NALA ACP — Contract Management

A homeowner emails a contractor: 'I will pay you $5,000 to repaint my house this month.' The contractor replies, 'Sounds good, I'll do it.' Under the common law of contracts, what term describes the homeowner's email?

• AAn offer
• BAn invitation to deal
• CA counteroffer
• DA conditional acceptance

Which of the following best describes the legal requirement of 'consideration' in contract formation?

• AA signed and notarized writing
• BA bargained-for exchange of legal value between the parties
• CThe motive or reason a party enters the contract
• DA promise to act in good faith

Under the common law 'mirror image rule,' a purported acceptance that adds or changes a material term of the offer operates as what?

• AA valid acceptance with the new term as a proposal
• BAn enforceable modification
• CA rejection and counteroffer
• DA binding option contract

An uncle promises his niece $10,000 'because you are a wonderful person,' with nothing requested or given in return. Is this promise enforceable as a contract?

• AYes, because the promise was in writing
• BYes, because the uncle intended to be bound
• CNo, because gifts are illegal
• DNo, because the promise lacks consideration

A company promises an employee a $20,000 bonus for work the employee already completed last year. Under the 'pre-existing duty' and 'past consideration' rules, is the bonus promise supported by consideration?

• ANo, because past consideration is not valid consideration
• BYes, because the employee was loyal
• CYes, because the work had real value
• DNo, because bonuses must be in the original contract

Under the doctrine of promissory estoppel, a promise may be enforced even without consideration when which combination of elements is present?

• AA signed writing and notarization
• BA promise, reasonable and foreseeable reliance, actual detrimental reliance, and injustic…
• CMutual mistake and rescission
• DAn offer, acceptance, and a peppercorn of value

A seller makes a written offer to sell a parcel of land and states, 'This offer is irrevocable for 30 days.' No money or other consideration is paid for that promise, and the transaction is governed by the common law. May the seller revoke before 30 days expire?

• ANo, the writing makes it irrevocable
• BNo, because land contracts are always firm
• CYes, because the offer can be revoked absent consideration for an option
• DYes, but only with the buyer's consent

Which of the following parties generally LACKS full capacity to contract, allowing them to disaffirm most contracts?

• AA sole proprietor
• BA corporation in good standing
• CA licensed attorney
• DA minor under the age of majority

A contract requires a party to perform an act that is illegal under state law. What is the status of the contract?

• AVoid as against public policy and unenforceable
• BValid but unenforceable until cured
• CVoidable at the option of either party
• DEnforceable if both parties knew of the illegality

Under the 'mailbox rule' at common law, when is an acceptance sent by an authorized means generally effective?

• AWhen the offeror actually reads it
• BWhen it is dispatched (placed in the mail)
• CWhen it is received by the offeror
• DOnly after the offeror acknowledges it

A homeowner offers a reward: 'I will pay $500 to anyone who finds and returns my lost dog.' A neighbor finds and returns the dog. This is an example of what kind of contract?

• AA bilateral contract
• BA quasi-contract
• CA unilateral contract accepted by performance
• DAn adhesion contract

Two parties sign an agreement, but one party was induced to sign by the other's knowing false statement of a material fact. The deceived party may treat the contract as:

• AVoid from inception
• BAutomatically reformed by the court
• CFully enforceable against both
• DVoidable at the option of the defrauded party

Which doctrine allows a court to refuse to enforce a contract or clause that is so one-sided and oppressive, with an absence of meaningful choice, that enforcement would be unfair?

• AUnconscionability
• BAccord and satisfaction
• CNovation
• DSubrogation

An offer states, 'You may accept only by sending written notice by certified mail.' The offeree accepts by phone instead. Under common law, what is the most likely result?

• AA valid contract because acceptance was communicated
• BNo contract, because the offeror is master of the offer and prescribed an exclusive method
• CA contract voidable by the offeree
• DA unilateral contract formed by the call

Which of the following is NOT one of the essential elements generally required to form a valid contract?

• AMutual assent (offer and acceptance)
• BConsideration
• CA notarized signature
• DLegal capacity and lawful purpose

A paralegal is reviewing whether an 'agreement to agree' on a key open term in the future is enforceable. Under traditional contract principles, such an agreement is generally:

• AFully enforceable like any contract
• BConverted into an option contract
• CAutomatically completed by the court at a fair price
• DUnenforceable for indefiniteness where a material term is left for future agreement

Under the Statute of Frauds, which of the following contracts must generally be evidenced by a signed writing to be enforceable?

• AA contract that by its terms cannot be performed within one year
• BA contract to paint a house for $300
• CA one-week consulting engagement
• DAn oral agreement to sell goods for $200

Which of the following is the clearest example of a 'bilateral contract'?

• AA reward offer for finding a lost item
• BAn exchange of mutual promises to deliver and to pay for software development services
• CA promise to make a gift
• DA standing offer accepted only by full performance

A buyer and seller appear to agree on a 'shipment of cotton arriving on the Peerless,' but each means a different ship of that name sailing months apart, and neither is at fault. Under the doctrine illustrated by Raffles v. Wichelhaus, what is the result?

• AA contract enforced according to the buyer's meaning
• BA contract enforced according to the seller's meaning
• CNo contract, because there was no true meeting of the minds (mutual misunderstanding)
• DA voidable contract subject to reformation

An offer will terminate, and can no longer be accepted, by operation of law in which of the following situations?

• AThe offeree begins thinking about whether to accept
• BThe offeree asks a clarifying question
• CThe offeror restates the offer
• DThe death or incapacity of the offeror before acceptance

A contract is signed by a person under extreme physical threat of violence made by the other party. The contract is best characterized as:

• AVoidable due to duress
• BValid and enforceable
• CVoid for lack of consideration
• DEnforceable subject to reformation

Under the objective theory of contracts, a party's intent to enter a contract is determined by:

• AThe party's secret, subjective intentions
• BThe outward, objective manifestations of assent as a reasonable person would understand t…
• CWhatever the party later testifies to
• DThe party's emotional state at signing

Which of the following statements about consideration is TRUE under modern contract law?

• AOnly money can serve as consideration
• BConsideration must be of roughly equal economic value to the other party's
• CCourts will generally not inquire into the adequacy of consideration, only its existence
• DConsideration is unnecessary if the contract is in writing

An intended third-party beneficiary of a contract acquires the right to enforce it when:

• AThe contract is signed by all original parties only
• BThe third party pays consideration to a contracting party
• CAny stranger happens to gain an incidental benefit
• DThe contracting parties intended to confer a benefit directly on that third party and the…

A silent failure to respond to an offer generally does NOT constitute acceptance. Which is the most accurate statement of the 'silence as acceptance' rule?

• ASilence is acceptance only where prior dealings or circumstances make silence a reasonabl…
• BSilence always operates as acceptance
• CSilence can never be acceptance under any circumstances
• DSilence is acceptance if the offer says so, regardless of context

A paralegal must determine which body of law governs a contract. UCC Article 2 applies to a transaction primarily involving:

• AThe sale of services
• BThe sale of goods (movable, tangible personal property)
• CThe sale or lease of real estate
• DAn employment relationship

A contract is for the purchase of a custom industrial machine that the seller must also install and configure on-site. Most courts decide whether the UCC or common law governs this mixed goods-and-services contract using which test?

• AThe 'last in time' test
• BThe 'gist of the action' test
• CThe 'predominant purpose' (predominant factor) test
• DThe 'first to perform' test

Under UCC 2-205, a merchant's signed written offer that gives assurance it will be held open is irrevocable without consideration for the time stated, but in no event longer than:

• A30 days
• BOne year
• CSix months
• DThree months

Under the UCC Statute of Frauds (2-201), a contract for the sale of goods generally requires a signed writing when the price is:

• A$500 or more
• B$250 or more
• C$100 or more
• D$5,000 or more

Under the common law, the perfect tender rule does NOT apply; instead, a party who renders 'substantial performance' may recover on the contract. Under UCC Article 2, by contrast, the seller's tender of goods must:

• ASubstantially conform to the contract
• BConform to the contract in every respect (perfect tender), subject to limited exceptions
• CMerely be delivered on time
• DBe approved by a third-party inspector

Under UCC 2-207 (the 'battle of the forms'), when two merchants exchange forms and a definite acceptance contains additional terms, those additional terms between merchants:

• AAlways become part of the contract
• BNever become part of the contract
• CBecome part of the contract unless they materially alter it, the offer limits acceptance…
• DVoid the contract entirely

Under the UCC, a contract modification between the parties:

• AAlways requires new consideration to be binding
• BIs never enforceable once performance begins
• CMust always be notarized
• DNeeds no new consideration if made in good faith (UCC 2-209)

The implied warranty of merchantability under UCC 2-314 is implied in a contract for the sale of goods when:

