Multistate Bar Exam Contracts 3 — Questions and Answers
Question 1: A party enters a contract under duress caused by the other party's improper threat. The contract is:
- Void ab initio
- Voidable at the option of the party under duress (Correct answer)
- Enforceable because pressure is inherent in negotiations
- Voidable at the option of either party
Correct answer: Voidable at the option of the party under duress
A contract induced by duress is voidable — not void — at the election of the party who was coerced, because the agreement lacked genuine assent.
Question 2: Seller contracts to sell 1,000 barrels of oil to Buyer for $50/barrel. Before delivery, a government embargo makes performance illegal. Under the doctrine of impossibility/impracticability, the likely result is:
- Seller must perform or pay expectation damages
- The contract is discharged and neither party is liable (Correct answer)
- Buyer may sue for breach because price risk was seller's
- The contract is reformed to reflect market price
Correct answer: The contract is discharged and neither party is liable
Supervening illegality (a government embargo) renders performance objectively impossible, discharging both parties' obligations under the doctrine of impossibility.
Question 3: An offer states: 'I'll sell you my car for $5,000. Accept by Friday noon.' On Thursday, the offeree sends a letter saying 'I accept, but please include a full tank of gas.' This response is:
- A valid acceptance creating a contract on the original terms
- A counter-offer that terminates the original offer (Correct answer)
- A valid acceptance with a mere request that doesn't affect the contract
- An acceptance of a unilateral contract
Correct answer: A counter-offer that terminates the original offer
Under the common law mirror-image rule, an acceptance that adds new terms is a counter-offer, which rejects and terminates the original offer.
Question 4: A contractor agrees to build a bridge for a county. Halfway through construction, the county assigns its right to receive the completed bridge to a neighboring township. The contractor objects. The assignment is:
- Valid because contract rights are freely assignable (Correct answer)
- Invalid because it materially increases the contractor's burden
- Valid but the county remains secondarily liable
- Invalid because government contracts cannot be assigned
Correct answer: Valid because contract rights are freely assignable
The right to receive performance (the completed bridge) can be freely assigned to a third party; assignment of rights to receive a fixed performance generally does not materially burden the obligor.
Question 5: A homeowner hires a painter for $2,000 to paint her house. The painter delegates the job to his assistant without the homeowner's consent. The homeowner objects to the assistant. This delegation is:
- Permissible because all duties may be delegated freely
- Impermissible because painting involves personal skill and trust (Correct answer)
- Permissible only if the assistant is equally qualified
- Void because service contracts cannot be delegated
Correct answer: Impermissible because painting involves personal skill and trust
Duties requiring personal skill, taste, or judgment — such as painting a home where the customer relied on the specific contractor — cannot be delegated without the obligee's consent.
Question 6: Seller contracts to deliver custom software by August 1 for $50,000. The contract is silent as to whether payment is due before or after delivery. Under the UCC or common law, when is payment due?
- Payment is due before delivery because seller bears creation risk
- Payment is due simultaneously with delivery as concurrent conditions (Correct answer)
- Payment is due 30 days after delivery by industry custom
- Payment is due when the buyer signs the acceptance certificate
Correct answer: Payment is due simultaneously with delivery as concurrent conditions
Under common law and the UCC, where the order of performance is not specified, duties are treated as concurrent conditions — each party must tender performance at the same time.
Question 7: A non-compete agreement prevents an employee from working in the industry for 10 years nationwide. A court finds the restriction unreasonably broad. Under the 'blue pencil' doctrine, the court may:
- Void the entire non-compete agreement
- Enforce the agreement exactly as written
- Modify the agreement to make it reasonable and enforceable (Correct answer)
- Enforce only the geographic restriction but not the time limit
Correct answer: Modify the agreement to make it reasonable and enforceable
The blue pencil (or reformation) doctrine allows courts to modify an unreasonably broad restrictive covenant to the extent necessary to make it reasonable rather than voiding it entirely.
Multistate Bar Exam Contracts 3
A party enters a contract under duress caused by the other party's improper threat.
The contract is: