CPA STUDY QUESTIONS AND
ANSWERS PART 3| Latest 2024/2025
Update | 100% Correct | GRADED A |
Verified Elaborations | Download to
Score An A
What are the three components of a valid contract?
(ANSWER)
-Offer and acceptance
-Consideration exchanged
-Absence of defenses
When is a contract required to be in writing?
(ANSWER)
If it is subject to the statute of frauds:
Contracts related to marriage
Agreements lasting over a year (this refers to the period from the date of signing to the
completion date being more than a year, NOT that it actually requires a year to complete.
Exception: full performance)
Contracts involving land and lasting more than a year without partial or full performance
Executor contracts
Goods valued over $500
Surety agreements
What are the essential elements of an offer?
(ANSWER)
-Intended seriously
-Clearly defined and certain
-Communicated effectively
,When can an offer be withdrawn?
(ANSWER)
When it has been seriously, definitively, and clearly communicated to and received by the offeree
What are the three exceptions to the offeror's ability to revoke?
(ANSWER)
-An option has been bought (regardless of the amount)
-A merchant's firm offer as defined under UCC
-The initiation of performance under a unilateral contract
What are the two components of consideration?
(ANSWER)
-An exchange that has been negotiated, AND
-Something of legal value
In the realm of common law contracts, what is needed to modify an existing agreement between
two parties?
(ANSWER)
-Mutual agreement AND
-New or different consideration is provided
When will a promise be upheld without consideration?
(ANSWER)
In cases of detrimental reliance or promissory estoppel
Fraud
(ANSWER)
Must demonstrate:
-MAIDS
It can be voidable OR damages can be sought.
Fraud in the execution
, (ANSWER)
Must demonstrate:
-Lack of "meeting of the minds"
It is considered void.
Fraud in the inducement
(ANSWER)
Must demonstrate:
-Material misrepresentation
It is considered voidable.
Innocent Misrepresentation
(ANSWER)
Must demonstrate:
-MAID
No punitive damages (potentially compensatory damages).
Duress
(ANSWER)
Must demonstrate:
-Physical duress leads to void contracts
-Social or economic duress results in voidable contracts
-Simply taking advantage of someone is permissible; fairness is not a concern as long as no
threat is involved.
Undue Influence
(ANSWER)
Must demonstrate:
-Exploitation of a position of trust or confidence
Mutual Mistake
(ANSWER)
ANSWERS PART 3| Latest 2024/2025
Update | 100% Correct | GRADED A |
Verified Elaborations | Download to
Score An A
What are the three components of a valid contract?
(ANSWER)
-Offer and acceptance
-Consideration exchanged
-Absence of defenses
When is a contract required to be in writing?
(ANSWER)
If it is subject to the statute of frauds:
Contracts related to marriage
Agreements lasting over a year (this refers to the period from the date of signing to the
completion date being more than a year, NOT that it actually requires a year to complete.
Exception: full performance)
Contracts involving land and lasting more than a year without partial or full performance
Executor contracts
Goods valued over $500
Surety agreements
What are the essential elements of an offer?
(ANSWER)
-Intended seriously
-Clearly defined and certain
-Communicated effectively
,When can an offer be withdrawn?
(ANSWER)
When it has been seriously, definitively, and clearly communicated to and received by the offeree
What are the three exceptions to the offeror's ability to revoke?
(ANSWER)
-An option has been bought (regardless of the amount)
-A merchant's firm offer as defined under UCC
-The initiation of performance under a unilateral contract
What are the two components of consideration?
(ANSWER)
-An exchange that has been negotiated, AND
-Something of legal value
In the realm of common law contracts, what is needed to modify an existing agreement between
two parties?
(ANSWER)
-Mutual agreement AND
-New or different consideration is provided
When will a promise be upheld without consideration?
(ANSWER)
In cases of detrimental reliance or promissory estoppel
Fraud
(ANSWER)
Must demonstrate:
-MAIDS
It can be voidable OR damages can be sought.
Fraud in the execution
, (ANSWER)
Must demonstrate:
-Lack of "meeting of the minds"
It is considered void.
Fraud in the inducement
(ANSWER)
Must demonstrate:
-Material misrepresentation
It is considered voidable.
Innocent Misrepresentation
(ANSWER)
Must demonstrate:
-MAID
No punitive damages (potentially compensatory damages).
Duress
(ANSWER)
Must demonstrate:
-Physical duress leads to void contracts
-Social or economic duress results in voidable contracts
-Simply taking advantage of someone is permissible; fairness is not a concern as long as no
threat is involved.
Undue Influence
(ANSWER)
Must demonstrate:
-Exploitation of a position of trust or confidence
Mutual Mistake
(ANSWER)
