CLA/CP Exam Contract Law and Formation 2 — Questions and Answers
Question 1: Under the mailbox rule, an acceptance transmitted by mail is effective at what point?
- When the offeror receives it
- When it is properly dispatched by the offeree (Correct answer)
- When the offeror reads it
- When the post office delivers it
Correct answer: When it is properly dispatched by the offeree
The mailbox rule makes acceptance effective upon dispatch (dropping in the mailbox), not upon receipt by the offeror.
Question 2: A contract formed under duress is best described as:
- Void ab initio
- Voidable at the option of the coerced party (Correct answer)
- Unenforceable only against third parties
- Valid because both parties signed
Correct answer: Voidable at the option of the coerced party
Duress renders a contract voidable, not void; only the coerced party may elect to affirm or rescind it.
Question 3: Which doctrine prevents a party from using the statute of frauds as a defense when the other party has substantially performed in reliance on an oral contract?
- Promissory estoppel (Correct answer)
- Accord and satisfaction
- Quantum meruit
- Equitable subrogation
Correct answer: Promissory estoppel
Promissory estoppel can bar the statute of frauds defense when injustice can only be avoided by enforcement of the oral promise.
Question 4: An advertisement in a newspaper is generally treated as:
- An offer that can be accepted by any reader
- An invitation to make an offer (Correct answer)
- A firm offer under the UCC
- A binding contract upon publication
Correct answer: An invitation to make an offer
Advertisements are generally invitations to make offers, not offers themselves, because they lack specific quantity and addressee.
Question 5: Which of the following is an example of an illusory promise that negates contract formation?
- 'I will sell you my car for $5,000.'
- 'I will buy your car if I feel like it.' (Correct answer)
- 'I will deliver goods within 30 days.'
- 'I promise to pay you upon completion.'
Correct answer: 'I will buy your car if I feel like it.'
A promise conditioned solely on the promisor's own whim or desire is illusory because it commits the promisor to nothing.
Question 6: Under UCC Article 2, a contract for the sale of goods of $500 or more must generally be in writing under:
- The parol evidence rule
- The statute of frauds (Correct answer)
- The perfect tender rule
- The battle of the forms rule
Correct answer: The statute of frauds
UCC § 2-201 requires a writing signed by the party to be charged for contracts involving goods of $500 or more.
Question 7: Which element distinguishes a bilateral contract from a unilateral contract?
- A bilateral contract involves only one party making a promise
- A bilateral contract is formed by an exchange of mutual promises (Correct answer)
- A unilateral contract requires a written agreement
- A unilateral contract cannot be revoked after formation
Correct answer: A bilateral contract is formed by an exchange of mutual promises
A bilateral contract is formed when two parties exchange promises to perform, whereas a unilateral contract is formed by performance in response to a promise.
CLA/CP Exam Contract Law and Formation 2
Under the mailbox rule, an acceptance transmitted by mail is effective at what point?