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Question 1Contracts

On Monday, an offeror mails an offer to an offeree. On Wednesday, the offeree mails an acceptance. On Thursday, the offeree receives a telephone call in which the offeror revokes the offer. The acceptance reaches the offeror on Friday. Was a contract formed?

  1. No, because the revocation was received before the acceptance.
  2. Yes, but only if the offeror had not previously mailed a revocation.
  3. No, because the offeror had not yet received the acceptance.
  4. Yes, because the acceptance was effective when mailed on Wednesday. Correct answer.

Explanation

Under the mailbox rule, an acceptance sent by an authorized medium is effective on dispatch, not on receipt. The contract therefore formed on Wednesday, before the Thursday revocation. A later revocation cannot undo an offer that has already been accepted.

Question 2Contracts

A merchant signs and sends a writing that promises to keep an offer open for two months. The offeree gives no consideration for that promise. What is the effect under the UCC?

  1. The offer stays open indefinitely until the offeree rejects it.
  2. The offer is irrevocable for the two months stated. Correct answer.
  3. The promise is enforceable only if the offeree pays something.
  4. The promise must be renewed in writing every thirty days.

Explanation

A signed writing by a merchant assuring that an offer will be held open is irrevocable without consideration. It remains open for the time stated, or a reasonable time if none is stated, but never longer than three months. Two months falls within that limit.

Question 3Contracts

A buyer and seller orally agree on the sale of a used motorcycle for $3,000. Nothing is written, and no payment or delivery has occurred. The buyer later refuses to perform. What is the likely result?

  1. The agreement is enforceable because $3,000 is a modest sum.
  2. The agreement is enforceable because the buyer is a consumer.
  3. The agreement is enforceable because the parties agreed on all terms.
  4. The agreement is unenforceable under the UCC writing requirement. Correct answer.

Explanation

A contract for the sale of goods priced at $500 or more is within the statute of frauds and requires a writing signed by the party to be charged. No exception applies here, because there has been no payment, no delivery, and no specially manufactured goods. The oral agreement therefore cannot be enforced.

Question 4Contracts

An offeror mails an offer to an offeree. Before accepting, the offeree learns from a reliable third party that the offeror has revoked the offer. What is the status of the offer?

  1. Terminated, because the offeree learned of the revocation. Correct answer.
  2. Still open, because only the offeree can terminate an offer.
  3. Still open, because no revocation letter has arrived.
  4. Terminated only if the offeree signs a written acknowledgment.

Explanation

An offer is revoked when the offeree receives reliable information that the offeror has taken definite action inconsistent with an intention to enter the contract. Indirect notice through a reliable source is sufficient. The offer therefore ended before any acceptance.

Question 5Contracts

A seventeen-year-old buys a car from a dealer and pays cash. Two months later, still a minor, he returns the car and demands his money back. What is the likely result?

  1. He may disaffirm and recover the purchase price. Correct answer.
  2. He is bound because he paid cash and took delivery.
  3. He may disaffirm only after turning eighteen.
  4. He may not disaffirm because the car was used.

Explanation

A minor may disaffirm a contract at any time while still a minor or within a reasonable time after reaching majority. On disaffirmance the minor must return whatever remains of the consideration. Paying cash and taking delivery do not make the contract binding.

Question 6Contracts

A party to a contract assigns her right to receive payment to a bank and also delegates her duty to perform services to a third party. Which statement is correct?

  1. Neither can be done unless the contract expressly permits it.
  2. The assignment is valid, but delegating personal services may not be. Correct answer.
  3. Both are invalid without the other party's consent.
  4. The delegation is valid, but the assignment is invalid unless in writing.

Explanation

Contract rights are generally freely assignable unless the assignment materially changes the obligor's duty or is barred by law or the contract. Duties may be delegated, but a delegation is ineffective where the obligee has a substantial interest in personal performance. No writing or consent is needed for the assignment itself.

