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Contract Law

1,497 Questions

Contract Law encompasses the rules and statutes governing legally binding agreements between parties. This hub provides practice questions on essential topics like legal obligations, breach of contract, and termination clauses. These concepts are frequently tested in law entrance tests and various other competitive government examinations.

Legal obligationsVoid contractsBreach of contractCommunication of acceptanceStatute of FraudsContract clauses

Contract Law Questions

Multiple choice

In the context of novation, what is the legal term for the party who agrees to assume the obligations of the old contract?

  1. Promisor

  2. Promisee

  3. Assignor

  4. Assignee
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In the context of novation, the party who agrees to assume the obligations of the old contract is called the Assignee.

Multiple choice

In the context of accord and satisfaction, what is the legal term for the party who agrees to accept the new obligation in satisfaction of the old obligation?

  1. Promisor

  2. Promisee

  3. Assignor

  4. Assignee
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In the context of accord and satisfaction, the party who agrees to accept the new obligation in satisfaction of the old obligation is called the Promisee.

Multiple choice

Which of the following is a common example of an accord and satisfaction?

  1. Accepting a lump sum payment in exchange for a disputed debt

  2. Agreeing to a new payment plan for a loan

  3. Substituting a new product for a defective product

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Common examples of accord and satisfaction include accepting a lump sum payment in exchange for a disputed debt, agreeing to a new payment plan for a loan, and substituting a new product for a defective product.

Multiple choice

Can an accord and satisfaction be implied from the conduct of the parties?

  1. Yes

  2. No

  3. It depends on the circumstances

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In some cases, an accord and satisfaction can be implied from the conduct of the parties, even if there is no express agreement to accord and satisfy the dispute.

Multiple choice

What is the legal effect of a valid novation?

  1. The old contract is extinguished and replaced by the new contract

  2. The old contract remains in effect and the new contract is void

  3. The old contract is modified by the new contract

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The legal effect of a valid novation is that the old contract is extinguished and replaced by the new contract.

Multiple choice

What is the legal effect of a valid accord and satisfaction?

  1. The old obligation is extinguished and replaced by the new obligation

  2. The old obligation remains in effect and the new obligation is void

  3. The old obligation is modified by the new obligation

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The legal effect of a valid accord and satisfaction is that the old obligation is extinguished and replaced by the new obligation.

Multiple choice

Can an accord and satisfaction be rescinded?

  1. Yes

  2. No

  3. It depends on the circumstances

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An accord and satisfaction can be rescinded if there is a mutual agreement between the parties to rescind the accord and satisfaction, or if there is a material breach of the new obligation.

Multiple choice

What are some of the consequences of failing to comply with MCLE requirements?

  1. Suspension of law license.

  2. Fines.

  3. Both of the above.

  4. None of the above.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Failing to comply with MCLE requirements can result in suspension of law license, fines, or both.

Multiple choice

Which of the following is NOT an essential element of consideration?

  1. It must be of value.

  2. It must be legal.

  3. It must be in writing.

  4. It must be capable of being performed.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Consideration does not have to be in writing to be valid. It can be oral, written, or implied.

Multiple choice

What is the rule regarding illusory promises?

  1. Illusory promises are valid consideration.

  2. Illusory promises are not valid consideration.

  3. Illusory promises are valid consideration only if they are in writing.

  4. Illusory promises are valid consideration only if they are supported by a moral obligation.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Illusory promises are not valid consideration because they do not give the promisor any real choice. The promisor is not obligated to do anything, so there is no consideration for the promise.

Multiple choice

What is the rule regarding penalties?

  1. Penalties are valid consideration.

  2. Penalties are not valid consideration.

  3. Penalties are valid consideration only if they are in writing.

  4. Penalties are valid consideration only if they are supported by a moral obligation.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Penalties are not valid consideration because they are not a reasonable estimate of the actual damages that will be suffered if the contract is breached.

Multiple choice

What is the rule regarding impossibility?

  1. Impossibility is a valid defense to a breach of contract action.

  2. Impossibility is not a valid defense to a breach of contract action.

  3. Impossibility is a valid defense to a breach of contract action only if it is in writing.

  4. Impossibility is a valid defense to a breach of contract action only if it is supported by a moral obligation.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Impossibility is a valid defense to a breach of contract action because it makes the performance of the contract impossible. If the performance of the contract is impossible, then the promisor is not liable for breach of contract.

Multiple choice

What is the rule regarding frustration of purpose?

  1. Frustration of purpose is a valid defense to a breach of contract action.

  2. Frustration of purpose is not a valid defense to a breach of contract action.

  3. Frustration of purpose is a valid defense to a breach of contract action only if it is in writing.

  4. Frustration of purpose is a valid defense to a breach of contract action only if it is supported by a moral obligation.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Frustration of purpose is not a valid defense to a breach of contract action because it does not make the performance of the contract impossible. The promisor is still liable for breach of contract even if the purpose of the contract is frustrated.

Multiple choice

What is the rule regarding anticipatory breach?

  1. An anticipatory breach is a breach of contract that occurs before the time for performance.

  2. An anticipatory breach is a breach of contract that occurs after the time for performance.

  3. An anticipatory breach is a breach of contract that is in writing.

  4. An anticipatory breach is a breach of contract that is supported by a moral obligation.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An anticipatory breach is a breach of contract that occurs before the time for performance. It gives the non-breaching party the right to terminate the contract and sue for damages.

Multiple choice

What is the rule regarding substantial performance?

  1. Substantial performance is a defense to a breach of contract action.

  2. Substantial performance is not a defense to a breach of contract action.

  3. Substantial performance is a defense to a breach of contract action only if it is in writing.

  4. Substantial performance is a defense to a breach of contract action only if it is supported by a moral obligation.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Substantial performance is a defense to a breach of contract action because it means that the promisor has substantially performed the contract and the non-breaching party has received the benefit of the contract. The non-breaching party is not entitled to damages if the promisor has substantially performed the contract.