Master Contract Law in Commercial Contexts: Online Quizzes and Study Guide

Question 1

Which type of consideration is sufficient to support the enforceability of a commercial contract?

Accepted Answer

Executory consideration

Answer

Past consideration

Answer

Moral obligation

Question 2

What is the foundational principle of privity of contract?

Accepted Answer

Only parties directly involved in a contract can enforce its terms.

Answer

Third parties can enforce a contract if they are explicitly named as beneficiaries.

Answer

Non-parties to a contract may be held liable for breaches.

Answer

Parties to a contract can freely assign their rights and obligations to third parties.

Question 3

How are express and implied contracts primarily distinguished?

Accepted Answer

Express contracts arise from the parties' explicit statements, while implied contracts arise from their conduct.

Answer

Express contracts are written, while implied contracts are oral.

Question 4

Which of the following is NOT an essential element of a legally binding contract in English law?

Accepted Answer

Delivery and payment

Answer

Offer

Answer

Acceptance

Answer

Consideration

Question 5

What type of offer can be withdrawn prior to acceptance?

Accepted Answer

Revocable offer

Answer

Unilateral offer

Answer

Bilateral offer

Answer

Irrevocable offer

Question 6

Which remedy for breach of contract awards monetary compensation for the losses incurred?

Accepted Answer

Damages

Answer

Specific performance

Answer

Injunction

Answer

Rescission

Question 7

Which legal defense may excuse a party from performing their contractual obligations due to unforeseen circumstances?

Accepted Answer

Frustration

Answer

Illegality

Answer

Duress

Answer

Unconscionability

Question 8

Which provision of English law seeks to protect consumers from potentially unfair terms in standard form contracts?

Accepted Answer

Unfair Contract Terms Act 1977

Answer

Sale of Goods Act 1979

Answer

Supply of Goods and Services Act 1982

Answer

Consumer Rights Act 2015

Question 9

Which type of mistake, if shared by both parties to a contract, can potentially render the contract void?

Accepted Answer

Mutual mistake

Answer

Mistake of fact

Answer

Mistake of law

Answer

Unilateral mistake

Question 10

What is the primary remedy for breach of contract?

Accepted Answer

Damages

Answer

Specific performance

Answer

Rescission

Answer

Injunction

Question 11

Which of the following is NOT a source of contractual obligations?

Accepted Answer

Tort

Answer

Agreement

Answer

Custom

Answer

Estoppel

Question 12

What is the role of the parol evidence rule in contract law?

Accepted Answer

To prevent the introduction of extrinsic evidence to contradict the terms of a written contract.

Answer

To allow the introduction of extrinsic evidence to explain the terms of a written contract.

Answer

To prevent the introduction of extrinsic evidence to supplement the terms of a written contract.

Answer

To allow the introduction of extrinsic evidence to modify the terms of a written contract.

Question 13

Which of the following is a key principle of the doctrine of privity of contract?

Accepted Answer

Only parties to a contract can enforce its terms.

Answer

Third parties can enforce a contract if they are intended beneficiaries.

Answer

Contracts can be assigned to third parties without the consent of the other party.

Answer

Third parties can be liable for breaching a contract if they induce its breach.

Question 14

What is the purpose of a liquidated damages clause?

Accepted Answer

To set a predetermined amount of compensation for breach of contract.

Answer

To provide a penalty for breach of contract.

Answer

To encourage the parties to perform the contract.

Answer

To discourage the parties from breaching the contract.

Question 15

A contract can be validly assigned when:

Accepted Answer

The assignee takes on the assignor's rights and obligations.

Answer

The contract is deemed illegal.

Answer

The contract has been fully completed.

Answer

The assignor gets permission from everyone involved in the contract.

Question 16

Which type of contract has yet to be fulfilled by either party?

Accepted Answer

Executory contract

Answer

Void contract

Answer

Executed contract

Answer

Unenforceable contract

Question 17

What is the effect of acceptance by conduct in contract formation?

Accepted Answer

Acceptance can be implied by the conduct of a party, leading to the formation of a binding contract.

Answer

Acceptance by conduct creates a counter-offer that must be accepted by the original offeror.

Answer

Acceptance by conduct automatically revokes the original offer.

Question 18

In a contract, what is the primary distinction between a condition and a warranty?

