LATEST UPDATE 2026 CONTRACT LAW EXAM
QUESTIONS AND CORRECT ANSWERS PLUS
RATIONALES.
1. Which of the following best defines a valid offer in contract law?
A. A statement of future intention
B. A clear expression of willingness to contract on specific terms
C. An invitation to treat
D. A vague proposal subject to negotiation
Correct Answer: B
Rationale: A valid offer must be clear, definite, and show willingness to be bound
upon acceptance. A, C, and D lack certainty or intent.
2. An invitation to treat is best described as:
A. A legally binding offer
B. A preliminary communication inviting offers
C. A form of acceptance
D. A counteroffer
Correct Answer: B
Rationale: Invitations to treat invite others to make offers. They are not binding offers
themselves.
3. Which case established that advertisements are generally invitations to treat?
A. Carlill v Carbolic Smoke Ball Co
B. Partridge v Crittenden
C. Hyde v Wrench
D. Entores v Miles Far East
Correct Answer: B
Rationale: In Partridge v Crittenden, advertisements were held to be invitations to
treat, not offers.
4. What is required for valid acceptance?
A. It must be communicated and unconditional
B. It must be written
C. It must include new terms
D. It must be delayed
Correct Answer: A
Rationale: Acceptance must mirror the offer and be communicated clearly. Other
options are incorrect requirements.
,5. The “postal rule” applies when:
A. Acceptance is received
B. Acceptance is posted
C. Offer is revoked
D. Contract is breached
Correct Answer: B
Rationale: Acceptance is effective upon posting, not receipt, under the postal rule.
6. A counteroffer has what effect on the original offer?
A. It strengthens it
B. It has no effect
C. It terminates it
D. It suspends it temporarily
Correct Answer: C
Rationale: A counteroffer rejects and terminates the original offer.
7. Consideration must be:
A. Adequate and sufficient
B. Sufficient but not necessarily adequate
C. Adequate but not sufficient
D. Neither adequate nor sufficient
Correct Answer: B
Rationale: Consideration must have value in law but need not be equal in value.
8. Past consideration is:
A. Valid consideration
B. Invalid consideration
C. Always enforceable
D. Preferred in contracts
Correct Answer: B
Rationale: Past consideration is generally not valid as it is not given in exchange for
the promise.
9. Which element distinguishes a contract from a mere agreement?
A. Social intention
B. Legal intention
C. Emotional intention
D. Written form
Correct Answer: B
Rationale: Contracts require intention to create legal relations.
,10. Agreements between family members are presumed to:
A. Be legally binding
B. Lack intention to create legal relations
C. Always be enforceable
D. Require witnesses
Correct Answer: B
Rationale: Domestic agreements are presumed not to have legal intent unless proven
otherwise.
11. Which of the following makes a contract void?
A. Misrepresentation
B. Mistake
C. Duress
D. Undue influence
Correct Answer: B
Rationale: Fundamental mistake can render a contract void; others make it voidable.
12. A unilateral contract involves:
A. Mutual promises
B. One party making a promise in exchange for an act
C. Written agreements only
D. Multiple parties
Correct Answer: B
Rationale: A unilateral contract is accepted by performance, not promise.
13. Misrepresentation renders a contract:
A. Void
B. Illegal
C. Voidable
D. Unenforceable
Correct Answer: C
Rationale: The innocent party may rescind the contract, making it voidable.
14. Which type of misrepresentation involves deliberate deceit?
A. Innocent
B. Negligent
C. Fraudulent
D. Implied
Correct Answer: C
Rationale: Fraudulent misrepresentation involves intentional false statements.
, 15. A contract entered under duress is:
A. Valid
B. Void
C. Voidable
D. Illegal
Correct Answer: C
Rationale: Duress allows the victim to rescind the contract.
16. Undue influence occurs when:
A. A party makes a mistake
B. A party is forced physically
C. A party is improperly influenced by another
D. Terms are unclear
Correct Answer: C
Rationale: Undue influence involves unfair pressure affecting consent.
17. Capacity to contract refers to:
A. Ability to negotiate
B. Legal ability to enter a contract
C. Financial capability
D. Emotional readiness
Correct Answer: B
Rationale: Capacity relates to legal competence (e.g., age, mental state).
18. Contracts with minors are generally:
A. Always enforceable
B. Void
C. Voidable
D. Illegal
Correct Answer: C
Rationale: Contracts with minors are generally voidable at the minor’s option.
19. Which of the following is an essential element of a valid contract?
A. Writing
B. Seal
C. Agreement
D. Witness
Correct Answer: C
Rationale: Agreement (offer + acceptance) is fundamental to contract formation.
