LAW OF CONTRACTS EXAM 2 TEST PAPER
2026 FULL SOLUTION VERIFIED
◉ Offeror. Answer: A person who makes an offer.
◉ Offeree. Answer: a person receiving the contract
◉ Contract. Answer: agreement between two or more parties
◉ Consideration. Answer: each party must receive something of
value
◉ Legality. Answer: has to have a legal purpose
◉ Genuine Assent. Answer: no mistake, no fraud involved
◉ not every promise is a contract. Answer: not an exchange for
equal value just exchange for value
◉ Object 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 intrpreted by a reasonable person, rather than by the
party's own secrect, subjective intentions.
◉ a contract is not a. Answer: a contract simply because its in
writing
◉ Bilateral Contract. Answer: promise for a promise made by 2
people
◉ Unilateral Contract. Answer: promise in exchange for an act , you
only owe something if the task is complete
◉ Express Contract. Answer: all important terms are made clearly
either orally or in writing
◉ Implied Contract. Answer: A contract that comes about simply
from actions of the parties. ex= waving a candy bar at the clerk and
they know your gonna pay
◉ Jim and Kathy have a contract with a term that is not clear. Kathy
and Jim both have a different interpretation of the contract. If Kathy
wrote the contract, a court will:
,a. accept Jim's interpretation because Kathy wrote the contract.
b. accept Kathy's interpretation because she wrote the contract and
should know what she meant.
c. evaluate both interpretations and develop a reasonable
interpretation that is somewhere in between.
d. call in a third party to develop a reasonable interpretation..
Answer: a. accept Jim's interpretation because Kathy wrote the
contract.
◉ Cathy promises to buy Mark's car for $2,000. Cathy is:
an officer.
b. an offeree.
c. a promisee.
d. a promisor.. Answer: d. a promisor.
◉ Carol's car was hit while it was parked. Carol calls A-1 Towing,
tells the dispatcher that the car needs to be towed, and gives her
location. Carol never mentions a price and leaves before the tow
, truck arrives, so she does not talk with the driver or sign any
documents. Carol:
a. owes the company for towing her car under an implied contract.
b. does not owe the company for towing her car because she did not
know that she would have to pay.
c. owes the company for towing her car under an express contract.
d. does not owe the company for towing her car because she did not
have a chance to reject its services.. Answer: a. owes the company for
towing her car under an implied contract.
◉ Doris, an eighty-seven-year-old widow, collapsed while shopping
at a store. She was taken to the Detroit city hospital by ambulance.
She stayed there for fourteen days and was then transferred to
another hospital, where she later died. She never regained
consciousness. After she died, the hospitals and the ambulance
company sued her estate to recover their expenses. Will Doris's
estate be held liable for the medical bills?
2026 FULL SOLUTION VERIFIED
◉ Offeror. Answer: A person who makes an offer.
◉ Offeree. Answer: a person receiving the contract
◉ Contract. Answer: agreement between two or more parties
◉ Consideration. Answer: each party must receive something of
value
◉ Legality. Answer: has to have a legal purpose
◉ Genuine Assent. Answer: no mistake, no fraud involved
◉ not every promise is a contract. Answer: not an exchange for
equal value just exchange for value
◉ Object 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 intrpreted by a reasonable person, rather than by the
party's own secrect, subjective intentions.
◉ a contract is not a. Answer: a contract simply because its in
writing
◉ Bilateral Contract. Answer: promise for a promise made by 2
people
◉ Unilateral Contract. Answer: promise in exchange for an act , you
only owe something if the task is complete
◉ Express Contract. Answer: all important terms are made clearly
either orally or in writing
◉ Implied Contract. Answer: A contract that comes about simply
from actions of the parties. ex= waving a candy bar at the clerk and
they know your gonna pay
◉ Jim and Kathy have a contract with a term that is not clear. Kathy
and Jim both have a different interpretation of the contract. If Kathy
wrote the contract, a court will:
,a. accept Jim's interpretation because Kathy wrote the contract.
b. accept Kathy's interpretation because she wrote the contract and
should know what she meant.
c. evaluate both interpretations and develop a reasonable
interpretation that is somewhere in between.
d. call in a third party to develop a reasonable interpretation..
Answer: a. accept Jim's interpretation because Kathy wrote the
contract.
◉ Cathy promises to buy Mark's car for $2,000. Cathy is:
an officer.
b. an offeree.
c. a promisee.
d. a promisor.. Answer: d. a promisor.
◉ Carol's car was hit while it was parked. Carol calls A-1 Towing,
tells the dispatcher that the car needs to be towed, and gives her
location. Carol never mentions a price and leaves before the tow
, truck arrives, so she does not talk with the driver or sign any
documents. Carol:
a. owes the company for towing her car under an implied contract.
b. does not owe the company for towing her car because she did not
know that she would have to pay.
c. owes the company for towing her car under an express contract.
d. does not owe the company for towing her car because she did not
have a chance to reject its services.. Answer: a. owes the company for
towing her car under an implied contract.
◉ Doris, an eighty-seven-year-old widow, collapsed while shopping
at a store. She was taken to the Detroit city hospital by ambulance.
She stayed there for fourteen days and was then transferred to
another hospital, where she later died. She never regained
consciousness. After she died, the hospitals and the ambulance
company sued her estate to recover their expenses. Will Doris's
estate be held liable for the medical bills?
