HTM 411 CH-4 ACTUAL EXAM QUESTIONS AND
CORRECT ANSWERS
What are the six essential elements of a contract? - CORRECT ANSWERS a) Contractual
capacity
b) Mutuality
c) Legality
d) Consideration
e) Proper form
f) Genuine assent
What categories of people lack contractual capacity? - CORRECT ANSWERS • Minors
(different by states)
• Mentally incompetent
• Very intoxicated
What is meant by mutuality? - CORRECT ANSWERS o All parties to the contract are
interested in its terms and intend to enter an agreement to which they will be legally bound
o Established when one party makes and offer (offeror) and the other accepts (offeree).
o A proposal to do or give something of value in exchange for something else
• Offer must be definite
• It defines the exact responsibilities of each part.
• Offers that are vague are called invitations to negotiate and do not constitute a contract.
• Response to the offer:
• Acceptance
• Counteroffer
, What is the legal effect of an illegal contract? - CORRECT ANSWERS Legality of the
objective of the contract: If the objective of the contract is illegal then the contact is void
Name three types of contracts that are unenforceable unless they are in writing: - CORRECT
ANSWERS Contracts for the purchase and sale of real property:
• Land
• Out buildings
• Easements (right of one person to use another person's land for some particular, limited
purpose - ex. Use of parking lots)
o Contacts that cannot be completed in one year from when they are made.
Ex) 2 years of employment contract
o Contracts for one person to pay another
What are the three exceptions to the Statute of Frauds? - CORRECT ANSWERS • Past
performance: if one party has performed part of the contract.
• Contract for goods in excess of $500 ONLY IF...
o Seller has delivered goods and the buyer has accepted them.
o The buyer made payment and the seller accepted the payment.
• Parol evidence: oral agreements made before the contract was written, but we omitted from
the written version are not binding, but those made after the signing are enforceable.
Describe the parol evidence rule and how it applies to written contracts. - CORRECT
ANSWERS Oral agreements made before the contract was written, but we omitted from
the written version are not binding, but those made after the signing are enforceable.
What types of damages will plaintiff in a breach of contract case normally be able to recover? -
CORRECT ANSWERS Compensatory Damages
CORRECT ANSWERS
What are the six essential elements of a contract? - CORRECT ANSWERS a) Contractual
capacity
b) Mutuality
c) Legality
d) Consideration
e) Proper form
f) Genuine assent
What categories of people lack contractual capacity? - CORRECT ANSWERS • Minors
(different by states)
• Mentally incompetent
• Very intoxicated
What is meant by mutuality? - CORRECT ANSWERS o All parties to the contract are
interested in its terms and intend to enter an agreement to which they will be legally bound
o Established when one party makes and offer (offeror) and the other accepts (offeree).
o A proposal to do or give something of value in exchange for something else
• Offer must be definite
• It defines the exact responsibilities of each part.
• Offers that are vague are called invitations to negotiate and do not constitute a contract.
• Response to the offer:
• Acceptance
• Counteroffer
, What is the legal effect of an illegal contract? - CORRECT ANSWERS Legality of the
objective of the contract: If the objective of the contract is illegal then the contact is void
Name three types of contracts that are unenforceable unless they are in writing: - CORRECT
ANSWERS Contracts for the purchase and sale of real property:
• Land
• Out buildings
• Easements (right of one person to use another person's land for some particular, limited
purpose - ex. Use of parking lots)
o Contacts that cannot be completed in one year from when they are made.
Ex) 2 years of employment contract
o Contracts for one person to pay another
What are the three exceptions to the Statute of Frauds? - CORRECT ANSWERS • Past
performance: if one party has performed part of the contract.
• Contract for goods in excess of $500 ONLY IF...
o Seller has delivered goods and the buyer has accepted them.
o The buyer made payment and the seller accepted the payment.
• Parol evidence: oral agreements made before the contract was written, but we omitted from
the written version are not binding, but those made after the signing are enforceable.
Describe the parol evidence rule and how it applies to written contracts. - CORRECT
ANSWERS Oral agreements made before the contract was written, but we omitted from
the written version are not binding, but those made after the signing are enforceable.
What types of damages will plaintiff in a breach of contract case normally be able to recover? -
CORRECT ANSWERS Compensatory Damages
