Contract Law Quiz

Daniel and Anika enter into a contract, fully aware that the agreement is for an illegal purpose. What is the consequence of such a contract?

• It is voidable at the discretion of the parties.

• It is enforceable in court.

• It is not enforceable in court.

• It is automatically valid.

Answer explanation

A contract for an illegal purpose is not enforceable in court. Since Daniel and Anika knowingly entered into such an agreement, it lacks legal validity, making the correct choice that it is not enforceable.

Charlotte enters into a contract with a company, but later discovers that she was misled about an important detail. In the context of contract law, what does it mean if the contract is 'voidable'?

• The contract can be invalidated at the discretion of one party.

• The contract is valid only if in writing.

• The contract is automatically invalid.

• The contract can be enforced by either party.

Answer explanation

A 'voidable' contract means that one party has the option to invalidate it due to misrepresentation or other issues. Therefore, the correct choice is that the contract can be invalidated at the discretion of one party.

Scarlett promises to give Arjun $1,000 to help him start his business, and Arjun relies on this promise by signing a lease for office space. Later, Scarlett decides not to give the money. What is the legal theory that allows Arjun to enforce Scarlett's promise even though there was no consideration?

• Promissory Estoppel

• Performance of an Existing Duty

• Unilateral Contract

• Legality

Answer explanation

The legal theory that allows Arjun to enforce Scarlett's promise is Promissory Estoppel. This doctrine applies when a party relies on a promise to their detriment, even without consideration, as Arjun did by signing the lease.

Jackson, who has been diagnosed with a severe mental disorder, signs a contract to sell his car. What happens if it is found that Jackson lacked the mental capacity to enter into the contract?

• The contract is enforceable.

• The contract is voidable.

• The contract is automatically void.

• The contract is valid only if in writing.

Answer explanation

If Jackson lacked mental capacity, the contract is voidable. This means he can choose to affirm or void the contract, as individuals with mental incapacity are not fully able to understand the implications of their agreements.

Nora and Hannah are entering into a business agreement. Which of the following is NOT a requirement for their contract to be valid?

• Legality

• Mental Capacity

• Promissory Estoppel

• Consideration

Answer explanation

Promissory Estoppel is not a requirement for a valid contract. The essential elements are legality, mental capacity, and consideration, which must be present for the contract between Nora and Hannah to be valid.

Luna is considering signing a contract to purchase a car. What is required for Luna to have the competency to enter into this contract?

• Being over the age of 21

• Having a written agreement

• Understanding the nature and consequences of the transaction

• A transient surge of lucidity

Answer explanation

For Luna to have the competency to enter into the contract, she must understand the nature and consequences of the transaction. This ensures she is aware of her rights and obligations, which is essential for valid consent.

Avery and Abigail are discussing different types of agreements. Which of the following is an example of an agreement between them that is likely not intended to be legally binding?

• A contract for the sale of a house

• An agreement between family members to go out to dinner

• A contract for employment

• A contract for the purchase of a car

Answer explanation

The correct choice is 'An agreement between family members to go out to dinner' because such informal arrangements are typically not intended to create legal obligations, unlike contracts for the sale of a house, employment, or a car.

William promises Mason that he will not enforce a debt owed by Mason, and based on this promise, Mason takes certain actions. Later, William tries to enforce the debt. What is the role of promissory estoppel in this situation?

• To enforce promises made without consideration

• To allow minors to enter into contracts

• To void illegal contracts

• To ensure all contracts are in writing

Answer explanation

Promissory estoppel allows enforcement of promises made without consideration when one party relies on the promise to their detriment. Here, Mason relied on William's promise not to enforce the debt.

Jackson and Benjamin are discussing a business arrangement. Which of the following contracts between them must be in writing under the Statute of Frauds?

• A contract for a short-term lease

• A contract for a freelance project

• A contract for the sale of a bicycle

• A contract that cannot be performed in less than one year

Answer explanation

Under the Statute of Frauds, contracts that cannot be performed within one year must be in writing. Therefore, the correct choice is 'A contract that cannot be performed in less than one year'.

James is planning to buy a house from Harper. Under the Statute of Frauds, which type of contract must be in writing for their agreement to be enforceable?

• Contracts between family members

• Contracts for services that can be completed in less than a year

• Contracts for the purchase of real property

• Contracts for the sale of goods under $500

Answer explanation

Under the Statute of Frauds, contracts for the purchase of real property must be in writing to be enforceable. Therefore, James and Harper's agreement requires a written contract.