SD Bar Contracts 1 — Questions and Answers
Question 1: Under the common law, which of the following is required for a valid contract?
- Offer, acceptance, and consideration (Correct answer)
- Written agreement signed by both parties
- Notarization and witnesses
- Consideration and a written memorandum
Correct answer: Offer, acceptance, and consideration
A valid common law contract requires offer, acceptance, and consideration — the three essential elements of contract formation.
Question 2: Under the mirror image rule, which of the following best describes how an acceptance must be made?
- The acceptance must match the terms of the offer exactly (Correct answer)
- The acceptance may vary minor terms without affecting contract formation
- The acceptance must be in writing to be effective
- The acceptance is valid only if delivered within 24 hours
Correct answer: The acceptance must match the terms of the offer exactly
Under the common law mirror image rule, an acceptance must be unequivocal and conform exactly to the offer's terms; any variation constitutes a counteroffer.
Question 3: A bilateral contract is formed when:
- Both parties exchange promises (Correct answer)
- One party performs an act in response to an offer
- A written document is signed by one party
- An offeror makes a firm offer that cannot be revoked
Correct answer: Both parties exchange promises
A bilateral contract is formed through an exchange of mutual promises, where each party's promise serves as consideration for the other's promise.
Question 4: Under the mailbox rule, when is an acceptance by mail effective?
- Upon dispatch, when properly mailed (Correct answer)
- Upon receipt by the offeror
- Upon the offeror's acknowledgment
- Three business days after mailing
Correct answer: Upon dispatch, when properly mailed
The mailbox rule provides that an acceptance is effective upon dispatch — the moment it is properly mailed — not when the offeror receives it.
Question 5: Which of the following is NOT valid consideration for a contract?
- A promise to perform a pre-existing legal duty (Correct answer)
- A promise to pay money
- A promise to refrain from a legal right
- A promise to deliver goods at a future date
Correct answer: A promise to perform a pre-existing legal duty
A promise to perform a pre-existing legal duty is not valid consideration because the promisor is already legally obligated to perform that duty.
Question 6: Under UCC Article 2, a merchant's firm offer is irrevocable for up to:
- Three months (Correct answer)
- Six months
- One year
- Thirty days
Correct answer: Three months
Under UCC § 2-205, a merchant's signed, written firm offer is irrevocable for the period stated, but no longer than three months.
Question 7: A contract between two parties is voided by mutual mistake when:
- Both parties were mistaken about a material fact existing at the time of contracting (Correct answer)
- One party was mistaken about the value of the subject matter
- Both parties made mathematical errors in calculating the price
- One party misrepresented a fact to the other party
Correct answer: Both parties were mistaken about a material fact existing at the time of contracting
Mutual mistake allows rescission when both parties share a mistaken belief about a material fact that existed at the time of contract formation.
SD Bar Contracts 1
Under the common law, which of the following is required for a valid contract?