AIC 301 COMPREHENSIVE TEST BANK
PRACTICE QUESTIONS AND RATIONALES
●● agreements
Answer: not all __________________ are legally binding contracts
●● 1) agreement
2) capacity
3) mutual assent
4) consideration
5) legal purpose
6) form required by law
Answer: 6 elements of a legally binding contract
●● promisor
Answer: party making a promise
●● promisee
Answer: party to whom a promise is made
●● privity of contract
Answer: the relationship that exists between 2 parties to a contract
,●● privity
Answer: a party cannot sue for breach of contract without being in
______________ of contract with the other party
●● third-party beneficiary
Answer: a person who is not a party to a contract but who benefits from
it and has a legal right to enforce the contract if it is breached by either
of the contracting parties
●● breach of contract
Answer: the failure without legal excuse, to fulfill a contractual promise
●● agreement
Answer: must include an offer and its acceptance
●● offeror
Answer: party making the offer
●● offeree
Answer: party who makes a promise or acts in return for something
offered by another party
,●● definite
Answer: offers must include _____________ terms and be
communicated to and received by the offeree
●● counteroffer
Answer: if the offeree requests changes to conditions of the offer
●● mentally competent
Answer: all parties must be ______________ _________________ for a
contract to be legally binding
●● mutual assent
Answer: the act of 2 or more parties deliberately negotiating all terms to
achieve consensus
●● consideration
Answer: something of value that is given in return for a promise
●● legal purpose
Answer: a contract must serve a legal purpose to be legally enforceable
●● form required by law
, Answer: contracts must be in a proper, legally stipulated form to be
binding
●● 1) sale of real estate
2) agreements that can't be performed within 1 year
3) transactions > $500
4) agreements to pay a debt owed
Answer: 4 examples of contracts that have to be in writing
●● bilateral contract
Answer: a contract where each party promises to perform an act in
exchange for an act by the other party
●● unilateral contract
Answer: a contract where one party promises to pay for the act of the
other party
●● executed contract
Answer: contract where nothing more is required of either party to be
fulfilled
●● executory contract
Answer: a contract that hasn't been fully executed
PRACTICE QUESTIONS AND RATIONALES
●● agreements
Answer: not all __________________ are legally binding contracts
●● 1) agreement
2) capacity
3) mutual assent
4) consideration
5) legal purpose
6) form required by law
Answer: 6 elements of a legally binding contract
●● promisor
Answer: party making a promise
●● promisee
Answer: party to whom a promise is made
●● privity of contract
Answer: the relationship that exists between 2 parties to a contract
,●● privity
Answer: a party cannot sue for breach of contract without being in
______________ of contract with the other party
●● third-party beneficiary
Answer: a person who is not a party to a contract but who benefits from
it and has a legal right to enforce the contract if it is breached by either
of the contracting parties
●● breach of contract
Answer: the failure without legal excuse, to fulfill a contractual promise
●● agreement
Answer: must include an offer and its acceptance
●● offeror
Answer: party making the offer
●● offeree
Answer: party who makes a promise or acts in return for something
offered by another party
,●● definite
Answer: offers must include _____________ terms and be
communicated to and received by the offeree
●● counteroffer
Answer: if the offeree requests changes to conditions of the offer
●● mentally competent
Answer: all parties must be ______________ _________________ for a
contract to be legally binding
●● mutual assent
Answer: the act of 2 or more parties deliberately negotiating all terms to
achieve consensus
●● consideration
Answer: something of value that is given in return for a promise
●● legal purpose
Answer: a contract must serve a legal purpose to be legally enforceable
●● form required by law
, Answer: contracts must be in a proper, legally stipulated form to be
binding
●● 1) sale of real estate
2) agreements that can't be performed within 1 year
3) transactions > $500
4) agreements to pay a debt owed
Answer: 4 examples of contracts that have to be in writing
●● bilateral contract
Answer: a contract where each party promises to perform an act in
exchange for an act by the other party
●● unilateral contract
Answer: a contract where one party promises to pay for the act of the
other party
●● executed contract
Answer: contract where nothing more is required of either party to be
fulfilled
●● executory contract
Answer: a contract that hasn't been fully executed
