VT Bar Contracts and Commercial Law 5

Question 1

Under UCC Article 2, which risk of loss rule applies when goods are to be shipped by carrier and the contract says 'FOB Seller's City'?

Accepted Answer

Risk passes to the buyer when the seller delivers the goods to the carrier

Answer

Under a 'shipment contract' (FOB seller's city), risk of loss passes to the buyer when the seller duly delivers the goods to the carrier under UCC §2-509(1)(a).

Question 2

A contract between a homeowner and a roofer includes a liquidated damages clause of $500 per day for delays. The roofer finishes 10 days late, costing the homeowner only $200 in actual damages. Which is the most accurate statement about the clause's enforceability?

Accepted Answer

The clause is enforceable if it was a reasonable estimate of anticipated damages at the time of contracting

Answer

A liquidated damages clause is enforceable if it represents a reasonable forecast of compensatory damages at the time of contracting, even if actual damages differ.

Question 3

A seller delivers 500 widgets under an installment contract; 100 are defective. The buyer wishes to cancel the entire contract. Under UCC Article 2, the buyer may cancel only if:

Accepted Answer

The defect substantially impairs the value of the entire contract

Answer

Under UCC §2-612, a buyer may cancel an installment contract only when a defect substantially impairs the value of the whole contract, not just a single installment.

Question 4

Under common law, when parties intend to substitute a new contract for an existing one and the new contract extinguishes the old, this is called:

Accepted Answer

Novation

Answer

A novation substitutes a new contract — or sometimes a new party — for an existing one, discharging the prior obligation.

Question 5

Maria mistakenly believes the painting she agrees to sell for $500 is a reproduction, but it is actually an original worth $50,000. The buyer knows the painting is an original. Which best describes the contract?

Accepted Answer

Voidable by Maria based on unilateral mistake because the buyer knew of and exploited the mistake

Answer

When a unilateral mistake is known to and exploited by the other party, courts may allow rescission because enforcement would be unconscionable.

(VT Bar) Vermont Bar Exam Practice Test

(VT Bar) Vermont Bar Exam Practice Test

VT Bar Contracts and Commercial Law 5