LGS 200- ABIGAIL HAMMOND- EXAM 2 UPDATED
ACTUAL QUESTIONS AND CORRECT ANSWERS
Question:
1. Contract
Answer:
An agreement that can be enforced in court; formed by two parties, each of whom agrees to perform or to
refrain from performing some act now or in the future.
Question:
2. What are the two parties involved in every contract?
Answer:
1. Offeror - A person who makes an offer.
2. Offeree - A person to whom an offer is made.
Question:
3. When is intent important?
Answer:
In determining whether a contract has been formed. The intent is determined by the objective theory of
contracts.
Question:
4. Objective theory of contracts
Answer:
A theory under which the intent to form a contract will be judged by outward, objective facts (what the
party said when entering into the contract, how the party acted or appeared, and the circumstances
surrounding the transaction) as interpreted by a reasonable person, rather than by the party's own secret,
subjective intentions. Objective facts might include: 1. What a party said when entering into the contract
2. How a party acted or appeared 3. The circumstances surrounding the transaction
Question:
5. What are the four requirements that must be met before a valid contract exists?
Answer:
1. Agreement • an offer by one party to enter into the agreement and an acceptance of the terms of the offer
by another party. 2. Consideration • Any promises made by the parties to the contract must be supported by
legally sufficient and bargained-for consideration (something of value received or promised, such as
money, to convince a person to make a deal). 3. Contractual capacity • Both parties entering into the
contract must have the contractual capacity. That is, the law must recognize them as possessing
characteristics that qualify them as competent parties. 4. Legality • The contract's purpose must be to
accomplish some goal that is legal and not against public policy.
Question:
6. What are the requirements typically raised as defenses to the enforceability of an otherwise valid
contract?
,Answer:
1. Voluntary consent • The consent of both parties must be voluntary
2. Form • The contract must be in whatever form the law requires. (Slide 5 for examples)
Question:
7. Types of contracts: Formation
Answer:
1. Bilateral—A promise for a promise.
2. Unilateral—A promise for an act—that is, acceptance is the completed performance of the act.
3. Formal—Requires a special form for creation.
4. Informal—Requires no special form for creation.
5. Express—Formed by words, such as oral, written, or a combination.
6. Implied—Formed by the conduct of the parties.
Question:
8. Types of contracts: Performance
Answer:
1. Executed—A fully performed contract.
2. Executory—A contract not fully performed.
Question:
9. Types of contracts: enforceability
Answer:
1. Valid—The contract has the necessary contractual elements: agreement (offer and acceptance),
consideration, legal capacity of the parties, and legal purpose.
2. Unenforceable—A contract exists, but it cannot be enforced because of a legal defense.
3. Voidable—One party has the option of avoiding or enforcing the contractual obligation.
4. Void—No contract exists, or there is a contract without legal obligations.
Question:
10. Agreement Definition
Answer:
A meeting of two or more minds in regard to the terms of a contract.
Question:
11. Agreement events
Answer:
1. An offer by one party to form a contract (offeror)
2. An acceptance of the offer by the person to whom the offer is made (offeree)
Question:
12. Agreement decisions
Answer:
1. Both parties must manifest to each other their mutual agreement to the same bargain.
2. Once an agreement is reached, if the other elements of a contract (consideration, capacity, and legality)
are present, a valid contract is formed.
, Question:
13. Offer
Answer:
A promise or commitment to perform or refrain from performing some specified act in the future.
Question:
14. What are the three elements that are necessary for an offer to be effective?
Answer:
1. The offeror must have a serious intention to become bound by the offer.
2. The terms of the offer must be reasonably certain, or definite, so that the parties and the court can make
sure the terms of the contract.
3. The offer must be communicated to the offeree.
Question:
15. What are the ways an offer can be terminated?
Answer:
• Termination by Action of the Offeror
• Termination by Action of the Offeree
• Termination by Operation of Law
Question:
16. Termination by Action of the Offeror
Answer:
Some offers can be made irreversible, such as option contracts
Question:
17. Option contract
Answer:
A contract under which the offeror cannot revoke his or her offer for a stipulated time period and the
offeree can accept or reject the offer at any time during this period.
Question:
18. Termination by Action of the Offeree
Answer:
•Revocation (offeror)
•Rejection (offeree)
•Counteroffer (offeree)
Question:
19. Termination by Operation of Law
Answer:
1. Lapse of time
2. Destruction of the subject matter
3. Death or incompetence of the offeror or offeree
4. Supervening illegality (the offer becomes illegal)
ACTUAL QUESTIONS AND CORRECT ANSWERS
Question:
1. Contract
Answer:
An agreement that can be enforced in court; formed by two parties, each of whom agrees to perform or to
refrain from performing some act now or in the future.
