PVL3702 Law of Contract Complete
Examination Review 2026 | 100 Practice
Questions and Answers with Detailed
Rationales | Offer & Acceptance,
Consideration, Capacity,
Misrepresentation, Breach, Remedies,
Consumer Protection, Agency & Contract
Law Success Guide
PVL3702 Law of Contract
Comprehensive 100-Question Practice Examination
with Detailed Rationales
Questions 1–100
Contract Formation
1. A contract is best defined as:
,A. A legally enforceable agreement between parties
B. A social arrangement only
C. A moral obligation without legal consequences
D. A government regulation
Correct Answer: A
Rationale: A contract is a legally enforceable agreement creating rights and
obligations between parties.
Difficulty: Easy
2. One essential element of a valid contract is:
A. Agreement between the parties
B. Friendship between the parties
C. Written communication only
D. Witness testimony in every case
Correct Answer: A
Rationale: A valid contract generally requires agreement, intention, capacity,
legality, and certainty.
Difficulty: Easy
3. An offer is:
A. A definite proposal capable of acceptance
B. An invitation to negotiate only
C. A completed contract
D. A legal remedy
Correct Answer: A
Rationale: An offer demonstrates a willingness to contract on specific terms.
Difficulty: Easy
,4. Acceptance occurs when:
A. The offeree agrees to the terms of the offer
B. The offer is withdrawn
C. Negotiations begin
D. A dispute arises
Correct Answer: A
Rationale: Acceptance creates agreement when it corresponds with the offer.
Difficulty: Easy
5. For acceptance to be valid, it must generally be:
A. Clear and unconditional
B. Conditional and uncertain
C. Silent in all circumstances
D. Oral only
Correct Answer: A
Rationale: Acceptance must correspond to the offer without introducing new
terms.
Difficulty: Moderate
6. A counteroffer has the effect of:
A. Rejecting the original offer and proposing new terms
B. Accepting the original offer automatically
C. Creating a valid contract immediately
D. Extending the original offer indefinitely
Correct Answer: A
Rationale: A counteroffer terminates the original offer and introduces a new
proposal.
Difficulty: Moderate
, 7. An invitation to treat is:
A. An invitation to negotiate rather than an offer
B. A legally binding contract
C. An acceptance
D. A remedy
Correct Answer: A
Rationale: Invitations to treat encourage offers but are not themselves offers.
Difficulty: Moderate
8. Goods displayed in a store are generally considered:
A. Invitations to treat
B. Offers
C. Acceptances
D. Counteroffers
Correct Answer: A
Rationale: Displayed goods usually invite customers to make offers to
purchase.
Difficulty: Moderate
9. Communication of acceptance is generally required because:
A. The offeror must know the offer has been accepted
B. Consideration is unnecessary
C. Capacity is established automatically
D. Contracts require witnesses
Correct Answer: A
Rationale: Acceptance must generally be communicated to create a binding
agreement.
Examination Review 2026 | 100 Practice
Questions and Answers with Detailed
Rationales | Offer & Acceptance,
Consideration, Capacity,
Misrepresentation, Breach, Remedies,
Consumer Protection, Agency & Contract
Law Success Guide
PVL3702 Law of Contract
Comprehensive 100-Question Practice Examination
with Detailed Rationales
Questions 1–100
Contract Formation
1. A contract is best defined as:
,A. A legally enforceable agreement between parties
B. A social arrangement only
C. A moral obligation without legal consequences
D. A government regulation
Correct Answer: A
Rationale: A contract is a legally enforceable agreement creating rights and
obligations between parties.
Difficulty: Easy
2. One essential element of a valid contract is:
A. Agreement between the parties
B. Friendship between the parties
C. Written communication only
D. Witness testimony in every case
Correct Answer: A
Rationale: A valid contract generally requires agreement, intention, capacity,
legality, and certainty.
Difficulty: Easy
3. An offer is:
A. A definite proposal capable of acceptance
B. An invitation to negotiate only
C. A completed contract
D. A legal remedy
Correct Answer: A
Rationale: An offer demonstrates a willingness to contract on specific terms.
Difficulty: Easy
,4. Acceptance occurs when:
A. The offeree agrees to the terms of the offer
B. The offer is withdrawn
C. Negotiations begin
D. A dispute arises
Correct Answer: A
Rationale: Acceptance creates agreement when it corresponds with the offer.
Difficulty: Easy
5. For acceptance to be valid, it must generally be:
A. Clear and unconditional
B. Conditional and uncertain
C. Silent in all circumstances
D. Oral only
Correct Answer: A
Rationale: Acceptance must correspond to the offer without introducing new
terms.
Difficulty: Moderate
6. A counteroffer has the effect of:
A. Rejecting the original offer and proposing new terms
B. Accepting the original offer automatically
C. Creating a valid contract immediately
D. Extending the original offer indefinitely
Correct Answer: A
Rationale: A counteroffer terminates the original offer and introduces a new
proposal.
Difficulty: Moderate
, 7. An invitation to treat is:
A. An invitation to negotiate rather than an offer
B. A legally binding contract
C. An acceptance
D. A remedy
Correct Answer: A
Rationale: Invitations to treat encourage offers but are not themselves offers.
Difficulty: Moderate
8. Goods displayed in a store are generally considered:
A. Invitations to treat
B. Offers
C. Acceptances
D. Counteroffers
Correct Answer: A
Rationale: Displayed goods usually invite customers to make offers to
purchase.
Difficulty: Moderate
9. Communication of acceptance is generally required because:
A. The offeror must know the offer has been accepted
B. Consideration is unnecessary
C. Capacity is established automatically
D. Contracts require witnesses
Correct Answer: A
Rationale: Acceptance must generally be communicated to create a binding
agreement.
