Contracts Flashcards
7 cards from real NC BAR practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Contracts flashcards as text
A contractor builds a house but installs the wrong brand of pipe, though the pipe is of equal quality and value. The homeowner demands the contractor tear out all the walls and reinstall the correct brand. Which remedy concept best limits the homeowner's recovery?
Answer: The economic waste doctrine
The economic waste doctrine (applied in cases like Jacob & Youngs v. Kent) limits a non-breaching party to diminution in value damages rather than cost of completion when completion would involve unreasonable economic waste with no real benefit.
Which of the following is the best example of a valid requirements contract under the UCC?
Answer: Buyer agrees to purchase all the widgets Buyer requires from Seller for one year.
A requirements contract under UCC § 2-306 is one in which the buyer agrees to purchase all of a particular good that the buyer requires from the seller, which provides sufficient consideration through the implied obligation of good faith.
Under the parol evidence rule, which of the following extrinsic evidence is admissible to interpret a fully integrated written contract?
Answer: Course of dealing evidence to explain an ambiguous term
Course of dealing, course of performance, and trade usage are always admissible to explain or supplement a contract's terms, even when the contract is fully integrated, as long as such evidence explains rather than contradicts the written terms.
A party seeks rescission of a contract based on mutual mistake. Which element is NOT required to establish mutual mistake?
Answer: The party seeking rescission bore the risk of the mistake under the contract.
For mutual mistake, the party seeking rescission must show a basic assumption, mutual mistake, and material effect, but if the party bore the risk of the mistake, rescission is not available—bearing the risk defeats, rather than supports, the claim.
In a breach of contract action, which of the following damages is LEAST likely to be recoverable under the Hadley v. Baxendale foreseeability rule?
Answer: Highly unusual consequential damages unknown to the breaching party at contract formation
Under Hadley v. Baxendale, consequential damages are recoverable only if they were foreseeable at the time of contracting; highly unusual losses unknown to the breaching party at formation are not recoverable.
A homebuilder contracts to build a house for $300,000. After the homebuilder completes 80% of the work, the owner wrongfully refuses to let the builder finish. What measure of damages can the builder recover?
Answer: The contract price less the cost of completing the remaining 20% of the work
When an owner wrongfully prevents a contractor from completing performance, the contractor may recover the full contract price less the cost the contractor would have incurred to complete the remaining work.
Under the UCC, when does risk of loss pass from seller to buyer in a shipment contract (F.O.B. shipping point)?
Answer: When the seller delivers the goods to the carrier
Under UCC § 2-509, in a shipment contract (F.O.B. point of origin), risk of loss passes to the buyer when the seller duly delivers the goods to the carrier.