NE Bar Contracts 2 — Questions and Answers
Question 1: Sam agrees to mow Linda's lawn for $100, but Linda later refuses to pay. Sam's most straightforward remedy is:
- Specific performance compelling Linda to pay
- Expectation damages equal to the contract price of $100 (Correct answer)
- Restitution measured by the market value of Sam's services
- Rescission and restitution of Sam's time
Correct answer: Expectation damages equal to the contract price of $100
Expectation damages place the non-breaching party in the position they would have been in had the contract been performed, which here equals the promised $100.
Question 2: An anticipatory repudiation occurs when:
- A party breaches after the other party has fully performed
- A party unequivocally indicates before the due date that it will not perform (Correct answer)
- A party demands a modification without legal justification
- A party fails to deliver goods within the agreed time period
Correct answer: A party unequivocally indicates before the due date that it will not perform
Anticipatory repudiation is an unequivocal statement or conduct by a party before performance is due indicating it will not perform its contractual obligations.
Question 3: The parol evidence rule generally prohibits introduction of:
- Evidence of trade usage to explain contract terms
- Prior or contemporaneous oral agreements that contradict a fully integrated written contract (Correct answer)
- Evidence of fraud in the inducement of a contract
- Subsequent oral modifications to a written contract
Correct answer: Prior or contemporaneous oral agreements that contradict a fully integrated written contract
The parol evidence rule bars evidence of prior or contemporaneous oral (or written) agreements that would vary or contradict the terms of a fully integrated written contract.
Question 4: Under which doctrine may a court refuse to enforce a contract whose terms are unreasonably favorable to one party and the other party had no meaningful choice?
- Frustration of purpose
- Unconscionability (Correct answer)
- Undue influence
- Misrepresentation
Correct answer: Unconscionability
Unconscionability doctrine allows courts to refuse to enforce or to limit oppressive contract terms when there is both procedural and substantive unconscionability.
Question 5: Alice contracts to buy Bob's house. Before closing, a tornado destroys the house. Assuming risk of loss had not yet passed, which doctrine would most likely excuse Alice's obligation to perform?
- Frustration of purpose
- Impossibility of performance (Correct answer)
- Anticipatory repudiation
- Mutual mistake
Correct answer: Impossibility of performance
Impossibility of performance excuses a party's duties when an unexpected event makes performance objectively impossible, such as the destruction of the specific subject matter.
Question 6: A third-party beneficiary's rights vest when:
- The contract is first formed between the promisor and promisee
- The beneficiary learns of and assents to the contract, changes position in reliance, or brings suit (Correct answer)
- The beneficiary is named in the written contract
- The promisor begins performance of the contract
Correct answer: The beneficiary learns of and assents to the contract, changes position in reliance, or brings suit
A third-party beneficiary's rights vest when the beneficiary learns of the contract and assents, materially changes position in reliance on it, or files suit to enforce it.
Question 7: Maria agrees to buy Carlos's car for $5,000 but later discovers it has a hidden engine defect Carlos knew about but did not disclose. Maria can most likely avoid the contract on the basis of:
- Mutual mistake
- Fraudulent misrepresentation (Correct answer)
- Unilateral mistake by Maria
- Lack of consideration
Correct answer: Fraudulent misrepresentation
Carlos's knowing concealment of a material defect constitutes fraudulent misrepresentation (or fraudulent concealment), which entitles Maria to rescind the contract.
NE Bar Contracts 2
Sam agrees to mow Linda's lawn for $100, but Linda later refuses to pay.
Sam's most straightforward remedy is: