MI Bar Contracts and Sales 2 — Questions and Answers
Question 1: A merchant sends a signed written offer to sell 500 widgets, stating the offer will remain open for 90 days. Under UCC Article 2, how long is the offer irrevocable without consideration?
- 90 days as stated
- Only 3 months maximum, so 90 days here
- No longer than 3 months, so irrevocability caps at 3 months even if a longer period is stated (Correct answer)
- The offer is revocable at any time without consideration
Correct answer: No longer than 3 months, so irrevocability caps at 3 months even if a longer period is stated
A merchant's firm offer under UCC 2-205 is irrevocable for the stated time but never longer than 3 months without consideration.
Question 2: A homeowner promises to pay a painter $5,000 after the painter has already finished painting the house as a surprise gift. Is the promise enforceable under the majority rule?
- Yes, because the painter conferred a benefit
- No, because past consideration is not valid consideration (Correct answer)
- Yes, under promissory estoppel automatically
- No, unless the promise is notarized
Correct answer: No, because past consideration is not valid consideration
Past consideration is not bargained-for and generally cannot support a contract.
Question 3: A buyer and seller orally agree to the sale of goods for $450. The seller later refuses to perform, citing the Statute of Frauds. What result?
- The contract is unenforceable because all sales of goods must be in writing
- The contract is enforceable because it is under the $500 UCC threshold (Correct answer)
- The contract is unenforceable unless partially performed
- The contract is enforceable only if both parties are merchants
Correct answer: The contract is enforceable because it is under the $500 UCC threshold
UCC 2-201 requires a writing only for sales of goods priced at $500 or more.
Question 4: An offeree mails an acceptance, then immediately sends a faster rejection that arrives first. The offeror reads the rejection and sells to another party. What governs?
- The acceptance controls because of the mailbox rule, but the offeree is estopped if the offeror relied on the rejection (Correct answer)
- The rejection always controls because it arrived first
- Neither communication is effective and the offer lapses
- The acceptance is void because it was overtaken
Correct answer: The acceptance controls because of the mailbox rule, but the offeree is estopped if the offeror relied on the rejection
Under the mailbox rule the acceptance was effective on dispatch, but reliance on the overtaking rejection estops the offeree from enforcing the contract.
Question 5: A contract for the sale of a rare painting is silent on risk of loss, and the seller is not a merchant. The painting is destroyed by fire after tender of delivery but before the buyer picks it up. Who bears the loss?
- The seller, because the buyer never took possession
- The buyer, because risk passed on tender of delivery by a non-merchant seller (Correct answer)
- The seller, because risk always passes only on receipt
- The parties share the loss equally
Correct answer: The buyer, because risk passed on tender of delivery by a non-merchant seller
When the seller is a non-merchant, risk of loss passes to the buyer upon tender of delivery under UCC 2-509(3).
Question 6: A general contractor uses a subcontractor's bid to compute its own bid and wins the project. The subcontractor then tries to revoke. What doctrine likely binds the subcontractor?
- Unilateral contract formation
- Promissory estoppel making the bid irrevocable for a reasonable time (Correct answer)
- The merchant firm offer rule
- Accord and satisfaction
Correct answer: Promissory estoppel making the bid irrevocable for a reasonable time
Under Drennan-style promissory estoppel, foreseeable reliance on a sub-bid makes it irrevocable for a reasonable time.
Question 7: A buyer accepts nonconforming goods and wants to sue for breach of warranty. What must the buyer do to preserve the claim under the UCC?
- Revoke acceptance immediately
- Notify the seller of the breach within a reasonable time after discovering it (Correct answer)
- Return the goods within 10 days
- File suit within 30 days of delivery
Correct answer: Notify the seller of the breach within a reasonable time after discovering it
UCC 2-607(3)(a) bars any remedy unless the buyer notifies the seller of breach within a reasonable time after discovery.
MI Bar Contracts and Sales 2
A merchant sends a signed written offer to sell 500 widgets, stating the offer will remain open for 90 days.
Under UCC Article 2, how long is the offer irrevocable without consideration?