QUESTIONS AND CORRECT ANSWERS PLUS
RATIONALES.
1. Which of the following best defines a valid offer in contract law?
A. A statement of future intention
B. A clear expression of willingness to contract on specific terms
C. An invitation to treat
D. A vague proposal subject to negotiation
Correct Answer: B
Rationale: A valid offer must be clear, definite, and show willingness to be bound
upon acceptance. A, C, and D lack certainty or intent.
2. An invitation to treat is best described as:
A. A legally binding offer
B. A preliminary communication inviting offers
C. A form of acceptance
D. A counteroffer
Correct Answer: B
Rationale: Invitations to treat invite others to make offers. They are not binding offers
themselves.
3. Which case established that advertisements are generally invitations to treat?
A. Carlill v Carbolic Smoke Ball Co
B. Partridge v Crittenden
C. Hyde v Wrench
D. Entores v Miles Far East
Correct Answer: B
Rationale: In Partridge v Crittenden, advertisements were held to be invitations to
treat, not offers.
4. What is required for valid acceptance?
A. It must be communicated and unconditional
B. It must be written
C. It must include new terms
D. It must be delayed
Correct Answer: A
Rationale: Acceptance must mirror the offer and be communicated clearly. Other
options are incorrect requirements.
,5. The “postal rule” applies when:
A. Acceptance is received
B. Acceptance is posted
C. Offer is revoked
D. Contract is breached
Correct Answer: B
Rationale: Acceptance is effective upon posting, not receipt, under the postal rule.
6. A counteroffer has what effect on the original offer?
A. It strengthens it
B. It has no effect
C. It terminates it
D. It suspends it temporarily
Correct Answer: C
Rationale: A counteroffer rejects and terminates the original offer.
7. Consideration must be:
A. Adequate and sufficient
B. Sufficient but not necessarily adequate
C. Adequate but not sufficient
D. Neither adequate nor sufficient
Correct Answer: B
Rationale: Consideration must have value in law but need not be equal in value.
8. Past consideration is:
A. Valid consideration
B. Invalid consideration
C. Always enforceable
D. Preferred in contracts
Correct Answer: B
Rationale: Past consideration is generally not valid as it is not given in exchange for
the promise.
9. Which element distinguishes a contract from a mere agreement?
A. Social intention
B. Legal intention
C. Emotional intention
D. Written form
Correct Answer: B
Rationale: Contracts require intention to create legal relations.
,10. Agreements between family members are presumed to:
A. Be legally binding
B. Lack intention to create legal relations
C. Always be enforceable
D. Require witnesses
Correct Answer: B
Rationale: Domestic agreements are presumed not to have legal intent unless proven
otherwise.
11. Which of the following makes a contract void?
A. Misrepresentation
B. Mistake
C. Duress
D. Undue influence
Correct Answer: B
Rationale: Fundamental mistake can render a contract void; others make it voidable.
12. A unilateral contract involves:
A. Mutual promises
B. One party making a promise in exchange for an act
C. Written agreements only
D. Multiple parties
Correct Answer: B
Rationale: A unilateral contract is accepted by performance, not promise.
13. Misrepresentation renders a contract:
A. Void
B. Illegal
C. Voidable
D. Unenforceable
Correct Answer: C
Rationale: The innocent party may rescind the contract, making it voidable.
14. Which type of misrepresentation involves deliberate deceit?
A. Innocent
B. Negligent
C. Fraudulent
D. Implied
Correct Answer: C
Rationale: Fraudulent misrepresentation involves intentional false statements.
, 15. A contract entered under duress is:
A. Valid
B. Void
C. Voidable
D. Illegal
Correct Answer: C
Rationale: Duress allows the victim to rescind the contract.
16. Undue influence occurs when:
A. A party makes a mistake
B. A party is forced physically
C. A party is improperly influenced by another
D. Terms are unclear
Correct Answer: C
Rationale: Undue influence involves unfair pressure affecting consent.
17. Capacity to contract refers to:
A. Ability to negotiate
B. Legal ability to enter a contract
C. Financial capability
D. Emotional readiness
Correct Answer: B
Rationale: Capacity relates to legal competence (e.g., age, mental state).
18. Contracts with minors are generally:
A. Always enforceable
B. Void
C. Voidable
D. Illegal
Correct Answer: C
Rationale: Contracts with minors are generally voidable at the minor’s option.
19. Which of the following is an essential element of a valid contract?
A. Writing
B. Seal
C. Agreement
D. Witness
Correct Answer: C
Rationale: Agreement (offer + acceptance) is fundamental to contract formation.
