AIC 301 EXAM REPORTED QUESTIONS
WITH CORRECT ANSWERS
Third-party beneficiary - Answer-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 - Answer-The failure, without legal excuse, to fulfill a contractual
promise.
Offeror - Answer-The party to a contract who promises to give something in return for a
promise or an act by another party.
Offeree - Answer-The party to a contract who makes a promise or acts in return for
something offered by another party.
Uniform Commercial Code - Answer-A code of federal laws that govern commercial
transactions in the United States.
Bilateral contract - Answer-A contract in which each party promises a performance.
Unilateral contract - Answer-A contract in which only one party makes a promise or
undertakes the requested performance.
Executed contract - Answer-A contract that has been completely performed by both
parties.
Executory contract - Answer-A contract that has not been completely performed by one
or both of the parties.
Express contract - Answer-A contract whose terms and intentions are explicitly stated.
Implied contract - Answer-A contract whose terms and intentions are indicated by the
actions of the parties to the contract and the surrounding circumstances.
Implied-in-fact contract - Answer-A contract that is not express but that the parties
presumably intended, either by tacit understanding or by the assumption that it existed.
Implied-in-law contract - Answer-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.
, Voidable contract - Answer-A contract that one of the parties can reject (avoid) based
on some circumstance surrounding its execution.
Void contract - Answer-An agreement that, despite the parties' intentions, never reaches
contract status and is therefore not legally enforceable or binding.
Mutual assent - Answer-The act of two or more parties coming together to agree to the
terms of a contract.
Fraud - Answer-An intentional misrepresentation resulting in harm to a person or an
organization.
Representation - Answer-A statement of alleged fact.
Material fact - Answer-A fact that is significant to a decision or matter at hand.
Rescission - Answer-A legal act of canceling something (like a contract) and making it
void.
Unilateral mistake - Answer-A perception by one party to a contract that does not agree
with the facts.
Bilateral mistake - Answer-A perception by both parties to a contract that does not
agree with the facts.
Duress - Answer-The use of restraint, violence, threats of violence, or wrongful pressure
to compel a party to act contrary to his or her wishes or interests.
Undue influence - Answer-The improper use of power or trust to deprive a person of
free will and substitute another's objective, resulting in lack of genuine assent to a
contract.
Uniform Commercial Code (UCC) - Answer-A model code that has been adopted in
whole or in part by each state and whose purpose is to provide a consistent legal basis
for business transactions throughout the United States and its territories.
Parol evidence rule - Answer-A provision that prevents the terms of a contract from
being modified by evidence of oral or other agreements after the contract has been
written.
Statute of frauds - Answer-A law to prevent fraud and perjury by requiring that certain
contracts be in writing and contain the signature of the party responsible for performing
that contract.
Real property (realty) - Answer-Tangible property consisting of land, all structures
permanently attached to the land, and whatever is growing on the land.
WITH CORRECT ANSWERS
Third-party beneficiary - Answer-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 - Answer-The failure, without legal excuse, to fulfill a contractual
promise.
Offeror - Answer-The party to a contract who promises to give something in return for a
promise or an act by another party.
Offeree - Answer-The party to a contract who makes a promise or acts in return for
something offered by another party.
Uniform Commercial Code - Answer-A code of federal laws that govern commercial
transactions in the United States.
Bilateral contract - Answer-A contract in which each party promises a performance.
Unilateral contract - Answer-A contract in which only one party makes a promise or
undertakes the requested performance.
Executed contract - Answer-A contract that has been completely performed by both
parties.
Executory contract - Answer-A contract that has not been completely performed by one
or both of the parties.
Express contract - Answer-A contract whose terms and intentions are explicitly stated.
Implied contract - Answer-A contract whose terms and intentions are indicated by the
actions of the parties to the contract and the surrounding circumstances.
Implied-in-fact contract - Answer-A contract that is not express but that the parties
presumably intended, either by tacit understanding or by the assumption that it existed.
Implied-in-law contract - Answer-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.
, Voidable contract - Answer-A contract that one of the parties can reject (avoid) based
on some circumstance surrounding its execution.
Void contract - Answer-An agreement that, despite the parties' intentions, never reaches
contract status and is therefore not legally enforceable or binding.
Mutual assent - Answer-The act of two or more parties coming together to agree to the
terms of a contract.
Fraud - Answer-An intentional misrepresentation resulting in harm to a person or an
organization.
Representation - Answer-A statement of alleged fact.
Material fact - Answer-A fact that is significant to a decision or matter at hand.
Rescission - Answer-A legal act of canceling something (like a contract) and making it
void.
Unilateral mistake - Answer-A perception by one party to a contract that does not agree
with the facts.
Bilateral mistake - Answer-A perception by both parties to a contract that does not
agree with the facts.
Duress - Answer-The use of restraint, violence, threats of violence, or wrongful pressure
to compel a party to act contrary to his or her wishes or interests.
Undue influence - Answer-The improper use of power or trust to deprive a person of
free will and substitute another's objective, resulting in lack of genuine assent to a
contract.
Uniform Commercial Code (UCC) - Answer-A model code that has been adopted in
whole or in part by each state and whose purpose is to provide a consistent legal basis
for business transactions throughout the United States and its territories.
Parol evidence rule - Answer-A provision that prevents the terms of a contract from
being modified by evidence of oral or other agreements after the contract has been
written.
Statute of frauds - Answer-A law to prevent fraud and perjury by requiring that certain
contracts be in writing and contain the signature of the party responsible for performing
that contract.
Real property (realty) - Answer-Tangible property consisting of land, all structures
permanently attached to the land, and whatever is growing on the land.
