law
beginner
10 sample questions
Contract Formation MCQ Practice Test
Binding agreement requirements
Q1. A French court is presented with a case where a contract was formed between a French company and a German company, with the contract stipulating that German law would govern any disputes. However, the contract was negotiated and signed in a hotel room in Switzerland, where the French representative did not have the authority to bind the company. Which of the following is the correct legal principle that the court would likely apply?
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A. The contract is voidable at the company's option because the representative lacked authority. ✓
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B. The contract is governed by Swiss law, as that is where it was negotiated and signed.
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C. The contract is governed by German law, as that is what the parties agreed to.
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D. The contract is governed by French law, because the company is French.
Explanation: The central issue is authority, not choice of law: a representative who had no power to bind the company cannot create binding obligations, so the contract is not effective against the company and is voidable (relative nullity) at the company's option. The agreed German choice-of-law clause governs the substance of any disputes but does not cure the lack of authority.
Q2. In a contract for the sale of a rare artwork, the buyer and seller orally agree on the terms, but the buyer later claims that the artwork is defective. The seller argues that the contract is governed by the principle of “de minimis non curat lex,” which excuses minor defects. However, the buyer points out that the contract also includes a clause stating that the artwork must be in “pristine condition.” Which of the following is the correct legal principle that applies in this situation?
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A. The de minimis non curat lex principle will prevail because the contract is governed by a choice of law clause requiring application of the law of the country where the artwork is located.
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B. The seller's argument is irrelevant because the contract's condition clause takes precedence over the de minimis non curat lex principle. ✓
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C. The buyer's claim of defect is time-barred due to the statute of limitations, which is a defense to the action.
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D. The contract is unenforceable due to a lack of consideration because the buyer did not pay the full purchase price.
Explanation: The principle of de minimis non curat lex is a doctrine that excuses minor defects or omissions in a contract. However, in this case, the contract includes a condition clause that requires the artwork to be in pristine condition. This condition clause takes precedence over the de minimis non curat lex principle, and the seller's argument is therefore irrelevant.
Q3. A merchant in a foreign country enters into a contract with a domestic seller through a standardized form contract that is not translated into the buyer's language. The contract includes a clause stating that the buyer's acceptance is deemed to be effective upon receipt of the goods, despite the buyer's lack of knowledge of the contract terms. Which of the following is the correct outcome?
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A. The contract is voidable at the buyer's option due to lack of consent. ✓
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B. The contract is enforceable against the buyer, as the buyer's silence is equivalent to acceptance.
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C. The contract is unenforceable due to the UCC's requirement for a written contract in a negotiable instrument.
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D. The contract is void due to the UCC's prohibition on adhesive contracts.
Explanation: A contract formed on a standardized form not translated into the buyer's language, where the buyer could not reasonably understand the terms, lacks genuine consent: the buyer did not assent to terms they could not read, so the contract is voidable at the buyer's option. Silence-as-acceptance applies only where the party had a reasonable opportunity to read and object to the terms.
Q4. In a contract for the sale of a rare art piece, the buyer and seller agree to a payment schedule contingent upon the buyer's ability to secure a loan. The contract states that the buyer must provide written notice to the seller upon securing the loan, and the seller must then deliver the art piece within 30 days. However, the contract does not specify the date by which the buyer must secure the loan. Which of the following is the correct statement regarding the formation of this contract?
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A. The contract is unenforceable due to the lack of a definite acceptance by the buyer.
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B. The contract is enforceable, but the buyer's obligation to secure the loan is a condition precedent that must be satisfied before the seller's obligation to deliver the art piece arises. ✓
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C. The contract is enforceable, and the buyer's obligation to secure the loan is a condition subsequent that must be satisfied before the seller's obligation to deliver the art piece arises.
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D. The contract is unenforceable due to the lack of a definite time for performance by the buyer.
Explanation: A condition precedent is a condition that must be satisfied before a contractual obligation arises. In this case, the buyer's obligation to secure the loan is a condition precedent that must be satisfied before the seller's obligation to deliver the art piece arises. The lack of a definite date by which the buyer must secure the loan does not affect the enforceability of the contract, as the condition precedent can be satisfied at any time before the seller's obligation to deliver the art piece arises.
Q5. In a contract formation scenario, where a merchant offers to sell goods to a consumer via a website, but the website's 'accept' button is actually a pre-checked box that automatically places an order without requiring the consumer to actively click on it, which of the following is the correct conclusion regarding the formation of a binding contract?
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A. The consumer is bound by the contract because they had a reasonable opportunity to review and reject the terms of the contract before clicking the 'accept' button.
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B. The consumer is not bound by the contract because they did not provide their informed consent to the terms of the contract, given the misleading nature of the pre-checked box. ✓
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C. The consumer is bound by the contract because they had actual knowledge of the terms of the contract and failed to reject them within a reasonable time period.
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D. The consumer is not bound by the contract because the merchant failed to obtain a signed writing evidencing the terms of the contract.
Explanation: This question requires the application of contract formation principles, specifically the concept of informed consent. The pre-checked box on the website's order form is a misleading trap that fails to obtain the consumer's genuine assent to the contract. As such, the consumer is not bound by the contract.
Q6. A party to a contract for the sale of a rare, antique clock claims that the contract was formed through a mistaken belief that the clock was made of gold, whereas in fact it was made of brass. The seller had intentionally failed to disclose the material composition of the clock. Which of the following principles would be most relevant to determining the enforceability of the contract?
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A. The principle of good faith would render the contract unenforceable due to the seller's intentional failure to disclose.
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B. The principle of unconscionability would render the contract unenforceable due to the significant disparity in value between the clock's actual and perceived worth.
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C. The principle of mistake would render the contract voidable at the option of the buyer, as the mistake related to a fundamental assumption of the contract.
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D. The principle of fraud would render the contract unenforceable due to the seller's intentional misrepresentation of the clock's material composition. ✓
Explanation: The seller knew the truth and intentionally concealed the clock's brass composition while allowing the buyer to believe it was gold - fraudulent misrepresentation by concealment. Fraud makes the contract voidable at the buyer's option and can support damages. Simple mistake would apply only where the seller shared the buyer's mistaken belief.
Q7. A supplier's failure to deliver goods by the contract deadline is, in general terms, best characterized as what?
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A. A breach of contract that may give rise to damages ✓
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B. An automatic force majeure event excusing performance
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C. A criminal offence
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D. Grounds for immediate rescission regardless of materiality
Explanation: Missing a contractual delivery deadline is a breach. The buyer's remedies (damages, and termination where the delay goes to the root of the contract) depend on materiality and any force majeure or extension clauses; delay alone is not automatically excused or automatically terminable.
Q8. A supplier of rare artifacts enters into a contract with a museum to deliver a ancient statue, but the contract contains a clause that the museum is not obligated to pay for the statue if it is deemed to be a forgery. The supplier is unaware that the statue is a forgery. Which of the following statements is correct regarding the formation of this contract?
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A. discharged, because the contract expressly conditions payment on authenticity ✓
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B. unchanged, because the supplier was unaware of the forgery
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C. increased, as a penalty for delivering a forgery
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D. transferred to the original owner of the statue
Explanation: The clause makes payment conditional on the statue being authentic: once the statue is a forgery, the agreed condition fails and the buyer's obligation to pay is discharged. The supplier's lack of knowledge of the forgery does not revive the payment obligation, though it may matter for separate warranty or restitution claims.
Q9. A contract for the sale of a rare, exotic animal is formed through a series of electronic communications between a breeder and a buyer. The breeder sends an email to the buyer stating the terms of the sale, including the price and the animal's description. The buyer responds with a series of emails, one of which includes the phrase "I accept the terms, but only if the animal is guaranteed to be free from any genetic defects." The breeder responds with a final email stating "The animal is guaranteed to be free from genetic defects, and I will provide a warranty to that effect." Which of the following best describes the status of the contract?
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A. The contract is enforceable, and the warranty constitutes an additional term.
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B. The contract is not enforceable due to the lack of a complete and unambiguous offer and acceptance. ✓
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C. The contract is enforceable, but the warranty is an additional term that may be subject to interpretation.
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D. The contract is not enforceable due to the buyer's attempts to negotiate the terms after the initial offer was made.
Explanation: The emails exchanged between the breeder and the buyer do not constitute a complete and unambiguous offer and acceptance. The buyer's response includes additional terms, which the breeder then accepts. This constitutes a counteroffer, rather than an acceptance of the original offer. As a result, the contract is not enforceable.
Q10. In a contract between a manufacturer and a supplier, the supplier agrees to provide a unique component that is not commercially available on the market. The manufacturer requests the supplier to provide a written guarantee that the component will be produced exclusively for the manufacturer. The supplier provides a letter stating that the component will be produced exclusively for the manufacturer, but the letter does not contain any language that precludes the supplier from selling the component to other customers in the future. Is the contract between the manufacturer and the supplier enforceable under the doctrine of promissory estoppel?
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A. The contract is enforceable because the supplier's letter constitutes a promise that is sufficiently specific and certain to support a claim for promissory estoppel. ✓
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B. The contract is not enforceable because the supplier's letter does not contain any language that precludes the supplier from selling the component to other customers in the future.
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C. The contract is enforceable because the supplier's letter constitutes an implied-in-fact contract that can be enforced under the doctrine of promissory estoppel.
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D. The contract is not enforceable because the doctrine of promissory estoppel only applies to contracts that are in writing.
Explanation: The doctrine of promissory estoppel allows a court to enforce a promise that is not supported by consideration if the promisor should reasonably have expected the promise to have a certain legal effect. In this case, the supplier's letter constitutes a promise that is sufficiently specific and certain to support a claim for promissory estoppel. The supplier's promise to produce the component exclusively for the manufacturer is a clear and definite promise that is intended to have a legal effect, and the manufacturer has relied on that promise by entering into the contract. Therefore, the contract between the manufacturer and the supplier is enforceable under the doctrine of promissory estoppel.
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