gould’s “mcq’s in the morning” multiple choice program · contracts. c. morgan will prevail...

GOULD’S “MCQ’s in the MORNING”Multiple Choice Program:

CONTRACT LAW QUESTIONS, 21-30

© 2012 GOULD’S, ALL RIGHTS RESERVED.


21. Morgan sent a purchase order form for 20 blue widgets to WidgetCo, for immediate shipment. WidgetCo had only red widgets, but wanted to help Morgan out because he needed widgets immediately, and so they immediately shipped 20 red widgets to Morgan.

If Morgan sues WidgetCo for breach of contract, what is the likely result?

A. Morgan will prevail because he ordered blue widgets. B. WidgetCo will prevail because they acted immediately under the context of good faith and fair dealing as dictated by the Uniform Commercial Code of contracts. C. Morgan will prevail if he acted immediately under the context of good faith and fair dealing as dictated by the Uniform Commercial Code of contracts. D. WidgetCo will prevail because they shipped the precise quantity that was in the offer, thus meeting the more liberal interpretation of definite terms under the Uniform Commercial Code of contracts.


21. CORRECT ANSWER: A.

This is an accommodation shipment situation. When WidgetCoreceived the order for prompt / immediate shipment, and realizedthat they did not have conforming blue widgets, they could ship redwidgets without a note thereby accepting the offer from Morgan, orship red widgets with a note of accommodation, thereby givingMorgan the power of acceptance. Inasmuch as WidgetCo did notsend a note of accommodation, they accepted Morgan’s offer.Further, when Morgan received the non-conforming red widgets, hecould reject the non-conforming goods under the UCC’s PerfectTender Rule, and bring an action for breach of contract. Morgan willprevail in a breach of contract claim, because he ordered bluewidgets, and not the non-conforming red widgets.


22. Albert wrote to Cynthia, “Please ship sixty Model 412 Airplane Rotors, at the catalog price.” Upon receipt of Albert’s message, Cynthia shipped sixty Model 415 Airplane Rotors, which are quite similar to Model 412 Airplane Rotors. Upon receipt of the Model 415 Airplane Rotors, Albert complained that he did not receive the Model 412 Airplane Rotors, and sued Cynthia for breach of contract.

What is the likely result?

A. Albert wins, because Cynthia shipped Model 415 Airplane Rotors. B. Albert wins, because Cynthia failed to substantially perform under her contractual duty.C. Cynthia wins, because there was no meeting of the minds necessary for proper contract formation.D. Cynthia wins, because the shipment of Model 412 Airplane Rotors was an accommodation shipment.



Pursuant to the UCC’s Perfect Tender Rule regarding non-conforminggoods, Albert had the right to accept the shipment, to reject theshipment, or to accept part of the shipment and reject part of theshipment, upon his seasonal inspection. The Perfect Tender Rulemeans what it says, and the good must specifically conform to theterms of the contract. Therefore, even though the airplane rotors weresimilar, Albert had the right to reject the goods, and sue for breach ofcontract. In order to have sent an accommodation shipment, Cindywould have to had included a note of accommodation, which she didnot include with the shipment. Therefore, Cindy’s shipment of goodswas non-conforming, and Albert will prevail in a breach of contractclaim.


23. Computer Store sent a valid firm offer to Computer Vendor on September 1 that said Computer Store would offer premium computer screens at $250 (normally selling for $350), and superior computer screens at $300 (normally selling for $400). Computer Vendor got a rush of back to school orders that it could not fill, and sent a rush order via a faxed communication for prompt shipment on September 8 for ten premium computer screens at $250 each (then normally selling at $350 each), and ten superior computer screens for $300 each (then normally selling at $400 each), payment included. Computer Store immediately shipped to Computer Vendor ten premium computer screens, and ten excellent computer screens instead of ten superior computer screens, because Computer Store was out of stock of the superior computer screens. The excellent computer screens were of similar quality to the superior computer screens. If Computer Vendor sues Computer Store for breach of contract, what is the likely result?

A, Computer Vendor will prevail, because Computer Store breached the contract. B. Computer Vendor will prevail, because they ordered prompt shipment of goods.C. Computer Vendor will not prevail, because Computer Store substantially performed their obligations under the contract.D. Computer Vendor will not prevail, because Computer Store sent an accommodation shipment, which Computer Vendor was free to accept, but in no event was a contract formed when Computer Store shipped the order to Computer Vendor.



