NYLE Contract Law Principles 5 — Questions and Answers
Question 1: Which of the following statements best describes the 'mailbox rule' regarding contract acceptance?
- Acceptance is effective only when received by the offeror
- Acceptance is effective upon dispatch if the offeree uses an authorized means of communication (Correct answer)
- Acceptance by email is never effective until opened
- The mailbox rule applies only to rejections
Correct 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.
Question 2: An agreement to keep an offer open in exchange for consideration is called:
- A firm offer
- An option contract (Correct answer)
- A conditional acceptance
- A revocable offer
Correct 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.
Question 3: 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?
- Implied warranty of title
- Implied warranty of fitness for a particular purpose
- Implied warranty of merchantability (Correct answer)
- Express warranty
Correct 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.
Question 4: 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?
- The buyer is a corporation
- The buyer has taken possession and made substantial improvements in reliance on the oral contract (Correct answer)
- The purchase price is below $500
- The contract is for a lease of less than 12 months
Correct 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.
Question 5: Which of the following is NOT a required element for a contract to be enforceable?
- Offer and acceptance
- Consideration
- Written form (Correct answer)
- Capacity of the parties
Correct 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.
Question 6: If a seller delivers non-conforming goods under the UCC, the buyer's right to 'cure' allows:
- The buyer to keep the goods and withhold payment
- The seller to replace or repair the defective goods within the contract time (Correct answer)
- The court to award punitive damages for the defective delivery
- The buyer to cancel the contract immediately without notice
Correct 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).
Question 7: Under the objective theory of contracts, the formation of a contract is determined by:
- What each party subjectively intended when they made the agreement
- What a reasonable person would understand the parties' words and conduct to mean (Correct answer)
- The written terms only, regardless of the parties' conduct
- The court's determination of what is fair to both parties
Correct 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.
NYLE Contract Law Principles 5
Which of the following statements best describes the 'mailbox rule' regarding contract acceptance?