Question 7Contracts

Under the common law, an acceptance that adds new terms to an offer generally operates as:

  1. An enforceable acceptance of the original offer.
  2. A counteroffer that terminates the original offer. Correct answer.
  3. A waiver of the offeree's right to negotiate.
  4. A firm offer that cannot be revoked.

Explanation

The common law requires an acceptance to mirror the offer exactly. A purported acceptance that varies the terms is treated as a counteroffer, which operates as a rejection of the original offer. The original offeror may then accept or reject the counteroffer.

Question 8Contracts

An offeror promises in writing to keep an offer open for thirty days in exchange for the offeree's payment of $50. The offeree pays. Which is correct?

  1. The offer is irrevocable, because an option contract was formed. Correct answer.
  2. The offer became a firm offer only when the offeree accepted.
  3. The promise is unenforceable because $50 is inadequate consideration.
  4. The offer may be revoked at any time before acceptance.

Explanation

Consideration for a promise to keep an offer open creates an option contract, which makes the offer irrevocable for the stated period. Courts do not inquire into the adequacy of the recited consideration. The $50 payment therefore supports the option even if it is small.

Question 9Contracts

A builder is under contract to construct a house for $200,000. Midway through, the builder threatens to stop work unless the owner promises an extra $20,000. The owner, unable to find another builder in time, agrees in writing. The builder finishes the house. Which is correct under the common law?

  1. The owner must pay because of economic duress.
  2. The owner must pay because the builder finished the work.
  3. The owner need not pay the extra $20,000. Correct answer.
  4. The owner must pay because the modification was in writing.

Explanation

A promise to perform an existing contractual duty is not consideration for a modification. The builder gave nothing new in exchange for the extra $20,000, so the promise to pay it is unenforceable. A writing does not cure the lack of consideration, and duress would void rather than enforce the modification.

Question 10Contracts

A company promises a supplier that it will buy goods for three years if the supplier expands its plant. The supplier reasonably relies and builds the expansion, but the company then refuses to buy. No written agreement exists and the elements of a bargain are missing. What theory best supports the supplier?

  1. Anticipatory repudiation, because the company refused to perform.
  2. Quasi-contract, because the company was unjustly enriched.
  3. Implied-in-fact contract, because of the parties' dealing history.
  4. Promissory estoppel, because the supplier reasonably relied. Correct answer.

Explanation

Promissory estoppel enforces a promise when the promisor should reasonably expect reliance, reliance in fact occurs, and injustice can be avoided only by enforcement. The expansion was a foreseeable and detrimental reliance on the promise. Quasi-contract and implied-in-fact contracts are unavailable when the parties' dealings lack the elements of a bargain.

Question 11Contracts

Two merchants orally agree on the sale of goods. The seller then sends a written confirmation with a clause requiring arbitration of disputes. The buyer sends its own confirmation with a clause requiring litigation in court. Neither party objects. A dispute arises. Under the UCC, which term governs?

  1. The buyer's litigation clause, because it was sent last.
  2. Both clauses, and a court must select one of them.
  3. Neither clause, because the conflicting terms cancel out. Correct answer.
  4. The seller's arbitration clause, because it was sent first.

Explanation

When the parties' writings do not establish a contract but their conduct does, the contract consists of the terms on which the writings agree plus UCC gap-fillers. Additional terms in the writings do not survive, and directly conflicting terms knock each other out. Neither the arbitration clause nor the litigation clause becomes part of the contract.

Question 12Contracts

A seller ships goods that conform in every respect except that the packaging is slightly different from the contract specification, causing no harm. The buyer rejects the shipment before accepting it. Is the rejection effective under the UCC?

  1. No, because the goods substantially conformed.
  2. Yes, because perfect tender permits rejection. Correct answer.
  3. Yes, but only if the buyer can show actual damages.
  4. No, because the buyer must first allow cure.

Explanation

The perfect tender rule allows a buyer to reject goods that fail in any respect to conform to the contract, even in a minor way. A packaging deviation is a nonconformity, so rejection is effective. The seller may have a right to cure, but that does not make the rejection itself ineffective.

