HCCC-BUSINESS LAW – SAMPLE CONTRACT TEST QUESTIONS 1. For an offer to be valid, it need only be: (1) definite and certain, (2) communicated to the offeree. F 2. To be definite and certain, an offer should specify all the terms and conditions of the contract. T 3. The communication of an offer is usually done in usual ways, including oral communication (in person or by telephone, television, or radio) and written communication (such as letters, faxes, e-mails or other written forms). T 4. Offers made in anger or jest, or those made under severe emotional strain are not made with the intent of entering into a valid, enforceable agreement. T 5. Any lack of seriousness of intent on the part of an offeror communicating an offer need not be apparent to a reasonable person. F 6. A call for a bid or estimate for materials to be furnished or work to be performed is not considered an offer, but rather a request for an offer or an invitation to negotiate that can be accepted or rejected by the person calling for the bid. T 7. An advertisement, such as one that appears every day in the newspaper or on television or radio, is generally regarded as an invitation to trade. T 8. When an advertisement offers a reward for information that might lead to the arrest of a criminal or for the return of a lost thing, it is regarded as a general offer to the public at large. T 9. An acceptance of a public offer by anyone, as indicated by the performance of the act, results in an un-enforceable contract. F 10. It is the general rule that an acceptance of an offer becomes effective when the parties so intend it to be effective. T 11. If the offer is silent as to the time the acceptance will be effective, then the “mailbox rule” states that an acceptance sent via the postal system or by courier (special messenger) is effective when received by the offeror. F 12. An acceptance communicated by telephone or fax is considered effective when received because the acceptance is communicated immediately. T 13. Silence may indicate acceptance or assent to an offer when both parties agree beforehand that this (silence) is to be the means of acceptance. T 14. A counter-offer is considered a conditional or qualified acceptance of an offer and is generally interpreted as a rejection of the initial offer and, therefore, that initial offer is not binding on the parties. T 15. It is a general rule of contract law that provides that the acceptance of an offer must be in the same terms as the offer and if there is any differences between the terms of the offer and the terms of the acceptance, the “acceptance” is considered a counteroffer which immediately rejects the initial offer. T 16. Offers are terminated only by revocation by offeror or rejection by offeree. F 17. An Offeror can take back, withdraw or revoke an offer provided that the offer has not been rejected or accepted by the Offeree. T 18. An offer, once rejected by the offeree, can not be revived or made into a count ...

1. HCCC-BUSINESS LAW – SAMPLE CONTRACT TEST
QUESTIONS
1. For an offer to be valid, it need only be: (1) definite and
certain, (2) communicated to the offeree. F
2. To be definite and certain, an offer should specify all the
terms and conditions of the contract. T
3. The communication of an offer is usually done in usual ways,
including oral communication (in person or by telephone,
television, or radio) and written communication (such as letters,
faxes, e-mails or other written forms). T
4. Offers made in anger or jest, or those made under severe
emotional strain are not made with the intent of entering into a
valid, enforceable agreement. T
5. Any lack of seriousness of intent on the part of an offeror
communicating an offer need not be apparent to a reasonable
person. F
6. A call for a bid or estimate for materials to be furnished or
work to be performed is not considered an offer, but rather a
request for an offer or an invitation to negotiate that can be
accepted or rejected by the person calling for the bid. T
7. An advertisement, such as one that appears every day in the
newspaper or on television or radio, is generally regarded as an
invitation to trade. T
8. When an advertisement offers a reward for information that
might lead to the arrest of a criminal or for the return of a lost
thing, it is regarded as a general offer to the public at large. T
9. An acceptance of a public offer by anyone, as indicated by
the performance of the act, results in an un-enforceable
contract. F
10. It is the general rule that an acceptance of an offer becomes
effective when the parties so intend it to be effective. T
11. If the offer is silent as to the time the acceptance will be
effective, then the “mailbox rule” states that an acceptance sent
via the postal system or by courier (special messenger) is

2. effective when received by the offeror. F
12. An acceptance communicated by telephone or fax is
considered effective when received because the acceptance is
communicated immediately. T
13. Silence may indicate acceptance or assent to an offer when
both parties agree beforehand that this (silence) is to be the
means of acceptance. T
14. A counter-offer is considered a conditional or qualified
acceptance of an offer and is generally interpreted as a rejection
of the initial offer and, therefore, that initial offer is not binding
on the parties. T
15. It is a general rule of contract law that provides that the
acceptance of an offer must be in the same terms as the offer
and if there is any differences between the terms of the offer
and the terms of the acceptance, the “acceptance” is considered
a counteroffer which immediately rejects the initial offer. T
16. Offers are terminated only by revocation by offeror or
rejection by offeree. F
17. An Offeror can take back, withdraw or revoke an offer
provided that the offer has not been rejected or accepted by the
Offeree. T
18. An offer, once rejected by the offeree, can not be revived or
made into a counteroffer once the communication of the
rejection has been received by the offeror. T
19. If an offeror acknowledges a rejection from the offeree, but
the offeror restates the offer, then the offeree still has the
opportunity to accept, reject or make a counteroffer. T
20. Fraud, is the intentional misstatement or nondisclosure of a
material fact made by one party with the hope of influencing the
other party for the benefit of the party who commits the fraud.
T
21. One of the elements or requirements for there to be a fraud
is that the misstatement be made with knowledge of its falsity
or with reckless disregard of its truth. T
22. “Puffing” is a general expression of opinion (usually by a
salesperson) that is used to persuade a prospective purchaser to

3. buy a product. T
23. “Puffing” is the legal equivalent of a misrepresentation of a
material fact. F
24. In the eyes of the law, “mistake” is a belief that is not in
accord with the facts. T
25. In order for there to be a mistake in contract law, the
mistaken belief must concern an existing fact and not a belief
about what might happen in the future. T
26. In order for the law to declare a contract dissolved because
of a mistake, the mistake must mutual as to subject matter
and/or value of the subject matter of the contract. T
27. When someone uses a power to control the actions of
another because of a special or confidential relationship over
that other person and the power is used improperly or to his or
her personal advantage, “duress” is said to exist. T
28. Undue influence is the act of applying unlawful or improper
pressure or influence to a person in order to gain his or her
agreement to a contract. F
29. A contract that involves parties who have unequal
bargaining power and is usually considered a “take it or leave it
deal” is known as an unconscionable contract. F
30. An contract of adhesion is one that is regarded as
“shockingly unjust or unfair.” F
31. “Forbearance” is the promise to refrain from doing
something that a party has a legal right to do or the promise of
in-action. T
32. A valid contract does not exist if the consideration is a
promise to perform an illegal act, or to avoid performing an act
that is legally already required to be performed. T
33. Traditionally, the courts generally do not make any attempt
to judge whether or not the exchange of Texpenses, is still
bound by the terms of the contract. T
34. A “pre-existing duty” is a promise to pay an existing debt or
to obey the law, or a similar promise of something already
owed. T
35. A “barren promise” is an obligation that a party is already

4. bound to or by law or by some other agreement, which means
the party may not use this as consideration for a new agreement.
T
36. A person who makes a promise without requiring some
benefit in return has made a “gratuitous (gift) promise”. T
37. Agreements based on gratuitous promises are generally not
enforceable. T
38. A promise to make or give someone a gift is a gratuitous
promise. T
39. “Moral consideration” is when a person is not legally bound
to do what he or she may feel obligated to do because of love,
friendship, honor, sympathy, loyalty, conscience. T
40. The promise to repay someone for a benefit after it has
already been received is known as “past consideration”. T
41. In contracts between a minor and a competent person, only
the minor has the privilege of disaffirming or canceling the
contract provided (except) it is a contract for what is termed
“necessities of life”. T
42. For a minor to disaffirm a contract he or she entered into,
that disaffirmance must be done before the minor reached the
legal age of majority or within a reasonable period of time after
reaching adulthood. T
43. If a minor is considered “emancipated” then he or she
assumes many of the right and obligations of a person of legal
age and is not protected by the law of contracts as it pertains to
minors. T
44. Contracts involving a mentally incompetent person are
usually considered voidable at the option of the mentally
incompetent person and therefore such a contract can not be
enforced against that person if he or she does not carry out the
contract, excepting of course a contract that provided
“necessaries of life” to the mentally incompetent person. T
45. If a person makes a contract while so intoxicated by alcohol
or affected by drug use that he or she is unable to understand
the nature and effect of the contract, it is voidable at his or her
option when he/she becomes sober. T

5. 46. A person who was so intoxicated by alcohol or affected by
drug use that he or she is unable to understand the nature and
effect of the contract, when no longer impaired, can chose to
carry out the contract provided he or she does so within a
reasonable period of time after no longer being impaired. T
47. The law does not protect minors who have committed a tort
or a crime and this means that a minor is held responsible for
injury to other persons, damaged property and damaging
statements. T
48. A bilateral contract is one where a promise is offered
seeking a promise in return. T
49. All contracts are not agreement but all agreements are
contracts. F
50. All agreements are not contracts but all contracts are
agreements. T
(PLEASE PROCEED TO MULTIPLE CHOICE QUESTIONS
STARTING ON NEXT PAGE)
SECTION 2: MULTIPLE CHOICE. CHOOSE YOUR
ANSWER BY CIRCLING THE LETTER REPRESENTING
YOUR ANSWER TO EACH OF THE BELOW QUESTIONS OR
STATEMENTS.
1. Jamieson lost an expensive pedigreed dog while at the park.
He placed an advertisement in the Daily Journal, offering a
$200.00 reward for the dog’s safe return. This offer is:
a. Valid, even though directed to thousands of readers, only one
of whom could accept it and is known as a public offer.
b. Valid, provided there is a promise to accept the offer.
c. Not valid, because the offer is not specifying to whom the
offeree is and, therefore, is reaching persons of unknown
identity which makes the offer not definite or specific enough.
A
2. Fraud may be committed by:
a. Spoken or written words only.

6. b. By acts or conduct only.
c. By either written words or acts or conduct, or both.
d. In writing only.
C
3. The unintentional misstatement of a material fact that results
in inducing another to enter into an agreement to his or her loss,
is:
a. Fraud.
b. Intentional misrepresentation.
c. Just misrepresentation also known as innocent
misrepresentation.
d. Unintentional fraud.
e. Neither of the above.
C
4. Chin, a collector of rare paintings, offered to sell a particular
painting by Picasso (catalog number 1401) to Kovacs for
$14,000.00. When it came time to exchange the painting for
the money, it was obvious that Kovacs was expecting a different
Picasso painting (bearing catalog number 1410). Chin was also
surprised because he thought Kovacs wanted to buy the painting
bearing catalog number 1401. Under these facts, the contract
between Chin and Kovacs:
a. Is valid as the mistake was not mutual, but instead unilateral.
b. Is valid because Kovacs was still getting a Picasso which
would still be worth a lot of money.
c. Is invalid because it lacked consideration due to the mistake.

7. d. Can be canceled by either party as the mistake was mutual
and the mutual mistake concerned nature of the subject matter
and/or its value.
D
5. A contract resulting from the use of undue influence is:
a. Voidable at the option of the party wrongfully influenced.
b. Void.
c. Voidable at the option of the person committing the undue
influence.
d. Valid as long as the essential elements of a contract are
present.
A
6. For there to be duress, the pressure exerted must be:
a. Only as to bodily harm.
b. Only in the form of a threat of bodily harm to an individual.
c. Only in the form of a threat of bodily harm to an individual’s
family.
d. Only the threat of serious loss or damage to a person’s
property.
e. Either the threat of bodily harm to an individual or his or her
family or the threat of serious loss or damage to his or her
property.
E
7. A pledge or subscription (which is a promise to donate money

8. to a church, temple, mosque, college or other charitable
organization) is considered:
a. Unenforceable as it is not supported by valid consideration.
b. Unenforceable because there is not a promise for a promise
and there is no benefit to the person making the pledge.
c. Enforceable because they are for some worthy cause so the
courts have generally held them enforceable as they are
considered beneficial to society to enforce.
C
8. Contractual capacity is:
a. When an incompetent party to a contract has the ability to
contract.
b. When a party does not understand the meaning of a contract
nor is that person capable of such an understanding.
c. Considered to be possessed by a competent party to a contract
meaning that he or she has normal mentality to be capable of
understanding the meaning of a contract which means the ability
to make a valid contract.
d. Someone who has not attained the age of majority of the state
they are in when they make a contract but still has the capacity
to understand the meaning of the contract.
C
9. Eakins was 17 years old and married. He has a full time job
as a computer programmer and lives with his spouse in their
own apartment (not with any parents). A doctor sued him to
recover the cost of medical care and surgery provided to him.
Eakins did not have medical insurance. In this situation, the
Court would:

9. a. Declare the contract invalid since Eakins is a minor and
protected as the result of that status.
b. Declare the contract voidable at the option of Eakins and let
him decide whether he wanted to pay the doctor or not under
some moral obligation.
c. Declare the contract valid and enforceable by the doctor.
Eakins circumstances of being married and employed full time
and living with his spouse (not his parents) made him
emancipated and thus his minority status no longer protected
him. Thus, he would have to pay the doctor for the services
rendered.
D
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HCCC – BUSINESS LAW –SPRING 2021

12. FINAL EXAM: CONTRACT LAW
(ALL CLASSES: BUS 230-04; BUS-230-NO1; BUS-230-JTV
AND BUS-230- NTV)
INSTRUCTIONS ON PROVIDING ANSWER SHEET ONLY
FOR FINAL EXAM.
IN ACCORDANCE WITH EARLIER ANNOUNCEMENT(S) TO
THE CLASS, YOU ARE HEREBY PROVIDED WITH YOUR
CONTRACTS LAW FINAL EXAM.
PLEASE CAREFULLY READ THE INSTRUCTIONS BELOW
THAT RELATE TO THIS FINAL EXAM.
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DUE DATE: THURSDAY, MAY 13, 2021 BY 6:30 P.M.
(YOU MAY SUBMIT YOUR “ANSWER SHEET ONLY” AT
ANYTIME BEFORE THIS DEAD LINE DATE AND TIME).
YOU ARE TO PROVIDE AN “ANSWER SHEET ONLY” AND
ATTACHED IT TO AN EMAIL TO ME AT THE SCHOOL’S
EMAIL SYSTEM AS EITHER A “WORD DOCUMENT” OR
“PDF FILE” ATTACHMENT. DO NOT USE THE “FILE
SHARING APP” BECAUSE FOR REASONS THAT ARE
BEYOND ME THE SYSTEMDOES NOT ALLOW ME TO
OPEN “FILE SHARING APPS.”
DO NOT ( I REPEAT)-DO NOT PROVIDE YOUR ANSWERS
ON THE FINAL EXAM ITSELF AND SEND ME ALL OF IT
AS AN ATTACHMENT. YOU ARE TO PROVIDE AN
“ANSWER SHEET ONLY”. IF ANYTHING IS SENT OTHER
THAN OR IN ADDITION TO “AN ANSWER SHEET ONLY,”
IT WILL BE REJECTED AND WILL NEED TO BE
RESUBMITTED IN ACCORDANCE WITH THIS
INSTRUCTION/DIRECTION.
FURTHER, YOUR ANSWER SHEET ONLY SHOULD HAVE
YOUR FIRST AND LAST NAME INDICATED AND SHOULD
BE PROPERLY NUMBERED SO I KNOW WHICH QUESTION
OF THE EXAM YOU ARE ANSWERING.
AS TO THE TRUE/FALSE SECTION, YOU PLACE EITHER A
CAPITAL“T”FOR “TRUE” IF YOUR ANSWER IS “TRUE,”

13. OR A CAPITAL “F” IF YOUR ANSWER IS “FALSE.”
AS TO THE MULTIPLE CHOICE SECTION 2: YOU NUMBER
YOUR ANSWERS TO CORRESPOND TO THE QUESTION
YOU ARE ANSWERING AND PLACE THE LETTER OF
YOUR ANSWER (I.E. A, B, C, D, ETC) NEXT TO THE
NUMBER IT BELONGS TO.
NOTE: NO OTHER HEIROGLYPHICS, SYMBOLS,
CHARACTERS, MARKINGS, DRAWINGS WILL BE
ACCEPTED AS AN ANSWER TO ANY QUESTION ON THE
TEST
ALSO, AS TO THE BOTH SECTIONS OF THE EXAM, NO
EXPLANATIONS OF YOUR ANSWER ARE PERMITTED
AND CANNOT BE TAKEN INTO ACCOUNT.
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BE SURE TO FOLLOW THE INSTRUCTIONS STRICTLY.
NO DEVIATION WILL BE PERMITTED UNLESS SUCH
DEVIATION IS ALLOWED BASED ON HARDSHIP OR ANY
OTHER “JUST CAUSE” PRESENTED BY THE STUDENT
AND DETERMINED BY THE INSTRUCTOR TO BE
MERITORIOUS AND PLACED IN WRITING BY THE
INSTRUCTOR TO THE STUDENT.
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IF DEADLINE FOR THIS FINAL EXAM IS MISSED:
IF A STUDENT’S “ANSWER SHEET ONLY” IS NOT SENT IN
IN ACCORDANCE WITH THESE INSTRUCTIONS BY THE
DUE DATE AND TIME INDICATED ABOVE FOR THIS
TEST, AND THE INSTRUCTOR HAS NOT GRANTED AN
EXTENSION TO THE STUDENT OR OTHERWISE
EXCUSING THE STUDENT FROM SENDING THE TEST IN
BY THE DUE DATE AND TIME, THEN THE FOLLOWING
SANCTIONS WILL APPLY:
-A LOSS OF 5 PTS PER DAY WILL BE DEDUCTED FOR
EACH DAY PAST THE DUE DATE AND TIME UNTIL THE
EXAM IS RECEIVED BY INSTRUCTOR FROM THE

14. STUDENT.
-NO ADDITIONAL CURVE POINTS, IF APPLICABLE, WILL
BE APPLIED TO THAT LATE MIDTERM SUBMISSION.
-IF IT IS RECEIVED THE DAY BEFORE THE INSTRUCTOR
MUST REPORT FINAL GRADES TO THE SCHOOL’S
REGISTRAR (THURSDAY, MAY 20, 2021) THEN THE
INSTRUCTOR WILL SUBMIT AN “I” FOR “INCOMPLETE
GRADE” TO THE REGISTRAR FOR THAT STUDENT FOR
THAT STUDENT’S FINAL COURSE GRADE. THEN WHEN
THE FINAL EXAM IS SUBMITTED TO THE INSTRUCTOR,
IT WILL BE GRADED AND THE FINAL COURSE GRADE
FACTORED BY THE INSTRUCTOR THEN INFORMING THE
REGISTRAR WILL BE TO CHANGE THE “I” TO THE
LETTER GRADE RECEIVED BY THE STUDENT. PLEASE
NOTE, PER THE SCHOOL’S POLICY ON “I” GRADES, IF IT
IS NOT CHANGED WITHIN 30 DAYS THAT FINAL COURSE
GRADES ARE TO BE REPORT, THE STUDENT WILL
RECEIVE AN “F” FOR THE COURSE GRADE.
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THIS FINAL EXAM IS COMPOSED OF THE FOLLOWING
SECTIONS:
TRUE/FALSE: 31 QUESTIONS @ 1.3 EACH = 40
MULTIPLE CHOICE: 30 PROBLEMS @ 2.2 EACH = 66
POTENTIAL TOTAL SCORE = 106
PLEASE MAKE SURE YOU HAVE THE NUMBER OF
QUESTIONS INDICATED AND THAT NO PAGES OF THE
EXAM ARE MISSING. IF THIS IS THE CASE, PLEASE
CONTACT INSTRUCTIOR AS SOON AS POSSIBLE.
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SECTION 1: TRUE/FALSE. CHOOSE YOUR ANSWER TO
THE QUESTIONS BELOW BY EITHER CIRCLING “T” FOR
TRUE OR “F” FOR FALSE. (31 X 1.3 EACH = 40)
1. All agreements are contracts, but not all contracts are
agreements. T F

15. 2. All contracts are agreements and all agreements are contracts.
T F
3. Written contracts must be handwritten in pen in order to be
enforceable. T F
4. To be legally enforceable all contracts must be in writing.
T F
5. For an offer to be valid, it must only be definite and certain,
communicated directly to the offeree. T F
6. Silence on the part of an offeree to an offer received from
an offeror is usually never considered acceptance unless both
parties have agreed beforehand that this is to be the means of
acceptance.
T F
7. A conditional or qualified response to an offer is not
considered an acceptance but is interpreted by law as an
immediate rejection of the original offer and it becomes a
counter-offer.
T F
8. The “mirror-image” rule of contract law states that the
terms of an acceptance of an offer must be in the same terms as
the offer, and that if there are any differences between the offer
and the “acceptance”/response, then the “acceptance”/response
is a considered an immediate rejection of the initial offer,
thereby becoming a counter-offer.
T F
9. Revocation of an offer is the calling back/withdrawing of
the offer by the offeror and can be done at any time even if the

16. offer is accepted by the offeree.
T F
10. A bilateral contract is one which has a promise for a
promise between the parties. T F
11. The problem with unilateral contracts is that they are not
considered accepted until the performance or substantial
performance requested in return to the promise is rendered
which essentially leaves the offeree in a potential tenuous
position of having the offeror be able to back out of the
transaction without any legal liability to the offeree.
T F
12. The law favors bilateral contracts and, therefore, a contract
is considered created when the offeree has made the return
promise to the offeror as acceptance.
T F
13. For a contract to be canceled because of a mistake, the
mistake may be either mutual or it can be unilateral if the
unilateral mistake is made in good faith.
T F
14. When threats are used by someone who does not have a
special legal relationship of trust or a confidential relationship
to another person to force someone to enter into a contract, the
agreement or contract is considered entered into because of
undue influence.
T F
15. A contract of adhesion is characterized by its shocking
unfairness or is shockingly unjust. T F
16. When it comes to the consideration of a contract, the courts
(as has been the traditional approach) do not look into the

17. adequacy or sufficiency of the consideration supporting the
transaction if there are not circumstances of fraud, duress,
undue influence, mistake, etc.
T F
17. An example of a contract that lacks consideration but is
still enforced by the courts because they are considered socially
beneficial are pledges or subscriptions (which are promises to
donate money).
T F
18. A gratuitous promise is a gift and is enforceable in a court
of law because they are considered to have moral consideration
even though someone makes a promise without requiring some
benefit in return.
T F
19. A contract with a minor can be ratified/approved by the
minor from the time up to the minor becomes an adult ( age, 18)
or a reasonable time after the minor has reached the age of
majority (age, 18).
T F
20. Upon reaching the age of majority (age 18 for contract
law), contract law provides that a minor must ratify an earlier
contract entered into while a minor - in writing and no later
than 6 months after reaching the age of majority.
T F
21. Normal mentality for purposes of determining competency
or the capacity to contract under contract law means that both
and all parties to a contract must have a sufficient
understanding that they are getting themselves into the
seriousness of a contract.
T F

18. 22. The law allows minors to cancel contracts they get into
with the exception of contracts for necessaries, i.e. food,
clothing, medical care, lodging provided to the minor by an
adult.
T F
23. A valid contract can be entirely handwritten.
T F
24. An agreement that can be completed within six (6) months
must be in writing in order to be enforced pursuant to the
Statute of Frauds.
T F
25. An agreement for the sale of personal property for $ 501.00
must be in writing in order to be enforced in court according to
the Statute of Frauds.
T F
26. The Statute of Frauds only applies to those contracts listed
in the statute and only if those contracts are yet to be
performed, meaning they are not fully completed, but are
executory.
T
F
27. The transfer of a right to a contract is known as a
delegation. T F
28. The legal significance of being a third-party intended
beneficiary to a contract made by two other people, is that this
type of beneficiary gets legal rights to the contract which he or
she can enforce.
T F
29. A third party who benefits incidentally from a contract has a

19. right to the benefits if the benefits exceed $1,000.00.
T
F
30. The personal services or duties owed in a contract by artists,
musicians, singers and athletes can be delegated and almost
always are transferred.
T F
31. The legal distinction between a contract of adhesion and an
unconscionable contract is that the law enforces contracts of
adhesion despite unequal bargaining power between the parties.
T F
SECTION 2: MULTIPLE CHOICE. CHOOSE YOUR
ANSWER BY CIRCLING JUST THE LETTER
REPRESENTING YOUR ANSWER TO EACH OF THE BELOW
QUESTIONS OR STATEMENTS. (30 X 2.2 = 66)
1. John offers to buy Ann’s Smartphone for $200.00. John also
promises Ann that he will give her the cash for the phone on the
following Friday when he gets paid. Ann accepts John’s offer
and promises to give him the phone when he pays her on Friday.
What type of contract have John and Ann made?:
a. A unilateral contract.
b. A bilateral contract.
c. An unconscionable contract that will be unenforceable.
d. A mutual contract that is unenforceable but only if it is in
writing.
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2. Dina tells Ed that she will pay him $1,000.00 to set fire to
her store so she can collect under the fire insurance policy she
has covering the store. Ed sets fire to the store. When he goes
to collect the $1,000.00 from Dina, she refuses to pay him. Can
Ed sue Dina to collect the $1,000.00?

20. a. Yes, because all the elements of a valid enforceable contact
are present and this type of contract did not have to be in
writing.
b. No, This contract is for an illegal purpose and, therefore, the
element that a contract be for a lawful purpose is not present.
Thus, this “contract” between them is void.
c. Yes, especially if the insurance company never realizes that it
was an arson.
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3. Jamieson lost an expensive pedigreed dog while at the park.
He placed an advertisement in the Daily Journal, offering a
$200.00 reward for the dog’s safe return. This offer is:
a. Valid, even though directed to thousands of readers, only one
of whom could accept it and is known as a public offer.
b. Valid, provided there is a promise to accept the offer.
c. Not valid, because the offer is not specifying to whom the
offeree is and, therefore, is reaching persons of unknown
identity which makes the offer not definite or specific enough.
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4. Jane rides to work with Bob in his just purchased new car.
Bob purchased the car thirty days ago for $26,000.00. One very
cold morning, the car would not start. Bob yells out in anger
and frustration “I’ll sell this car to anyone for $500.00. Jane
immediately takes out her check book and writes Bob a check
for $500.00 and hands it to him. Has a valid offer been made
by Bob for Jane to accept?
a. Yes, under the circumstances, even though Bob was angry
and frustrated, he was obviously serious about making such an
offer. Otherwise, he should have stated that his language should
not be taken seriously.
b. Yes, under the circumstances, an objective reasonable person

21. would not interpret Bob’s language as anger or disappointment,
but language of serious intent to make an offer to get rid of his
car for $500.00.
c. No. A reasonable person, taking into Bob’s anger and
frustration and the obvious difference between teh car’s
purchase price and market value compared to the amount Bob
indicated he would sell it for, would conclude that Bob’s offer
was not made with serious objective intent and so there could
not be a valid acceptance by Jane and no agreement exists
between them.
d. Yes, serious intent to be bound to an offer is not measured by
a reasonable person standard, but by the subjective standard
from the perspective of the offeree in hearing the language of
what could be interpreted as an offer.
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5. John places a classified ad in the local newspaper and online
as follows:
“For Sale: To the first person who appears at my house with
$1,000.00, cash only, I will sell my 2004 Honda motorcycle.
It’s only been driven once, is in excellent condition, and runs
great. Must sell; I am leaving the country. ---John Doe, 123
Maple Street, Springfield, N.J.”
Suppose you are interested in the motorcycle and you call John
having obtained his telephone number on the internet. You tell
him that you will buy his motorcycle. Have you created a
legally binding contract?
a. No, because it does not identify who can accept the offer.
Without this level of specificity, John’s ad is simply an
advertisement and not an offer.
b. No, John’s ad is not specific as to what will be the focus of
the contract.
c. Yes, because any action or conduct by you saying you accept
the offer will sufficient to create a legally binding contract.
d. No, because you have not accepted the offer in the terms

22. specified in the offer. In order to accept, you must comply with
the terms set forth in the offer by John, i.e. appearing at his
house with $1,000.00 cash.
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6. Fidelity Corporation offers to hire Ron to replace Monica,
who has given Fidelity a month’s notice of intent to quit.
Fidelity gives Ron a week to decide whether to accept. Two
days later, Monica decided not to quit and signs a two (2) year
employment contract with Fidelity. The next day, Monica tells
Ron of the new contract she signed with Fidelity. Ron
immediately faxes to Fidelity a formal letter of acceptance of
the offer of employment it made to him. Do Fidelity and Ron
have a contract?
a. Yes. Since Fidelity gave Ron a week to decide whether to
accept the offer of employment made to him, it was implied that
the offer would remain open for him until after the week
expired.
b. Yes. For Fidelity to go behind Ron’s back and then sign a
contract with Monica who was quitting the employment would
be considered bad faith dealing and would not prevail under
contract law principles or in court.
c. No. Revocation of an offer may be implied by conduct
inconsistent with the offer made. When Fidelity rehired Monica
and Ron learned of the hiring, the offer to him was legally
considered revoked. His acceptance was too late.
d. Yes. The revocation of the offer to Ron by Fidelity was not
made with notice to Ron and so its offer to him was not
properly revoked. Ron’s acceptance letter should be considered
timely and effective.
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7. Chin, a collector of rare paintings, offered to sell a particular
painting by Picasso (catalog number 1401) to Kovacs for
$14,000.00. When it came time to exchange the painting for

23. the money, it was obvious that Kovacs was expecting a different
Picasso painting (bearing catalog number 1410). Chin was
surprised because he clearly discussed with Kovacs and Kovacs
clearly indicated that he wanted to buy the Picasso painting
bearing catalog number 1401. An employee for Chin even heard
the discussion between them and will verify Chin’s statements.
Under these facts, the contract between Chin and Kovacs:
a. Is valid as the mistake was not mutual, but was instead
unilateral with the mistake being only on the part of Kovacs.
b. Is invalid because Kovacs was still getting a Picasso which
would still be worth a lot of money.
c. Is invalid because it lacked consideration due to the mistake.
d. Can be canceled by either party as the mistake was mutual.
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8. Stein promised to give his 19-year old nephew $3,000.00 on
his 22nd birthday. The nephew was most pleased to hear this
from Stein and as a courtesy invited him to his graduation
Hudson County Community College. This is an example of:
a. A legal contract and demonstrates a gift promise as
consideration.
b. An invalid/unenforceable contract for it lacks consideration.
A gratuitous promise does not require any legal benefit be
received by the promisor and therefore is said not to support or
be valid consideration for a contract.
c. Unenforceable because it should have been in writing under
the Statute of Frauds.
d. None of the above.
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9. A pledge or subscription (which is a promise to donate money
to a church, temple, mosque, college or other charitable
organization) is considered:

