Acceptance must match the offer exactly to create a binding contract

Question 12

According to Section 2-207 of the UCC, how is an expression of acceptance treated?

Answer 12

As an acceptance

Question 13

True or False: Silence on the offeree’s part implies acceptance.

Answer 13

False

Question 14

When does acceptance become legally binding according to the mailbox rule?

Answer 14

When the offeree dispatches it

Question 15

What is consideration in contract law?

Answer 15

Receipt of a legal benefit or the suffering of a legal detriment

Question 16

What is ‘accord and satisfaction’?

Answer 16

Resolving a dispute over an amount owed by reaching a compromise

Question 17

What does the term ‘preexisting obligation’ mean?

Answer 17

A party does not give consideration by promising to do something they are already obligated to do

Question 18

What is a promise to make a gift considered in contract law?

Answer 18

Not enforceable as it lacks consideration

Question 19

Fill in the blank: A minor’s contract is generally _______.

Answer 19

voidable

Question 20

What can render a contract void?

Answer 20

Commission of a crime or tort, or violation of accepted standards of behavior

Question 21

What is fraud in the context of contract law?

Answer 21

Intentional misstatement of fact that induces another to enter into a contract

Question 22

What does the Statute of Frauds require?

Answer 22

Certain contracts to be in writing

Question 23

List the types of contracts that must be in writing according to the Statute of Frauds.

Answer 23

• Sale of an interest in land
• Collateral promise to pay another’s debt
• Contracts that cannot be performed in a year
• Sale of goods of $500 or more

Question 24

What are the exceptions to the writing requirement of the Statute of Frauds?

Answer 24

• Part performance
• Rules involving goods
• Judicial admission