AL Bar Contracts 2 — Questions and Answers
Question 1: A contract is voidable on the ground of mutual mistake when:
- One party made a computational error
- Both parties were mistaken about a basic assumption materially affecting the agreed exchange (Correct answer)
- The price was unreasonably low
- The contract is ambiguous on its face
Correct answer: Both parties were mistaken about a basic assumption materially affecting the agreed exchange
Mutual mistake requires both parties to share a mistaken belief about a basic assumption that materially affects the agreed exchange of performances.
Question 2: An offeree's power of acceptance is terminated by:
- The offeree's request for more information
- Rejection, counteroffer, lapse of time, revocation, or death of the offeror (Correct answer)
- The offeree beginning performance
- A change in market conditions
Correct answer: Rejection, counteroffer, lapse of time, revocation, or death of the offeror
The power of acceptance terminates by rejection, counteroffer, lapse, revocation before acceptance, or the death or incapacity of either party.
Question 3: Under the doctrine of promissory estoppel, a promise is enforceable without consideration if:
- It is in writing
- The promisor should have reasonably expected reliance, reliance occurred, and injustice can only be avoided by enforcement (Correct answer)
- Both parties are merchants
- The promise involves more than $500
Correct answer: The promisor should have reasonably expected reliance, reliance occurred, and injustice can only be avoided by enforcement
Promissory estoppel requires a promise, foreseeable and actual reliance to the promisee's detriment, and that enforcement is necessary to avoid injustice.
Question 4: Expectation damages in contract law are designed to put the non-breaching party in the position they would have been in:
- Before the contract was formed
- If the contract had been fully performed (Correct answer)
- At the time the breach was discovered
- After any unjust enrichment is returned
Correct answer: If the contract had been fully performed
Expectation damages award the benefit of the bargain, placing the non-breaching party in the economic position they would have occupied had the contract been performed.
Question 5: A condition precedent in a contract is one that must occur:
- After the party's performance duty arises
- Before a party's duty to perform arises (Correct answer)
- Simultaneously with performance
- Within a reasonable time after breach
Correct answer: Before a party's duty to perform arises
A condition precedent must occur before the duty to perform under the contract becomes operative.
Question 6: The doctrine of impossibility of performance excuses a party's contractual obligation when:
- Performance becomes financially burdensome
- Performance becomes objectively impossible due to an unforeseen event after contract formation (Correct answer)
- A party subjectively cannot perform
- Market conditions change drastically
Correct answer: Performance becomes objectively impossible due to an unforeseen event after contract formation
Impossibility excuses performance when an unforeseen supervening event makes the promised performance objectively impossible, not merely more difficult or costly.
AL Bar Contracts 2
A contract is voidable on the ground of mutual mistake when: