Contract Law Principles Flashcards

Which of the following statements best describes the 'mailbox rule' regarding contract acceptance?

Answer: Acceptance is effective upon dispatch if the offeree uses an authorized means of communication

The mailbox rule makes acceptance effective upon proper dispatch (mailing), not upon receipt, as long as the offeree uses an authorized means of communication.

An agreement to keep an offer open in exchange for consideration is called:

Answer: An option contract

An option contract is a binding promise to keep an offer open, supported by consideration, which prevents the offeror from revoking during the option period.

In a contract for the sale of goods, which implied warranty guarantees that goods are fit for the ordinary purposes for which they are used?

Answer: Implied warranty of merchantability

UCC §2-314 provides an implied warranty of merchantability—that goods are fit for the ordinary purposes for which such goods are used—arising in every sale by a merchant.

Under New York's Statute of Frauds (GOL §5-703), a contract for the sale of real property must be in writing. Which of the following is an exception that may allow enforcement of an oral real estate contract?

Answer: The buyer has taken possession and made substantial improvements in reliance on the oral contract

Part performance—such as taking possession and making valuable improvements in reliance on an oral contract—may allow a court of equity to enforce an oral real estate agreement.

Which of the following is NOT a required element for a contract to be enforceable?

Answer: Written form

Written form is not universally required—most contracts are valid orally unless a specific statute (e.g., the Statute of Frauds) requires writing.

If a seller delivers non-conforming goods under the UCC, the buyer's right to 'cure' allows:

Answer: The seller to replace or repair the defective goods within the contract time

UCC §2-508 gives the seller a right to cure a defective tender by providing conforming goods within the original contract time (and sometimes beyond it with proper notice).

Under the objective theory of contracts, the formation of a contract is determined by:

Answer: What a reasonable person would understand the parties' words and conduct to mean

The objective theory holds that contract formation is judged by the outward expressions of the parties, as a reasonable person would understand them, not by subjective intent.