Unilateral mistake (where only one party is mistaken) is generally not a basis to void a contract because it would undermine certainty in commercial transactions. However, courts may allow rescission for unilateral mistake when: (1) the other party knew or should have known of the mistake (making enforcement inequitable), or (2) enforcement would be unconscionable. The mistake must be about a material fact. Answer B is incorrect because not all unilateral mistakes allow voiding. Answer C is too absolute; courts do recognize certain unilateral mistake defenses. Answer D imposes a dollar threshold not found in contract law.

The defense of impossibility (or commercial impracticability) excuses a party's performance when an unforeseen event after contract formation makes performance objectively impossible. Destruction of the specific subject matter of the contract (such as the goods to be sold) through no fault of either party is a classic case of impossibility that excuses the seller's obligation to deliver and the buyer's obligation to pay. Answer A (mutual mistake) addresses errors about existing facts at the time of contract formation, not supervening events. Answer C (fraud) is inapplicable. Answer D (failure of consideration) relates to the other party's non-performance, not destruction of the subject matter.

Unconscionability arises when a contract is so one-sided and oppressive that it shocks the conscience of the court. Courts look for both procedural unconscionability (unfairness in the bargaining process - lack of meaningful choice, oppressive terms, fine print) and substantive unconscionability (unreasonably harsh or one-sided terms). A 250% interest rate consumer loan with hidden terms forced on an unsophisticated borrower illustrates both types. Answer A describes breach. Answer B describes a fair exchange (no unconscionability). Answer C describes a reasonable, enforceable limitation clause.

The Statute of Frauds requires certain contracts to be in writing, including: contracts for the sale of interests in real property, contracts that cannot be performed within one year from the date of formation, contracts for the sale of goods for $500 or more (UCC), promises to answer for the debts of another (suretyship), and promises made in consideration of marriage. A contract for the sale of real property falls squarely within the Statute of Frauds and must be evidenced by a writing. Answer B (groceries for $200) is below the UCC $500 threshold. Answer C (one-year employment beginning immediately) can be completed within one year of formation. Answer D (goods for $400) is below the UCC $500 threshold.

When a contract requires the performance of an act that is illegal under applicable law or violates public policy (such as a contract to commit a crime, defraud others, or restrain trade unreasonably), the contract is generally unenforceable as illegal. Courts will typically leave both parties in the position they are in and provide no remedy to either party. Answer A is too broad; regulated businesses may enter many legitimate contracts. Answer C is incorrect because criminal arrest is not required for a contract to be illegal. Answer D is incorrect because illegality may render a contract void regardless of whether both parties knew of it.

Contracts entered into by minors are generally voidable at the minor's option. The minor may disaffirm (void) the contract during minority or within a reasonable time after reaching the age of majority (18). Upon disaffirmance, the minor must return any goods still in their possession. Exceptions exist for necessities (minors are liable for the reasonable value of necessities). Answer B is incorrect because minor's contracts are voidable (the minor can enforce or disaffirm), not void (with no legal effect). Answer C is incorrect because receiving a benefit does not prevent disaffirmance (though the minor must return what they still have). Answer D is incorrect because a writing does not make minors' contracts fully enforceable.

The frustration of purpose doctrine excuses performance when: (1) the principal purpose of the contract is substantially frustrated; (2) the frustrating event was not foreseeable at the time of contracting; and (3) the non-occurrence of the frustrating event was a basic assumption of the contract. Unlike impossibility, performance may still be technically possible, but the purpose for which the contract was made has been destroyed. The classic example is Krell v. Henry, where a hotel room was rented to view a coronation procession that was subsequently cancelled. Answer A is incorrect because increased cost is generally not frustration. Answer B describes impossibility, not frustration. Answer D is incorrect because financial hardship alone is not frustration.

The Statute of Frauds applies to contracts that cannot by their terms be performed within one year of formation. A service contract that is fully capable of being completed within one year does not need to be in writing, even if it is not yet completed. The test is whether performance within one year is possible, not whether it is likely. Answer A (suretyship) must be in writing. Answer B (sale of goods $600) must be in writing under UCC ($500 threshold). Answer D (real property lease over one year) must be in writing.

Mental incapacity in contract law is determined by a cognitive test: at the time of contracting, the party must have been unable to understand the nature and consequences of the transaction, or (under the modern test) unable to act in a reasonable manner due to a mental illness or defect, and the other party had reason to know of the condition. The contract is voidable (not void) by the incapacitated party. Answer B is incorrect because formal adjudication is not required; capacity is evaluated at the moment of contracting. Answer C is incorrect because temporary intoxication must be severe enough to prevent understanding and the other party must know of it. Answer D is incorrect because contracts with mentally incapacitated persons are generally voidable, not void.

Under UCC Section 2-201, a writing sufficient to satisfy the Statute of Frauds for a sale of goods must: (1) indicate that a contract has been made; (2) state the quantity of goods; and (3) be signed by the party against whom enforcement is sought. Missing terms other than quantity may be supplied by the UCC's gap-filler provisions. The writing is only enforceable up to the quantity stated. Answer A is incorrect because the UCC does not require all essential terms in the writing. Answer B is incorrect because formal company letterhead is not required. Answer D is incorrect because only the signature of the party to be charged is required (not both parties).