Question 13Contracts

On June 1, a seller of goods clearly tells the buyer that it will not deliver the goods scheduled for August 1. The buyer does nothing until August 5, when it sues. The seller argues the buyer waited too long. What is the likely result?

  1. The buyer's claim is barred because the seller could retract.
  2. The buyer must first demand assurances in writing.
  3. The buyer's claim is barred because it did not sue in June.
  4. The buyer may sue now or wait until the performance date. Correct answer.

Explanation

An anticipatory repudiation gives the nonbreaching party an immediate right to treat the contract as breached and sue. That party may instead wait for the performance date to arrive. Delaying suit does not waive the claim unless the delay continues after the time for performance.

Question 14Contracts

A caterer contracts to provide food at a wedding. A government order closes all restaurants and bans gatherings in the city on the wedding date, so the caterer cannot lawfully perform. Which doctrine most directly excuses the caterer?

  1. Anticipatory repudiation, because the caterer refused to perform.
  2. Frustration of purpose, because the wedding lost its value.
  3. Waiver, because the couple accepted the risk.
  4. Impracticability, because performance became illegal. Correct answer.

Explanation

Impracticability discharges a party when an unforeseen event makes performance illegal or extraordinarily difficult. A government order forbidding the performance is a classic ground of impracticability. Frustration of purpose addresses a destroyed objective, not an inability to perform.

Question 15Contracts

A company rents a hotel room overlooking the harbor to watch a fireworks display. Days before the event, the city cancels the fireworks for safety reasons, but the room remains available. The company wants to avoid paying. Which doctrine best supports the company?

  1. Frustration of purpose, because the rental lost its purpose. Correct answer.
  2. Duress, because the hotel pressured the company into the lease.
  3. Mistake, because both parties assumed the fireworks would occur.
  4. Impracticability, because another venue would cost more.

Explanation

Frustration of purpose discharges a party when an unforeseen event destroys the principal purpose of the contract, even though performance remains possible. The room is still available, so performance is not impracticable; what vanished was the reason for renting it. Both parties understood that purpose at the time of contracting.

Question 16Contracts

A buyer contracts to purchase a machine for $10,000. The seller breaches, and the buyer buys an identical machine elsewhere for $12,000. The buyer also incurs $300 in incidental shipping costs. What is the buyer's damage award under the UCC?

  1. $2,300, the cover price difference plus incidentals. Correct answer.
  2. $10,000, representing the original contract price.
  3. $0, because the buyer obtained a substitute machine.
  4. $300, representing the incidental costs only.

Explanation

When a buyer covers after a seller's breach, damages are the difference between the cost of cover and the contract price, plus incidental and consequential losses, less expenses saved. Here the cover difference is $2,000 and shipping adds $300. The total award is $2,300.

Question 17Contracts

An employer fires an employee mid-term without cause, in breach of a one-year employment contract. The employee finds comparable work two months later. In the employee's suit for damages, what is the effect of the new job?

  1. Damages are barred because the employee found work.
  2. Damages equal the full salary for the remaining term.
  3. Damages include punitive damages for the wrongful firing.
  4. Damages are limited to the loss before the new job began. Correct answer.

Explanation

A discharged employee must use reasonable efforts to mitigate by finding comparable employment. Earnings from substitute employment reduce the recoverable damages. The employee therefore recovers only the salary lost during the two months before replacement work began.

Question 18Contracts

A construction contract provides that the contractor will pay $500 for each day of delay. At the time of contracting, delay damages were difficult to estimate, and $500 per day was a reasonable forecast. The contractor finishes twenty days late. Is the clause enforceable?

  1. No, because it operates as a penalty.
  2. Yes, because it reasonably forecasts anticipated harm. Correct answer.
  3. Yes, but the owner must prove $500 per day in losses.
  4. No, because delay damages are always speculative.

