FYLSX Contracts Formation & Enforcement 4 — Questions and Answers
Question 1: Under the UCC's battle of the forms (§ 2-207), if both parties are merchants and the offeree's acceptance includes additional terms, those terms:
- Are automatically rejected and the original offer controls.
- Become part of the contract unless they materially alter the offer or the offeror objects. (Correct answer)
- Require a separate signed agreement to be enforceable.
- Void the original offer and create a counteroffer.
Correct answer: Become part of the contract unless they materially alter the offer or the offeror objects.
Under UCC § 2-207, additional (not different) terms in a merchant's acceptance become part of the contract unless they materially alter the offer, the offer expressly limits acceptance to its terms, or the offeror objects.
Question 2: Which of the following is an example of an illusory promise?
- 'I will pay you $100 when I sell my car.'
- 'I will buy all the widgets I want from you this year.' (Correct answer)
- 'I will deliver 500 units on June 1.'
- 'I promise to pay you $200 for painting my fence.'
Correct answer: 'I will buy all the widgets I want from you this year.'
A promise to buy 'all I want' is illusory because the promisor retains complete discretion to want nothing, making the promise unenforceable for lack of real commitment.
Question 3: A contractor discovers unexpected bedrock while digging a foundation, tripling costs. The owner refuses to pay more than the contract price. Which defense is most applicable to the contractor?
- Frustration of purpose
- Commercial impracticability
- Mutual mistake (Correct answer)
- Economic duress
Correct answer: Mutual mistake
When both parties were unaware of a material fact (hidden bedrock) at contract formation, the contractor may assert mutual mistake to seek rescission or modification.
Question 4: Lucy promises to give her friend a car 'someday when I feel like it.' This promise lacks enforceability primarily because of:
- Lack of consideration
- Indefiniteness of the essential terms (Correct answer)
- The Statute of Frauds
- Lack of capacity
Correct answer: Indefiniteness of the essential terms
A promise conditioned entirely on the promisor's subjective future desire is too indefinite to constitute an enforceable offer because there is no objective standard to measure performance.
Question 5: Which of the following would satisfy the part-performance exception to the Statute of Frauds for a land contract?
- The buyer pays a deposit only.
- The buyer pays the full purchase price only.
- The buyer pays part of the price, takes possession, and makes improvements. (Correct answer)
- The parties exchange signed letters about the deal.
Correct answer: The buyer pays part of the price, takes possession, and makes improvements.
Part performance for land contracts requires at least two of three elements—payment, possession, and improvements—to take the oral contract out of the Statute of Frauds.
Question 6: A seller agrees to sell 'my entire output of widgets' to a buyer at a fixed price per unit. This is best described as:
- An illusory contract
- An output contract enforceable under the UCC (Correct answer)
- A requirements contract
- A void contract for lack of quantity term
Correct answer: An output contract enforceable under the UCC
An output contract, where the seller agrees to sell all it produces to the buyer, is enforceable under UCC § 2-306 because the seller's actual output measures the quantity.
Question 7: Grace hires Mark to paint her house for $3,000. Before Mark begins, Grace tells him the deal is off. Mark does nothing in response. Has Grace committed anticipatory repudiation?
- No, because Mark has not yet started performance.
- Yes, and Mark may immediately sue for breach or wait until performance was due. (Correct answer)
- No, because oral repudiation of a service contract is ineffective.
- Yes, but Mark must first demand that Grace retract her repudiation before suing.
Correct answer: Yes, and Mark may immediately sue for breach or wait until performance was due.
A clear, unequivocal repudiation before the performance date is anticipatory repudiation, entitling the non-breaching party to sue immediately or wait until the performance date.
FYLSX Contracts Formation & Enforcement 4
Under the UCC's battle of the forms (§ 2-207), if both parties are merchants and the offeree's acceptance includes additional terms, those terms: