ID Bar Contracts 2 — Questions and Answers
Question 1: Which of the following is NOT a recognized defense to contract formation?
- Duress
- Undue influence
- Mutual mistake
- Anticipatory repudiation (Correct answer)
Correct answer: Anticipatory repudiation
Anticipatory repudiation is a breach doctrine, not a formation defense — duress, undue influence, and mutual mistake all go to defects in the contracting process.
Question 2: Under the parol evidence rule, extrinsic evidence is generally inadmissible to:
- Explain ambiguous terms in a written contract
- Show fraud in the inducement
- Contradict or vary the terms of a final integrated written agreement (Correct answer)
- Establish a condition precedent not mentioned in the writing
Correct answer: Contradict or vary the terms of a final integrated written agreement
The parol evidence rule bars introduction of prior or contemporaneous extrinsic evidence to contradict or vary the terms of a final, integrated written agreement.
Question 3: When a party to a contract learns the other party will not perform before the performance date, this is called:
- Constructive eviction
- Anticipatory repudiation (Correct answer)
- Accord and satisfaction
- Novation
Correct answer: Anticipatory repudiation
Anticipatory repudiation occurs when a party clearly indicates before the performance date that it will not perform its contractual obligations.
Question 4: Under the common law, which of the following is an excuse for nonperformance based on an unforeseen event?
- Substantial performance
- Impossibility or frustration of purpose (Correct answer)
- Novation
- Assignment
Correct answer: Impossibility or frustration of purpose
Impossibility (objective inability to perform) and frustration of purpose (principal purpose has been destroyed by an unforeseen event) are recognized excuses for nonperformance.
Question 5: Which of the following best describes expectation damages in a contracts context?
- Damages that return the plaintiff to their pre-contract position
- Damages that put the plaintiff in the position they would have been in had the contract been performed (Correct answer)
- Damages based on unjust enrichment of the defendant
- Punitive damages for willful breach
Correct answer: Damages that put the plaintiff in the position they would have been in had the contract been performed
Expectation damages — the standard contract remedy — aim to place the non-breaching party in the position it would have occupied had the contract been fully performed.
Question 6: Under the Restatement (Second) of Contracts, a contract is voidable for mutual mistake when:
- Both parties were mistaken about a basic assumption that materially affects the exchange (Correct answer)
- One party made a unilateral computational error
- The price of goods changed after contract formation
- The contract terms are ambiguous
Correct answer: Both parties were mistaken about a basic assumption that materially affects the exchange
Mutual mistake doctrine voids a contract when both parties share a mistaken belief about a basic assumption on which the contract was made, and the mistake materially affects the agreed exchange.
ID Bar Contracts 2
Which of the following is NOT a recognized defense to contract formation?