NC Bar Contracts 3

Question 1

Which of the following is an example of promissory estoppel that could make an otherwise unenforceable promise binding?

Accepted Answer

A charitable pledge without consideration that the charity detrimentally relied upon by beginning construction

Answer

Promissory estoppel under Restatement § 90 makes a promise binding when the promisor reasonably expects it to induce reliance, the promisee does detrimentally rely, and injustice can only be avoided by enforcement—a charitable pledge with detrimental reliance is a classic example.

Question 2

A contract is formed between two parties, but one party was intoxicated at the time of signing and did not understand the nature of the transaction. Under North Carolina law, the intoxicated party's contract is best characterized as:

Accepted Answer

Voidable at the election of the intoxicated party

Answer

Contracts entered into while a party was so intoxicated as to be unable to understand the nature of the transaction are voidable at the election of the intoxicated party, not void, because the party retains the ability to ratify or disaffirm upon regaining capacity.

Question 3

Buyer and Seller enter a written contract for the sale of a car for $5,000. A clerical error causes the written contract to state $500. Under which doctrine could a court correct the written contract to reflect the true agreement?

Accepted Answer

Reformation

Answer

Reformation is the equitable remedy that allows a court to rewrite or correct a written contract to conform to the actual agreement of the parties when the writing does not accurately reflect their true intent due to mistake or fraud.

Question 4

Under the UCC, an acceptance that contains additional terms will generally:

Accepted Answer

Accept the offer, and the additional terms become proposals for addition to the contract between merchants

Answer

Under UCC § 2-207, a definite expression of acceptance operates as an acceptance even if it contains additional terms; between merchants, those additional terms become part of the contract unless the offer expressly limits acceptance to its terms, they materially alter the contract, or the offeror objects.

Question 5

A seller agrees to sell land to a buyer. Before closing, the seller sells and deeds the same property to a third party who pays fair value and has no notice of the prior contract. Under North Carolina's recording act (a notice statute), which party prevails?

Accepted Answer

The third party, because they are a bona fide purchaser without notice who recorded first

Answer

Under North Carolina's recording act (a notice/race-notice statute), a subsequent bona fide purchaser for value without notice of a prior unrecorded interest who records first prevails over the earlier unrecorded transfer.

NC Bar - North Carolina Bar Exam Practice Test

NC Bar - North Carolina Bar Exam Practice Test

NC Bar Contracts 3