AIC 301 Question and Answer [2026] |
UPDATED ACTUAL Exam | Detailed Answer
Explanations
• contract -✓✓ a legally enforceable agreement between 2 or more parties
• agreements -✓✓ not all __________________ are legally binding contracts
• 1) agreement
2) capacity
3) mutual assent
4) consideration
5) legal purpose
6) form required by law -✓✓ 6 elements of a legally binding contract
• promisor -✓✓ party making a promise
• promisee -✓✓ party to whom a promise is made
• privity of contract -✓✓ the relationship that exists between 2 parties to a contract
• privity -✓✓ a party cannot sue for breach of contract without being in
______________ of contract with the other party
,• third-party beneficiary -✓✓ 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 -✓✓ the failure without legal excuse, to fulfill a contractual
promise
• agreement -✓✓ must include an offer and its acceptance
• offeror -✓✓ party making the offer
• offeree -✓✓ party who makes a promise or acts in return for something offered
by another party
• definite -✓✓ offers must include _____________ terms and be communicated to
and received by the offeree
• counteroffer -✓✓ if the offeree requests changes to conditions of the offer
• mentally competent -✓✓ all parties must be ______________
_________________ for a contract to be legally binding
• mutual assent -✓✓ the act of 2 or more parties deliberately negotiating all terms
to achieve consensus
• consideration -✓✓ something of value that is given in return for a promise
,• legal purpose -✓✓ a contract must serve a legal purpose to be legally enforceable
• form required by law -✓✓ 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 -✓✓ 4 examples of contracts that have to be in
writing
• bilateral contract -✓✓ a contract where each party promises to perform an act in
exchange for an act by the other party
• unilateral contract -✓✓ a contract where one party promises to pay for the act of
the other party
• executed contract -✓✓ contract where nothing more is required of either party to
be fulfilled
• executory contract -✓✓ a contract that hasn't been fully executed
• express contract -✓✓ contract where terms and intentions are clearly stated
• implied contract -✓✓ contract where terms and intentions are indicated by the
actions of the parties to the contract and the surrounding circumstances
, • implied-in-fact contracts -✓✓ parties presumably intended, either by tacit
understanding or by the assumption that it already existed
• implied-in-law contracts -✓✓ an obligation that is not an actual contract but that
is imposed by law because of the parties' conduct or some special relationship
between them or because one of them would otherwise be unjustly enriched
• implied-in-law contracts -✓✓ sometimes called "quasi-contracts"
• voidable contract -✓✓ a contract that one of the parties can reject (avoid) based
on some circumstances regarding its execution
• behavior -✓✓ the _______________ of one of the contracting parties can make a
contract voidable
• void contract -✓✓ an agreement that despite that parties' intentions, never reaches
contract status and is therefore not legally enforceable or binding
• void contact -✓✓ ex. agreement to commit a crime (what type of contract?)
• 1) fraud
2) mistake
3) duress
4) undue influence
5) innocent misrepresentation -✓✓ 5 factors lacking for mutual assent
UPDATED ACTUAL Exam | Detailed Answer
Explanations
• contract -✓✓ a legally enforceable agreement between 2 or more parties
• agreements -✓✓ not all __________________ are legally binding contracts
• 1) agreement
2) capacity
3) mutual assent
4) consideration
5) legal purpose
6) form required by law -✓✓ 6 elements of a legally binding contract
• promisor -✓✓ party making a promise
• promisee -✓✓ party to whom a promise is made
• privity of contract -✓✓ the relationship that exists between 2 parties to a contract
• privity -✓✓ a party cannot sue for breach of contract without being in
______________ of contract with the other party
,• third-party beneficiary -✓✓ 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 -✓✓ the failure without legal excuse, to fulfill a contractual
promise
• agreement -✓✓ must include an offer and its acceptance
• offeror -✓✓ party making the offer
• offeree -✓✓ party who makes a promise or acts in return for something offered
by another party
• definite -✓✓ offers must include _____________ terms and be communicated to
and received by the offeree
• counteroffer -✓✓ if the offeree requests changes to conditions of the offer
• mentally competent -✓✓ all parties must be ______________
_________________ for a contract to be legally binding
• mutual assent -✓✓ the act of 2 or more parties deliberately negotiating all terms
to achieve consensus
• consideration -✓✓ something of value that is given in return for a promise
,• legal purpose -✓✓ a contract must serve a legal purpose to be legally enforceable
• form required by law -✓✓ 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 -✓✓ 4 examples of contracts that have to be in
writing
• bilateral contract -✓✓ a contract where each party promises to perform an act in
exchange for an act by the other party
• unilateral contract -✓✓ a contract where one party promises to pay for the act of
the other party
• executed contract -✓✓ contract where nothing more is required of either party to
be fulfilled
• executory contract -✓✓ a contract that hasn't been fully executed
• express contract -✓✓ contract where terms and intentions are clearly stated
• implied contract -✓✓ contract where terms and intentions are indicated by the
actions of the parties to the contract and the surrounding circumstances
, • implied-in-fact contracts -✓✓ parties presumably intended, either by tacit
understanding or by the assumption that it already existed
• implied-in-law contracts -✓✓ an obligation that is not an actual contract but that
is imposed by law because of the parties' conduct or some special relationship
between them or because one of them would otherwise be unjustly enriched
• implied-in-law contracts -✓✓ sometimes called "quasi-contracts"
• voidable contract -✓✓ a contract that one of the parties can reject (avoid) based
on some circumstances regarding its execution
• behavior -✓✓ the _______________ of one of the contracting parties can make a
contract voidable
• void contract -✓✓ an agreement that despite that parties' intentions, never reaches
contract status and is therefore not legally enforceable or binding
• void contact -✓✓ ex. agreement to commit a crime (what type of contract?)
• 1) fraud
2) mistake
3) duress
4) undue influence
5) innocent misrepresentation -✓✓ 5 factors lacking for mutual assent
