Contracts
The MBE tests contract formation, defenses, third-party rights, performance, breach, and remedies. Common law governs services and real estate; UCC Article 2 governs goods. Know the differences.
Formation and defenses
- Offer: manifestation of present intent to be bound, definite terms. Acceptance: mirror image under common law; UCC § 2-207 allows additional terms between merchants.
- Consideration: bargained-for exchange. Promissory estoppel: detrimental reliance.
- Defenses: Statute of Frauds (sale of goods > $500, land, suretyship, marriage, one year), unconscionability, mistake, duress, fraud.
Performance and breach
- Common law: substantial performance; material breach excuses other party.
- UCC: perfect tender rule; buyer may reject nonconforming goods, but seller may cure.
- Anticipatory repudiation: clear and unequivocal; nonbreaching party may sue or wait.
- Remedies: expectation, reliance, restitution. UCC: cover, market damages, incidental/consequential.
Worked example
A homeowner contracts with a painter to paint her house for $10,000. The painter finishes but uses a slightly different shade of white than specified. The homeowner refuses to pay. Under common law, the painter substantially performed; the minor deviation is not a material breach. The homeowner must pay the contract price minus damages for the difference in value. If the painter had stopped halfway, that would be material breach. UCC perfect tender does not apply because this is a service contract.
Traps
- UCC applies to goods; common law to services. Mixed contracts: predominant purpose.
- Statute of Frauds requires writing for sale of goods > $500; UCC has merchant's confirmatory memo.
- Anticipatory repudiation must be clear; mere request for assurance is not repudiation.
- Expectation damages put plaintiff in position as if contract performed; no punitive damages.