Contract Law interview questions

What a strong answer covers

• Define an 'offer' as a clear, definite proposal showing intent to be bound upon acceptance.
• Define an 'invitation to treat' as an expression of willingness to negotiate or receive offers, lacking intent to be bound.
• Provide an example of an offer, such as a specific price quote for a service with clear terms.
• Provide an example of an invitation to treat, such as goods displayed in a shop window or an advertisement.

Where people lose the point

• ×Confusing an advertisement with a binding offer, rather than an invitation to treat.
• ×Failing to emphasize the 'intent to be bound' as the key differentiator.

What a strong answer covers

• Define consideration as the 'bargained-for exchange' of something of legal value between parties.
• Explain that 'legal value' can be a promise, an act, or a forbearance.
• State that consideration is essential because it distinguishes a legally enforceable contract from a mere gift or gratuitous promise.
• Mention that courts generally do not inquire into the adequacy of consideration, only its existence.

Where people lose the point

• ×Defining consideration as merely 'something of value' without including the 'bargained-for exchange' element.
• ×Suggesting that consideration must be of equal monetary value between parties.

What a strong answer covers

• State the general rule that contracts entered into by minors are voidable at the minor's option.
• Explain that 'voidable' means the minor can choose to disaffirm (cancel) the contract, but the adult party is bound.
• Discuss the exception for contracts for 'necessaries' (e.g., food, shelter, medical care), which minors are generally bound to pay for at a reasonable price.
• Mention that a minor can ratify (affirm) a contract upon reaching the age of majority, making it fully enforceable.

Where people lose the point

• ×Stating that contracts with minors are always void, rather than voidable.
• ×Failing to mention the 'necessaries' exception or the concept of ratification.

What a strong answer covers

• Define breach of contract as a failure, without legal excuse, to perform any promise that forms all or part of a contract.
• Explain that it occurs when a party fails to fulfill their contractual obligations.
• Provide a simple example, such as a contractor failing to complete a renovation by the agreed-upon deadline.
• Mention that a breach gives the non-breaching party a right to remedies.

Where people lose the point

• ×Omitting the 'without legal excuse' part of the definition.
• ×Providing an example that is not clearly a failure to perform a contractual obligation.

What a strong answer covers

• Define the mirror image rule: an acceptance must be an exact, unequivocal assent to the terms of the offer.
• Explain that any change, addition, or qualification to the offer's terms constitutes a counteroffer, not an acceptance.
• Discuss the implication that a counteroffer terminates the original offer, meaning it can no longer be accepted.
• Mention that this rule applies primarily to common law contracts (services, real estate) and less strictly to UCC contracts (sale of goods).

Where people lose the point

• ×Confusing a mere inquiry about terms with a counteroffer.
• ×Failing to explain that a counteroffer terminates the original offer.

What a strong answer covers

• Define past consideration as an act or promise that was performed or made before the current promise was given.
• Explain that it is not valid consideration because it was not 'bargained for' in exchange for the new promise.
• Illustrate with an example: 'You saved my life last year, so I promise to give you $1000 now.' The act of saving a life happened before the promise.
• Mention that there are limited exceptions, such as promises to pay a debt barred by the statute of limitations or a promise to pay for a past benefit where there was a moral obligation and a subsequent promise.

Where people lose the point

• ×Failing to link the invalidity of past consideration to the 'bargained-for exchange' requirement.
• ×Providing an example that could be interpreted as present consideration.

What a strong answer covers

• Define misrepresentation as a false statement of fact that induces another party to enter into a contract.
• Describe 'innocent misrepresentation' (unintentional, believed to be true) and its primary remedy of rescission.
• Describe 'negligent misrepresentation' (made carelessly without reasonable grounds for belief) and its remedies of rescission and/or damages.
• Describe 'fraudulent misrepresentation' (made knowingly false or recklessly without belief in its truth) and its remedies of rescission and/or damages (including punitive damages in some cases).

Where people lose the point

• ×Confusing misrepresentation with a mere opinion or a puffery.
• ×Incorrectly assigning remedies (e.g., punitive damages for innocent misrepresentation).

What a strong answer covers

• Define liquidated damages as a clause in a contract that specifies a predetermined amount of money that must be paid as damages by a breaching party.
• Explain that they are enforceable if they are a reasonable forecast of actual damages that would result from a breach, and not a penalty.
• State the two key conditions for enforceability: (1) actual damages must be difficult to ascertain at the time of contracting, and (2) the stipulated amount must be a reasonable estimate of the anticipated loss.
• Mention that if the clause is deemed a penalty, it will be unenforceable, and the non-breaching party will have to prove actual damages.

Where people lose the point

• ×Stating that liquidated damages are always enforceable, regardless of reasonableness.
• ×Failing to mention that the purpose is to estimate damages, not to punish.

What a strong answer covers

• Explain the purpose of the Statute of Frauds: to prevent fraud and perjury by requiring certain important contracts to be in writing to be enforceable.
• List at least three types of contracts covered: (1) contracts for the sale of land or interests in land, (2) contracts that cannot be performed within one year from their making, (3) contracts for the sale of goods over a certain monetary value (e.g., $500 under UCC), (4) contracts to answer for the debt of another (suretyship), (5) contracts made in consideration of marriage.
• Mention that the writing typically needs to be signed by the party against whom enforcement is sought and contain essential terms.
• Briefly discuss the consequences of non-compliance (unenforceable, not void).

Where people lose the point

• ×Stating that all contracts must be in writing to be enforceable.
• ×Confusing the Statute of Frauds with other contract defenses like illegality or impossibility.

What a strong answer covers

• Define a bilateral contract as a 'promise for a promise,' where both parties exchange promises to perform in the future.
• Provide an example of a bilateral contract: 'I promise to pay you $100 if you promise to paint my fence next week.'
• Define a unilateral contract as a 'promise for an act,' where one party makes a promise and the other party accepts by performing a specified act.
• Provide an example of a unilateral contract: 'I will pay you $100 if you paint my fence by the end of the day' (acceptance is by completing the painting).

Where people lose the point

• ×Confusing the offeror and offeree's roles in each type of contract.
• ×Providing examples that are ambiguous and could fit either definition.

What a strong answer covers

• Define promissory estoppel as a legal principle that allows a party to recover on a promise made even if a formal contract does not exist, typically in the absence of consideration.
• List the key elements: (1) a clear and unambiguous promise, (2) reasonable and foreseeable reliance by the promisee on that promise, (3) actual reliance by the promisee, and (4) injustice can only be avoided by enforcing the promise.
• Explain that it serves as an equitable remedy to prevent injustice when a party has detrimentally relied on a promise.
• Discuss its application as an alternative to consideration, allowing enforcement of a promise that would otherwise fail for lack of consideration.

Where people lose the point

• ×Treating promissory estoppel as a substitute for all elements of a contract, rather than specifically for consideration.
• ×Failing to emphasize the 'injustice' element as a critical factor for its application.

What a strong answer covers

• Define frustration of purpose: an unforeseen event occurs after contract formation that destroys the central purpose or value of the contract for one or both parties, even though performance remains physically possible.
• Differentiate it from impossibility: in impossibility, performance itself becomes objectively impossible; in frustration, performance is possible but pointless due to the loss of the underlying reason for the contract.
• List the key requirements: (1) a supervening event occurs after contract formation, (2) the event was not reasonably foreseeable by the parties, (3) the event completely or almost completely destroys the purpose of the contract, and (4) the purpose was understood by both parties as the basis of the contract.
• Provide a classic example, such as renting a room to view a coronation parade that is subsequently canceled.

Where people lose the point

• ×Confusing frustration of purpose with impossibility or impracticability.
• ×Failing to emphasize that performance is still technically possible, but the value is gone.

What a strong answer covers

• Define a material breach as a substantial failure in performance that goes to the essence of the contract, depriving the non-breaching party of the benefit they reasonably expected.
• Explain why the distinction is important: it determines the remedies available to the non-breaching party.
• State the legal consequences: a material breach allows the non-breaching party to (1) suspend their own performance, (2) terminate the contract, and (3) sue for full damages (including future damages).
• Contrast with a minor (non-material) breach, which only allows the non-breaching party to sue for damages for the specific breach, but they must still perform their own obligations.

Where people lose the point

• ×Treating all breaches as having the same legal consequences.
• ×Failing to explain that a material breach allows the non-breaching party to terminate the contract.

What a strong answer covers

• Define undue influence as the improper use of power or trust in a relationship to deprive a person of free will and substitute another's will, leading them to enter into a contract.
• Explain that it typically arises in relationships of trust and confidence (e.g., attorney-client, doctor-patient, guardian-ward, elderly parent-child).
• List factors courts consider: (1) susceptibility of the victim, (2) opportunity for the influencer to exert undue influence, (3) disposition of the influencer to do so, (4) the result of the transaction (e.g., unfairness, unnatural disposition of property).
• State that if proven, the contract is voidable by the victim.

Where people lose the point

• ×Confusing undue influence with duress (which involves threats or coercion).
• ×Failing to emphasize the element of a special relationship of trust or dominance.

What a strong answer covers

• Define the Parol Evidence Rule: when parties have reduced their agreement to a final, complete written document (an 'integrated' agreement), evidence of prior or contemporaneous oral or written agreements that contradict, vary, or add to the terms of the written contract is inadmissible.
• Explain its purpose: to give finality and certainty to written contracts and prevent parties from later claiming that the written agreement doesn't reflect their true understanding.
• List common exceptions: (1) to clarify ambiguous terms, (2) to prove a defense to formation (e.g., fraud, duress, mistake), (3) to prove a condition precedent to the contract's effectiveness, (4) to prove a subsequent modification of the contract, (5) to prove a collateral agreement that would naturally be omitted from the writing.
• Mention that the rule does not apply to evidence that explains or supplements, rather than contradicts, the written terms if the writing is not fully integrated.

Where people lose the point

• ×Stating that the rule applies to all evidence outside the written contract, including subsequent agreements.
• ×Failing to distinguish between fully integrated and partially integrated agreements when discussing exceptions.