CP CP Contracts & Business Law 1 — Questions and Answers
Question 1: Under California law, which of the following is NOT an essential element of a valid contract?
- Offer
- Acceptance
- Consideration
- Written documentation (Correct answer)
Correct answer: Written documentation
California contracts generally require offer, acceptance, consideration, and mutual assent; writing is only required for certain contracts under the Statute of Frauds.
Question 2: California's Statute of Frauds (Civil Code § 1624) requires a writing for which of the following contracts?
- A contract for the sale of a car for $400
- A contract for the sale of real property (Correct answer)
- An employment contract lasting 3 months
- A contract for services valued at $200
Correct answer: A contract for the sale of real property
California Civil Code § 1624 requires contracts for the sale of real property to be in writing and signed by the party to be charged.
Question 3: In contract law, 'consideration' is best defined as:
- A party's polite behavior during negotiations
- A bargained-for exchange of something of legal value (Correct answer)
- The written terms of a contract
- The parties' good-faith intentions
Correct answer: A bargained-for exchange of something of legal value
Consideration is the bargained-for exchange—each party must give something of legal value, such as a promise, act, or forbearance.
Question 4: Which California statute governs the formation and enforcement of contracts with consumers and sets unconscionability standards?
- California Civil Code § 1750 (CLRA)
- California Civil Code § 1670.5 (Correct answer)
- California Business and Professions Code § 17200
- California Commercial Code § 2302
Correct answer: California Civil Code § 1670.5
California Civil Code § 1670.5 codifies the unconscionability doctrine, allowing courts to refuse enforcement of oppressive or one-sided contract terms.
Question 5: A California LLC is primarily governed by which statute?
- California Corporations Code § 100 et seq.
- California Revised Uniform Limited Liability Company Act (Corp. Code § 17701 et seq.) (Correct answer)
- California Business and Professions Code § 6000
- California Labor Code § 2750.3
Correct answer: California Revised Uniform Limited Liability Company Act (Corp. Code § 17701 et seq.)
California LLCs are governed by the California Revised Uniform Limited Liability Company Act, codified at Corporations Code § 17701 et seq.
Question 6: Under the California Commercial Code (UCC Article 2), a contract for the sale of goods valued at $500 or more must be:
- Notarized
- In writing and signed by the party against whom enforcement is sought (Correct answer)
- Witnessed by two disinterested parties
- Approved by the California Secretary of State
Correct answer: In writing and signed by the party against whom enforcement is sought
California Commercial Code § 2201 (Statute of Frauds for goods) requires a written contract signed by the party to be charged for goods sales of $500 or more.
CP CP Contracts & Business Law 1
Under California law, which of the following is NOT an essential element of a valid contract?