Explanation

A liquidated damages clause is enforceable when the harm is difficult to estimate at contracting and the stipulated amount is a reasonable forecast of probable loss. Both conditions are satisfied here. Once the clause is valid, the owner need not prove actual damages.

Question 19Contracts

After a divorce, a father agrees with the mother to pay their children's college tuition. The children are not parties to the agreement. The father stops paying. May the children enforce the agreement?

  1. No, because only the mother may sue on the promise.
  2. Yes, because they are intended beneficiaries. Correct answer.
  3. Yes, but only if they are minors when suit is filed.
  4. No, because they gave no consideration.

Explanation

A third party may enforce a contract when the contracting parties intended to confer a direct benefit on that party. A promise to pay a named person's tuition manifests that intent. Lack of consideration from the beneficiary does not matter, because the promisee supplied the consideration.

Question 20Contracts

A homeowner contracts with a painter to paint a house for $5,000. The painter finishes but uses a slightly different shade of white than specified, a minor deviation fixable for $200. The homeowner refuses to pay anything. What is the likely result?

  1. The homeowner owes the price less the cost of the defect. Correct answer.
  2. The homeowner owes the full $5,000 with no deduction.
  3. The homeowner owes nothing until the painter repaints.
  4. The homeowner owes nothing because performance was incomplete.

Explanation

Substantial performance entitles a contracting party to the contract price, reduced by the cost of curing any minor defects. A slight shade variation that causes no real harm is a minor breach. The homeowner therefore must pay the price minus the $200 repair cost.

Question 21Contracts

A written contract for the sale of a car states that it is the complete agreement. Before signing, the seller orally promised to include new tires. The buyer sues to enforce the tire promise. What is the likely result under the parol evidence rule?

  1. It is inadmissible under the parol evidence rule. Correct answer.
  2. It is admissible because it favors the buyer.
  3. It is admissible to show fraud in every case.
  4. It is admissible because it was made before signing.

Explanation

The parol evidence rule bars prior or contemporaneous oral statements that contradict or add to a fully integrated writing. The merger clause establishes that the writing is complete. The tire promise would add a term to the integrated agreement and therefore cannot be received.

Question 22Contracts

A contract for the sale of goods is silent on price. The parties have already performed part of the deal without objection. Under the UCC, what price term applies?

  1. The contract fails for indefiniteness of price.
  2. The price the seller listed in its catalog.
  3. A reasonable price at the time of delivery. Correct answer.
  4. The market price at the time of contracting.

Explanation

The UCC permits a sale-of-goods contract to be enforced even if the price is left open. The gap-filler is a reasonable price at the time for delivery. Common-law indefiniteness concerns do not defeat an otherwise enforceable goods contract.

Question 23Contracts

An adult asks a friend to lend his nephew $5,000. The adult orally promises, "If my nephew does not repay you, I will." The adult's main purpose is to help the nephew, not to serve his own economic interest. The nephew defaults. Is the adult's promise enforceable?

  1. Yes, because promises to pay another's debt bind the promisor.
  2. No, because the friend gave no consideration.
  3. No, because a surety promise must be in writing. Correct answer.
  4. Yes, because the promise was made voluntarily.

Explanation

A promise to answer for the debt of another falls within the statute of frauds unless the main purpose is the promisor's own economic advantage. Here the adult's dominant motive was to help his nephew, so the main purpose doctrine does not remove the promise from the statute. Because the promise was oral, it is unenforceable.

Question 24Contracts

A consumer with limited English signs a contract to buy a refrigerator at four times the market price, with a clause waiving all warranties and requiring arbitration in a distant state. The seller used high-pressure tactics. Which doctrine most directly supports the consumer?

  1. Unconscionability, because the terms and process were unfair. Correct answer.
  2. Mistake, because the consumer misunderstood the terms.
  3. Frustration of purpose, because the refrigerator was overpriced.
  4. Anticipatory repudiation, because the seller may not deliver.