24. a. Unenforceable as it is not supported by valid consideration.
b. Unenforceable because there is not a promise for a promise
and there is no benefit to the person making the pledge.
c. Enforceable even though there appears to be a lack of
consideration because they are for some worthy cause so the
courts have generally held them enforceable.
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10. Contractual capacity is:
a. When an incompetent party to a contract has the ability to
contract.
b. When a party does not understand the meaning of a contract
nor is that person capable of such an understanding.
c. Considered to be possessed by a competent party to a contract
meaning that he or she has normal mentality to be capable of
understanding the meaning of a contract which means the ability
to make a valid contract.
d. Someone who has not attained the age of majority of the state
they are in when they make a contract but still has the capacity
to understand the meaning of the contract.
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11. Eakins was 17 years old, married and had a full-time job
with which he was able to support himself, his wife and their 2
small children. A doctor sued him to recover the cost of
medical care and surgery provided to him. Eakins did not have
medical insurance. In this situation, the Court would:
a. Declare the contract invalid since Eakins is a minor and
protected as the result of that status.
b. Declare the contract voidable at the option of Eakins and let
him decide whether he wanted to pay the doctor or not under
some moral obligation.
c. Declare the contract valid because Eakins circumstances
made him emancipated and thus his minority status no longer
protected him as the law does when it comes to contracts

25. entered into by a minor. Thus, he would have to pay the doctor
for the services rendered.
d. Eakins is a minor despite his circumstances because he is not
financially/economically independent and since what was
provided – medical care – is a necessary of life, this is an
exception to the rule that minors are protected from contract
liability and he would have to pay the reasonable value for the
medical care provided to him.
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12. On April 1, Al Nextbestplayerinbaseball, sends a letter to
the New York Yankees offering to play for them for
$500,000.00 per season for the first 3 seasons. The offer states
that the team has to accept the offer by April 11th. It does not
specify any particular mode or method of accepting. The
Yankees receive the offer by regular mail on April 4. On April
10, the Yankees send Al an acceptance by U.S. mail. Al
receives the acceptance on April 15th. The likely result under
the mailbox rule is:
a. Although Al received the acceptance 4 days past the deadline
for acceptance, a valid contract has been formed because the
Yankees dispatched their acceptance by sending it by U.S. mail
on April 10th and under the mailbox rule, such an acceptance is
effective when placed into the control of the U.S. Postal system.
b. Although Al received the acceptance 4 days past the deadline
for acceptance, a valid contract has not been formed because the
Yankees dispatched their acceptance after the stated time period
within which the acceptance was required to be sent.
c. The acceptance is late because it was received by Al past the
deadline and under the mailbox rule this would invalidate the
acceptance so no valid contract can be considered formed.
d. The acceptance should have been sent by a faster method of

26. communication to be effective under the mailbox rule, thus no
valid contract can be considered formed.
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13. What is the best definition of a contract?
a. A voluntary agreement by two or more parties that to
perform or refrain from performing some act in the now or in
the future which is enforceable in a court of law in the event
one of the parties does not comply with a provision of the
contract.
b. An agreement by only two parties that may or may not be
enforceable in a court of law.
c. An agreement by only two parties that may be enforceable in
court
d. An understanding between two or more parties that they may
have an agreement.
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14. The objective theory of contracts is:
a. Is a legal theory by which intent of parties to enter a contract
is determined and provides that a party’s intention to enter a
contract is judged by outward, objective facts as interpreted by
a reasonable person , rather than by a party’s secret subjective
intention.
b. Is a rule in contract law that the intention of parties to a
contract is determined by their subjective personal intention of
whether they wanted or intended to enter into a contract.
c. It allows a party to an agreement or contract to provide an
unexpressed reason for entering into an agreement or contract.
d. It relates only to a parties motivations for entering into a
contract.
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15. The four (4) main elements to a contract are: (1) agreement;

27. (2) capacity to contract; (3) consideration; and (4)
lawful purpose. These elements are called “essential” elements
because:
a. They are equally important.
b. They belong together.
c. They are all required to exist for there to be a valid
enforceable contract. If any one or more are not present, then
there can be no valid enforceable contract.
d. As long as there are a majority of the elements, then common
law contract law provides that there is still a valid enforceable
contract.
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16. For there to be a legally valid offer, the following elements
must be present:
a. Serious and objective intent to enter into a contract and an
offer.
b. Communication of the offer with a serious and objective
intent to be bound and a price term.
c. Communication of the offer to the specific offeree,
reasonably definite and certain terms in the offer and a serious
objective intention to be bound by the offeror.
d. Communication of the offer to the specific offeree,
reasonably definite and certain terms in the offer and a serious
subjective intention to be bound by the offeror.
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17. Hawkins took his son to the doctor and asked the doctor to
operate on the son’s injured hand. The doctor said the boy
would be in the hospital for three or four days and that the hand
would probably heal a few days later. The son’s hand did not
heal for a month. If the father sued the doctor for breach of
contract, the likely result would be:
a. The father would win the lawsuit for breach of contract since
his son’s hand did not heal a few days after the three or four

28. day hospital stay.
b. The father would win the lawsuit for breach of contract since
the doctor made a specific promise when the son’s hand would
heal and it did not heal in that time period.
c. The father would lose the breach of contract lawsuit since the
doctor did not make an offer to heal the son’s hand in three or
four days, he merely expressed an opinion as to when the hand
would heal.
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18. A revocation of an offer sent FedEx on April 1, 2017 and
delivered to the offeree’s residence or place of business on
April 3, 2017. The offeree has not yet accepted the offer. The
revocation of the offer becomes effective:
a. On April 1, 2017 in that in the majority of states, a
revocation becomes effective when the offeror sends it to the
offeree or the offeree’s agent.
b. On April 2, 2017 since in the majority of states, a revocation
becomes effective the day after the offeror sends it to the
offeree or the offeree’s agent.
c. On April 3, since in most states a revocation becomes
effective when the offeree or the offeree’s agent actually
receives the offer provided that the offeree has not yet accepted
it.
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19. Raymond offer to buy Francie’s iPhone6 for $500.00 and
Francie responds: “Is that your best offer?” or “Will you pay
$575.00 for it?” The likely result would be:
a. A reasonable person would conclude that Francie rejected the
offer and made a counter-offer to Raymond.
b. A reasonable person would conclude that Francie rejected the
offer and did not make a counter-offer to Raymond but only
indicated a desire to continue to negotiate.
c. A reasonable person would conclude that Francie did not
reject the offer but merely made an inquiry about it. So she can

29. still accept the offer and bind Raymond to the $500.00 purchase
price.
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20. Burke offers to sell his house to Lang for $270,000.00.
Lang respond: “Your price is too high. I’ll offer to purchase
your home for $250,000.00.” What is Lang’s response
considered to be under contract law.
a. Lang’s response is considered an invitation to further trade
and a new offer would have to be made by Burke.
b. Lang’s response is considered an acceptance of Burke’s offer
but at a lower purchase price which will bind Burke which is
why Burke needed to be more careful when making the offer.
c. Lang’s response is considered a counter-offer and is
considered to legally immediately reject Burke’s offer to sell at
$270,000.00 and creates a new offer by Lang to purchase the
home at a price of $250,000.00.
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21. Justin earns extra income by washing store windows. He
taps on the window of a store, catches the attention of the store
manager, and points to the window and raises his cleaner,
signaling that he will be washing the window. The manager
does nothing to stop him. The likely result will be:
a. The store manager will not have to pay Justin for the w ork
he did cleaning the window since silence is never considered an
acceptance.
b. The store manager will not have to pay Justin for the work he
did cleaning the window since silence is never considered an
acceptance and the store manager and Justin did not have a prior
working relationship where silence by the manager would
constitute acceptance.
c. The store manager will have to pay Justin for cleaning the
window, since under the circumstances, the manager would have

30. a duty to speak and should have either accepted Justin’s offer or
rejected it.
d. The store manager will have to pay Justin for cleaning the
window, since under the circumstances, the manager would have
a duty to speak and should have either accepted Justin’s offer or
rejected it and especially since the manager and the store
received the benefit of the offered services by Justin even
though the manager knew he had an opportunity to reject them
and knew that the services were offered by Justin with the
expectation of being paid.
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22. Robert says to his son, “In consideration of the fact that you
are not as wealthy as your brothers, I will pay you
$5,000.00 by Friday of next week.” Is there consideration in
this transaction?
a. Yes, especially since Robert used the word “consideration” is
his statement.
b. Yes, Robert’s promise is enforceable as a “bargained-for-
exchange” and since it is between a father and son, contract law
does not look for the son to have to do anything to receive the
$5,000.00 promised and does not need to give Robert something
of legal value in return for the promise of $5,000.00.
c. No, Robert’s promise is unenforceable because there is no
“bargained-for-exchange” because the son need not do anything
to receive the $5,000.00 promised. There is no requirement that
the son give Robert something of legal value in return for the
promise made by Robert.
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23. Carol contracts orally to sell her vacant Seaside real
property to Axel for $25,000.00. Later, Carol decides not to
sell the property. Has there been a valid contract that Axel can
enforce in court and obtain the property upon paying for it.?
a. Yes. Since the real property transaction was under $
30,000.00, even though it was an oral contract, Carol cannot

31. cancel the contract by not selling to Axel.
b. Yes. All the elements of a valid contract appear present and
even though it may be oral, neither party can cancel.
c. No. The Statute of Frauds is a defense to this type of
contract since it is the sale and purchase of real property.
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24. Jamil Blackmon became friends with Allen Iverson when
Iverson was a high school student who showed tremendous
promise as an athlete. Blackmon suggested that Iverson use
“The Answer” as a nickname in the league tournaments and said
that Iverson would be “The Answer” to the National Basketball
Association’s declining attendance. Later Iverson said he
would give Blackmon 25% of any proceeds from the
merchandising of products that used “The Answer” as a logo or
a slogan. Is Iverson’s promise enforceable?
a. Yes, because a valid oral contract had been made between
Blackmon and Iverson with all required elements of a contract
present.
b. Yes, because Iverson’s promise was made in return for past
consideration, and past consideration is enforceable especially
where one party makes a profit.
c. No, because Iverson’s promise was made in return for past
consideration (Blackmon’s earlier suggestion) so it was
enforceable. In effect, Iverson stated his intention to give
Blackmon a gift.
d. Yes, because even though Iverson’s promise was made in
return for past consideration, it was not Iverson’s intention to
give Blackmon a gift.
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25. Bonna Petite, a clever and advanced 17 year old with an
appetite for fancy food. She desired to eat at a fancy French
Restaurant called “Tres Cher” the most elegant and fancy
restaurant in town. She was not under or experiencing any life

32. circumstances which would consider the lunch a “necessary of
life” for Ms. Petite. One day, she dressed up and groomed
herself to look like a 25 year old businesswoman. She was
seated at the restaurant and ordered a very expensive lunch. At
the end of the meal, she summoned the waiter over and said:
“This has been an excellent lunch and it is therefore with great
sadness that I must inform you that I am a minor. I must
disaffirm my contract to purchase this lunch.” She showed
him a form of identification clearly showing she was only 17.
The age of majority in her State is 18. The State contract law
does not make any exceptions if a minor misrepresents herself
as being older than a minor. May she disaffirm (cancel) the
implied contract to pay for the lunch she ate?
a. Yes. A minor may disaffirm/disapprove a contract at any
time before turning the age of majority (18) or within a
reasonable time after attaining the age of majority. This general
rule places the burden on the restaurant to inquire about the age
of its youthful-looking customers and it bears the risk of not
doing so.
b. No. She will not be able to disaffirm/disapprove the contract
to pay for the lunch since in her State the lunch would be
considered providing a “necessary of life” and she will (or her
parents will) be responsible for paying the reasonable value of
the lunch. Providing “necessaries of life” to a minor is an
exception to the general rule that a minor may disaffirm a
contract at the minor’s option.
c. Yes, she can disaffirm the contract to buy lunch but only if
she promises never to come back to that restaurant.
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26. Rhonda has been diagnosed with manic depression for
which she refuses to take medication. However, a court has not
declared her mentally incompetent. One afternoon, she goes to
Classic Automotive wearing shabby clothes, uncombed hair and
un-showered. After 2 hours of negotiation with the salesperson,

33. she trades in her Honda Civic and signs a lease for a new BMW.
Note, the negotiation took 2 hours because it was apparent that
Rhonda many times did not understand even the most basic of
discussion with the salesperson about buying the car. She does
not test-drive the new car, she has difficulty removing the keys
to the Civic from her key ring, and the payments of the BMW
are well more than she can afford. Can Rhonda cancel the
contract for the lease of the BMW?
a. Yes, because all of the circumstances of her condition
demonstrated that she did not understand she was executing an
auto lease, especially if it was far more than she could afford.
b. Yes, because a person who is considered incompetent,
although not judged incompetent by a court, can avoid/cancel
any contract they enter into without being required to have to
reasonably understand the nature and terms of a contract or
lease.
c. No. In this situation, nothing -including Rhonda’s disheveled
appearance, her difficulty with the keys to the Civic, her failure
to test-drive the car and her failure to object to the price or
lease payment - indicated that she did not understand she was
executing an auto lease contract for the amount of the price of
the car and the indicated per month lease payment.
d. No, because it does not matter whether anyone considered her
to be mentally incompetent, for mental incompetence one needs
to be adjudicated mentally incompetent by a court in order to
claim that at the time of the contract’s execution, the person did
not reasonably understand the nature and terms of the contract.
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27. Paco buys a violin from Beverly for $250.00. Although the
violin is very old, neither party believes that it is valuable.
Later, however, an antiques dealer informs the parties that the
violin is rare and worth thousands of dollars. Can Beverly
rescind/cancel the contract?

34. a. No. Although both parties are mistaken, they are mistaken
as to the value rather than a mistake of fact. Only a mistake as
to fact warrants contract rescission/cancellation.
b. Yes. As long as the mistake is mutual, then it can be
cancelled or rescinded by either party.
c. No. Even though it looks like a mutual mistake, in reality it
is a unilateral mistake because Paco is the one protected from
such a mistake.
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28. Actor Tom Selleck contracts to purchase a horse named
Zorro for his daughter from Ms. Cuenca. Cuenca acted like
Zorro was fit to ride in competitions, when in reality, Cuenca
knew the horse was unfit for this use because of a medical
condition. Selleck filed a lawsuit against Cuenca for
wrongfully concealing the horse’s condition. The most likely
result from the court will be:
a. Selleck will lose because Cuenca did not make any
statements that were fraudulent so a fraudulent
misrepresentation concerning Zorro was not made.
b. Selleck will lose because he never indicated to Cuenca that
he wanted the horse for his daughter so she could ride in
competitions with it.
c. Selleck will prevail and be awarded compensation in that
Cuenca’s fraudulent misrepresentation was by conduct and did
not have to be by making a verbal or written statement.
Fraudulent misrepresentation can occur by or through a party’s
conduct and Cuenca’s acting like Zorro was fit to ride in
competitions will be sufficient for a court to conclude she
committed misrepresentation by conduct.
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29. Superior University forms a contract with Sam that Sam
will teach three courses of business law during the coming
academic year (September 15, 2017 through June 15, 2018).

35. The contract is formed on March 1, 2017. Does the contract
need to be in writing to be enforced in accordance with the
Statute of Frauds?
a. Yes. Since it was formed/created on March 1, 2017, it needs
to be in writing under the Statute of Frauds to be enforceable
because it cannot be performed within one year from the date of
its creation.
b. No. Since it was formed on March 1, 2017, seven months
before it has to begin, then it can be performed within one year.
c. Yes. Since it is a contract that cannot be completely
performed within one (1) year (or within 364 days), it must be
in writing in order to be enforced according to the Statute of
Frauds. It matters not when it was formed as long as it was
formed before September 15, 2017.
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30. The New York Giants football organization sent Ronald
Yocca a brochure offering him the right to buy season tickets.
Prices and locations of seats were indicated in the diagram in
the brochure. Yocca responded, listing his seating preferences.
The Giants sent him tickets with a diagram that showed
different seating sections than were shown in the brochure.
Also enclosed, was a document that read, ”This
agreement/contract contained the entire agreement of the
parties.” Yocca signed and returned the document. When
Yocca went to the first game, he discovered that his seat was
not where he expected it to be based on the brochure. He sued
for breach of contract. The most likely result is:
a. The court will conclude the brochure was not part of the
parties’ contract and will dismiss the lawsuit against the Giants.
Under the parol evidence rule (P.E.R.), the signed document
could not be supplemented by evidence of previous negotiations
or agreements. Under the P.E.R., if a court finds that a written
contract represents the complete and final expression of the

36. parties’ agreement, then it will not allow either party to present
parol (extrinsic) evidence (testimony or other evidence of
communications between the parties that is not contained in the
contract itself) to supplement, add to, modify, or contradict the
terms of the final writing of the parties.
b. The court will conclude the brochure was part of parties’
contract and not dismiss the lawsuit against the Giants. Under
the parol evidence rule (P.E.R.), the signed document could be
supplemented by evidence of previous negotiations/agreements.
Under the P.E.R. if a court finds a written contract represents
complete and final statement of the parties’ agreement, then it
will allow either party to present parol evidence (testimony or
other evidence of communications between the parties that is
not contained in the contract itself).
c. The court should not rely on the Parol Evidence Rule at all, it
would be unfair to harm a fan like this by the Giants football
team and it should honor his seating preferences.
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TOTAL POSSIBLE SCORE: T/F = 31 X 1.3 = 40.3 = 40 M/C
= 30 X 2.2 = 66 / 40 + 66 (40 + 66 = 106)
1