KS Bar Contracts 3 — Questions and Answers
Question 1: Which measure of damages is designed to put the non-breaching party in the position they were in before the contract was made?
- Expectation damages
- Reliance damages (Correct answer)
- Consequential damages
- Liquidated damages
Correct answer: Reliance damages
Reliance damages reimburse the non-breaching party for expenditures made in preparation for or in performance of the contract, restoring the pre-contract position.
Question 2: Under the Restatement (Second), a contract may be voidable for mutual mistake when the mistake concerns which type of fact?
- Future events or predictions
- A basic assumption of the contract that materially affects the agreed exchange (Correct answer)
- The legal effect of the contract terms
- Market conditions known to both parties
Correct answer: A basic assumption of the contract that materially affects the agreed exchange
Restatement (Second) § 152 allows avoidance for mutual mistake only when it concerns a basic assumption of the contract and materially affects the agreed exchange of performances.
Question 3: What distinguishes a condition precedent from a promise in contract law?
- A condition precedent creates a duty to perform; a promise does not
- Non-occurrence of a condition precedent excuses performance without liability; breach of a promise creates liability (Correct answer)
- Conditions precedent are always express; promises may be implied
- Only conditions precedent are subject to the statute of frauds
Correct answer: Non-occurrence of a condition precedent excuses performance without liability; breach of a promise creates liability
If a condition precedent does not occur, the obligor's duty never arises and no breach occurs; failure to perform a promise, however, constitutes a breach creating liability.
Question 4: A buyer rejects a non-conforming tender of goods under the UCC perfect tender rule. What right does the seller have if time remains in the contract period?
- No further rights; rejection is final
- The right to cure by making a conforming delivery within the contract time (Correct answer)
- The right to demand arbitration only
- The right to cancel the contract and sue immediately
Correct answer: The right to cure by making a conforming delivery within the contract time
UCC § 2-508 grants the seller a right to cure a non-conforming tender if the time for performance has not yet expired and the seller seasonably notifies the buyer.
Question 5: Which equitable remedy compels a party to perform its contractual obligations rather than paying damages?
- Rescission
- Restitution
- Specific performance (Correct answer)
- Injunction
Correct answer: Specific performance
Specific performance is an equitable remedy ordered when monetary damages are inadequate, most commonly in contracts for unique goods or real property.
Question 6: Under promissory estoppel, what must a plaintiff show to recover even without consideration?
- A written promise, reliance, and detriment
- A clear promise, foreseeable and actual reliance, and injustice that can only be avoided by enforcement (Correct answer)
- A promise supported by past consideration
- An implied promise arising from custom and usage
Correct answer: A clear promise, foreseeable and actual reliance, and injustice that can only be avoided by enforcement
Restatement (Second) § 90 requires a promise that the promisor should reasonably expect to induce reliance, actual reliance, and a showing that injustice can only be avoided by enforcement.
Question 7: A contract clause states that neither party shall be liable for 'acts of God.' A flood destroys the seller's warehouse. Under what doctrine would the seller also argue non-performance is excused at common law?
- Frustration of purpose
- Impossibility or impracticability (Correct answer)
- Unconscionability
- Anticipatory repudiation
Correct answer: Impossibility or impracticability
The doctrine of impossibility (or commercial impracticability under UCC § 2-615) excuses performance when an unforeseeable supervening event makes performance objectively impossible or commercially impracticable.
KS Bar Contracts 3
Which measure of damages is designed to put the non-breaching party in the position they were in before the contract was made?