CLA/CP Exam Contract Law and Formation 5

Question 1

A contract that violates a licensing statute designed primarily to protect the public is generally held to be:

Accepted Answer

Void and unenforceable as against public policy

Answer

When a licensing requirement is designed to protect the public (not merely raise revenue), a contract by an unlicensed party is void as against public policy.

Question 2

Which statement best describes the difference between a void contract and a voidable contract?

Accepted Answer

A void contract has no legal effect from inception; a voidable contract is valid until a party elects to rescind it

Answer

A void contract is a legal nullity and cannot be ratified or enforced by anyone, while a voidable contract is effective unless the aggrieved party chooses to avoid it.

Question 3

Under contract law, 'adequacy of consideration' means courts will:

Accepted Answer

Generally not inquire into whether consideration was of equal value

Answer

Courts do not examine whether consideration was economically equivalent; even nominal consideration (e.g., $1) is sufficient if it was actually bargained for.

Question 4

An agreement to pay a debt already barred by the statute of limitations is generally:

Accepted Answer

Enforceable as a new promise without requiring new consideration in most jurisdictions

Answer

Most jurisdictions hold that a new promise to pay a time-barred debt is enforceable without new consideration because the moral obligation serves as a substitute.

Question 5

Which of the following scenarios best illustrates the concept of 'promissory estoppel'?

Accepted Answer

A contractor moves across the country and quits a job in reliance on an employer's oral promise of employment

Answer

Promissory estoppel applies when a party makes a clear promise that foreseeably induces detrimental reliance by another, and injustice can only be avoided by enforcement.

CLA/CP Exam Practice Test

CLA/CP Exam Practice Test

CLA/CP Exam Contract Law and Formation 5