Formation
A seller offered to sell a painting for $5,000, stating, “Let me know by Friday.” On Thursday morning, he sold the painting to someone else. The original offeree calls Thursday afternoon to accept.
Is there a valid contract?
A. Yes, because the offeree accepted within the stated deadline
B. No, because the offer was revoked before acceptance
C. Yes, if the offeree had no knowledge of the revocation
D. No, because selling to another acted as a counteroffer
✅ Correct Answer: B
💡 Explanation: Offers can be revoked any time before acceptance unless they are irrevocable. Selling to another and communicating it revokes the offer.
nothing further. She later refuses to pay.
Is the promise enforceable?
A. No, because there was no consideration
B. Yes, because moral obligation suffices
C. Yes, because he relied on the promise
D. No, because it was a gift conditional on future action
✅ Correct Answer: A
💡 Explanation: A gratuitous promise is not enforceable without bargained-for consideration.
A 16-year-old signs a contract to purchase a used car. One week later, he changes his mind and seeks to cancel.
Is the contract enforceable?
A. Yes, because vehicle purchases are exceptions for minors
B. No, because contracts with minors are void
C. Yes, unless the seller knew the buyer was a minor
D. No, because the minor can disaffirm the contract
✅ Correct Answer: D
💡 Explanation: Contracts with minors are voidable at the option of the minor. They may disaffirm the contract and avoid liability.
A contractor completes a home renovation late but with no material defects. The homeowner refuses to pay.
What remedy does the contractor have?
A. None, because time was of the essence
B. Full payment, because the breach was minor
C. No remedy unless the contract specified liquidated damages
D. Only partial payment for substantial performance
✅ Correct Answer: B
💡 Explanation: A minor delay, if not of the essence, is not a material breach and does not excuse payment.
A buyer places an order for goods. The seller sends a written confirmation with slightly different terms.
What governs under the UCC?
A. The original offer
B. The confirmation, if terms are immaterial
C. The different terms, unless objected to
D. The buyer’s silence
✅ Correct Answer: B
💡 Explanation: Under UCC §2-207, minor additional terms in a confirmation become part of the contract between merchants unless objected to.
A contractor bids $20,000 to install flooring. A homeowner responds, “Sounds good — I’ll think it over and let you know.” Two hours later, the contractor emails, “Offer withdrawn.” The homeowner immediately replies, “I accept!”
Is there a contract?
A. Yes, because she accepted before hearing of the revocation
B. No, because “I’ll think it over” is not an acceptance
C. Yes, because revocation was not made orally
D. No, because email is not a valid method of revocation
✅ Correct Answer: A
💡 Explanation: Revocation must be communicated before acceptance. Here, acceptance occurred before effective notice of revocation.
A contractor agrees to complete a job for $100,000. Halfway through, he demands an extra $10,000 to finish. The homeowner agrees but later refuses to pay.
Is the extra $10,000 enforceable?
A. No, because the contractor had a pre-existing duty
B. Yes, because the agreement modified the contract
C. Yes, if the homeowner orally agreed
D. No, because construction contracts can’t be modified
✅ Correct Answer: A
💡 Explanation: At common law, modifications require new consideration. Doing what one is already obligated to do is not consideration.
A man agreed to sell his house, believing his neighbor’s property line included a valuable well. It did not.
Can he void the contract for mutual mistake?
A. No, because the mistake must relate to the price
B. Yes, if the mistake was material and about a basic assumption
C. No, because only unilateral mistakes void contracts
D. Yes, if the buyer should have known of the mistake
✅ Correct Answer: B
💡 Explanation: A mutual mistake about a material fact that goes to the heart of the bargain renders a contract voidable.
A buyer prepays for a one-of-a-kind antique. The seller later refuses to deliver.
What remedy is most appropriate?
A. Rescission and restitution
B. Compensatory damages
C. Liquidated damages
D. Specific performance
✅ Correct Answer: D
💡 Explanation: Specific performance is the preferred remedy for unique goods when monetary damages are inadequate.
A buyer inspects goods and discovers a defect. She still accepts the delivery.
What are her options?
A. Reject the goods
B. Sue for breach but must notify seller within a reasonable time
C. Return the goods without penalty
D. Accept and waive all claims
✅ Correct Answer: B
💡 Explanation: Under UCC §2-607, a buyer who accepts nonconforming goods must still notify the seller promptly to preserve a breach claim.
A man offers to buy a rare book from his friend. The friend replies, “I'll sell it for $150.” The man replies, “Okay, $150 is fine.”
Is there a contract?
A. No, because both parties issued offers rather than accepting
B. Yes, because the friend’s reply was an acceptance
C. Yes, because the friend’s response was a counteroffer that was accepted
D. No, because the terms were not sufficiently definite
✅ Correct Answer: C
💡 Explanation: The friend’s response changes the price, making it a counteroffer. The man’s next response accepts that counteroffer, forming a contract.
A supplier promises to deliver goods for $2,000, but later calls to say the price is now $2,200. The buyer agrees under protest to avoid breach.
Can the buyer later sue for the extra $200?
A. No, because he agreed
B. Yes, because the modification lacked consideration
C. No, unless the change was in writing
D. Yes, because the supplier violated the UCC statute of frauds
✅ Correct Answer: B
💡 Explanation: Under common law, modifications without consideration are unenforceable, even if agreed to under economic pressure.
A woman sells artwork claiming it is a famous painter’s original, when it is not. She believed her claim to be true.
Can the buyer rescind the contract?
A. Yes, based on innocent misrepresentation
B. No, because the seller lacked fraudulent intent
C. Yes, only if there was a warranty
D. No, because the buyer didn’t inspect it
✅ Correct Answer: A
💡 Explanation: Even without fraud, a material misrepresentation — if relied on — allows rescission.
A supplier delivers defective goods, breaching the contract. The buyer buys replacement goods at a higher price.
What damages are recoverable?
A. Incidental damages only
B. The difference between the contract and cover price
C. Full refund only
D. Consequential damages only
✅ Correct Answer: B
💡 Explanation: Under the UCC, buyers may recover the difference between the cover price and the contract price.
A seller ships goods late without prior notice. The buyer refuses delivery.
Is the rejection proper?
A. Yes, because timely delivery is a material term
B. No, because the buyer must give a chance to cure
C. Yes, if the delay causes substantial loss
D. No, unless the contract states “time is of the essence”
✅ Correct Answer: A
💡 Explanation: Timeliness is material in UCC contracts, especially if performance date is specified. Late delivery justifies rejection.
A woman mails an offer to sell her car for $3,000. The recipient mails back an acceptance the next day. Before receiving it, the woman calls to revoke the offer.
Is a contract formed?
A. No, because the revocation was communicated before receipt of the acceptance
B. Yes, because acceptance by mail is effective upon dispatch
C. No, because phone revocation overrides mail acceptance
D. Yes, but only if the letter arrived before the call
✅ Correct Answer: B
💡 Explanation: Under the mailbox rule, acceptance is effective when dispatched — even if revocation is received later.
A man agrees to pay his friend $100 for tutoring. Later, he says he’ll pay $200 because he was so impressed.
Is the second promise enforceable?
A. Yes, because it reflects fair market value
B. No, because past consideration is not valid
C. Yes, because moral obligation makes the second promise binding
D. No, because tutoring is not legally recognized as consideration
✅ Correct Answer: B
💡 Explanation: Consideration must be bargained for at the time of the agreement. A later promise based on past performance is unenforceable.
An elderly man, confused and under medication, signs a complex investment contract.
Is the contract enforceable?
A. No, if the man lacked capacity at the time of signing
B. Yes, unless the contract is unconscionable
C. No, if the terms were not fully explained
D. Yes, because contracts with the elderly are not voidable
✅ Correct Answer: A
💡 Explanation: A party must have the mental capacity to understand the nature and consequences of the transaction for the contract to be valid.
A seller partially performs under a contract, but breaches before completion. The buyer sues.
What remedy applies under the doctrine of expectation damages?
A. Full contract price
B. Cost to complete performance plus losses
C. Restitution for unjust enrichment
D. Return of goods and refund only
✅ Correct Answer: B
💡 Explanation: Expectation damages put the non-breaching party in the position they would’ve been had the contract been fully performed.
A seller tenders nonconforming goods, but there is still time left under the contract.
What is the seller’s right under the UCC?
A. None, because the buyer has already rejected
B. Cure the defect before the time for performance expires
C. Demand payment regardless
D. Deliver substitute goods at seller’s option
✅ Correct Answer: B
💡 Explanation: UCC §2-508 allows sellers to cure defects if time remains under the contract.
A contractor makes an offer to a supplier via email. The supplier replies, “I accept your offer.” However, they never agree on delivery date or shipping terms.
Is a contract formed?
A. Yes, because agreement on all material terms is unnecessary
B. No, because essential terms were missing
C. Yes, if both parties subjectively believed they had a deal
D. No, unless performance commenced
✅ Correct Answer: A
💡 Explanation: A contract can be formed despite missing minor terms if the essential terms are agreed upon — intent to contract and price usually suffice.
A landlord promises not to raise rent in exchange for the tenant agreeing not to break the lease. The tenant was already legally obligated not to break it.
Is this consideration valid?
A. Yes, because both parties gave up something
B. No, because the tenant’s promise was illusory
C. No, because promising to perform a pre-existing duty is not consideration
D. Yes, if the tenant relied on the promise
✅ Correct Answer: C
💡 Explanation: A promise to do what one is already obligated to do under contract is not valid consideration for a modification.
A door-to-door vacuum cleaner salesman pressures a woman to buy an expensive model. She signs under pressure but regrets it immediately.
Which doctrine offers her relief?
A. Mistake
B. Duress
C. Unconscionability
D. Undue influence
✅ Correct Answer: C
💡 Explanation: Gross disparity in bargaining power, combined with oppressive terms, can render a contract unconscionable and unenforceable.
A landlord breaches a lease agreement with a tenant who must pay more to rent elsewhere. The tenant sues.
What is the standard for consequential damages?
A. They must flow naturally from the breach
B. They must be foreseeable and reasonably certain
C. They are automatically awarded
D. They must be speculative and uncertain
✅ Correct Answer: B
💡 Explanation: Consequential damages must be foreseeable and proven with reasonable certainty to be recoverable.
A buyer orders goods but later says they can’t pay. The seller hasn’t shipped yet.
What remedy does the seller have?
A. Resell goods and recover damages
B. Force the buyer to accept
C. Deliver anyway and sue later
D. Seek specific performance
✅ Correct Answer: A
💡 Explanation: When a buyer repudiates, the seller may resell in good faith and recover the difference between resale and contract price.