Q.1 Which of the following is essential for a valid contract?
Offer and Acceptance
Intention to make a gift
Social Agreement
Family Understanding
Explanation - A valid contract requires offer, acceptance, consideration, and intention to create legal relations.
Correct answer is: Offer and Acceptance
Q.2 What is 'consideration' in contract law?
Something of value exchanged between parties
A formal written document
A legal notice
A court ruling
Explanation - Consideration refers to the benefit or detriment given or received by the parties, making a contract enforceable.
Correct answer is: Something of value exchanged between parties
Q.3 Which of these contracts must be in writing to be enforceable?
Contracts for sale of goods over $500
All oral contracts
Social agreements
Handshake deals
Explanation - Certain contracts, like those above a specified monetary threshold, must be in writing under the Statute of Frauds.
Correct answer is: Contracts for sale of goods over $500
Q.4 What is the legal term for a party withdrawing from a contract before performance?
Breach
Revocation
Termination
Novation
Explanation - Revocation occurs when an offeror withdraws the offer before it has been accepted.
Correct answer is: Revocation
Q.5 A contract entered into under undue influence is:
Valid
Voidable
Illegal
Unenforceable
Explanation - Contracts entered under undue influence are valid until the influenced party chooses to void them.
Correct answer is: Voidable
Q.6 Which of the following makes a contract void?
Illegal subject matter
Mutual agreement
Offer and acceptance
Consideration
Explanation - Contracts with illegal objects are void as they are against public policy.
Correct answer is: Illegal subject matter
Q.7 What is the effect of a minor entering into a contract?
Always valid
Voidable at minor's option
Void from the start
Automatically enforceable
Explanation - Contracts with minors are generally voidable at their discretion unless for necessities.
Correct answer is: Voidable at minor's option
Q.8 Which type of contract is formed by the conduct of the parties rather than words?
Express contract
Implied contract
Void contract
Executed contract
Explanation - An implied contract arises from actions, conduct, or circumstances indicating agreement.
Correct answer is: Implied contract
Q.9 What is 'capacity' in contract law?
Ability to enter a contract legally
Formal approval by a court
Written permission
Negotiated terms
Explanation - Capacity refers to the legal ability of a person to enter into a binding contract.
Correct answer is: Ability to enter a contract legally
Q.10 A contract made under threat or coercion is:
Valid
Voidable
Void
Executed
Explanation - Contracts made under duress are voidable at the option of the coerced party.
Correct answer is: Voidable
Q.11 Which of these is NOT a form of consideration?
Promise to perform
Promise to abstain from doing something
Past action
Legal detriment
Explanation - Consideration must be present or future; past actions cannot serve as consideration.
Correct answer is: Past action
Q.12 What is the difference between a void and voidable contract?
Void contracts are unenforceable; voidable can be enforced until rescinded
Void contracts are enforceable; voidable are not
Both are always unenforceable
Voidable contracts are illegal
Explanation - Void contracts have no legal effect; voidable contracts are valid until the aggrieved party chooses to void them.
Correct answer is: Void contracts are unenforceable; voidable can be enforced until rescinded
Q.13 Which of the following is a unilateral contract?
Promise in exchange for performance
Promise in exchange for a promise
Contract in writing
Void contract
Explanation - A unilateral contract involves one party promising something in exchange for the other's performance.
Correct answer is: Promise in exchange for performance
Q.14 When is an offer considered legally terminated?
On revocation, lapse of time, rejection, or death
Only when accepted
Only after signing
When consideration is paid
Explanation - An offer ceases to exist upon any of these events, making acceptance impossible thereafter.
Correct answer is: On revocation, lapse of time, rejection, or death
Q.15 What is an 'executed contract'?
A contract fully performed by both parties
A contract not yet performed
A voidable contract
An illegal contract
Explanation - An executed contract is one where all obligations have been fulfilled.
Correct answer is: A contract fully performed by both parties
Q.16 A contract supported by fraud is:
Valid
Voidable
Void
Executed
Explanation - Contracts induced by fraud are valid until the defrauded party decides to void them.
Correct answer is: Voidable
Q.17 Which of the following is an example of a formal contract?
Negotiable instrument
Oral agreement to sell goods
Handshake agreement
Implied by conduct
Explanation - Formal contracts require a specific format or formality prescribed by law, like negotiable instruments.
Correct answer is: Negotiable instrument
Q.18 Which type of mistake makes a contract void?
Mutual mistake about a material fact
Unilateral mistake of opinion
Mistake about future events
Clerical error
Explanation - A mutual mistake regarding a fundamental fact invalidates the contract as no true agreement exists.
Correct answer is: Mutual mistake about a material fact
Q.19 What is the purpose of the 'Statute of Frauds'?
To require certain contracts to be in writing
To enforce oral contracts
To regulate consideration
To define duress
Explanation - The Statute of Frauds prevents fraud by requiring certain types of contracts to be documented in writing.
Correct answer is: To require certain contracts to be in writing
Q.20 Which of the following is a condition precedent in contract performance?
An event that must occur before a duty arises
A duty that must be completed immediately
A minor obligation
A past consideration
Explanation - A condition precedent delays the performance of a contractual obligation until a specified event occurs.
Correct answer is: An event that must occur before a duty arises
Q.21 Which remedy aims to put the injured party in the position they would have been in if the contract were performed?
Damages
Specific performance
Rescission
Injunction
Explanation - Compensatory damages are awarded to restore the injured party to the position they would have had under the contract.
Correct answer is: Damages
Q.22 What is a 'quasi-contract'?
An obligation imposed by law to prevent unjust enrichment
A contract entered into voluntarily
A voidable contract
A contract with minors
Explanation - Quasi-contracts are not true contracts but are legal constructs to prevent one party from unfairly benefiting at another's expense.
Correct answer is: An obligation imposed by law to prevent unjust enrichment
Q.23 Which of the following is true about electronic contracts?
They are valid if they meet the same requirements as traditional contracts
They are always invalid
They cannot have consideration
They must be notarized
Explanation - Electronic contracts are enforceable if offer, acceptance, consideration, and intent are present, similar to traditional contracts.
Correct answer is: They are valid if they meet the same requirements as traditional contracts
Q.24 A contract is said to be 'executory' when:
Some obligations are yet to be performed
All obligations are completed
It is void
It is voidable
Explanation - An executory contract is one where one or more parties have not yet fulfilled their obligations.
Correct answer is: Some obligations are yet to be performed