CO Bar Contracts and Sales 3 — Questions and Answers
Question 1: A landowner orally agrees to sell her farm to a buyer. The buyer pays part of the price, takes possession, and builds a barn on the land. The landowner then refuses to convey, citing the Statute of Frauds. What is the buyer's best argument?
- The part performance doctrine takes the oral land contract out of the Statute of Frauds (Correct answer)
- Oral land contracts are always enforceable if witnessed
- The Statute of Frauds applies only to goods
- Payment alone always satisfies the Statute of Frauds for land
Correct answer: The part performance doctrine takes the oral land contract out of the Statute of Frauds
Part performance—typically payment plus possession or improvements—permits specific enforcement of an oral land sale contract despite the Statute of Frauds.
Question 2: A buyer purchases a used car after asking the dealer to select a vehicle 'reliable enough for daily 100-mile commutes.' The dealer picks the car, but it breaks down constantly. Which UCC warranty is most likely breached?
- The implied warranty of fitness for a particular purpose (Correct answer)
- The express warranty of title
- The implied warranty of merchantability only
- No warranty, because used goods carry no warranties
Correct answer: The implied warranty of fitness for a particular purpose
When a seller knows the buyer's particular purpose and the buyer relies on the seller's skill to select goods, an implied warranty of fitness for a particular purpose arises.
Question 3: A debtor owes a creditor $10,000, and the debt is undisputed and due. The creditor accepts $7,000 with a signed agreement stating the debt is fully satisfied. The creditor later sues for the remaining $3,000. Under the common law, who prevails?
- The creditor, because payment of a lesser sum on an undisputed debt is not consideration for discharging the balance (Correct answer)
- The debtor, because any signed release is binding
- The debtor, because partial payment always discharges a debt
- The creditor, but only if the debt was under seal
Correct answer: The creditor, because payment of a lesser sum on an undisputed debt is not consideration for discharging the balance
Under the common law rule, paying less than the full amount of a liquidated, undisputed debt provides no consideration for a promise to forgive the remainder.
Question 4: A wealthy patron promises a college $1 million to build a library. Relying on the promise, the college hires architects and breaks ground. The patron then revokes. What doctrine best supports the college's claim?
- Promissory estoppel, because the college reasonably and foreseeably relied to its detriment (Correct answer)
- Quasi-contract, because the patron was unjustly enriched
- The mailbox rule, because the promise was mailed
- Novation, because the parties substituted obligations
Correct answer: Promissory estoppel, because the college reasonably and foreseeably relied to its detriment
Promissory estoppel enforces a promise where the promisor should reasonably expect reliance and the promisee detrimentally relies, as with charitable pledges followed by action.
Question 5: A buyer contracts to buy 1,000 bushels of wheat at $8 per bushel. The seller fails to deliver, and the market price at the time the buyer learned of the breach is $10 per bushel. The buyer does not cover. What are the buyer's direct damages under the UCC?
- $2,000, the difference between market price and contract price (Correct answer)
- $8,000, the full contract price
- $10,000, the full market value
- Nothing, because the buyer failed to cover
Correct answer: $2,000, the difference between market price and contract price
Under UCC 2-713, a non-covering buyer recovers the difference between market price at the time of learning of the breach and the contract price.
Question 6: Two parties contract for the sale of a specific painting both believe is an original masterwork; it is actually a worthless copy. Neither party assumed the risk. What is the likely result if the buyer seeks to avoid the contract?
- The contract is voidable for mutual mistake going to a basic assumption with a material effect (Correct answer)
- The contract is enforceable because mistakes never excuse performance
- Only the seller may avoid the contract
- The contract is void for illegality
Correct answer: The contract is voidable for mutual mistake going to a basic assumption with a material effect
Mutual mistake about a basic assumption that materially affects the exchange makes the contract voidable by the adversely affected party who did not bear the risk.
Question 7: A general contractor uses a subcontractor's bid in computing its winning bid on a public project. Before the general accepts, the subcontractor attempts to revoke its bid. Can the general enforce the sub's bid?
- Yes, promissory estoppel makes the sub's bid temporarily irrevocable because the general foreseeably relied on it (Correct answer)
- No, because bids are always revocable before acceptance
- No, because subcontractor bids are mere invitations to deal
- Yes, but only if the sub's bid was under seal
Correct answer: Yes, promissory estoppel makes the sub's bid temporarily irrevocable because the general foreseeably relied on it
Under the Drennan rule, a subcontractor's bid is held open by promissory estoppel when the general contractor foreseeably relies on it in submitting its own bid.
CO Bar Contracts and Sales 3
A landowner orally agrees to sell her farm to a buyer.
The buyer pays part of the price, takes possession, and builds a barn on the land.
The landowner then refuses to convey, citing the Statute of Frauds.
What is the buyer's best argument?