Explanation

Unconscionability requires both an unfair bargaining process and oppressive substantive terms. High-pressure sales tactics aimed at a consumer with limited English supply the procedural element, and the inflated price plus warranty waiver and distant forum supply the substantive element. A court may refuse to enforce the contract or the offending terms.

Question 25Contracts

A contract requires the buyer to pay "upon satisfactory completion" of construction work. The contractor completes the work, but the buyer's dissatisfaction is honest yet unreasonable. Must the buyer pay?

  1. Yes, because satisfaction in construction is judged objectively. Correct answer.
  2. Yes, because the contractor finished the work as agreed.
  3. No, because honest dissatisfaction is conclusive.
  4. No, because satisfaction is judged subjectively in every case.

Explanation

When a condition of satisfaction concerns commercial value, mechanical fitness, or utility, courts apply an objective reasonableness standard. Subjective good faith governs only matters of personal taste or aesthetics. A construction defect question is judged objectively, so unreasonable dissatisfaction does not excuse payment.

Question 26Contracts

On May 1, an offeror mails a written offer to an offeree. On May 3, before the offeree receives it, the offeror mails a revocation. The offeree receives the offer on May 5 and mails an acceptance on May 6. The revocation reaches the offeree on May 7. When is the contract formed?

  1. May 6, when the acceptance is mailed. Correct answer.
  2. May 7, when the revocation reaches the offeree.
  3. May 3, when the offeror mails the revocation.
  4. May 5, when the offeree receives the offer.

Explanation

Under the mailbox rule, an acceptance is generally effective when dispatched, unless the offer provides otherwise or an option contract is involved. A revocation is effective only when received. Because the acceptance was mailed before the revocation was received, the contract formed on dispatch.

Question 27Contracts

An uncle tells his nephew, "Because you helped me move last month, I promise to pay you $1,000 next week." The uncle later refuses to pay. Is the promise enforceable?

  1. No, because the nephew's moving was past consideration. Correct answer.
  2. Yes, because the promise was made in writing.
  3. No, because $1,000 exceeds the limit for oral promises.
  4. Yes, because the uncle had a moral obligation to pay.

Explanation

Consideration must be bargained for and given in exchange for the promise. Past consideration is not consideration because the act was not induced by the promise. A moral obligation alone does not make the promise enforceable.

Question 28Contracts

A homeowner hires a contractor to build a deck for $10,000. After the contractor begins, the homeowner promises to pay an extra $1,000 if the contractor finishes on time, which the contractor was already obligated to do. The contractor finishes on time. Can the contractor recover the extra $1,000?

  1. No, because the contract was for services.
  2. Yes, because the modification was fair.
  3. Yes, because the homeowner received the benefit of timely completion.
  4. No, because the contractor gave no new consideration. Correct answer.

Explanation

Under the common law preexisting duty rule, a promise to perform an existing contractual duty is not consideration for a modification. The contractor did nothing more than it was already bound to do. Fairness alone does not supply consideration.

Question 29Contracts

A buyer promises to purchase "as many widgets as I choose" from a seller, and the seller promises to sell whatever quantity the buyer orders at a set price. The buyer orders none. Is the buyer's promise enforceable?

  1. Yes, because the UCC supplies a quantity term.
  2. No, because the buyer's promise was illusory. Correct answer.
  3. No, because the price term was missing.
  4. Yes, because the seller promised to sell at a set price.

Explanation

A promise is illusory when the promisor retains an unrestricted choice whether to perform. A promise to buy only as many goods as the buyer chooses does not commit the buyer to anything. Without mutuality of obligation, the agreement lacks consideration.

Question 30Contracts

A party claims that she did not intend to be bound by a signed contract because she secretly misunderstood its terms. The other party reasonably believed she assented. Under the objective theory of contracts, is the contract enforceable?

  1. Yes, but only if the contract is notarized.
  2. No, because any misunderstanding voids a contract.
  3. Yes, because assent is judged by outward manifestations. Correct answer.
  4. No, because the party's subjective intent controls.

