MD Bar Contracts and Sales 2 — Questions and Answers
Question 1: A Maryland retailer emails a wholesaler: "Will sell you 500 widgets at $10 each, offer firm for 10 days." Both are merchants and the email is signed. On day 5, the wholesaler tries to accept, but the retailer had revoked on day 3. Is a contract formed?
- Yes, because a signed merchant's firm offer under UCC 2-205 is irrevocable for the stated period (Correct answer)
- No, because no consideration was given to keep the offer open
- No, because an offer is always revocable before acceptance
- Yes, but only if the wholesaler had begun performance before revocation
Correct answer: Yes, because a signed merchant's firm offer under UCC 2-205 is irrevocable for the stated period
Under UCC 2-205, a signed writing by a merchant giving assurance an offer will be held open is irrevocable without consideration for the stated time, up to three months.
Question 2: A homeowner promises to pay a landscaper $5,000 for work the landscaper voluntarily completed last month. The landscaper sues when the homeowner refuses to pay. What is the homeowner's best defense?
- The promise lacks consideration because past consideration is not valid consideration (Correct answer)
- The statute of frauds bars enforcement of oral service contracts
- The landscaper failed to mitigate damages
- The promise is unenforceable because it was not in writing
Correct answer: The promise lacks consideration because past consideration is not valid consideration
A promise made in exchange for services already performed is supported only by past consideration, which is generally insufficient to form a contract.
Question 3: Buyer and Seller sign a written contract for the sale of land containing a merger clause. Buyer later claims Seller orally promised, before signing, to repave the driveway. Under the parol evidence rule, may Buyer introduce this oral promise?
- No, because a fully integrated agreement bars evidence of prior oral terms that contradict or supplement it (Correct answer)
- Yes, because oral promises are always admissible to explain a writing
- Yes, because the parol evidence rule applies only to sales of goods
- No, because the statute of frauds bars all oral evidence concerning land
Correct answer: No, because a fully integrated agreement bars evidence of prior oral terms that contradict or supplement it
A merger clause indicates full integration, and the parol evidence rule excludes prior or contemporaneous oral terms offered to supplement or contradict a fully integrated writing.
Question 4: A contractor agrees to build a deck for $20,000. Midway through, the contractor demands $5,000 more due to rising lumber costs, and the homeowner agrees. Under common law, is the modification enforceable?
- No, unless supported by new consideration or unanticipated circumstances making it fair and equitable (Correct answer)
- Yes, because contract modifications never require consideration
- Yes, because the homeowner's agreement constitutes a waiver
- No, because all modifications must be in writing
Correct answer: No, unless supported by new consideration or unanticipated circumstances making it fair and equitable
Under the common law pre-existing duty rule, a modification requires new consideration unless fair and equitable in light of unanticipated circumstances.
Question 5: A merchant buyer sends a purchase order for goods, and the merchant seller responds with a confirmation adding an arbitration clause. Neither form limits acceptance to its own terms and the buyer does not object. Under UCC 2-207, is the arbitration clause part of the contract?
- It becomes part of the contract unless it materially alters the agreement or the buyer objects within a reasonable time (Correct answer)
- It is automatically part of the contract because the buyer failed to object
- It is never part of the contract because acceptance must mirror the offer
- The contract fails entirely because the forms do not match
Correct answer: It becomes part of the contract unless it materially alters the agreement or the buyer objects within a reasonable time
Between merchants, additional terms in an acceptance become part of the contract unless they materially alter it, the offer limits acceptance to its terms, or objection is made; arbitration clauses are often held to be material alterations.
Question 6: A buyer contracts to purchase a rare painting for $50,000. The seller repudiates before delivery. Which remedy is the buyer most likely to obtain?
- Specific performance, because the painting is unique and money damages are inadequate (Correct answer)
- Punitive damages for the seller's willful breach
- Rescission and restitution only
- Nominal damages, because no market price exists
Correct answer: Specific performance, because the painting is unique and money damages are inadequate
Specific performance is available for the sale of unique goods, such as rare artwork, where legal damages are inadequate.
Question 7: An uncle promises his nephew $10,000 if the nephew graduates from law school. Relying on this, the nephew enrolls and incurs debt, but the uncle revokes before graduation. What is the nephew's best theory of recovery if consideration is found lacking?
- Promissory estoppel, because he reasonably and foreseeably relied to his detriment (Correct answer)
- Quasi-contract, because the uncle was unjustly enriched
- Third-party beneficiary rights under the enrollment contract
- Anticipatory repudiation entitling him to full expectation damages automatically
Correct answer: Promissory estoppel, because he reasonably and foreseeably relied to his detriment
Promissory estoppel permits enforcement of a promise where the promisor should reasonably expect reliance, the promisee relies to his detriment, and injustice can be avoided only by enforcement.
MD Bar Contracts and Sales 2
A Maryland retailer emails a wholesaler: "Will sell you 500 widgets at $10 each, offer firm for 10 days." Both are merchants and the email is signed.
On day 5, the wholesaler tries to accept, but the retailer had revoked on day 3.
Is a contract formed?