Multistate Bar Exam Contracts 5 — Questions and Answers
Question 1: Seller and Buyer have a written agreement for sale of 200 tables. Buyer claims seller orally agreed to also paint the tables. Under the parol evidence rule, this oral promise is:
- Admissible to supplement an incomplete written agreement
- Inadmissible if the written contract is fully integrated (Correct answer)
- Always admissible to show the true intent of the parties
- Admissible to explain an ambiguous term in the writing
Correct answer: Inadmissible if the written contract is fully integrated
The parol evidence rule bars extrinsic evidence of prior or contemporaneous agreements that would add to or contradict a fully integrated written contract.
Question 2: A subcontractor's bid is accidentally $50,000 lower than intended due to a clerical error. The general contractor relies on the bid and is awarded the project. The subcontractor discovers the error and refuses to perform. A court will most likely:
- Enforce the bid under the doctrine of promissory estoppel
- Allow rescission because of the unilateral mistake if contractor knew or should have known of the error (Correct answer)
- Enforce the bid because unilateral mistake is never a defense
- Award the subcontractor quantum meruit for work actually done
Correct answer: Allow rescission because of the unilateral mistake if contractor knew or should have known of the error
A unilateral mistake may allow rescission when the non-mistaken party knew or should have known of the error — a $50,000 discrepancy from competitors' bids would put the contractor on notice.
Question 3: A contract for the sale of 1,000 custom uniforms is silent on the delivery schedule. Under the UCC, delivery is due:
- Within a commercially reasonable time after formation (Correct answer)
- On the first of the month following contract formation
- Immediately upon contract formation
- Only after buyer provides 30 days' written notice
Correct answer: Within a commercially reasonable time after formation
UCC § 2-309 provides that if no time for delivery is stated, delivery must occur within a commercially reasonable time after contract formation.
Question 4: Parties form an oral contract for the sale of a $600 antique vase. The seller sends the buyer a written confirmation naming the price and quantity; the buyer, also a merchant, receives it but says nothing for 2 weeks. Under the UCC merchant exception to the Statute of Frauds:
- The oral contract remains unenforceable because there is no signed writing from the buyer
- The written confirmation satisfies the Statute of Frauds against the buyer who failed to object within 10 days (Correct answer)
- The oral contract is enforceable only if part payment was made
- The seller's writing is insufficient without the buyer's signature
Correct answer: The written confirmation satisfies the Statute of Frauds against the buyer who failed to object within 10 days
Under UCC § 2-201(2), a written merchant confirmation sent to another merchant satisfies the Statute of Frauds against the recipient unless the recipient objects within 10 days of receipt.
Question 5: A party seeks consequential damages for lost profits after a breach. Under Hadley v. Baxendale, these damages are recoverable only if:
- The breaching party was negligent in performance
- The lost profits were foreseeable at the time of contracting (Correct answer)
- The non-breaching party mitigated all other damages
- The contract expressly provides for consequential damages
Correct answer: The lost profits were foreseeable at the time of contracting
Under the rule of Hadley v. Baxendale, consequential damages are recoverable only if they were within the reasonable contemplation of the parties as a probable result of breach at the time of contracting.
Question 6: An employer agrees to employ a worker 'for life.' The employee works for two years and is then fired without cause. Under the majority common law view, the employment agreement is:
- Enforceable as a lifetime contract with full expectation damages
- Terminable at will because lifetime contracts lack mutuality (Correct answer)
- Void under the Statute of Frauds as impossible to perform within one year
- Enforceable only if the employee gave independent consideration beyond services
Correct answer: Terminable at will because lifetime contracts lack mutuality
Under the majority view, 'employment for life' is terminable at will because it lacks mutuality — courts treat such agreements as indefinite employment absent extraordinary consideration.
Question 7: Alpha contracts with Beta to build a garage. Beta assigns the contract to Gamma, who does poor work. Alpha sues. Against whom can Alpha recover?
- Gamma only, because Beta delegated all liability to Gamma
- Beta only, because an assignment transfers liability back to the original party
- Both Beta and Gamma, because Beta remains liable after delegation (Correct answer)
- Neither, because the assignment extinguished the original contract
Correct answer: Both Beta and Gamma, because Beta remains liable after delegation
Delegation of duties does not relieve the delegating party (Beta) of liability — Beta remains secondarily liable, and Gamma is primarily liable as the party who actually performed.
Multistate Bar Exam Contracts 5
Seller and Buyer have a written agreement for sale of 200 tables.
Buyer claims seller orally agreed to also paint the tables.
Under the parol evidence rule, this oral promise is: