Contract Law Practice Quiz (9 questions)

All questions and answers

1. What will a court generally do when a claim is based on an illegal bargain that violates a statute or public policy?

Enforce the bargain if both parties consented
Rewrite the bargain to remove its unlawful terms
Decline to hear the case based on that bargain
Award damages to the party who performed

Decline to hear the case based on that bargain

Explanation

Courts will not hear a case founded on an illegal bargain that violates a statute or public policy. Consent between the parties does not make such a bargain enforceable.

2. Which arrangement is an example of a contract that may violate public policy?

A contract setting a standard delivery schedule
An agreement documenting a reasonable consulting fee
An agreement imposing an unreasonable restraint on trade
A contract allocating ordinary business expenses

An agreement imposing an unreasonable restraint on trade

Explanation

Unreasonable restraints of trade are among the types of arrangements that violate public policy, along with exculpatory clauses and unconscionable contracts. A standard delivery schedule does not, by itself, fit one of those categories.

3. Which three groups are specifically addressed in connection with contractual capacity?

Creditors, debtors, and guarantors
Minors, incompetent persons, and intoxicated persons
Employees, agents, and independent contractors
Sellers, buyers, and brokers

Minors, incompetent persons, and intoxicated persons

Explanation

The capacity rules address minors, incompetent persons, and intoxicated persons. Employees, agents, and independent contractors describe roles in relationships, not the three groups identified by these capacity rules.

4. A minor has not affirmed a contract and wants to cancel it after turning 18. When may the minor disaffirm?

Within a reasonable time after reaching majority
Only before reaching the age of majority
After reaching majority, but only with the other party's consent
At any time, even after affirming the contract

Within a reasonable time after reaching majority

Explanation

A minor may disaffirm while still a minor or within a reasonable time after reaching majority, if the contract has not been ratified or affirmed. The minor need not act before reaching majority, but prior affirmation prevents disaffirmance under this rule.

5. What is the function of the Statute of Frauds in contract law?

It excludes oral agreements that would alter the terms of any written contract.
It prevents parties from forming specified contracts unless a court first approves them.
It requires every party to sign any written contract before it can be enforced.
It makes specified contracts unenforceable unless required written evidence is provided.

It makes specified contracts unenforceable unless required written evidence is provided.

Explanation

The Statute of Frauds is an enforcement mechanism that requires written evidence for specified categories of contracts. The parol evidence rule, rather than the Statute of Frauds, excludes oral agreements that would change the terms of a written contract.

6. At a typical real estate closing, which two performances commonly occur as concurrent conditions?

Recording of the deed and approval of the mortgage commitment
Approval of a mortgage application and delivery of the deed
Delivery of the deed and payment of the purchase price
Inspection of the property and payment of closing costs

Delivery of the deed and payment of the purchase price

Explanation

The deed is commonly delivered at the same time the buyer makes payment, illustrating concurrent conditions. A mortgage commitment is an example of a condition precedent, not one of the paired closing performances described.

7. What is the purpose of compensatory damages after a breach of contract?

To return to the injured party the value they gave to the other party
To require the breaching party to perform a promise involving unique property
To place the injured party in the position they would have occupied without the breach
To punish the breaching party for malicious conduct

To place the injured party in the position they would have occupied without the breach

Explanation

Compensatory damages aim to restore the injured party to the position they would have occupied had the contract not been breached. Punitive damages address malicious conduct, while restitution focuses on returning value given.

8. How do statutory violations and public-policy violations differ as grounds for treating a bargain as illegal?

A statutory violation concerns restraints of trade, while a public-policy violation concerns gambling restrictions.
A statutory violation breaches a legal rule, while a public-policy violation conflicts with a broader public interest.
A statutory violation conflicts with a broad public interest, while a public-policy violation breaches a licensing rule.
A statutory violation concerns unfair contract terms, while a public-policy violation concerns Sunday business restrictions.

A statutory violation breaches a legal rule, while a public-policy violation conflicts with a broader public interest.

Explanation

A statutory violation breaks a written legal limit, whereas a public-policy violation conflicts with a broader public interest. Sunday-business and gambling restrictions are examples of statutory rules, not the defining distinction between the two categories.

9. What is the consequence when a minor disaffirms a contract for goods that are not necessaries?

The minor may disaffirm only after compensating the other party for ordinary wear.
The minor must return the property in its original condition to receive a partial refund.
The minor may keep the property but must pay its reasonable value.
The minor must return the property in its current condition for a full refund.

The minor must return the property in its current condition for a full refund.

Explanation

Disaffirmance requires the minor to return the property received, even if its condition has changed, in exchange for a full refund. A duty to pay reasonable value applies to necessaries actually furnished and consumed, not to other goods.

Study with flashcards

Lock in the answers with 10 flashcards on Contract Law.

What do courts refuse to hear when a bargain violates a statute or public policy?

A case based on that illegal bargain.

Which three groups’ contractual capacity is addressed?

Minors, incompetent persons, and intoxicated persons.

What defines a minor, and how does the age of majority vary?

A minor is below the age of majority, which is 18 or 21 depending on the state.

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