VT Bar Contracts and Commercial Law 3 — Questions and Answers
Question 1: Greg agrees to buy Heather's business for $500,000 contingent on Greg securing financing within 60 days. Greg makes no effort to obtain financing and the deadline passes. Which doctrine applies?
- Frustration of purpose
- Impossibility of performance
- Prevention doctrine — Greg cannot benefit from a condition he prevented (Correct answer)
- The contract is unenforceable for lack of consideration
Correct answer: Prevention doctrine — Greg cannot benefit from a condition he prevented
Under the prevention doctrine, a party cannot benefit from the failure of a condition when that party's own conduct caused or prevented the condition from occurring.
Question 2: Under UCC Article 2, the 'perfect tender rule' applies to:
- Installment contracts where only material breach allows rejection
- Single-delivery contracts, giving the buyer the right to reject for any nonconformity (Correct answer)
- Only contracts exceeding $10,000 in value
- Service contracts involving the sale of goods
Correct answer: Single-delivery contracts, giving the buyer the right to reject for any nonconformity
UCC §2-601 allows a buyer to reject the whole, accept the whole, or accept any commercial units and reject the rest if goods or tender of delivery fail to conform in any respect.
Question 3: Which of the following best describes a requirements contract under UCC Article 2?
- A contract to supply all the goods a seller produces
- A contract to buy all goods the buyer requires from a specific seller (Correct answer)
- A contract specifying exact quantities to be delivered monthly
- A contract with an indefinite price term
Correct answer: A contract to buy all goods the buyer requires from a specific seller
A requirements contract obligates the buyer to purchase all of their requirements for a specific good from the seller, with quantity measured by the buyer's actual needs.
Question 4: Dana orally promises to pay her nephew $20,000 if he refrains from drinking alcohol until age 30. The nephew complies. Under which theory is the promise most likely enforceable?
- Promissory estoppel, because the nephew detrimentally relied on the promise
- Consideration, because the nephew's forbearance constitutes legal detriment (Correct answer)
- The Statute of Frauds, because the promise cannot be performed within one year
- Moral obligation, because the nephew deserves compensation
Correct answer: Consideration, because the nephew's forbearance constitutes legal detriment
Forbearance from a legal right constitutes valid consideration, making the promise enforceable on consideration grounds (following the logic of Hamer v. Sidway).
Question 5: A contract for the sale of real property contains an integration clause stating it is the 'complete and final agreement.' The buyer seeks to introduce evidence of a prior oral promise by the seller to repair the roof. Under the parol evidence rule:
- The oral evidence is admissible to supplement the written agreement
- The oral evidence is barred because it contradicts or adds to the fully integrated written agreement (Correct answer)
- The oral evidence is admissible because it concerns a condition precedent
- The integration clause itself is parol evidence and cannot be relied upon
Correct answer: The oral evidence is barred because it contradicts or adds to the fully integrated written agreement
When parties have a fully integrated written agreement, the parol evidence rule bars prior or contemporaneous oral agreements that would contradict or vary the written terms.
Question 6: Under UCC Article 2, which of the following is a valid basis for a seller's remedy of reclamation?
- The buyer paid with a dishonored check and the seller demands return of goods within 10 days of delivery (Correct answer)
- The buyer simply fails to pay the invoice within 30 days
- The goods were delivered under a credit agreement and the seller changed its mind
- The seller discovers a defect in the goods after delivery
Correct answer: The buyer paid with a dishonored check and the seller demands return of goods within 10 days of delivery
Under UCC §2-702, a seller may reclaim goods when the buyer received them on credit while insolvent, provided the demand is made within 10 days of delivery.
Question 7: Which of the following correctly describes the mailbox rule for contract acceptance?
- Acceptance is effective only when received by the offeror
- Acceptance by mail is effective upon proper dispatch, not upon receipt (Correct answer)
- The rule applies equally to revocations sent by the offeror
- Acceptance is effective at the time the offeror reads the letter
Correct answer: Acceptance by mail is effective upon proper dispatch, not upon receipt
Under the mailbox rule, an acceptance sent by an authorized medium is effective upon dispatch, not upon receipt by the offeror.
VT Bar Contracts and Commercial Law 3
Greg agrees to buy Heather's business for $500,000 contingent on Greg securing financing within 60 days.
Greg makes no effort to obtain financing and the deadline passes.
Which doctrine applies?