OR Bar Contracts and Sales 3 — Questions and Answers
Question 1: Under the common law Statute of Frauds, which contract MUST be evidenced by a signed writing?
- A contract for the sale of goods worth $400
- A contract that cannot be performed within one year of formation (Correct answer)
- An oral agreement between two merchants for services
- A contract for the sale of services worth $600
Correct answer: A contract that cannot be performed within one year of formation
The Statute of Frauds requires a writing for contracts that cannot possibly be performed within one year from the date of formation.
Question 2: A car dealer falsely tells a buyer the vehicle has never been in an accident, knowing this is false. The buyer purchases and later discovers the truth. The buyer may avoid the contract based on:
- Mutual mistake about the car's condition
- Fraudulent misrepresentation inducing assent (Correct answer)
- Constructive fraud due to the dealer's superior knowledge
- Material breach of an express warranty
Correct answer: Fraudulent misrepresentation inducing assent
Fraudulent misrepresentation occurs when a party knowingly makes a false statement of material fact intending to induce the other party's reliance.
Question 3: The parol evidence rule bars the introduction of prior or contemporaneous oral agreements to:
- Explain an ambiguous term in the written contract
- Prove a condition precedent to the contract's effectiveness
- Contradict a term in a fully integrated written contract (Correct answer)
- Show that a written contract was obtained by fraud
Correct answer: Contradict a term in a fully integrated written contract
The parol evidence rule prohibits using extrinsic evidence to contradict the terms of a fully integrated written agreement.
Question 4: A general contractor threatens to stop all work on a half-completed office building unless the owner pays $100,000 over the contract price. The owner pays under protest. This modification is:
- Enforceable because both parties consented in writing
- Voidable by the owner on grounds of economic duress (Correct answer)
- Enforceable because construction contracts can always be modified
- Void for lack of new consideration
Correct answer: Voidable by the owner on grounds of economic duress
Economic duress makes a modification voidable when one party wrongfully threatens to breach and the victim has no reasonable alternative.
Question 5: Both Alice and Bob believe they are contracting for 'the ship Peerless.' Unknown to either party, two ships share that name and each intends a different one. The result is:
- A contract at the price of the ship Alice intended
- No contract, because there is no mutual assent (Correct answer)
- A contract governed by the seller's intended meaning
- A voidable contract due to unilateral mistake
Correct answer: No contract, because there is no mutual assent
Under Raffles v. Wichelhaus, latent ambiguity about a material term with no objective basis to prefer one meaning over the other destroys mutual assent.
Question 6: A consumer contract buries arbitration-only, class-action-waiver, and prohibitively high fee provisions in fine print. A court is most likely to refuse enforcement on grounds of:
- The Statute of Frauds
- Unconscionability (Correct answer)
- Failure of consideration
- Fraudulent misrepresentation
Correct answer: Unconscionability
A clause that is both procedurally unfair (buried terms, unequal bargaining) and substantively oppressive (prohibitive fees) may be voided as unconscionable.
Question 7: Under UCC §2-201, which exception satisfies the Statute of Frauds for a $1,000 goods contract without a signed writing?
- A written confirmation sent by one merchant to another that is not objected to within 10 days (Correct answer)
- Witnesses to the oral agreement
- The seller's standard industry practice of oral contracting
- Market price evidence confirming the agreed amount
Correct answer: A written confirmation sent by one merchant to another that is not objected to within 10 days
The merchant confirmation rule satisfies the UCC SOF when a written confirmation is sent between merchants and the recipient fails to object within 10 days.
OR Bar Contracts and Sales 3
Under the common law Statute of Frauds, which contract MUST be evidenced by a signed writing?