Explanation

Contract formation is generally judged by the objective meaning of the parties' words and conduct, not their hidden intentions. If a reasonable person would believe the party assented, the contract is enforceable. Secret misunderstanding does not ordinarily prevent formation.

Question 31Contracts

A seller and buyer orally agree that the seller will sell the buyer a used piano for $800. The seller later refuses to deliver. Is the oral contract enforceable under the UCC?

  1. Yes, because the buyer paid part of the price.
  2. No, because used goods are not covered by the UCC.
  3. Yes, because a piano is a unique good.
  4. No, because the UCC Statute of Frauds applies. Correct answer.

Explanation

The UCC Statute of Frauds requires a writing for the sale of goods priced at $500 or more. The piano is a good, and the price is $800. No exception appears in the facts.

Question 32Contracts

A 17-year-old signs a contract to buy a car. After turning 18, she continues to drive the car for two months. Can she disaffirm the contract?

  1. Yes, because a minor may disaffirm at any time.
  2. No, because she ratified it after reaching majority. Correct answer.
  3. No, because the car was a necessary item.
  4. Yes, because she signed the contract as a minor.

Explanation

A minor may generally disaffirm a contract, but after reaching majority the former minor must disaffirm within a reasonable time. Continued use or retention of the benefits after majority can constitute ratification. Ratification makes the contract enforceable.

Question 33Contracts

A party breaches a contract. The nonbreaching party is entitled to damages that place it in the position it would have occupied had the contract been performed. What is this measure called?

  1. Restitution.
  2. Nominal damages.
  3. Expectation damages. Correct answer.
  4. Reliance damages.

Explanation

Expectation damages aim to put the nonbreaching party in the position it would have been in had the contract been performed. Reliance damages restore the position before contracting, and restitution returns benefits conferred. Nominal damages are a small sum awarded when no actual loss is shown.

Question 34Contracts

A store advertises in a newspaper: "First ten customers on Saturday receive a free television." A customer arrives first on Saturday and demands a television. Is the advertisement an offer?

  1. No, because advertisements are always invitations to deal.
  2. No, because the customer gave no consideration.
  3. Yes, because all newspaper advertisements are offers.
  4. Yes, because the advertisement's terms were definite. Correct answer.

Explanation

Advertisements are usually invitations to negotiate, but an advertisement can be an offer when it is definite and leaves nothing to negotiate. A promise to give a reward to the first ten customers can create a unilateral offer. Performance by arriving first can constitute acceptance.

Question 35Contracts

A offers to sell B a boat for $20,000. B replies, "I will pay $19,000." A says no. B then says, "I accept your original $20,000 offer." Is there a contract?

  1. No, because B's reply was a counteroffer. Correct answer.
  2. Yes, because A's original offer remained open indefinitely.
  3. Yes, because B accepted the original offer.
  4. No, because sales of boats require a writing.

Explanation

A counteroffer operates as a rejection of the original offer and terminates it. Once terminated, the original offer cannot later be accepted unless the offeror revives it. B's later statement therefore cannot create a contract.

Question 36Contracts

A merchant signs a written offer to sell goods and promises to keep the offer open for 60 days. The offeree gives no consideration. Under the UCC, is the offer irrevocable?

  1. No, because no consideration was given for the promise to keep the offer open.
  2. Yes, but only for 30 days.
  3. No, because the stated period exceeds 30 days.
  4. Yes, because a merchant made a signed firm offer. Correct answer.

Explanation

Under the UCC, a merchant's signed written offer to buy or sell goods that states it will be held open is irrevocable without consideration. The irrevocability lasts for the stated time, up to three months. A 60-day period is within that limit.

Question 37Contracts

On January 1, A orally agrees to work for B for 18 months starting February 1. After six months, A quits. Can B enforce the oral contract?

  1. No, because the contract cannot be performed within one year. Correct answer.
  2. Yes, because A began performance.
  3. Yes, because employment contracts are exempt from the Statute of Frauds.
  4. No, because the contract is for personal services.

