OH Bar Contracts and Sales 3 — Questions and Answers
Question 1: A buyer sends a purchase order for 1,000 bolts. The seller's acknowledgment form accepts but adds an arbitration clause. Both parties are merchants and the buyer does not object. Under UCC 2-207, is the arbitration clause part of the contract?
- It becomes part of the contract unless it materially alters the deal, the offer limits acceptance to its terms, or the buyer objects (Correct answer)
- Never, because additional terms are always mere proposals
- Always, because the buyer failed to object within a reasonable time
- No contract is formed because the forms do not match
Correct answer: It becomes part of the contract unless it materially alters the deal, the offer limits acceptance to its terms, or the buyer objects
Between merchants, additional terms become part of the contract under UCC 2-207(2) unless they materially alter it, the offer limits acceptance, or objection is made; arbitration clauses often count as material alterations.
Question 2: A singer contracts to perform at a theater on July 4. On June 1, she tells the theater, "I will not perform." What may the theater do?
- Treat the anticipatory repudiation as a breach and sue immediately, or await performance for a commercially reasonable time (Correct answer)
- Do nothing until July 4 because breach cannot occur before the performance date
- Only suspend its own performance without any right to sue
- Compel her to perform via specific performance
Correct answer: Treat the anticipatory repudiation as a breach and sue immediately, or await performance for a commercially reasonable time
An unequivocal anticipatory repudiation allows the non-breaching party to sue immediately, suspend performance, or await performance for a reasonable time.
Question 3: A farmer contracts to sell his specific crop of corn from his own fields. A drought destroys the entire crop without the farmer's fault. What is the farmer's best defense to a breach claim?
- Impossibility/impracticability because the contract contemplated crops from identified land destroyed without fault (Correct answer)
- Frustration of purpose because farming became unprofitable
- Mutual mistake about future weather
- Unconscionability of the price term
Correct answer: Impossibility/impracticability because the contract contemplated crops from identified land destroyed without fault
When a contract requires goods from an identified source that is destroyed without fault, performance is excused by impracticability under UCC 2-613/2-615 principles.
Question 4: A 17-year-old buys a car on credit, drives it for six months, then disaffirms the contract. In most jurisdictions applying the majority rule, what is the result?
- The minor may disaffirm and recover payments, returning the car in its current condition (Correct answer)
- The minor is bound because a car is a necessity
- The minor must pay the full contract price minus depreciation
- Disaffirmance is barred after any use of the goods
Correct answer: The minor may disaffirm and recover payments, returning the car in its current condition
Under the majority rule, a minor may disaffirm a contract for non-necessities and need only return the consideration in whatever condition it remains.
Question 5: A debtor honestly disputes the amount owed to a creditor and sends a check for less than the claimed amount marked "payment in full," which the creditor cashes. What is the effect?
- An accord and satisfaction discharges the disputed debt (Correct answer)
- The creditor may still sue for the balance because partial payment is not consideration
- The check is void as against public policy
- A novation substitutes a new obligation
Correct answer: An accord and satisfaction discharges the disputed debt
Cashing a full-payment check tendered in good faith on a genuinely disputed claim creates an accord and satisfaction discharging the balance.
Question 6: A contract requires a builder to construct a house "to the owner's personal satisfaction." The builder completes the work competently, but the owner honestly claims dissatisfaction. For aesthetic-taste contracts, what standard applies to the owner's rejection?
- A subjective good-faith standard, so honest dissatisfaction defeats recovery on the contract (Correct answer)
- An objective reasonable-person standard in all cases
- Satisfaction clauses are unenforceable as illusory
- The owner must accept if performance is substantial
Correct answer: A subjective good-faith standard, so honest dissatisfaction defeats recovery on the contract
For contracts involving personal taste or judgment, satisfaction clauses are measured by honest, good-faith subjective dissatisfaction.
Question 7: A seller of a business promises not to compete within the same city for two years. The buyer later sues to enforce the covenant. How will a court most likely analyze it?
- Enforce it if reasonable in scope, geography, and duration to protect a legitimate business interest (Correct answer)
- Refuse enforcement because all restraints on trade are illegal
- Enforce it automatically because it was bargained for
- Convert it to a money judgment only
Correct answer: Enforce it if reasonable in scope, geography, and duration to protect a legitimate business interest
Covenants not to compete ancillary to the sale of a business are enforceable if reasonably limited in time, territory, and scope.
OH Bar Contracts and Sales 3
A buyer sends a purchase order for 1,000 bolts.
The seller's acknowledgment form accepts but adds an arbitration clause.
Both parties are merchants and the buyer does not object.
Under UCC 2-207, is the arbitration clause part of the contract?