RI Bar Contracts 2 — Questions and Answers
Question 1: Under the UCC, a merchant's firm offer is irrevocable for how long if no time period is stated?
- 30 days
- 60 days
- 90 days
- A reasonable time not to exceed 3 months (Correct answer)
Correct answer: A reasonable time not to exceed 3 months
UCC § 2-205 makes a merchant's signed, written firm offer irrevocable for a reasonable time not exceeding 3 months even without consideration.
Question 2: Which doctrine prevents a party from asserting the Statute of Frauds when the other party has detrimentally relied on the oral contract?
- Promissory estoppel (Correct answer)
- Quasi-contract
- Unjust enrichment
- Accord and satisfaction
Correct answer: Promissory estoppel
Promissory estoppel can bar the Statute of Frauds defense when a party detrimentally relies on an oral promise to their detriment.
Question 3: A contractor builds a garage on the wrong lot due to a mutual mistake. The most likely remedy is:
- Compensatory damages for lost profits
- Rescission of the contract (Correct answer)
- Specific performance
- Liquidated damages
Correct answer: Rescission of the contract
Mutual mistake about a basic assumption material to the contract typically entitles the adversely affected party to rescission.
Question 4: Which of the following best describes an 'output contract' under the UCC?
- Buyer agrees to purchase all goods the seller produces (Correct answer)
- Seller agrees to supply all goods the buyer requires
- Parties fix both quantity and price at formation
- A contract where quantity is determined by auction
Correct answer: Buyer agrees to purchase all goods the seller produces
An output contract obligates the buyer to purchase all of the seller's production, with quantity measured by actual output.
Question 5: When is anticipatory repudiation retracted under contract law?
- Never; once repudiated the contract is void
- Before the other party materially changes position in reliance on it (Correct answer)
- Only with written notice to the breaching party
- After the innocent party elects to treat it as a total breach
Correct answer: Before the other party materially changes position in reliance on it
A repudiating party may retract the repudiation until the aggrieved party materially changes position, accepts it as final, or commences suit.
Question 6: Under the perfect tender rule applicable to single-delivery contracts, if goods fail to conform in any respect, the buyer may:
- Accept, reject, or accept any commercial unit and reject the rest (Correct answer)
- Only reject the entire shipment
- Only accept the entire shipment and sue for damages
- Retain the goods without payment
Correct answer: Accept, reject, or accept any commercial unit and reject the rest
UCC § 2-601 gives the buyer the right to accept the whole, reject the whole, or accept conforming commercial units and reject the rest.
Question 7: A contract clause specifying $500 per day for late delivery is enforceable as liquidated damages when:
- The amount is a reasonable estimate of actual harm and damages are difficult to calculate (Correct answer)
- The amount exceeds probable damages to deter breach
- The clause is labeled 'penalty' in the contract
- Both parties are merchants under the UCC
Correct answer: The amount is a reasonable estimate of actual harm and damages are difficult to calculate
Liquidated damages clauses are enforceable when the stipulated amount is a reasonable forecast of actual harm and actual damages would be difficult to prove.
RI Bar Contracts 2
Under the UCC, a merchant's firm offer is irrevocable for how long if no time period is stated?