Question:
2. What are the two parties involved in every contract?
Answer:
1. Offeror - A person who makes an offer.
2. Offeree - A person to whom an offer is made.
Question:
3. When is intent important?
Answer:
In determining whether a contract has been formed. The intent is determined by the objective theory of
contracts.
Question:
4. Objective theory of contracts
Answer:
A theory under which the intent to form a contract will be judged by outward, objective facts (what the
party said when entering into the contract, how the party acted or appeared, and the circumstances
surrounding the transaction) as interpreted by a reasonable person, rather than by the party's own secret,
subjective intentions. Objective facts might include: 1. What a party said when entering into the contract
2. How a party acted or appeared 3. The circumstances surrounding the transaction
Question:
5. What are the four requirements that must be met before a valid contract exists?
Answer:
1. Agreement • an offer by one party to enter into the agreement and an acceptance of the terms of the offer
by another party. 2. Consideration • Any promises made by the parties to the contract must be supported by
legally sufficient and bargained-for consideration (something of value received or promised, such as
money, to convince a person to make a deal). 3. Contractual capacity • Both parties entering into the
contract must have the contractual capacity. That is, the law must recognize them as possessing
characteristics that qualify them as competent parties. 4. Legality • The contract's purpose must be to
accomplish some goal that is legal and not against public policy.
Question:
6. What are the requirements typically raised as defenses to the enforceability of an otherwise valid
contract?
,Answer:
1. Voluntary consent • The consent of both parties must be voluntary
2. Form • The contract must be in whatever form the law requires. (Slide 5 for examples)
Question:
7. Types of contracts: Formation
Answer:
1. Bilateral—A promise for a promise.
2. Unilateral—A promise for an act—that is, acceptance is the completed performance of the act.
3. Formal—Requires a special form for creation.
4. Informal—Requires no special form for creation.
5. Express—Formed by words, such as oral, written, or a combination.
6. Implied—Formed by the conduct of the parties.
Question:
8. Types of contracts: Performance
Answer:
1. Executed—A fully performed contract.
2. Executory—A contract not fully performed.
Question:
9. Types of contracts: enforceability
Answer:
1. Valid—The contract has the necessary contractual elements: agreement (offer and acceptance),
consideration, legal capacity of the parties, and legal purpose.
2. Unenforceable—A contract exists, but it cannot be enforced because of a legal defense.
3. Voidable—One party has the option of avoiding or enforcing the contractual obligation.
4. Void—No contract exists, or there is a contract without legal obligations.
Question:
10. Agreement Definition
Answer:
A meeting of two or more minds in regard to the terms of a contract.
Question:
11. Agreement events
Answer:
1. An offer by one party to form a contract (offeror)
2. An acceptance of the offer by the person to whom the offer is made (offeree)
Question:
12. Agreement decisions
Answer:
1. Both parties must manifest to each other their mutual agreement to the same bargain.
2. Once an agreement is reached, if the other elements of a contract (consideration, capacity, and legality)
are present, a valid contract is formed.
, Question:
13. Offer
Answer:
A promise or commitment to perform or refrain from performing some specified act in the future.
Question:
14. What are the three elements that are necessary for an offer to be effective?
Answer:
1. The offeror must have a serious intention to become bound by the offer.
2. The terms of the offer must be reasonably certain, or definite, so that the parties and the court can make
sure the terms of the contract.
3. The offer must be communicated to the offeree.
Question:
15. What are the ways an offer can be terminated?
Answer:
• Termination by Action of the Offeror
• Termination by Action of the Offeree
• Termination by Operation of Law
Question:
16. Termination by Action of the Offeror
Answer:
Some offers can be made irreversible, such as option contracts
Question:
17. Option contract
Answer:
A contract under which the offeror cannot revoke his or her offer for a stipulated time period and the
offeree can accept or reject the offer at any time during this period.
Question:
18. Termination by Action of the Offeree
Answer:
•Revocation (offeror)
•Rejection (offeree)
•Counteroffer (offeree)
Question:
19. Termination by Operation of Law
Answer:
1. Lapse of time
2. Destruction of the subject matter
3. Death or incompetence of the offeror or offeree
4. Supervening illegality (the offer becomes illegal)
