Practice Exam

Question 1

What is the main purpose of the parol evidence rule?

Answer 1

To prevent prior or contemporaneous agreements from contradicting a final written contract — because courts assume the final writing reflects the parties’ complete agreement.

Question 2

fully integrated contract is silent on a material specification. Can prior email evidence clarifying that specification be admitted?
A) Never
B) Yes, if it supplements rather than contradicts
C) Only if fraud is alleged
D) Only in real estate contracts

Answer 2

B — because parol evidence may clarify or supplement missing terms as long as it does not contradict the writing.

Question 3

Why was “solid oak” admissible in your missed question?

Answer 3

Because the written contract did not specify wood type, so the email clarified a missing term rather than contradicting the contract.

Question 4

What is the Perfect Tender Rule under the UCC?

Answer 4

The buyer may reject goods if they fail in any respect to conform to the contract — because goods must match agreed specifications.

Question 5

A landlord includes a clause waiving liability for “gross negligence.” It is bold and clearly written. Is it enforceable?
A) Yes, because it was conspicuous
B) No, because public policy bars waiving gross negligence
C) Yes, unless fraud
D) Only if tenant is sophisticated

Answer 5

B — because courts do not enforce waivers of reckless or grossly negligent conduct as a matter of public policy.

Question 6

Why can ordinary negligence sometimes be waived but gross negligence cannot?

Answer 6

Because public policy allows parties to allocate ordinary risk but not reckless or egregious misconduct.

Question 7

What is the prevention doctrine?

Answer 7

A party cannot cause a condition to fail and then rely on that failure to escape liability — because of the implied duty of good faith

Question 8

A contract is contingent on financing. Buyer never applies for a loan. What result?
A) Buyer excused
B) Condition failed, no liability
C) Buyer breached good faith
D) Impossibility

Answer 8

C — because the buyer had a duty to make a good-faith effort to obtain financing

Question 9

How are expectation damages calculated when a home is resold for less after breach?

Answer 9

Contract price minus resale price — because damages equal the seller’s lost benefit of the bargain.

Question 10

Why is increased cost not impossibility?

Answer 10

Because performance is still physically possible — hardship alone does not discharge duties.

Question 11

When does impossibility discharge a contract?

Answer 11

When the specific subject matter is destroyed or performance becomes objectively impossible.

Question 12

Land is partially condemned by the government before closing. What result?
A) Seller breached
B) Seller must provide substitute land
C) Performance discharged
D) Buyer automatically wins damages

Answer 12

C — because condemnation destroys the specific subject matter required for performance.

Question 13

What makes a mistake “mutual”?

Answer 13

Both parties share the same mistaken belief about a material fact at formation.

Question 14

Why is authenticity of artwork a material fact rather than a value issue?

Answer 14

Because authenticity concerns identity of the item itself, not market fluctuation.

Question 15

When is unilateral mistake grounds for rescission?
A) Always
B) Never
C) When the mistake is obvious and enforcement would be unconscionable
D) Only in land contracts

Answer 15

C — because courts allow rescission when the other party knew or should have known of the mistake.

Question 16

What is the preexisting duty rule?

Answer 16

Doing what you are already legally obligated to do is not valid consideration

Question 17

When can a common law modification be enforced without new consideration?

Answer 17

When unforeseen circumstances arise and the modification is fair and equitable.

Question 18

Steel prices double mid-contract. Seller demands more money. Buyer agrees in writing. Is modification enforceable?
A) No, preexisting duty rule
B) Yes, if unforeseen and fair
C) Always unenforceable
D) Only under UCC

Answer 18

B — because Restatement §89 allows enforcement when circumstances were unforeseen and the change is equitable.

Question 19

Why is a requirements contract not illusory?

Answer 19

Because UCC §2-306 limits quantity to good faith requirements.

Question 20

What prevents a buyer from demanding unlimited quantities under a requirements contract?

Answer 20

The good faith and proportionality limitations under the UCC.

Question 21

Supplier delivers all they can produce in good faith but not as much as buyer wanted. Liability?
A) Yes, breach
B) No, fulfilled good faith duty
C) Only partial breach
D) Automatic damages

Answer 21

B — because the obligation is limited to good faith output or requirements.

Question 22

What are cover damages under the UCC?

Answer 22

Cover price minus contract price plus incidental damages — because they compensate for the buyer’s additional cost

Question 23

Are illegal contracts void or voidable?

Answer 23

Void — courts treat them as if they never existed.

Question 24

Why can’t bribery contracts be enforced?

Answer 24

Because they violate criminal law and public policy.

Question 25

What is the implied covenant of good faith and fair dealing?

Answer 25

A duty requiring parties not to undermine the contract’s purpose or prevent performance.