If Computer Store had seasonally informed Computer Vendor thatComputer Store did not have the superior computers, and thus weresending the excellent computers as an accommodation to ComputerVender, then there would have been no contract formed, and ComputerVendor would have been free to accept the terms of the contract byaccepting the excellent computers instead of the superior computers.However, since Computer Store did not send a letter ofaccommodation, they thereby accepted the rush order of ComputerVendor, when they shipped goods without a note of accommodation.Inasmuch as Computer Store shipped non-conforming goods, theirshipment was non-conforming under the UCC’s Perfect Tender Rule.Therefore, Computer Vendor will prevail in a breach of contract claim.


24. Samantha was happy to see that Junior had trimmed Samantha’s foliage while Samantha was out of town on business, even though Samantha had not asked Junior to trim Samantha’s foliage. Samantha then told Junior that Samantha would pay Junior $100 per week trim Samantha’s foliage, along with another $200 for the fact that Junior had trimmed Samantha’s foliage while Samantha was out of town.

Samantha is most likely obligated to pay Junior what amount of money?

A. $200. B. $300. C. $100 per week. D. $200, plus $100 per week.


24. CORRECT ANSWER: C.

Under the legal detriment element of consideration, the promiseemust do something they do not have to do, or refrain from doingsomething they have a right to do. The result must be a detrimentto the promisee, a benefit to the promisor, or both. However,when prior consideration is used for current consideration, thecurrent consideration will be considered invalid. Therefore, whenJunior did work when Samantha was out of town, and before thecontract was formed, such work must be considered as a gift,because it occurred before the contract was formed. Samanthamay still remunerate Junior for his prior work, but she is notobligated to do so under contract principles. Therefore, thecorrect answer is that Samantha currently owes Junior onehundred dollars per week.


25. A written contract stated at the time of contract formation, that Vern would give up his right to sue David, if David were to paint Vern’s house. A month later, Vern found out that even if he had tried to sue David, Vern did not have an enforceable claim.

Did the original contract have valid consideration?

A. Yes, if Vern reasonably believed at contract formation that he had an enforceable claim against David.B. No, because Vern did not, in fact, have a valid claim against David.C. Yes, because both Vern and David agreed to the terms of the contract in a written instrument.D. No, because Vern and David did not exchange money, thus indicating an illusory promise, lacking valid legal detriment.



Valid legal detriment exists to help establish considerationwhen a potential legal claim is surrendered by a party thatreasonably believes at the time of contract formation thatthey have a valid legal claim. Therefore, if at the time ofcontract formation, Vern reasonably believed that he had anenforceable legal claim against David, surrender of such apotential claim would serve as valid legal detriment, evenif Vern later found out that he did not, in fact, have anenforceable legal claim against David.


26. Stan of Stan’s Bakery entered into a written contract with Wilma, under which Stan agreed to purchase apples from Wilma for his apple pies on a monthly basis, for a calendar year, from Wilma. The contract stated that Stan “shall have no obligation to receive any specified quantity of apples, but just his monthly requirements of apples, from Wilma, and Wilma agrees to supply such requirements, at a fixed price, payment two weeks after delivery.” For eight months, Wilma delivered approximately eight bushels of apples to Stan. Then, Wilma experienced a price increase, and felt that it was beyond her financial capacity to continue with the fixed price contract with Stan. Can Wilma avoid the contract based on lack of consideration?

A. No, because Stan’s agreement to purchase his requirements of apples was sufficient consideration for Wilma’s agreement to supply the apples.B. Yes, because inasmuch as there was no quantity stated, the contract is technically illusory.C. Yes, because the contract lacks mutuality of obligation.D. No, because under the Uniform Commercial Code, requirements contracts need not have consideration.



An illusory promise is not supported by consideration, because itseems to promise something, but it does not actually commit thepromisor to do anything. Requirements and outputs contractssometimes appear to have illusory promises. However, the duty ofgood faith and fair dealing imputed in these UCC contracts will oftencure any otherwise illusory promises. In a requirements contract,consideration is present when a buyer’s agreement to purchase goodsis sufficient for seller’s agreement to supply the goods. Under theCommon Law of contracts, this would be an illusory promise,however, due to the good faith, fair dealing, and commercialreasonableness factors of Uniform Commercial Code contracts, theagreement between Stan and Wilma would have proper legaldetriment.


