NC Bar Contracts 2

Question 1

A contractor builds a house but installs the wrong brand of pipe, though the pipe is of equal quality and value. The homeowner demands the contractor tear out all the walls and reinstall the correct brand. Which remedy concept best limits the homeowner's recovery?

Accepted Answer

The economic waste doctrine

Answer

The economic waste doctrine (applied in cases like Jacob & Youngs v. Kent) limits a non-breaching party to diminution in value damages rather than cost of completion when completion would involve unreasonable economic waste with no real benefit.

Question 2

Which of the following is the best example of a valid requirements contract under the UCC?

Accepted Answer

Buyer agrees to purchase all the widgets Buyer requires from Seller for one year.

Answer

A requirements contract under UCC § 2-306 is one in which the buyer agrees to purchase all of a particular good that the buyer requires from the seller, which provides sufficient consideration through the implied obligation of good faith.

Question 3

Under the parol evidence rule, which of the following extrinsic evidence is admissible to interpret a fully integrated written contract?

Accepted Answer

Course of dealing evidence to explain an ambiguous term

Answer

Course of dealing, course of performance, and trade usage are always admissible to explain or supplement a contract's terms, even when the contract is fully integrated, as long as such evidence explains rather than contradicts the written terms.

Question 4

A party seeks rescission of a contract based on mutual mistake. Which element is NOT required to establish mutual mistake?

Accepted Answer

The party seeking rescission bore the risk of the mistake under the contract.

Answer

For mutual mistake, the party seeking rescission must show a basic assumption, mutual mistake, and material effect, but if the party bore the risk of the mistake, rescission is not available—bearing the risk defeats, rather than supports, the claim.

Question 5

In a breach of contract action, which of the following damages is LEAST likely to be recoverable under the Hadley v. Baxendale foreseeability rule?

Accepted Answer

Highly unusual consequential damages unknown to the breaching party at contract formation

Answer

Under Hadley v. Baxendale, consequential damages are recoverable only if they were foreseeable at the time of contracting; highly unusual losses unknown to the breaching party at formation are not recoverable.

NC Bar - North Carolina Bar Exam Practice Test

NC Bar - North Carolina Bar Exam Practice Test

NC Bar Contracts 2