MPOETC Contract Law & Commercial Transactions 2 — Questions and Answers
Question 1: A person signs a contract while under the influence of alcohol. Under contract law, this contract is most likely:
- Void ab initio
- Voidable at the intoxicated party's option (Correct answer)
- Fully enforceable regardless
- Automatically rescinded by law
Correct answer: Voidable at the intoxicated party's option
Contracts signed under intoxication are generally voidable, meaning the intoxicated party may choose to affirm or rescind them upon regaining capacity.
Question 2: Under the Uniform Commercial Code (UCC), a merchant's firm offer to keep an offer open is binding without consideration for a maximum of:
- 30 days
- 60 days
- 3 months (Correct answer)
- 6 months
Correct answer: 3 months
UCC §2-205 provides that a merchant's written firm offer is irrevocable for the stated time, but no longer than three months.
Question 3: When a police officer responds to a dispute over a home repair contract, which element would make the contract unenforceable for lack of consideration?
- The homeowner paid $500 for the work
- The contractor promised to do future work as consideration for past work already completed (Correct answer)
- The parties agreed in writing
- The contractor is licensed
Correct answer: The contractor promised to do future work as consideration for past work already completed
Past consideration — a promise given for something already done — is not valid consideration and renders a contract unenforceable.
Question 4: A seller delivers 500 widgets when the contract called for 600. Under the UCC, the buyer's rights include:
- Accept all 500 and pay full contract price
- Reject all, accept all, or accept conforming goods and reject the rest (Correct answer)
- Only reject the entire shipment
- Accept and pay proportionally with no other options
Correct answer: Reject all, accept all, or accept conforming goods and reject the rest
Under UCC §2-601, the perfect tender rule gives buyers the right to reject all, accept all, or accept any commercial units and reject the rest.
Question 5: An officer is investigating a fraud complaint involving a contract. Which of the following best describes fraudulent misrepresentation in contract law?
- An honest mistake about a material fact
- A knowingly false statement of material fact made to induce a party to contract (Correct answer)
- Failure to read the contract before signing
- An exaggerated sales claim about product quality
Correct answer: A knowingly false statement of material fact made to induce a party to contract
Fraudulent misrepresentation requires a false statement of material fact, knowledge of its falsity, intent to deceive, and reliance by the victim causing damages.
Question 6: A written contract includes an 'integration clause' stating it is the complete agreement. A party later tries to introduce prior verbal promises. Under the parol evidence rule, those verbal promises are:
- Always admissible to explain ambiguous terms
- Generally inadmissible to contradict the written contract (Correct answer)
- Admissible if both parties testify to them
- Automatically incorporated into the written contract
Correct answer: Generally inadmissible to contradict the written contract
The parol evidence rule bars introduction of prior or contemporaneous oral agreements to contradict or vary the terms of a fully integrated written contract.
Question 7: In Pennsylvania, home improvement contracts over a certain dollar amount must be in writing under the Home Improvement Consumer Protection Act. What is the minimum threshold?
- $100
- $500 (Correct answer)
- $100,000
- $1,000,000
Correct answer: $500
Pennsylvania's Home Improvement Consumer Protection Act requires written contracts for home improvement work costing $500 or more.
MPOETC Contract Law & Commercial Transactions 2
A person signs a contract while under the influence of alcohol.
Under contract law, this contract is most likely: