FYLSX Contracts Formation & Enforcement 3 — Questions and Answers
Question 1: Which of the following best describes a 'quasi-contract'?
- A contract implied from the parties' conduct
- A remedy imposed by law to prevent unjust enrichment where no contract exists (Correct answer)
- An oral contract for services under $500
- A contract between merchants under the UCC
Correct answer: A remedy imposed by law to prevent unjust enrichment where no contract exists
A quasi-contract is not a true contract but a legal fiction imposed by courts to prevent unjust enrichment when one party confers a benefit on another without a contractual basis.
Question 2: Carol signs a contract under a reasonable, mistaken belief that it was a receipt. This is an example of:
- Unilateral mistake
- Fraud in the inducement
- Fraud in the execution (Correct answer)
- Mutual mistake
Correct answer: Fraud in the execution
Fraud in the execution (factum) occurs when a party is deceived about the very nature of the document signed, making the contract void.
Question 3: Under the FYLSX, which contract must be in writing to be enforceable under the Statute of Frauds?
- A contract for services to be performed within six months
- A promise by an executor to pay estate debts from personal funds (Correct answer)
- A contract for the sale of goods worth exactly $400
- A two-month lease of an apartment
Correct answer: A promise by an executor to pay estate debts from personal funds
A promise by an executor to pay the decedent's debts from the executor's own funds is one of the classic Statute of Frauds categories (the 'suretyship' provision for personal liability).
Question 4: Two parties enter a contract with a mutual misunderstanding about a key term, each meaning something different. Under contract law, the result is most likely:
- The court enforces the term in the plaintiff's favor.
- No contract is formed due to lack of mutual assent. (Correct answer)
- The court reforms the contract to reflect the majority meaning.
- The court voids only the ambiguous term and enforces the rest.
Correct answer: No contract is formed due to lack of mutual assent.
Under the Raffles v. Wichelhaus principle, when parties attach materially different meanings to a key term and neither knows of the other's meaning, no contract is formed.
Question 5: An agreement to refrain from filing a lawsuit in exchange for a payment is enforceable if:
- The claim being waived is valid or the claimant has a good-faith belief it is valid. (Correct answer)
- The claimant actually would have won the lawsuit.
- The payment equals the expected damages from the lawsuit.
- The agreement is in writing and notarized.
Correct answer: The claim being waived is valid or the claimant has a good-faith belief it is valid.
Forbearance from asserting a legal claim constitutes good consideration if the claim is valid or the party has an honest, reasonable belief that it is valid.
Question 6: Which of the following constitutes a counteroffer under the mirror image rule?
- An acceptance that requests faster delivery but does not condition acceptance on it
- An acceptance that adds a new material term (Correct answer)
- An inquiry asking whether the offeror would accept a lower price
- An acknowledgment of receipt of the offer
Correct answer: An acceptance that adds a new material term
Under the mirror image rule, an acceptance that adds or changes a material term operates as a rejection and counteroffer, not an acceptance.
Question 7: Pam hires a contractor to renovate her kitchen for $20,000. The contractor finishes 90% of the work but walks off the job. Pam can withhold the entire $20,000 under which doctrine?
- Impossibility
- The substantial performance doctrine (Correct answer)
- The perfect tender rule
- Anticipatory repudiation
Correct answer: The substantial performance doctrine
Under the substantial performance doctrine for service contracts, near-complete performance entitles the contractor to the contract price minus damages for the incomplete work—Pam cannot withhold the entire amount.
FYLSX Contracts Formation & Enforcement 3
Which of the following best describes a 'quasi-contract'?