1. What is the first step in the formation of a contract?
a) Acceptance
b) Consideration
c) Offer
d) Performance
Answer: c) Offer
2. Which of the following is essential for an offer to be valid?
a) It must be a general statement
b) It must be communicated to the offeree
c) It must be made under duress
d) It must be accepted in writing
Answer: b) It must be communicated to the offeree
3. What does “acceptance” mean in contract formation?
a) The act of rejecting an offer
b) The act of making a counter-offer
c) The unconditional agreement to the terms of the offer
d) The negotiation of terms
Answer: c) The unconditional agreement to the terms of the offer
4. When does an acceptance become effective?
a) When it is sent
b) When it is received by the offeror
c) When it is signed
d) When the offeror acknowledges it
Answer: b) When it is received by the offeror
5. What is “consideration” in the context of contract formation?
a) The parties’ agreement to terms
b) The mutual exchange of something of value
c) The time frame for performance
d) The legal capacity of the parties involved
Answer: b) The mutual exchange of something of value
6. Which of the following is NOT a valid form of consideration?
a) Money
b) Services
c) A promise to refrain from a legal right
d) An illegal act
Answer: d) An illegal act
7. What does “capacity” refer to in the context of forming a contract?
a) The financial resources of the parties
b) The ability to understand and agree to the contract terms
c) The performance ability of the parties
d) The time frame for executing the contract
Answer: b) The ability to understand and agree to the contract terms
8. Which type of contract is formed when one party makes a promise in exchange for an act?
a) Bilateral contract
b) Unilateral contract
c) Executed contract
d) Express contract
Answer: b) Unilateral contract
9. What is a “counter-offer”?
a) An acceptance of the original offer
b) A rejection of the original offer with new terms
c) An agreement to the original offer
d) A formal contract execution
Answer: b) A rejection of the original offer with new terms
10. When is an offer typically considered to be “terminated”?
a) When it is accepted
b) When it is rejected or countered
c) When it is communicated
d) When it is executed
Answer: b) When it is rejected or countered
11. What is required for a contract to be considered legally binding?
a) Signature of all parties
b) Written documentation
c) Mutual assent and consideration
d) Legal review
Answer: c) Mutual assent and consideration
12. What happens if a contract is formed under duress or undue influence?
a) It is automatically enforceable
b) It is voidable at the option of the coerced party
c) It is legally binding but subject to negotiation
d) It becomes void
Answer: b) It is voidable at the option of the coerced party
13. What is an “express contract”?
a) A contract where terms are not clearly stated
b) A contract where terms are communicated directly and clearly
c) A contract formed by actions or conduct
d) A contract that is not legally binding
Answer: b) A contract where terms are communicated directly and clearly
14. What is an “implied contract”?
a) A contract written in formal language
b) A contract formed through actions or conduct
c) A contract that requires a formal offer and acceptance
d) A contract created by an official body
Answer: b) A contract formed through actions or conduct
15. What does “performance” mean in the context of contract formation?
a) The act of fulfilling the terms of the contract
b) The process of negotiating contract terms
c) The act of drafting the contract
d) The process of signing the contract
Answer: a) The act of fulfilling the terms of the contract