CLA/CP Exam CLA/CP Contract Law and Formation 1 — Questions and Answers
Question 1: Which of the following best describes an 'illusory promise' in contract law?
- A promise that is enforceable only if the other party performs first
- A promise that appears binding but leaves performance entirely to the promisor's discretion (Correct answer)
- A promise made under duress that cannot be enforced
- A promise supported by nominal consideration
Correct answer: A promise that appears binding but leaves performance entirely to the promisor's discretion
An illusory promise is one that gives the promisor complete discretion over whether to perform, meaning it imposes no real obligation. Because no true commitment exists, it fails as consideration, making any resulting agreement unenforceable.
Question 2: Under the common law mirror image rule, what happens when an offeree responds to an offer with modified terms?
- The original offer is accepted and the modifications become part of the contract
- The response operates as a counteroffer and rejects the original offer (Correct answer)
- The modifications are void but the original acceptance stands
- The offeror must explicitly reject the modified terms in writing
Correct answer: The response operates as a counteroffer and rejects the original offer
Under the mirror image rule, an acceptance must match the offer exactly. Any change in terms constitutes a counteroffer, which simultaneously rejects the original offer and places the power of acceptance with the original offeror.
Question 3: Which of the following transactions is governed by Article 2 of the Uniform Commercial Code rather than the common law of contracts?
- A lease of commercial office space for two years
- A contract for an attorney to draft a will
- A contract for the sale of 500 widgets (Correct answer)
- A partnership agreement between two business owners
Correct answer: A contract for the sale of 500 widgets
Article 2 of the UCC governs contracts for the sale of goods — movable, tangible personal property. The sale of 500 widgets qualifies as a goods transaction. Real property leases, personal service contracts, and partnership agreements are governed by common law.
Question 4: A contractor offers to build a deck for $8,000. Before the homeowner accepts, the contractor calls to revoke the offer. The homeowner argues the offer was irrevocable. Under common law, which fact would make the offer irrevocable?
- The offer was made in writing and signed by the contractor
- The homeowner had already begun clearing the yard in preparation
- The homeowner paid the contractor $50 to keep the offer open for 30 days (Correct answer)
- The offer specified a 30-day acceptance window
Correct answer: The homeowner paid the contractor $50 to keep the offer open for 30 days
Under common law, an offer is freely revocable unless it is supported by separate consideration — creating an option contract. Paying $50 to keep the offer open for 30 days provides that consideration, making it binding. Merely specifying a time window does not prevent revocation without consideration.
Question 5: What is the legal effect of a contract formed under economic duress?
- The contract is void ab initio and has no legal effect
- The contract is voidable at the election of the party who was coerced (Correct answer)
- The contract is enforceable but damages are limited to restitution
- The contract is unenforceable only if the duress was physical in nature
Correct answer: The contract is voidable at the election of the party who was coerced
A contract formed under duress — including economic duress — is voidable, not void. This means it remains in effect until the coerced party chooses to disaffirm it. The victim has the power to enforce or avoid the contract, but it is not automatically nullified.
Question 6: Which of the following scenarios best illustrates the concept of 'past consideration'?
- Alice promises to pay Bob $500 if he paints her fence next week
- Carlos gives Diana $100 in exchange for her promise to deliver goods
- Eve promises to pay Frank $200 for rescuing her dog last month (Correct answer)
- Grace and Henry exchange mutual promises to perform services
Correct answer: Eve promises to pay Frank $200 for rescuing her dog last month
Past consideration refers to an act that was already completed before the promise was made. Eve's promise to pay Frank for a rescue that already occurred cannot serve as valid consideration because the act was not done in exchange for the promise — it predates it.
CLA/CP Exam CLA/CP Contract Law and Formation 1
Which of the following best describes an 'illusory promise' in contract law?