AZ Bar Contracts and Commercial Law 1 — Questions and Answers
Question 1: Under common law, a valid contract requires:
- Offer, acceptance, consideration, and a writing
- Offer, acceptance, consideration, and capacity (Correct answer)
- Agreement, payment, and written signatures
- Mutual assent, consideration, and notarization
Correct answer: Offer, acceptance, consideration, and capacity
A valid common law contract requires an offer, acceptance, consideration, and the parties must have legal capacity; a writing is only required for contracts within the Statute of Frauds.
Question 2: Under UCC Article 2, a merchant's firm offer is irrevocable for up to:
- 30 days
- 90 days
- 3 months (Correct answer)
- 6 months
Correct answer: 3 months
UCC § 2-205 provides that a signed, written firm offer by a merchant is irrevocable for the period stated, or if no period is stated, for a reasonable time not to exceed 3 months.
Question 3: The parol evidence rule bars admission of extrinsic evidence to:
- Explain an ambiguous term in an integrated agreement
- Contradict or vary the terms of a fully integrated written agreement (Correct answer)
- Show that a condition precedent was not met
- Demonstrate fraud in the inducement
Correct answer: Contradict or vary the terms of a fully integrated written agreement
The parol evidence rule prevents parties from introducing prior or contemporaneous extrinsic evidence to contradict or vary the terms of a fully integrated written agreement.
Question 4: Anticipatory repudiation occurs when a party:
- Fails to perform on the due date
- Clearly and unequivocally indicates before performance is due that it will not perform (Correct answer)
- Requests a modification of the contract terms
- Performs in a materially deficient manner
Correct answer: Clearly and unequivocally indicates before performance is due that it will not perform
Anticipatory repudiation is an unequivocal statement or action by a party before the performance date indicating refusal to perform, allowing the non-breaching party to treat it as a present breach.
Question 5: Under the UCC, the battle of the forms provision (§ 2-207) provides that additional terms in an acceptance:
- Always become part of the contract
- Are proposals for addition that become part of the contract between merchants unless objected to or materially alter the offer (Correct answer)
- Constitute a counteroffer that voids the original offer
- Are enforceable only if in writing
Correct answer: Are proposals for addition that become part of the contract between merchants unless objected to or materially alter the offer
UCC § 2-207 provides that between merchants, additional terms in a definite acceptance become part of the contract unless the offer limits acceptance, they materially alter the offer, or the offeror objects.
Question 6: Promissory estoppel is available as a substitute for consideration when:
- A written promise is made by a merchant
- A party detrimentally relies on a promise and injustice can only be avoided by enforcement (Correct answer)
- The promise is for a sum greater than $500
- A unilateral contract is formed
Correct answer: A party detrimentally relies on a promise and injustice can only be avoided by enforcement
Promissory estoppel enforces a promise lacking consideration when there is a clear promise, foreseeable and actual detrimental reliance, and injustice cannot otherwise be avoided.
AZ Bar Contracts and Commercial Law 1
Under common law, a valid contract requires: