NYLE - New York Law Exam NY Contract Law Principles 1

Question 1

Under New York law, which of the following constitutes valid consideration to support a contract?

Accepted Answer

A promise to refrain from exercising a legal right the promisee is otherwise entitled to exercise

Answer

A promise to perform a pre-existing legal duty already owed to the promisor

Answer

Past services already rendered before the promise was made

Answer

A gift promise made in a signed writing

Question 2

Under New York law, the doctrine of promissory estoppel may render an otherwise unenforceable promise binding when:

Accepted Answer

The promisor made a clear and unambiguous promise on which the promisee foreseeably and detrimentally relied, and injustice can only be avoided by enforcement

Answer

The promise is supported by nominal consideration of at least $1

Answer

Both parties are sophisticated commercial entities and the promise was made in writing

Answer

The promisee substantially performed under the belief that a binding contract existed

Question 3

Under New York law, when a party to an executory contract unequivocally repudiates it before the date set for performance, the non-breaching party may:

Accepted Answer

Treat the repudiation as an immediate breach and sue for damages at once

Answer

Only file suit after the original performance date has passed

Answer

Continue performance and recover solely for out-of-pocket costs incurred

Answer

Rescind the contract but must provide 30 days' written notice before seeking damages

Question 4

Under New York law, which category of third-party beneficiary has standing to sue to enforce a contract?

Accepted Answer

An intended beneficiary whom the contracting parties specifically meant to benefit

Answer

An incidental beneficiary who foreseeably benefits from performance

Answer

Any person who receives a financial benefit when the contract is performed

Answer

A creditor beneficiary, but only if they were a signatory to the underlying debt instrument

Question 5

Under New York law, a party seeking to void a contract for mutual mistake must generally show that:

Accepted Answer

Both parties shared an erroneous belief about a material fact that existed at the time of contracting, and the risk of the mistake was not allocated to either party

Answer

Both parties were mistaken about the future market value of the contract's subject matter

Answer

One party was mistaken and the other exploited that mistake to gain an advantage

Answer

The mutual mistake resulted solely from ambiguous contract language

Question 6

Under New York law, the implied covenant of good faith and fair dealing:

Accepted Answer

Prohibits each party from acting in a manner that would deprive the other party of the benefit of their bargain under the contract

Answer

Permits a court to impose entirely new obligations not contemplated by the contract's express terms

Answer

Entitles a party to renegotiate contract terms that later prove economically burdensome

Answer

Applies exclusively to contracts for the sale of goods governed by UCC Article 2