Question 1

A party's intent to enter into a contract is judged by their personal,subjective intent or belief.

Accepted Answer

A party's intent to enter into a contract is judged by their outward manifestations of words and conduct, not their personal, subjective intent or belief. This is known as the objective theory of contracts.

Question 2

An incidental beneficiary is not entitled to enforce the promise of a promisor.

Accepted Answer

An incidental beneficiary is a third party who may benefit from a contract but is not intended to receive any direct benefit from it. They do not have the right to enforce the promise of the promisor as they are not a party to the contract.

Question 3

A contract lacking a quantity term,when appropriate,may not be enforceable.

Accepted Answer

According to the Statute of Frauds, contracts for the sale of goods worth $500 or more must have a quantity term to be enforceable. Additionally, most jurisdictions require contracts to have a definite and certain quantity term to be enforceable. If a contract does not have a quantity term, it may be too uncertain to be enforceable.

Question 4

Only a mistake in value will make a contract voidable.

Accepted Answer

A contract can also be voidable if there is a mistake in fact, fraud, duress, undue influence, or incapacity of one of the parties.

Question 5

A covenant not to compete is enforceable only if it is necessary to restrain trade.

Accepted Answer

A covenant not to compete is enforceable if it is reasonable in scope, duration, and geographic area, and if it protects a legitimate business interest, not merely to restrain trade.

Question 6

A contract entered into under undue influence is voidable.

Accepted Answer

A contract entered into under undue influence is voidable, not automatically void. The innocent party has the option to either validate or terminate the contract.

Question 7

Under the Statute of Frauds,all contracts must be in writing to be enforceable.

Accepted Answer

While some contracts must be in writing to be enforceable under the Statute of Frauds, not all contracts are required to be in writing. For example, contracts for goods under $500 and contracts that can be performed within one year do not need to be in writing.

Question 8

One of the elements of a valid contract is a fair price.

Accepted Answer

One of the elements of a valid contract is mutual consideration, which does not necessarily have to be a fair price. As long as both parties provide something of value to the other, the consideration is considered valid.

Question 9

An unequivocal acceptance operates as a rejection of the original offer.

Accepted Answer

An unequivocal acceptance operates as an acceptance of the original offer, not a rejection.

Question 10

An executory contract is one that has been fully performed.

Accepted Answer

An executory contract is one that has not been fully performed yet. It means that some or all of the parties involved in the contract have yet to fulfill their obligations under the contract.

Question 11

If a contract stipulates that a right cannot be assigned,then ordinarily it cannot be assigned.

Accepted Answer

If a contract specifically states that a right cannot be assigned, then that means the parties involved have agreed that it cannot be delegated to someone else. This is a valid and enforceable agreement, and thus the right cannot be assigned unless both parties agree to a modification of the contract.

Question 12

An advertisement is generally considered an invitation to negotiate.

Accepted Answer

An advertisement is not a binding offer, but rather an invitation for the customer to make an offer or negotiate terms.

Question 13

A contract is void if its purpose is illegal.

Accepted Answer

If the purpose of a contract is illegal, then it is considered void and unenforceable by law.

Question 14

Inadequate consideration may reflect a lack of bargained-for exchange.

Accepted Answer

Inadequate consideration means that one party did not receive sufficient value in exchange for their promise or performance. This can often indicate a lack of a true bargained-for exchange, meaning that one party did not receive something of equal value in return for their promise or performance. Therefore, inadequate consideration can reflect a lack of bargained-for exchange.

Question 15

An obligation is enforceable only if it is supported by past consideration.

Accepted Answer

An obligation is enforceable only if it is supported by consideration, but the consideration can be either past, present or future. Past consideration, without more, is generally insufficient to create an enforceable obligation.

Question 16

An innocent party can rescind a fraudulent contract.

Accepted Answer

An innocent party has the right to rescind a fraudulent contract because they were deceived into entering into it. Rescinding a contract means invalidating it from the beginning, as if it never existed, and restoring the parties to their original positions before the contract was made.

Question 17

A minor may not contract with an adult.

Accepted Answer

Minors can enter into contracts with adults, but such contracts are generally voidable at the minor's discretion, meaning the minor can choose to affirm or void the contract upon reaching the age of majority.

Question 18

An offer that a statute makes illegal automatically terminates the offer.

Accepted Answer

This is known as the doctrine of illegality or illegal subject matter. If an offer is based on an illegal act, it is automatically terminated and cannot be enforced.

Question 19

Contractual capacity refers to the size or volume of a contract.

Accepted Answer

Contractual capacity refers to a person's legal ability to enter into a contract. It is determined by factors such as age, mental capacity, and legal status, and has nothing to do with the size or volume of the contract.

Question 20

To be legally sufficient,consideration must include something of economic value.

Accepted Answer

The answer of To be legally sufficient,consideration must include something...

Quiz 9: Contract Formation