27. Sam made Ben a contractual offer for a job as an employee at the county fair, to last the entire summer, as long as Ben filled out an application form for a job. Ben filled out an application form for the job, and then moved seven hundred miles, while securing a new apartment, in order to be prepared to work at the county fair. Then, Sam told Ben not to report for work.

Will Ben be able to enforce the contract?

A. Yes, because Ben relied to his detriment on Sam’s offer. B. No, because valid consideration is missing. C. No, because there was no bargained for exchange. D. Yes, because Sam made a valid offer to Ben.



Valid consideration is present in this situation under the doctrineof promissory estoppel. Where an offeree relies to theirdetriment by making substantial efforts based on an offer givenby an offeror, consideration may be present if the offeror shouldhave reasonably foreseen that the offeree would rely on the offer,and that such reliance would be reasonable. In this situation, Benwas told that he would receive a summer job if he submittedpaperwork, which he did. He then moved to the worksite, andsecured an apartment, in order to begin work. The reliance byBen was substantial and reasonable, and consideration existsthrough the doctrine of promissory estoppel.


28. Mary entered into a valid written contract with Jason, stating that Mary would purchase Jason’s business, but only if Mary could find a purchaser for her business. Assume that Jason repudiates the contract after signing it, but before Mary takes any action to find a purchaser for her business.

Is there consideration present?

A. Yes, because the condition of Mary's promise requires her to make a good faith effort to find a buyer for her present business.B. Yes, because Mary's promise to sell her present business was consideration for Jason’s promise to sell his business to Mary. C. No, because Mary’s promise to buy was subject to a condition within her complete control, and was therefore illusory.D. No, because Mary's promise to buy was sham consideration.



Consideration is a bargained for exchange of acts orpromises, with either detriment to the promisee or benefit tothe promisor, or both. In performing their contractual duties,parties will be held to a good faith standard of performance.Therefore, even though Mary had taken no action to secure apurchaser for her business at the time of Jason’s repudiation,consideration would still be present in the contract betweenMary and Jason because of the good faith standard.


29. Lana and Sue were involved in tort litigation. Both parties had competent witnesses. At one point in the litigation, Lana approached Sue, and offered Sue ten thousand dollars to settle the case, even though the claim itself was for twenty-five thousand dollars. Sue accepted the offer.

If Lana later repudiates, what is the likely result in a breach of contract action?

A. Lana wins because such an agreement is void as against public policy. B. Lana wins because the arrangement was an executory accord.C. Sue wins because the arrangement is an enforceable modification.D. Sue wins because the agreement was supported by an enforceable compromise of a disputed claim.


29. CORRECT ANSWER: D.

Valid legal detriment exists to help establish considerationwhen a potential legal claim is surrendered by a partythat reasonably believes at the time of contract formationthat they have a valid legal claim. In other words,forbearance of a legal claim is a valid modality toestablish legal detriment within the context ofconsideration. In this situation, the agreement of acompromise, is related to forbearance of a legal claim,and indicates that consideration is present.


30. Christopher hired Amy to construct a deck on the back of Christopher’s house. From time to time, Christopher assisted Amy in Amy’s work to build the deck. After the deck was complete, and for all of Christopher’s assistance, Amy told Christopher that Amy would give Christopher tickets to the opera, to which statement Christopher excitedly answered in the affirmative.

If Amy refuses to give the tickets to Christopher, what will the result be if Christopher sues Amy for the tickets?

A. Christopher will prevail, because he provided valuable assistance to Amy. B. Christopher will prevail, inasmuch as the tickets are a reasonable modification of the original contract.C. Amy will prevail based on application of the parol evidence rule.D. Amy will prevail, because no consideration is present for the tickets.


30. CORRECT ANSWER: D.

Gifts do not constitute valuable consideration because there is nobargained for exchange, and the promisor gets nothing inreturn for their promise to act. When Christopher acted toassist Mary, he took such action out of the goodness of hisheart, but his action was outside of the contractual parameters.Therefore, Amy was under no obligation to reimburseChristopher for his work on the deck. As such, Amy’sstatement to Christopher that she would give him tickets to theopera is characterized as a promise to give a gift, but it doesnot serve as valid contractual consideration. Withoutconsideration, there is no contract, and Amy is under noobligation to give Christopher tickets to the opera.


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gould’s “mcq’s in the morning” multiple choice program · contracts. c. morgan will prevail...

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