• AThe seller is a merchant with respect to goods of that kind
• BAny party sells any goods
• CThe buyer specifically requests it in writing
• DThe goods are sold with a money-back guarantee

The implied warranty of fitness for a particular purpose (UCC 2-315) arises when:

• AThe buyer is a merchant
• BThe seller has reason to know the buyer's particular purpose and that the buyer is relyin…
• CThe goods are defective
• DThe seller advertises the goods as 'the best'

Under UCC 2-204 and related gap-filler provisions, a sales contract may still be enforceable even though some terms are left open, as long as:

• ANo terms are left open at all
• BThe price is always expressly stated
• CThe parties intended to make a contract and there is a reasonably certain basis for an ap…
• DThe contract specifies the exact delivery date

Under UCC 2-508, a seller who makes a nonconforming tender that the buyer rightfully rejects may have a right to:

• AForce the buyer to keep the goods
• BCancel the contract without notice
• CSue the buyer for the full price immediately
• DCure the defect within the contract time, or beyond it where the seller reasonably believ…

Which of the following is a key practical difference between common law and UCC Article 2 acceptance rules?

• AUnder the common law, additional terms in an acceptance create a counteroffer, while unde…
• BThe UCC strictly follows the mirror image rule
• CThe common law has no concept of offer and acceptance
• DThe UCC requires acceptance only by performance

A 'requirements contract' in which a buyer agrees to purchase all of its needs for a good from one seller is enforceable under the UCC because:

• AIt is illusory and therefore unenforceable
• BThe buyer's good-faith requirements supply the needed quantity term and consideration (UC…
• CQuantity terms are never required under the UCC
• DSuch contracts violate antitrust law per se

Who qualifies as a 'merchant' under UCC Article 2?

• AOnly a person who manufactures goods
• BAny consumer who buys goods
• CA person who deals in goods of the kind or otherwise holds itself out as having special k…
• DOnly a corporation

Under the UCC's 'merchant confirmatory memo' exception to the Statute of Frauds (2-201(2)), a written confirmation can bind a merchant who did not sign it when:

• AThe merchant never receives it
• BOnly the sender is a merchant
• CThe contract is for under $500
• DWithin a reasonable time a signed confirmation is received, the recipient has reason to k…

Under UCC 2-316, to effectively disclaim the implied warranty of merchantability in a writing, the disclaimer must:

• AMention the word 'merchantability' and be conspicuous
• BSimply say 'no warranties apply'
• CBe signed by a notary
• DBe approved by the buyer's attorney

Which statement correctly contrasts the common law and the UCC on contract formation timing?

• ABoth require an exact mirror-image acceptance
• BThe common law requires a mirror-image acceptance, while the UCC allows a contract to for…
• CNeither recognizes acceptance by conduct
• DThe UCC requires all contracts in writing

A buyer of goods who has accepted nonconforming goods and later wishes to undo the acceptance because of a substantial impairment in value may seek which UCC remedy?

• ASpecific performance
• BReformation
• CRevocation of acceptance (UCC 2-608)
• DRescission for fraud only

What is the primary function of an indemnification clause in a commercial contract?

• ATo set the price of the goods or services
• BTo define the term and renewal of the agreement
• CTo select the governing law
• DTo shift responsibility for specified losses, liabilities, or third-party claims from one…

A 'limitation of liability' clause that caps a party's total damages and excludes consequential damages primarily serves to:

• ADefine and cap the financial exposure of a party for breach or other claims
• BGuarantee a particular level of performance
• CTransfer ownership of intellectual property
• DEstablish the venue for disputes

A force majeure clause typically excuses or suspends a party's performance when:

• AThe party simply finds the contract unprofitable
• BAn extraordinary event beyond the parties' reasonable control (such as war, natural disas…
• CThe party changes its business strategy
• DThe market price moves against the party

An 'integration clause' (also called a merger or entire-agreement clause) is included in a contract primarily to:

• ACombine two companies into one entity
• BIntegrate the contract into a software system
• CEstablish that the written document is the complete and final expression of the parties'…
• DMerge the obligations of unrelated contracts

Under the parol evidence rule, when a contract is fully integrated, a party generally MAY NOT introduce:

• AEvidence of fraud in the inducement
• BEvidence explaining an ambiguous term
• CEvidence to show a condition precedent to the contract's effectiveness
• DPrior or contemporaneous oral agreements that contradict the written terms