MD Bar Contracts and Sales 1 — Questions and Answers
Question 1: What is the mailbox rule in contract law?
- An acceptance is effective when dispatched by the offeree, not when received by the offeror (Correct answer)
- Contracts must be mailed to be valid
- An offer expires when placed in the mailbox
- All contract communications must be in writing
Correct answer: An acceptance is effective when dispatched by the offeree, not when received by the offeror
The mailbox rule provides that an acceptance becomes effective at the moment of dispatch (when mailed), creating a contract even before the offeror receives it.
Question 2: What is consideration in contract formation?
- A bargained-for exchange of legal value between the parties (Correct answer)
- The physical contract document
- The amount of money involved in the deal
- A required waiting period before signing
Correct answer: A bargained-for exchange of legal value between the parties
Consideration is the legal concept requiring each party to give something of value — a promise, performance, or forbearance — in exchange for the other's promise or performance.
Question 3: What is promissory estoppel?
- A doctrine enforcing promises when a party reasonably relied on the promise to their detriment (Correct answer)
- A promise that was signed and notarized
- A promise made in a courtroom
- A requirement that all promises must be in writing
Correct answer: A doctrine enforcing promises when a party reasonably relied on the promise to their detriment
Promissory estoppel allows enforcement of a promise without consideration when the promisor should have expected reliance, the promisee did rely to their detriment, and injustice can only be avoided by enforcement.
Question 4: What is the statute of frauds?
- Certain contracts must be in writing to be enforceable, including land sales and contracts not performable within one year (Correct answer)
- All contracts must be in writing
- Fraud automatically invalidates any contract
- Only oral contracts are subject to fraud claims
Correct answer: Certain contracts must be in writing to be enforceable, including land sales and contracts not performable within one year
The statute of frauds requires a signed writing for certain categories of contracts including land sales, contracts not performable within one year, surety agreements, and contracts for goods over $500 under the UCC.
Question 5: What is a material breach of contract?
- A breach so substantial that it excuses the non-breaching party from further performance (Correct answer)
- Any minor deviation from the contract terms
- A breach that occurs on a material (physical) object
- A breach by a materials supplier
Correct answer: A breach so substantial that it excuses the non-breaching party from further performance
A material breach is a failure to perform a substantial part of the contract, going to the essence of the agreement and depriving the other party of the expected benefit.
Question 6: What is specific performance as a contract remedy?
- A court order requiring the breaching party to perform their contractual obligations (Correct answer)
- A monetary payment calculated at a specific rate
- A performance evaluation of contract compliance
- A penalty clause in the contract
Correct answer: A court order requiring the breaching party to perform their contractual obligations
Specific performance is an equitable remedy ordering the breaching party to actually perform their obligations, typically available when monetary damages are inadequate and the subject matter is unique.
MD Bar Contracts and Sales 1
What is the mailbox rule in contract law?