NC Bar Contracts 1 — Questions and Answers
Question 1: Under the UCC, a merchant's firm offer is irrevocable for the stated period even without consideration if it is in writing. What is the maximum period of irrevocability for a merchant's firm offer under the UCC?
- 30 days
- 60 days
- 90 days (Correct answer)
- 6 months
Correct answer: 90 days
Under UCC § 2-205, a merchant's firm offer is irrevocable for the time stated or, if no time is stated, for a reasonable time, but in no event may such period of irrevocability exceed 3 months (90 days).
Question 2: A buyer and seller enter a contract for the sale of 500 widgets. The seller ships 490 widgets and claims substantial performance. Under the UCC's perfect tender rule, which of the following is correct?
- The buyer must accept because substantial performance applies to goods contracts.
- The buyer may reject the entire shipment because the tender is non-conforming. (Correct answer)
- The buyer must accept 490 widgets and may only sue for the price difference.
- The buyer may reject only the missing 10 widgets.
Correct answer: The buyer may reject the entire shipment because the tender is non-conforming.
Under UCC § 2-601, the perfect tender rule requires that goods conform exactly to the contract; if they do not, the buyer may reject the whole, accept the whole, or accept any commercial unit and reject the rest.
Question 3: Under common law contract principles, which of the following modifications would be enforceable without new consideration?
- An oral modification to a written contract for the sale of real property
- A modification under seal by both parties (Correct answer)
- A written modification that both parties agree to in good faith to accommodate unanticipated circumstances
- A unilateral promise to perform an existing contractual obligation
Correct answer: A modification under seal by both parties
At common law, a modification under seal is enforceable without consideration because the seal itself substitutes for consideration in jurisdictions that recognize it.
Question 4: A contract contains the following clause: 'All disputes shall be resolved by arbitration in Charlotte, NC.' A party sues in court instead. Under North Carolina law, how should the court treat this clause?
- Void as against public policy since courts cannot be divested of jurisdiction.
- Enforceable, and the court should compel arbitration under the NC Revised Uniform Arbitration Act. (Correct answer)
- Unenforceable because arbitration clauses require separate consideration.
- Void unless the clause was negotiated by attorneys for both sides.
Correct answer: Enforceable, and the court should compel arbitration under the NC Revised Uniform Arbitration Act.
North Carolina has adopted the Revised Uniform Arbitration Act (NCRUAA), which enforces valid arbitration agreements and requires courts to compel arbitration when a valid agreement exists and a party refuses to arbitrate.
Question 5: Under the mailbox rule, when does an acceptance become effective?
- When the offeror receives the acceptance
- When the offeree deposits the acceptance in the mail (Correct answer)
- When the offeree intends to accept
- When a reasonable person would have received the acceptance
Correct answer: When the offeree deposits the acceptance in the mail
Under the mailbox rule (also called the dispatch rule), an acceptance is effective upon proper dispatch—i.e., when the offeree mails the acceptance, not when the offeror receives it.
Question 6: Seller contracts to deliver 1,000 pounds of tobacco to Buyer on June 1. On May 15, Seller clearly communicates that she will not perform. Which doctrine allows Buyer to sue immediately without waiting until June 1?
- Promissory estoppel
- Anticipatory repudiation (Correct answer)
- Frustration of purpose
- Impossibility of performance
Correct answer: Anticipatory repudiation
Anticipatory repudiation occurs when a party clearly and unequivocally indicates before the performance date that it will not perform, entitling the non-breaching party to treat the contract as immediately breached and sue at once.
Question 7: Under the Statute of Frauds in North Carolina, which of the following contracts must be in writing to be enforceable?
- A contract for services to be performed within one year
- A contract for the sale of goods worth $300
- A contract for the sale of real property (Correct answer)
- A contract for a lease of personal property for 6 months
Correct answer: A contract for the sale of real property
Under North Carolina's Statute of Frauds (N.C.G.S. § 22-2), contracts for the sale of real property must be in writing and signed by the party to be charged to be enforceable.
NC Bar Contracts 1
Under the UCC, a merchant's firm offer is irrevocable for the stated period even without consideration if it is in writing.
What is the maximum period of irrevocability for a merchant's firm offer under the UCC?