OK Bar Contracts and Sales 3 — Questions and Answers
Question 1: A buyer contracts to purchase a rare painting, but before delivery the painting is destroyed in a fire through no fault of either party. The seller's duty to deliver is most likely:
- Enforceable, because sellers bear all risk of loss
- Discharged by impossibility, because the specific subject matter was destroyed (Correct answer)
- Suspended until the seller finds a comparable painting
- Converted into a duty to pay the buyer's expectation damages
Correct answer: Discharged by impossibility, because the specific subject matter was destroyed
Destruction of the specific, irreplaceable subject matter of a contract without fault discharges the duty under the doctrine of impossibility.
Question 2: A software company contracts to pay a developer $80,000, and the developer assigns her right to payment to a bank. The company, unaware of the assignment, pays the developer. What is the bank's position?
- The bank can compel the company to pay again
- The assignment is void because payment rights cannot be assigned
- The company is discharged, and the bank must recover from the developer (Correct answer)
- The bank automatically becomes a party to the original contract
Correct answer: The company is discharged, and the bank must recover from the developer
An obligor who pays the assignor without notice of the assignment is discharged, leaving the assignee to pursue the assignor.
Question 3: A wealthy woman contracts with a landscaper to beautify a park, intending the neighboring school to benefit from the view. The school sues when the landscaper breaches. The school will likely lose because it is:
- An incidental beneficiary with no enforcement rights (Correct answer)
- A donee beneficiary whose rights never vested
- A creditor beneficiary barred by the statute of frauds
- An assignee who failed to give notice
Correct answer: An incidental beneficiary with no enforcement rights
A party who benefits only indirectly from a contract is an incidental beneficiary and cannot enforce it.
Question 4: A buyer receives a delivery of 1,000 light fixtures and discovers 5% are defective after a reasonable inspection period passes without objection. Under the UCC, the buyer has most likely:
- Rejected the goods by silence
- Accepted the goods and must pay, subject to a remedy for the nonconformity (Correct answer)
- Revoked acceptance automatically
- Voided the entire contract
Correct answer: Accepted the goods and must pay, subject to a remedy for the nonconformity
Failure to reject within a reasonable time after opportunity to inspect constitutes acceptance, though the buyer retains damages remedies for nonconformity.
Question 5: A contract states that the buyer's duty to pay arises 'only if the goods pass a third-party quality inspection.' The inspection never occurs through no one's fault. The buyer's payment duty is:
- Absolute, because conditions are disfavored
- Discharged, because an express condition precedent was not satisfied (Correct answer)
- Enforceable, because substantial performance excuses conditions
- Suspended only until the buyer waives the condition
Correct answer: Discharged, because an express condition precedent was not satisfied
When an express condition precedent fails, the duty it qualifies never arises and is discharged.
Question 6: A minor purchases a car, uses it for six months, and then disaffirms the contract before turning 18. In most jurisdictions, the minor may:
- Not disaffirm because cars are necessaries
- Disaffirm and recover payments, returning the car in its current condition (Correct answer)
- Disaffirm only by paying the fair rental value of the car
- Not disaffirm because performance is already complete
Correct answer: Disaffirm and recover payments, returning the car in its current condition
The majority rule allows a minor to disaffirm and recover consideration paid, restoring only what remains of the goods received.
Question 7: A vendor mistakenly bids $10,000 on a project all other bidders priced near $100,000, and the offeree hurries to accept. The vendor's best defense to enforcement is:
- Mutual mistake about a basic assumption
- Unilateral mistake that the other party knew or should have known about (Correct answer)
- Frustration of purpose
- Lack of capacity
Correct answer: Unilateral mistake that the other party knew or should have known about
A unilateral mistake is a defense when the nonmistaken party knew or had reason to know of the error, as with an obviously erroneous bid.
OK Bar Contracts and Sales 3
A buyer contracts to purchase a rare painting, but before delivery the painting is destroyed in a fire through no fault of either party.
The seller's duty to deliver is most likely: