LAW OF CONTRACTS EXAM 2 PRACTICE
PAPER 2026 COMPLETE SOLUTIONS
◉ Name two sources of CONTRACT Law. Answer: Common Law and
Legislation(Statutes)
◉ Uniform Commercial Code(UCC). Answer: To the extent the UCC
modifies general common law, provisions of the UCC govern all sales
and leases of goods.
◉ Why are Contracts Important?. Answer: The provide
PREDICTABILITY and STABILITY
◉ What is a CRITICAL element to determine whether parties have
formed a valid contract?. Answer: INTENT
◉ How do courts determine the parties' intent to form a contract?.
Answer: The courts will use the "reasonable person standard."
◉ Kevin sells Roman coins. He knows Jen is a coin collector, and he
sends Jen a letter stating that says he has a Julius Caesar coin he is
willing to sell for $2500. Jen signs and returns the letter, but adds
nothing more than her signature. Kevin mails the coin to Jen and
requests payment, but Jen sends the coin back claiming they do not
,have a contract. What standard will the court use to determine
whether they have a contract?. Answer: Reasonable person standard
◉ Freedom of Contract. Answer: This is the freedom of individuals
and groups to form contracts without government restrictions.
◉ What two parties must be involved (at least) to form a contract?.
Answer: Offeror - person who makes an offer.
Offeree - person to whom an offer is made.
◉ What are the 4 requirements/elements of a Valid Contract?.
Answer: 1. Agreement
2. Consideration
3. Contractual Capacity
4. Legality
◉ Agreement of a contract must include what two things?. Answer:
Offer and Acceptance
◉ Consideration of a contract must include what?. Answer:
Something of value must be exchanged and must be legally sufficient
and bargained for.
,◉ What must both parties of a contract show characteristics of that
will qualify them for Contractual Capacity?. Answer: Both parties
must show that they have competence.
◉ What must a contract be to have Legality?. Answer: The contract's
purpose must be legal and no contrary to public policy.
◉ Two DEFENSES to a contract being enforceable are...?. Answer: 1.
Voluntary Consent
2. Form of contract was improper.
◉ KNOW THIS!!!
Contract formation:
1. Bilateral vs Unilateral
2. Formal vs Informal
3. Express vs Implied. Answer: 1. Bilateral is a promise for a
promise, whereas uni - is a promise for an act.
2. Formal requires a special form for creation, whereas informal
does not.
3. Express is formed by words, while Implied is formed by the
conduct of the parties.
◉ What contract is this an example of?
, You are away on vacation and you call a security company to install a
security system. They promise to install while you are away and you
promise to pay them when you return home.. Answer: This is an
example of a Bilateral Contract.
◉ An offeror can "revoke" an offer up until when?. Answer: Until the
offeree accepts the offer.
◉ What contract is this an example of?
If you deliver your crutches to me by 5pm tomorrow, I promise to
pay you for them.. Answer: This is an example of a Unilateral
Contract.
◉ Give some examples of a Unilateral Contract. Answer: Contests,
Lotteries, Competitions offering Prizes
◉ Ironman Inc. sponsors a triathlon race and advertises a prize of
$50,000 to the winner. Bruce enters the competition and wins, but
Ironman Inc. only pays him $10,000. Did Ironman breach a valid
contract with Bruce?. Answer: Yes, a breach occurred.
◉ Ironman Inc. sponsors a triathlon race and advertises a prize of
$50,000 to the winner. They also advertise that they reserve the
right to change the offer at anytime. Bruce enters the competition
and wins, but Ironman Inc. only pays him $10,000. Did Ironman
PAPER 2026 COMPLETE SOLUTIONS
◉ Name two sources of CONTRACT Law. Answer: Common Law and
Legislation(Statutes)
◉ Uniform Commercial Code(UCC). Answer: To the extent the UCC
modifies general common law, provisions of the UCC govern all sales
and leases of goods.
◉ Why are Contracts Important?. Answer: The provide
PREDICTABILITY and STABILITY
◉ What is a CRITICAL element to determine whether parties have
formed a valid contract?. Answer: INTENT
◉ How do courts determine the parties' intent to form a contract?.
Answer: The courts will use the "reasonable person standard."
◉ Kevin sells Roman coins. He knows Jen is a coin collector, and he
sends Jen a letter stating that says he has a Julius Caesar coin he is
willing to sell for $2500. Jen signs and returns the letter, but adds
nothing more than her signature. Kevin mails the coin to Jen and
requests payment, but Jen sends the coin back claiming they do not
,have a contract. What standard will the court use to determine
whether they have a contract?. Answer: Reasonable person standard
◉ Freedom of Contract. Answer: This is the freedom of individuals
and groups to form contracts without government restrictions.
◉ What two parties must be involved (at least) to form a contract?.
Answer: Offeror - person who makes an offer.
Offeree - person to whom an offer is made.
◉ What are the 4 requirements/elements of a Valid Contract?.
Answer: 1. Agreement
2. Consideration
3. Contractual Capacity
4. Legality
◉ Agreement of a contract must include what two things?. Answer:
Offer and Acceptance
◉ Consideration of a contract must include what?. Answer:
Something of value must be exchanged and must be legally sufficient
and bargained for.
,◉ What must both parties of a contract show characteristics of that
will qualify them for Contractual Capacity?. Answer: Both parties
must show that they have competence.
◉ What must a contract be to have Legality?. Answer: The contract's
purpose must be legal and no contrary to public policy.
◉ Two DEFENSES to a contract being enforceable are...?. Answer: 1.
Voluntary Consent
2. Form of contract was improper.
◉ KNOW THIS!!!
Contract formation:
1. Bilateral vs Unilateral
2. Formal vs Informal
3. Express vs Implied. Answer: 1. Bilateral is a promise for a
promise, whereas uni - is a promise for an act.
2. Formal requires a special form for creation, whereas informal
does not.
3. Express is formed by words, while Implied is formed by the
conduct of the parties.
◉ What contract is this an example of?
, You are away on vacation and you call a security company to install a
security system. They promise to install while you are away and you
promise to pay them when you return home.. Answer: This is an
example of a Bilateral Contract.
◉ An offeror can "revoke" an offer up until when?. Answer: Until the
offeree accepts the offer.
◉ What contract is this an example of?
If you deliver your crutches to me by 5pm tomorrow, I promise to
pay you for them.. Answer: This is an example of a Unilateral
Contract.
◉ Give some examples of a Unilateral Contract. Answer: Contests,
Lotteries, Competitions offering Prizes
◉ Ironman Inc. sponsors a triathlon race and advertises a prize of
$50,000 to the winner. Bruce enters the competition and wins, but
Ironman Inc. only pays him $10,000. Did Ironman breach a valid
contract with Bruce?. Answer: Yes, a breach occurred.
◉ Ironman Inc. sponsors a triathlon race and advertises a prize of
$50,000 to the winner. They also advertise that they reserve the
right to change the offer at anytime. Bruce enters the competition
and wins, but Ironman Inc. only pays him $10,000. Did Ironman
