GA Bar Contracts and Sales 3 — Questions and Answers
Question 1: Which of the following contracts does NOT need to satisfy the Statute of Frauds to be enforceable?
- A contract for the sale of land
- A contract that by its terms cannot be performed within one year
- A contract for the sale of goods for $450 (Correct answer)
- A contract for a surety promising to pay another's debt
Correct answer: A contract for the sale of goods for $450
The UCC Statute of Frauds applies to contracts for the sale of goods priced at $500 or more; a $450 contract falls below the threshold and needs no writing.
Question 2: Under the parol evidence rule, which type of evidence is admissible to supplement or contradict a fully integrated written contract?
- A prior oral agreement that contradicts a contract term
- A contemporaneous oral agreement varying the price
- Evidence that a party was fraudulently induced to enter the contract (Correct answer)
- A prior written agreement that establishes different delivery terms
Correct answer: Evidence that a party was fraudulently induced to enter the contract
Fraud in the inducement is always admissible despite the parol evidence rule because it attacks the validity of the contract itself, not its terms.
Question 3: The specially manufactured goods exception to the UCC Statute of Frauds applies when:
- The seller is a merchant who specializes in those goods
- The goods are not suitable for sale to others and the seller has made a substantial beginning of manufacture (Correct answer)
- The goods cost more than $5,000
- The buyer has paid a deposit on the goods
Correct answer: The goods are not suitable for sale to others and the seller has made a substantial beginning of manufacture
Under UCC 2-201(3)(a), an oral contract is enforceable for specially manufactured goods not suitable for resale if the seller has made a substantial beginning of manufacture before repudiation.
Question 4: Under common law, modifying an existing contract without new consideration is generally:
- Valid if both parties agree in writing
- Valid if the modification is made in good faith
- Unenforceable due to the pre-existing duty rule (Correct answer)
- Enforceable only if one party is a merchant
Correct answer: Unenforceable due to the pre-existing duty rule
The pre-existing duty rule bars enforcement of a contract modification at common law unless the modification is supported by new consideration from both parties.
Question 5: Under UCC Article 2, modification of a contract for the sale of goods:
- Requires new consideration to be enforceable
- Requires no consideration but must be in good faith (Correct answer)
- Is void unless reduced to writing regardless of amount
- Can only be made by written agreement signed by both parties
Correct answer: Requires no consideration but must be in good faith
UCC 2-209 expressly rejects the common law pre-existing duty rule, allowing contract modifications without consideration as long as they are made in good faith.
Question 6: The merchant confirmation rule under UCC 2-201(2) provides that a written confirmation sent between merchants:
- Must be signed by both parties to bind either
- Satisfies the Statute of Frauds against both merchants if not objected to within 10 days of receipt (Correct answer)
- Only binds the sender, not the recipient
- Is effective only if it contains all material terms
Correct answer: Satisfies the Statute of Frauds against both merchants if not objected to within 10 days of receipt
Under UCC 2-201(2), a written confirmation satisfying the Statute of Frauds as to the sender is also effective against the recipient merchant who fails to object within 10 days.
Question 7: Which of the following acts is most likely to take an oral land contract outside the Statute of Frauds under the part performance doctrine?
- Paying a deposit to the seller
- Hiring a real estate attorney to prepare documents
- Taking possession of the land and making substantial improvements in reliance on the contract (Correct answer)
- Recording a notice of interest with the county clerk
Correct answer: Taking possession of the land and making substantial improvements in reliance on the contract
Courts apply part performance to oral land contracts when the buyer takes possession and makes substantial improvements that are unequivocally referable to the alleged contract.
GA Bar Contracts and Sales 3
Which of the following contracts does NOT need to satisfy the Statute of Frauds to be enforceable?