IN Bar Contracts and Sales 3 — Questions and Answers
Question 1: A seller ships nonconforming goods and the buyer rejects them within a reasonable time. Under UCC 2-508, the seller may cure if:
- The time for performance has not yet expired, or the seller reasonably believed the goods would be acceptable (Correct answer)
- The buyer is not a merchant
- The goods were sold as-is
- The contract price exceeds $5,000
Correct answer: The time for performance has not yet expired, or the seller reasonably believed the goods would be acceptable
A seller has a right to cure before the performance deadline, and beyond it when the seller had reasonable grounds to believe the tender would be accepted.
Question 2: A buyer signs an installment contract for monthly deliveries of grain. One installment is slightly nonconforming but can be cured. Under UCC 2-612, the buyer may reject that installment only if:
- The nonconformity substantially impairs the value of that installment and cannot be cured (Correct answer)
- Any defect exists, under the perfect tender rule
- The seller has been late before
- The buyer gives 30 days written notice
Correct answer: The nonconformity substantially impairs the value of that installment and cannot be cured
Installment contracts are an exception to perfect tender; rejection requires substantial impairment of the installment that cannot be cured.
Question 3: A singer contracts to perform at a venue, but the venue burns down through no one's fault before the concert. The parties' duties are most likely:
- Discharged by impossibility because the venue's existence was a basic assumption (Correct answer)
- Still enforceable because performance elsewhere is possible
- Discharged only if the contract had a force majeure clause
- Suspended until the venue is rebuilt
Correct answer: Discharged by impossibility because the venue's existence was a basic assumption
Destruction of a thing essential to performance, without fault, discharges both parties under the doctrine of impossibility.
Question 4: A father contracts with a music school to give his daughter lessons, and the daughter later sues the school for breach. The daughter can recover if she is:
- An intended beneficiary whose rights have vested (Correct answer)
- An incidental beneficiary
- A delegatee of the father's duties
- An assignee of the school
Correct answer: An intended beneficiary whose rights have vested
Only intended third-party beneficiaries whose rights have vested may enforce a contract made for their benefit.
Question 5: A buyer under a requirements contract suddenly demands quantities far exceeding any prior demand to resell at a profit. Under UCC 2-306, the seller must supply:
- Only quantities not unreasonably disproportionate to stated estimates or normal prior requirements (Correct answer)
- Whatever the buyer demands in good faith or bad faith
- Nothing, because requirements contracts are illusory
- The exact quantity of the previous order only
Correct answer: Only quantities not unreasonably disproportionate to stated estimates or normal prior requirements
Requirements are measured by good faith, and no quantity unreasonably disproportionate to estimates or normal prior requirements may be demanded.
Question 6: A party seeking to rescind a contract for mutual mistake must show the mistake concerned:
- A basic assumption with a material effect, where that party did not bear the risk (Correct answer)
- Any fact either party misunderstood
- Only the value of the consideration
- The other party's subjective motives
Correct answer: A basic assumption with a material effect, where that party did not bear the risk
Mutual mistake requires a basic assumption of the contract, material effect on the exchange, and that the adversely affected party did not assume the risk.
Question 7: A written agreement contains a merger clause stating it is the complete and final agreement. The buyer offers evidence of a prior oral warranty. Under the parol evidence rule, this evidence is:
- Inadmissible to add to a fully integrated writing, absent an exception like fraud or ambiguity (Correct answer)
- Always admissible under the UCC
- Admissible because warranties are collateral
- Inadmissible only if the seller objects at trial
Correct answer: Inadmissible to add to a fully integrated writing, absent an exception like fraud or ambiguity
Prior oral terms that contradict or supplement a fully integrated writing are barred unless an exception such as fraud, mistake, or ambiguity applies.
IN Bar Contracts and Sales 3
A seller ships nonconforming goods and the buyer rejects them within a reasonable time.
Under UCC 2-508, the seller may cure if: