VT Bar Contracts and Commercial Law 2 — Questions and Answers
Question 1: Under UCC Article 2, when a merchant sends a written confirmation of an oral agreement to another merchant and the recipient fails to object within 10 days, what is the effect?
- The confirmation is treated as a counteroffer
- The terms of the confirmation become part of the contract even without the recipient's signature (Correct answer)
- The oral agreement is rendered unenforceable
- The recipient must send a written acceptance within 10 days
Correct answer: The terms of the confirmation become part of the contract even without the recipient's signature
Under UCC §2-201(2), a written confirmation sent between merchants binds the recipient if they fail to object in writing within 10 days of receipt.
Question 2: Pauline offers to sell her car to Marcus for $5,000, stating the offer is open for two weeks. After five days, Pauline sells the car to another buyer. When Marcus attempts to accept on day eight, which is correct?
- Marcus's acceptance is valid because the offer period had not expired
- The offer was revoked when Pauline sold the car to another buyer (Correct answer)
- Pauline breached a firm offer under the UCC
- Marcus can enforce the contract under promissory estoppel
Correct answer: The offer was revoked when Pauline sold the car to another buyer
An offer is implicitly revoked when the offeror takes action inconsistent with keeping the offer open, and the offeree learns of that action before accepting.
Question 3: A contract clause states: 'All disputes arising under this agreement shall be resolved by binding arbitration.' Under Vermont law, which argument is most likely to render this clause unenforceable?
- The clause is a non-compete and violates public policy
- The clause was added after contract formation without new consideration (Correct answer)
- Arbitration clauses are generally void under Vermont statute
- The clause fails for lack of mutuality because only one party may bring claims
Correct answer: The clause was added after contract formation without new consideration
A modification to an existing contract must be supported by new consideration to be enforceable unless it falls within UCC rules for merchants.
Question 4: Under the Restatement (Second) of Contracts, anticipatory repudiation occurs when a party:
- Fails to tender performance on the due date
- Unequivocally indicates before the performance date that they will not perform (Correct answer)
- Requests a modification of the contract terms
- Partially performs but then stops without explanation
Correct answer: Unequivocally indicates before the performance date that they will not perform
Anticipatory repudiation requires a clear and unequivocal statement or conduct made before performance is due indicating the party will not perform.
Question 5: Sally contracts to paint Bob's house for $3,000. After completing 75% of the work, Sally abandons the job. Bob hires another painter who completes the work for $1,200. Under the doctrine of substantial performance, Bob owes Sally:
- Nothing, because Sally breached the contract
- $3,000 minus the $1,200 completion cost (Correct answer)
- $2,250 reflecting 75% of the contract price
- $3,000 minus any damages Bob can prove
Correct answer: $3,000 minus the $1,200 completion cost
Under the substantial performance doctrine, Bob owes the contract price minus the cost to remedy the deficiency caused by Sally's breach.
Question 6: Under UCC Article 2, when a buyer rightfully rejects non-conforming goods, what obligation does the buyer have regarding the rejected goods?
- The buyer must return the goods to the seller at the buyer's expense
- The buyer must hold the goods with reasonable care at the seller's disposition (Correct answer)
- The buyer may dispose of the goods immediately and bill the seller
- The buyer must accept the goods and sue for damages
Correct answer: The buyer must hold the goods with reasonable care at the seller's disposition
Under UCC §2-602, a buyer who rightfully rejects goods must hold them with reasonable care for a sufficient time to allow the seller to remove them.
Question 7: A construction contractor uses a standard form contract with a homeowner. The form contains an ambiguous term regarding change orders. Under contract interpretation principles, ambiguity is generally construed against:
- The party who stands to benefit from the ambiguous term
- The party who drafted the contract (Correct answer)
- The party with greater bargaining power
- The homeowner as the non-professional party
Correct answer: The party who drafted the contract
The doctrine of contra proferentem provides that ambiguous contract terms are construed against the drafter.
VT Bar Contracts and Commercial Law 2
Under UCC Article 2, when a merchant sends a written confirmation of an oral agreement to another merchant and the recipient fails to object within 10 days, what is the effect?