Accepted Answer

A condition is a fundamental term that goes to the root of the contract, while a warranty is a less important term that relates to a specific aspect of the contract's performance.

Answer

A condition is a promise, whereas a warranty is a representation.

Answer

A condition is breached before the contract is performed, while a warranty is breached after the contract is performed.

Question 19

Which principle governs the measure of damages for breach of contract?

Accepted Answer

The goal of damages is to place the non-breaching party in the position they would have been in if the contract had been fulfilled.

Answer

The measure of damages is typically the difference between the contract price and the market price.

Question 20

Regarding the formation of contracts, which of the following statements is accurate?

Accepted Answer

If an offer specifies a time limit for acceptance, acceptance within that time frame creates a binding contract, regardless of when it was communicated by the offeree.

Answer

All offers must be communicated in writing to be legally binding.

Answer

An offer can be revoked at any time, even if it has been accepted by the offeree.

Question 21

When a construction project experiences substantial delays due to unforeseen circumstances and the client refuses to pay the full contract price, what is the most appropriate legal remedy for the construction company?

Accepted Answer

Claiming damages for breach of contract.

Answer

Injunction, prohibiting the client from using the building.

Answer

Restitution of the payment already made by the client.

Answer

Specific performance, forcing the client to accept the delayed building.

Question 22

In a software development contract, which legal principle is most relevant when the delivered software lacks agreed-upon features?

Accepted Answer

Breach of contract, as the developer has failed to fulfill the agreed-upon obligations.

Answer

Misrepresentation, as the developer may have falsely stated the software's capabilities.

Answer

Frustration of contract, as unforeseen circumstances have made the contract impossible to perform.

Question 23

Regarding liquidated damages clauses in contracts, which statement is true?

Accepted Answer

Such clauses are enforceable if they constitute a fair and reasonable estimate of the potential losses arising from a breach of contract.

Answer

The non-breaching party can always claim actual losses, regardless of the existence of a liquidated damages clause.

Answer

Liquidated damages clauses are automatically unenforceable as they are considered penalty clauses.

Question 24

When a contract contains an arbitration clause, which statement is most accurate?

Accepted Answer

The clause is generally binding, and parties must submit to arbitration in the event of a dispute, unless there are grounds to challenge its validity.

Answer

Parties can choose between arbitration and litigation, even if there is an arbitration clause.

Answer

Arbitration clauses are unenforceable unless both parties explicitly agree to them in writing before any dispute arises.

Question 25

In contract law, which principle governs a business owner's promise to pay a bonus to a salesperson for achieving a specific sales target?

Accepted Answer

Consideration, as the salesperson's achievement of the target constitutes valuable consideration for the owner's promise.

Answer

Duress, if the salesperson was coerced into achieving the target.

Answer

Undue influence, if the owner exerted improper pressure on the salesperson.

Answer

Promissory estoppel, as the owner's promise may be enforceable despite the lack of consideration.

Question 26

In a contract for the sale of goods, what is the likelihood of an exclusion clause being enforceable?

Accepted Answer

Exclusion clauses are generally enforceable if they are incorporated into the contract clearly and without ambiguity and do not exclude liability for fundamental breach.

Answer

Exclusion clauses are automatically unenforceable as they are considered unfair to the party seeking to rely on them.

Question 27

Two companies enter into a contract for the supply of goods. The contract is silent on the matter of payment terms. Which of the following statements is most likely true?

Accepted Answer

The law implies a term that the buyer will pay a reasonable price for the goods.

Answer

The contract is unenforceable because it lacks essential terms.

Answer

The buyer can refuse to pay for the goods because there is no agreement on the price.

Question 28

A company makes a statement to a potential customer about the quality of its products. The statement is later found to be false. The customer relies on this statement and suffers financial losses as a result. Which of the following legal principles is most relevant to this scenario?

Accepted Answer

Misrepresentation.

Answer

Negligence.

Answer

Frustration of contract.

Answer

Breach of contract.

Question 29

A company enters into a contract with a supplier for the supply of raw materials. The contract includes a force majeure clause, which exempts the supplier from liability for delays caused by certain events beyond their control. The supplier's factory is destroyed by a fire, preventing them from delivering the materials. Which of the following statements is most likely true?

Accepted Answer

The force majeure clause is likely to be applicable, releasing the supplier from liability for the delay.

Answer

The supplier is still liable for the delay because they should have had insurance to cover such events.