GOULD’S “MCQ’s in the MORNING” Multiple Choice Program: CONTRACT LAW QUESTIONS, © 2012 GOULD’S LEGAL EDUCATION, ALL RIGHTS RESERVED.

© 2012 GOULD’S, ALL RIGHTS RESERVED Seller entered into a valid contract with Buyer to sell Seller’s land for $200,000. The closing date for the sale was to occur on August 10. On August 10, Buyer tendered payment of $200,000, but Seller failed to tender or deliver the deed. May Buyer sue Seller for breach of contract? A. No, because Buyer would have time to cure his non-performance. B. No, because failure to tender or deliver a deed at closing is indicative of an anticipatory repudiation. C. Yes, because Seller failed to tender or deliver the deed at closing. D. Yes, because Buyer tendered payment for $200,000.

© 2012 GOULD’S, ALL RIGHTS RESERVED CORRECT ANSWER: C. The performance of a land sale contract is a concurrent condition, whereby both parties perform at the same time. Thus, at closing, both parties should tender their performance through tender of payment or through tender of a deed. Tendering of payment means that a party indicates their current ability and willingness to pay the money for the land. In reality, both parties have conditions precedent, that are to occur at the same time. In this situation, since Buyer tendered his performance at closing, Seller performance became immediately due, and Seller was required to tender the deed. Inasmuch as Seller failed to tender the deed, Seller anticipatorily repudiated at closing, which gave rise to Buyer’s right to sue Seller for breach of contract.

© 2012 GOULD’S, ALL RIGHTS RESERVED Buyer ordered a $150,000 motorcycle from Seller. Seller regularly sold motorcycles. When Buyer showed up to pay for the motorcycle, Buyer noticed that the motorcycle did not have chrome handlebars as Buyer had ordered. Buyer was upset, and notified Seller that he (Buyer) would not accept the motorcycle. Seller then notified Buyer that Seller would immediately find a suitable motorcycle for Buyer. Which statement below most correctly states the rights of each party? A. Buyer had a right to reject the motorcycle, and Seller had a right to cure the non-conformity within a reasonable amount of time. B. Buyer had a right to reject the motorcycle, and Seller had no right to cure the non-conformity. C. Buyer had no right to reject the motorcycle, because the motorcycle was substantially the type of motorcycle that Buyer had ordered. D. Seller had a right to cancel the sale.

© 2012 GOULD’S, ALL RIGHTS RESERVED CORRECT ANSWER: A. Under the perfect tender rule, a buyer that receives non-conforming goods, may reject all, accept all, or reject some and accept some. However, where goods fail to be completely conforming, a seller will often be able to cure the non-conformity. In this situation, there is no specific deadline for delivery. Thus, upon notice of non- conformity from a buyer, a seller may inform a buyer of seller’s intent to cure the non-conformity by delivering conforming goods within a reasonable period of time. In this situation, after Buyer notified Seller of a non-conformity, and inasmuch as there was no stated time for performance, Seller had a reasonable time to cure upon notice from Seller to Buyer that Seller intended to cure. Therefore, Buyer had a right to reject the motorcycle, and Seller had a right to cure the non-conformity within a reasonable amount of time.

© 2012 GOULD’S, ALL RIGHTS RESERVED Buyer ordered a $150,000 motorcycle from Seller, and pre-paid for the motorcycle. Seller regularly sold motorcycles. When Buyer showed up to pay for the motorcycle, Buyer decided that he wanted custom handlebars, which cost $600 more, instead of the handlebars that were on the motorcycle, and he told Seller to put custom handlebars on the motorcycle, and Seller verbally agreed to put custom handlebars on the motorcycle. If Seller fails to deliver custom handlebars to Buyer, may Buyer enforce the agreement related to the custom handlebars? A. No, because there was a modification of the original contract for $600. B. Yes, because modifications under the Uniform Commercial Code need not have new consideration in order to be enforceable. C. No, because modifications need new consideration in order to be enforceable. D. Yes, if Buyer acted with good faith and fair dealing under the Uniform Commercial Code.

© 2012 GOULD’S, ALL RIGHTS RESERVED CORRECT ANSWER: A. No agreement which modifies a UCC contract will need additional consideration, as long as both parties operate with good faith and fair dealing. However, modifications for five hundred dollars or more will need to satisfy the Statute of Frauds, in order to be enforceable. In this situation, the custom handlebars cost $600, and therefore the modification for the custom handlebars would require a sufficient writing, because the handlebars cost more than $500. Without a writing to prove that the modification took place, Buyer will not have an ability to enforce the modification.

© 2012 GOULD’S, ALL RIGHTS RESERVED Buyer and Seller, both merchants, verbally agreed on a price of 400,000. Then, Seller sent Buyer a memorandum that cited the above facts, and was signed by the Seller. Buyer did not object to the memorandum. Is the above agreement enforceable? A. Yes, because Buyer did not object to the memorandum. B. No, because no quantity is stated. C. Yes, because both parties are merchants. D. No, because there is a solid indication that a contract was formed between the parties.

© 2012 GOULD’S, ALL RIGHTS RESERVED CORRECT ANSWER: B. The Statute of Frauds will be satisfied between merchants, even without a signed contract, if there is a sufficient memorandum. A signed memorandum that summarizes an agreement and includes the quantity, will be enforceable if the memorandum reasonably identifies the subject matter of the contract, there is a solid indication that a contract was formed between the parties, the essential terms of the contract are stated with reasonable certainty, the memorandum is signed by or on behalf of the party to be charged, and there is no objection by the receiving party within ten days. Here, no quantity is stated, and therefore the agreement will not be enforceable.

© 2012 GOULD’S, ALL RIGHTS RESERVED Buyer and Seller, both merchants, verbally agreed on a price of $400,000, for 40 motorcycles, and fashioned a valid written contract. Then, both parties orally agreed that Seller would deliver to Buyer 40 specialty decals that cost $10 each, to go with the 40 motorcycles. If Seller fails to deliver to Buyer the specialty decals, may Buyer seek to enforce the oral agreement against Seller? A. Yes, because the modification was for less than $500. B. No, because no new consideration is present. C. No, because the modification was not written. D. Yes, because Buyer relied to his detriment on the promise by Seller.

© 2012 GOULD’S, ALL RIGHTS RESERVED CORRECT ANSWER: A. No agreement which modifies a UCC contract will need additional consideration, as long as both parties operate with good faith and fair dealing. However, modifications for five hundred dollars or more will need to satisfy the Statute of Frauds. In this situation, the modification related to specialty decals, amounts to a total of $400, and therefore no writing is required.

© 2012 GOULD’S, ALL RIGHTS RESERVED Sarah sent a fax to Ben, stating that if Ben were to paint Sarah’s house, Sarah would pay Ben ten thousand dollars. Which statement below would best support Sarah’s contention that Sarah did not have an enforceable contract with Ben? A. That Ben had only prepared to paint Sarah’s house. B. That Ben had not promised to paint Sarah’s house. C. That Sarah revoked her offer soon after Ben started painting Sarah’s house. D. That Sarah detrimentally relied on Ben painting Sarah’s house.

© 2012 GOULD’S, ALL RIGHTS RESERVED CORRECT ANSWER: A. This situation presents an offer for a unilateral contract. Ben could accept the contract through full performance. If Ben were to start actual performance, the offer would be irrevocable for a reasonable period of time, in order to permit Ben to accept the offer through full performance. Ben need not make a promise to perform under a unilateral contract. However, mere preparation to perform will not indicate that actual performance has begun, and the offeror may revoke their offer before the offeree begins performance. Therefore, Sarah’s best argument that a contract does not exist, is that she revoked the offer while Ben was only in preparation to perform.

© 2012 GOULD’S, ALL RIGHTS RESERVED Frank, an auctioneer, expected that a Honus Wagner baseball glove would garner at least $1,500 at auction. However, after the bidding had proceeded for a couple of minutes, the highest bid was only $250, by Sidney. Frank then told Sidney that Frank would not sell the Honus Wagner baseball glove to Sidney, because Sidney’s price was too low, and Frank removed the Honus Wagner baseball glove from auction. If Sidney sues Frank for breach of contract, who will prevail? A. Sidney, if the item was placed up for auction “without reserve.” B. Sidney, if the item was placed up for auction “with reserve.” C. Frank, if the item was placed up for auction “without reserve.” D. Frank, because as the auctioneer, he would be the master of the offer.

© 2012 GOULD’S, ALL RIGHTS RESERVED CORRECT ANSWER: A. An auction item may be placed for sale either “with reserve” or “without reserve.” Unless expressly stated otherwise, an auction item will be deemed to be placed for sale “with reserve.” Under “with reserve” an auctioneer may withdraw an item for sale at any point in time before the auctioneer completes a sale. However, under “without reserve” an auctioneer may not withdraw an item, unless no bids are made within a reasonable amount of time. Here, Sidney had made an offer, before Frank removed the item from auction. Therefore, Frank would prevail if the item was placed up for auction “without reserve.”

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