Explanation

The one-year provision of the Statute of Frauds requires a writing for contracts that cannot be performed within one year from formation. An 18-month term starting one month later cannot be completed within one year. Beginning performance does not generally remove this bar.

Question 38Contracts

A orally agrees to sell B a lot. B pays the full price and takes possession, building a house on the lot with A's knowledge. A later refuses to convey. Can B enforce the oral agreement?

  1. Yes, because payment alone is always sufficient.
  2. No, because land sales require a signed writing.
  3. No, because B's improvements were unauthorized.
  4. Yes, under the part performance doctrine. Correct answer.

Explanation

The part performance doctrine can remove the Statute of Frauds bar for oral land contracts when the buyer pays, takes possession, and makes substantial improvements. These acts show that the parties intended a binding agreement. A's knowledge and lack of objection support enforcement.

Question 39Contracts

A buyer sends a purchase order for goods. The seller responds with an acceptance that adds a different arbitration clause. Both parties are merchants. Under the UCC, what is the effect of the added term?

  1. It becomes part unless it materially alters the deal. Correct answer.
  2. It prevents contract formation.
  3. It never becomes part of a contract between merchants.
  4. It makes the acceptance a counteroffer.

Explanation

Under UCC 2-207, a definite acceptance with additional terms can still form a contract. Between merchants, the additional term becomes part of the contract unless it materially alters the bargain or the other party objects. A different arbitration clause may be analyzed as a material alteration.

Question 40Contracts

An adult signs a contract while severely intoxicated and unable to understand the nature of the transaction. The other party knows this. The intoxicated party later seeks to avoid the contract. What is the likely result?

  1. The contract is void automatically.
  2. The contract may be voidable by the intoxicated party. Correct answer.
  3. The contract is enforceable because intoxication is voluntary.
  4. The contract is enforceable unless the intoxicated party was a minor.

Explanation

A contract may be voidable if a party was so intoxicated that it could not understand the nature of the transaction and the other party had reason to know of the incapacity. The contract is voidable, not automatically void. The party may need to return benefits received.

Question 41Contracts

An elderly person with diminished mental capacity transfers property to a caregiver who continuously pressures her and isolates her from family. The transfer is challenged. What doctrine most directly applies?

  1. Fraud.
  2. Mistake.
  3. Duress.
  4. Undue influence. Correct answer.

Explanation

Undue influence involves unfair persuasion that overcomes a person's free will, often in a confidential or dependent relationship. Isolation and persistent pressure by a caregiver are classic indicators. Duress requires a wrongful threat, and fraud requires a misrepresentation.

Question 42Contracts

A seller of a used car tells the buyer that the car has never been in an accident, knowing this is false. The buyer relies on the statement and buys the car. What is the buyer's best claim?

  1. Mutual mistake.
  2. Fraudulent misrepresentation. Correct answer.
  3. Undue influence.
  4. Innocent misrepresentation.

Explanation

Fraudulent misrepresentation requires a false statement of material fact made knowingly or recklessly and relied upon by the other party. The seller knew the statement was false, and the buyer relied on it. That supports avoidance and possibly damages.

Question 43Contracts

A state law requires electricians to be licensed to protect public safety. An unlicensed electrician contracts to wire a house. Can the electrician recover payment?

  1. No, because the licensing law protects public safety. Correct answer.
  2. No, because all oral contracts are unenforceable.
  3. Yes, because the work was performed.
  4. Yes, because only the homeowner can be punished.

Explanation

When a licensing statute is designed to protect the public, an unlicensed person generally cannot enforce a contract to perform the regulated work. The illegal contract is unenforceable by the unlicensed party. Performing the work does not cure the illegality.

Question 44Contracts

A contract provides that the buyer's duty to pay ends if the buyer receives a valid refund from a third party within 30 days. The buyer receives the refund on day 20. What type of condition is this?

  1. Condition precedent.
  2. Concurrent condition.
  3. Condition subsequent. Correct answer.
  4. Constructive condition.

Explanation

A condition subsequent is an event that terminates an existing duty when it occurs. Here, the refund cuts off the buyer's duty to pay. A condition precedent would have to occur before the duty arose.

Question 45Contracts

A debtor disputes a $5,000 bill, claiming it should be $4,000. The creditor agrees in writing to accept $4,000 as full payment, and the debtor pays $4,000. The creditor later sues for $1,000. What result?

  1. The creditor wins because the debt was liquidated.
  2. The debtor loses because accord and satisfaction requires court approval.
  3. The creditor wins because $4,000 is inadequate consideration.
  4. The debtor wins under accord and satisfaction. Correct answer.

Explanation

An accord and satisfaction discharges a disputed debt when the parties agree to a substituted performance and the debtor performs it. The dispute makes the claim unliquidated, so the part payment can support the agreement. Court approval is not required.

Question 46Contracts

A contractor submits a construction bid that omits a $50,000 item because of a clerical error. The project owner knows of the error before accepting but accepts anyway. Can the contractor avoid the contract?

  1. Yes, because the owner knew of the mistake. Correct answer.
  2. Yes, because all bidding errors make a contract void.
  3. No, because the contractor was negligent.
  4. No, because a unilateral mistake never allows avoidance.

Explanation

A unilateral mistake can sometimes permit avoidance when the mistake is material, the mistaken party did not bear the risk, and the other party knew or had reason to know of the error. The owner's knowledge before acceptance supports relief. The contract is voidable, not automatically void.

Question 47Contracts

Both parties believe a horse is sterile when they sell it. Later the horse proves fertile. The sale contract is challenged. What is the likely result?

  1. The contract is void because all mistakes void contracts.
  2. The contract may be voidable for mutual mistake. Correct answer.
  3. The contract is enforceable because the mistake concerned a future event.
  4. The contract is enforceable because the seller did not know the truth.

Explanation

A mutual mistake about a basic assumption of fact that materially affects the bargain can make a contract voidable by the adversely affected party. Both parties shared the mistaken belief about the horse's fertility. The mistake concerned an existing fact, not merely a future event.

Question 48Contracts

A daycare center includes a clause in its contract exempting it from all liability for injuries caused by its own negligence. A parent signs the contract. A child is injured by the center's negligence. Is the clause enforceable?

  1. Yes, because the clause was in writing.
  2. No, because exculpatory clauses are always illegal.
  3. Yes, because adults are free to contract.
  4. No, because it exempts negligence in an essential service. Correct answer.

Explanation

Exculpatory clauses are generally enforced in some contexts, but courts often refuse to enforce them for negligence in essential public services or where bargaining power is unequal. A daycare's care of children implicates public safety and essential services. The clause is therefore likely unenforceable.

Question 49Contracts

A manufacturer agrees to sell its entire output of a product to a distributor for five years. The manufacturer later shuts down production because of a labor dispute and sells nothing. The distributor sues. What is the manufacturer's best defense?

  1. The contract is illusory because the manufacturer controls output.
  2. It acted in good faith in reducing output. Correct answer.
  3. The distributor did not pay consideration.
  4. The quantity term is too indefinite, so no contract exists.

Explanation

Under the UCC, output and requirements contracts are enforceable even though quantity is measured by the party's production or needs. The quantity must be determined in good faith. A genuine shutdown caused by a labor dispute may justify reduced output if the manufacturer is not acting opportunistically.

Question 50Contracts

A famous singer contracts to perform at a concert. She refuses to perform. The promoter seeks a court order compelling her to sing. What is the likely result?

  1. The court will deny because the promoter did not pay.
  2. The court will grant specific performance but only for one performance.
  3. The court will grant specific performance because the contract is unique.
  4. The court will deny specific performance. Correct answer.

Explanation

Courts generally will not order specific performance of personal services because doing so resembles involuntary servitude and is difficult to supervise. The promoter may recover damages or seek an injunction against performing elsewhere, but not an order to sing. Uniqueness does not override this rule.