MPOETC Contract Law & Commercial Transactions 5 — Questions and Answers
Question 1: A contractor begins renovating a house but stops after the owner verbally says 'I'll pay you extra to finish faster.' Later the owner refuses to pay the extra amount. This promise is likely unenforceable because:
- Oral contracts for home improvement are always void
- The contractor was already obligated to finish, providing no new consideration (Correct answer)
- The Statute of Frauds requires all employment contracts in writing
- The contractor should have demanded written confirmation
Correct answer: The contractor was already obligated to finish, providing no new consideration
Under the pre-existing duty rule, a promise to pay more for performance of an existing legal obligation lacks consideration and is unenforceable at common law.
Question 2: Which of the following would constitute a valid 'accord and satisfaction' resolving a contract dispute?
- One party threatens to sue unless the other pays
- Both parties agree to accept different performance to discharge the original obligation, and the new performance is completed (Correct answer)
- A court orders a settlement amount
- One party unilaterally decides to accept less
Correct answer: Both parties agree to accept different performance to discharge the original obligation, and the new performance is completed
Accord and satisfaction requires mutual agreement on substitute performance (accord) followed by completion of that substitute performance (satisfaction).
Question 3: In Pennsylvania, the 'plain language' requirement for consumer contracts primarily means:
- Contracts must be written in English only
- Consumer contracts must use clear, understandable language that average consumers can comprehend (Correct answer)
- Contracts cannot exceed one page
- Only licensed attorneys may draft consumer contracts
Correct answer: Consumer contracts must use clear, understandable language that average consumers can comprehend
Pennsylvania's Plain Language Consumer Contract Act requires that consumer contracts be written in clear, simple language so that average consumers can understand their rights and obligations.
Question 4: A police officer is taking a theft report where a person claims they paid for goods via wire transfer but never received them. The relevant UCC rule for risk of loss in a shipment contract passes risk to the buyer when:
- The buyer pays for the goods
- The seller delivers the goods to a carrier (Correct answer)
- The goods arrive at the buyer's location
- The buyer inspects and accepts the goods
Correct answer: The seller delivers the goods to a carrier
Under UCC §2-509, in a shipment contract, risk of loss passes to the buyer when the seller duly delivers the goods to the carrier.
Question 5: A car dealership adds a clause in small print waiving all implied warranties. Under the UCC, to effectively disclaim the implied warranty of merchantability, the disclaimer must:
- Be written by an attorney
- Mention 'merchantability' specifically and be conspicuous (Correct answer)
- Be approved by the state attorney general
- Be included as a separate addendum to the contract
Correct answer: Mention 'merchantability' specifically and be conspicuous
UCC §2-316 requires that a disclaimer of the implied warranty of merchantability specifically use the word 'merchantability' and be conspicuous to be effective.
Question 6: When investigating a consumer fraud complaint, an officer learns the victim signed a contract due to a salesperson's high-pressure tactics exploiting the victim's emotional distress over a recent bereavement. This may constitute:
- Bilateral mistake
- Undue influence or duress (Correct answer)
- Promissory estoppel
- Mutual assent
Correct answer: Undue influence or duress
Undue influence involves overcoming a person's free will through improper pressure, often by exploiting a position of trust or a vulnerable emotional state.
Question 7: A contract includes a 'time is of the essence' clause. If one party delivers performance one day late, the legal consequence is:
- A minor breach entitling the other party to nominal damages only
- A material breach allowing the other party to treat the contract as terminated (Correct answer)
- No breach because one day is a de minimis delay
- A suspended obligation pending renegotiation
Correct answer: A material breach allowing the other party to treat the contract as terminated
A 'time is of the essence' clause makes deadlines conditions of performance; missing the deadline even by one day constitutes a material breach entitling the other party to rescind.
MPOETC Contract Law & Commercial Transactions 5
A contractor begins renovating a house but stops after the owner verbally says 'I'll pay you extra to finish faster.' Later the owner refuses to pay the extra amount.
This promise is likely unenforceable because: