ND Bar Contracts and Commercial Law 2 — Questions and Answers
Question 1: Which doctrine allows a court to enforce a promise made without consideration when the promisor should reasonably have expected detrimental reliance?
- Unjust enrichment
- Promissory estoppel (Correct answer)
- Quasi-contract
- Specific performance
Correct answer: Promissory estoppel
Promissory estoppel substitutes for consideration when a party detrimentally and reasonably relies on a promise, making it unjust not to enforce it.
Question 2: A contract is voidable (not void) when:
- The subject matter is illegal
- One party lacked contractual capacity due to age (Correct answer)
- The contract was formed for an immoral purpose against public policy
- The contract requires commission of a crime
Correct answer: One party lacked contractual capacity due to age
A contract made by a minor is voidable at the minor's option, not automatically void, because it protects the minor who can ratify or disaffirm upon reaching majority.
Question 3: Under contract law, 'impossibility of performance' excuses a party's obligation when:
- Performance would be more expensive than anticipated
- The subject matter of the contract has been destroyed without the promisor's fault (Correct answer)
- A better opportunity arises after the contract is formed
- The other party's performance becomes less valuable
Correct answer: The subject matter of the contract has been destroyed without the promisor's fault
True impossibility requires that the specific subject matter necessary for performance no longer exists, through no fault of the breaching party.
Question 4: In a contract for the sale of a house, the seller's duty to perform is conditioned on the buyer obtaining financing. If the buyer cannot obtain financing, this is an example of:
- Anticipatory repudiation
- Impossibility
- A condition precedent that has failed (Correct answer)
- A material breach by the buyer
Correct answer: A condition precedent that has failed
A condition precedent must occur before a party's duty to perform arises; if financing is not obtained, the seller's duty to convey title never becomes absolute.
Question 5: Which measure of damages places the non-breaching party in the position they would have been in had the contract been fully performed?
- Reliance damages
- Restitution damages
- Expectation damages (Correct answer)
- Nominal damages
Correct answer: Expectation damages
Expectation damages (also called benefit-of-the-bargain damages) are designed to give the non-breaching party the economic benefit they expected from full performance.
Question 6: Under UCC Article 2, if a seller delivers non-conforming goods, the buyer's rights include all of the following EXCEPT:
- Accept the goods and sue for damages
- Reject all of the goods
- Accept any commercial unit or units and reject the rest
- Demand full rescission regardless of the severity of the non-conformity (Correct answer)
Correct answer: Demand full rescission regardless of the severity of the non-conformity
While the buyer has broad rejection rights under the perfect tender rule, the UCC does not allow a buyer to automatically rescind the entire contract without first giving the seller a right to cure in certain circumstances.
Question 7: A modification to an existing common law contract requires:
- New consideration (Correct answer)
- Written consent of both parties
- Notarization
- Approval by the original offeror only
Correct answer: New consideration
Under common law, a modification to an existing contract requires new consideration because the pre-existing duty rule prevents using performance of an existing obligation as consideration.
ND Bar Contracts and Commercial Law 2
Which doctrine allows a court to enforce a promise made without consideration when the promisor should reasonably have expected detrimental reliance?