OK Bar Performance 2 — Questions and Answers
Question 1: A builder completes a house but installs the wrong brand of pipe, which is of equal quality and hidden in the walls. Under common law, what is the builder entitled to recover?
- The contract price minus damages for the defect (Correct answer)
- Nothing, because performance was not perfect
- Only restitution for the value of materials
- The full contract price with no offset
Correct answer: The contract price minus damages for the defect
Under the substantial performance doctrine, a builder who performs in good faith with only minor deviations recovers the contract price less damages caused by the defect.
Question 2: Under UCC Article 2, a buyer receives a delivery of goods that fails to conform to the contract in any respect. What may the buyer generally do?
- Reject the whole, accept the whole, or accept any commercial unit and reject the rest (Correct answer)
- Only reject the entire shipment
- Only accept with a price reduction
- Nothing until giving the seller 30 days to cure
Correct answer: Reject the whole, accept the whole, or accept any commercial unit and reject the rest
The UCC perfect tender rule lets a buyer reject the whole, accept the whole, or accept any commercial unit or units and reject the rest when goods fail to conform in any respect.
Question 3: A contract requires a homeowner to pay a painter 'upon completion of the job to the homeowner's satisfaction.' The painter finishes competently, but the homeowner honestly dislikes the color choice the homeowner approved earlier. For aesthetic satisfaction clauses, courts generally apply which standard?
- A good-faith subjective standard of honest dissatisfaction (Correct answer)
- A reasonable-person objective standard only
- Strict liability for the payor
- No enforcement, since such clauses are illusory
Correct answer: A good-faith subjective standard of honest dissatisfaction
For contracts involving personal taste or aesthetics, satisfaction clauses are judged by a subjective good-faith standard, so honest dissatisfaction excuses payment.
Question 4: A seller tenders nonconforming goods before the contract delivery date, and the buyer rejects them. What is the seller's right under the UCC?
- To cure by making a conforming delivery within the original contract time after seasonable notice (Correct answer)
- No right to cure once goods are rejected
- To demand the buyer accept the goods with a discount
- To cancel the contract without liability
Correct answer: To cure by making a conforming delivery within the original contract time after seasonable notice
When the time for performance has not yet expired, the seller may seasonably notify the buyer of intent to cure and make a conforming delivery within the contract time.
Question 5: A contract states, 'Payment is due only if the shipment arrives by June 1.' The shipment arrives June 3 through no one's fault. What is the legal effect?
- The express condition failed, so the payment duty never arose (Correct answer)
- The payor must pay because the delay was minor
- The condition is excused as a forfeiture
- Substantial performance satisfies the condition
Correct answer: The express condition failed, so the payment duty never arose
Express conditions must be strictly satisfied, so failure of the condition discharges the duty it conditions regardless of fault or the delay's magnitude.
Question 6: In a construction contract silent on order of performance, which party must perform first?
- The builder must substantially complete the work before payment is due (Correct answer)
- The owner must pay before work begins
- Both must perform simultaneously
- Neither owes performance until a court orders it
Correct answer: The builder must substantially complete the work before payment is due
Where one performance takes time and the other (payment) can be instantaneous, the longer performance is a constructive condition precedent to payment.
Question 7: A buyer accepts goods and later discovers a latent defect that substantially impairs their value. The buyer may revoke acceptance if:
- Acceptance was induced by the difficulty of discovery or the seller's assurances, and revocation occurs within a reasonable time (Correct answer)
- The buyer simply changes their mind within 10 days
- The defect is trivial but annoying
- The seller refuses a price renegotiation
Correct answer: Acceptance was induced by the difficulty of discovery or the seller's assurances, and revocation occurs within a reasonable time
Revocation of acceptance requires substantial impairment plus acceptance based on the defect's difficulty of discovery or the seller's assurances, exercised within a reasonable time.
OK Bar Performance 2
A builder completes a house but installs the wrong brand of pipe, which is of equal quality and hidden in the walls.
Under common law, what is the builder entitled to recover?