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Contracts BarBri Questions and Correct Answers/
Latest Update / Already Graded
A contract is
Ans: a promise or set of promises, for the breach of which the law gives a
remedy, or the performance of which the law in some way recognizes as a duty.
COMMON LAW VS. ARTICLE 2 SALE OF GOODS
Ans: Generally, the common law governs contracts.
However, special rules have been developed for
contracts involving the sale of goods, and those rules are contained in Article 2 of
the Uniform Commercial Code ("UCC"). Article 2 has adopted much of the
common law of contracts, but where the common law and Article 2 differ, Article
2 prevails in a contract for the sale of goods.
"Sale" Defined
Ans: A sale is a contract in which title to goods passes from the seller to the
buyer for a price.
"Goods" Defined
Ans: Article 2 defines "goods" as all things movable at the time they are
identified as the items to be sold under the contract.
Thus, Article 2 applies to sales of most tangible things (e.g., cars, horses,
hamburgers), but does not apply to the sale of real estate, services (e.g., a health
club membership), or intangibles (e.g., a patent), or to construction contracts.
Goods associated with real estate (e.g., minerals, growing crops and uncut timber,
and fixtures removed from the land) may fall under Article 2 under certain
circumstances.
© 2025/ 2026 | ® All rights reserved
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Contracts Involving Goods and Nongoods
Ans: If a sale involves both goods and services (e.g., a contract to paint a
portrait), a court will determine which aspect is dominant and apply the law
governing that aspect to the whole contract. However, if the contract divides
payment between goods and services, then Article 2 will apply to the sale portion
and the common law will apply to the services portion.
Merchants vs. Nonmerchants
Ans: A number of the rules in Article 2 depend on whether the seller and/or
buyer are merchants.
Article 2 generally defines "merchant" as one who regularly deals in goods of the
kind sold or who otherwise by his occupation holds himself out as having
knowledge or skill peculiar to the practices or goods involved. [UCC §2-104(1)]
For many of the Article 2 provisions dealing with general business practices (e.g.,
Statute of Frauds, confirmatory memos, firm offers, modification), almost anyone
in business can be deemed a merchant because they have knowledge of the
business practices. However, a few Article 2 provisions (e.g., the implied warranty
of merchantability) are narrower and require a person to be a merchant
with respect to goods of the kind being sold. To be subject to any of the
merchant rules, the merchant must be acting in his mercantile capacity; i.e., he
must be acting in his business, rather than personal, capacity.
Example: Martha sells computers for Acme Corp. On Monday, Martha places
Acme Corps annual coffee order with the coffee service. Later that day, she
offers
to sell her car to her neighbor for $5,000. Martha is a merchant with respect to
the coffee order, but she is not a merchant with respect to the offer to sell her
car. In the first instance, she is acting in her mercantile capacity (i.e., as part of her
business). In the second, she is engaging in a transaction in her personal life.
Good Faith and Fair Dealing
© 2025/ 2026 | ® All rights reserved
, 3 | Page
Ans: Every contract within the UCC imposes an obligation of good faith in its
performance and enforcement. [UCC §1-304]
*The UCC's definition of "good faith" is honesty in fact and the observance of
reasonable commercial standards.* [UCC §1-201(20)]
The common law also imposes a duty of good faith and fair dealing on each party
to a contract with respect to performance and enforcement.
A breach of this duty is a question of fact, but it usually involves exercising
discretion in a way that deprives the other party of the fruits of the contract.
Example: Pursuant to a written contract giving both parties the power terminate
the contract without cause, CarCo employs Sam to sell cars on commission, with
the commission to be paid when the customers take delivery of their cars. One
month, Sam earned $100,000 in potential commissions, with the bulk of his
customers taking delivery at the end of the month. To avoid paying the
commissions, CarCo terminated Sam's employment on the 28th of the month.
Although CarCo was within its contractual rights in terminating Sam, it was acting
in bad faith. CarCo terminated the employment to escape paying money that was
rightfully due. Thus, Sam is entitled to recover the commission.
[See Fortune v. National Cash Register, 373 Mass. 96 (1977)]
C. TYPES OF CONTRACTS
Ans: Contracts are frequently described as express, implied, or quasi. Only the
first two are actually contracts, and they differ only in the manner in which they
are formed.
a. Express Contract
Ans: Express contracts are formed by language, oral or written.
b. Implied in Fact Contract
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, 4 | Page
Ans: Implied contracts are formed by manifestations of assent other than oral
or written language, i.e., by conduct (e.g., if a person sits in a barber's chair and
the barber cuts his hair, a contract has been formed by the parties' conduct).
c. Quasi-Contract or Implied in Law Contract
Ans: Quasi-contracts are not contracts at all. They are constructed by courts to
avoid unjust enrichment by permitting the plaintiff to bring an action in restitution
to recover the amount of the benefit conferred on the defendant. Their only
relationship to genuine contracts is historical.
Bilateral Contracts—Exchange of Mutual Promises
Ans: The traditional bilateral contract is one consisting of the exchange of
mutual promises, i.e., a promise for a promise, in which each party is both a
promisor and a promisee.
Example: Sidney promises to sell Blackacre to Bertram for $6,000, and Bertram
promises to purchase Blackacre at that price.
Unilateral Contracts—Acceptance by Performance
Ans: The traditional unilateral contract is one in which the offeror requests
performance rather than a promise. Here, the offeror-promisor promises to pay
upon the completion of the requested act by the promisee. Once the act is
completed, a contract is formed. In such contracts, there is one promisor and one
promisee.
Example: Susan promises to pay Charles $5 if he will deliver a textbook to Rick.
Charles is not obligated to deliver the book, but if he does in fact deliver it, Susan
is obligated to pay him the $5.
1) Acceptance by Promise or Start of Performance
© 2025/ 2026 | ® All rights reserved
Contracts BarBri Questions and Correct Answers/
Latest Update / Already Graded
A contract is
Ans: a promise or set of promises, for the breach of which the law gives a
remedy, or the performance of which the law in some way recognizes as a duty.
COMMON LAW VS. ARTICLE 2 SALE OF GOODS
Ans: Generally, the common law governs contracts.
However, special rules have been developed for
contracts involving the sale of goods, and those rules are contained in Article 2 of
the Uniform Commercial Code ("UCC"). Article 2 has adopted much of the
common law of contracts, but where the common law and Article 2 differ, Article
2 prevails in a contract for the sale of goods.
"Sale" Defined
Ans: A sale is a contract in which title to goods passes from the seller to the
buyer for a price.
"Goods" Defined
Ans: Article 2 defines "goods" as all things movable at the time they are
identified as the items to be sold under the contract.
Thus, Article 2 applies to sales of most tangible things (e.g., cars, horses,
hamburgers), but does not apply to the sale of real estate, services (e.g., a health
club membership), or intangibles (e.g., a patent), or to construction contracts.
Goods associated with real estate (e.g., minerals, growing crops and uncut timber,
and fixtures removed from the land) may fall under Article 2 under certain
circumstances.
© 2025/ 2026 | ® All rights reserved
, 2 | Page
Contracts Involving Goods and Nongoods
Ans: If a sale involves both goods and services (e.g., a contract to paint a
portrait), a court will determine which aspect is dominant and apply the law
governing that aspect to the whole contract. However, if the contract divides
payment between goods and services, then Article 2 will apply to the sale portion
and the common law will apply to the services portion.
Merchants vs. Nonmerchants
Ans: A number of the rules in Article 2 depend on whether the seller and/or
buyer are merchants.
Article 2 generally defines "merchant" as one who regularly deals in goods of the
kind sold or who otherwise by his occupation holds himself out as having
knowledge or skill peculiar to the practices or goods involved. [UCC §2-104(1)]
For many of the Article 2 provisions dealing with general business practices (e.g.,
Statute of Frauds, confirmatory memos, firm offers, modification), almost anyone
in business can be deemed a merchant because they have knowledge of the
business practices. However, a few Article 2 provisions (e.g., the implied warranty
of merchantability) are narrower and require a person to be a merchant
with respect to goods of the kind being sold. To be subject to any of the
merchant rules, the merchant must be acting in his mercantile capacity; i.e., he
must be acting in his business, rather than personal, capacity.
Example: Martha sells computers for Acme Corp. On Monday, Martha places
Acme Corps annual coffee order with the coffee service. Later that day, she
offers
to sell her car to her neighbor for $5,000. Martha is a merchant with respect to
the coffee order, but she is not a merchant with respect to the offer to sell her
car. In the first instance, she is acting in her mercantile capacity (i.e., as part of her
business). In the second, she is engaging in a transaction in her personal life.
Good Faith and Fair Dealing
© 2025/ 2026 | ® All rights reserved
, 3 | Page
Ans: Every contract within the UCC imposes an obligation of good faith in its
performance and enforcement. [UCC §1-304]
*The UCC's definition of "good faith" is honesty in fact and the observance of
reasonable commercial standards.* [UCC §1-201(20)]
The common law also imposes a duty of good faith and fair dealing on each party
to a contract with respect to performance and enforcement.
A breach of this duty is a question of fact, but it usually involves exercising
discretion in a way that deprives the other party of the fruits of the contract.
Example: Pursuant to a written contract giving both parties the power terminate
the contract without cause, CarCo employs Sam to sell cars on commission, with
the commission to be paid when the customers take delivery of their cars. One
month, Sam earned $100,000 in potential commissions, with the bulk of his
customers taking delivery at the end of the month. To avoid paying the
commissions, CarCo terminated Sam's employment on the 28th of the month.
Although CarCo was within its contractual rights in terminating Sam, it was acting
in bad faith. CarCo terminated the employment to escape paying money that was
rightfully due. Thus, Sam is entitled to recover the commission.
[See Fortune v. National Cash Register, 373 Mass. 96 (1977)]
C. TYPES OF CONTRACTS
Ans: Contracts are frequently described as express, implied, or quasi. Only the
first two are actually contracts, and they differ only in the manner in which they
are formed.
a. Express Contract
Ans: Express contracts are formed by language, oral or written.
b. Implied in Fact Contract
© 2025/ 2026 | ® All rights reserved
, 4 | Page
Ans: Implied contracts are formed by manifestations of assent other than oral
or written language, i.e., by conduct (e.g., if a person sits in a barber's chair and
the barber cuts his hair, a contract has been formed by the parties' conduct).
c. Quasi-Contract or Implied in Law Contract
Ans: Quasi-contracts are not contracts at all. They are constructed by courts to
avoid unjust enrichment by permitting the plaintiff to bring an action in restitution
to recover the amount of the benefit conferred on the defendant. Their only
relationship to genuine contracts is historical.
Bilateral Contracts—Exchange of Mutual Promises
Ans: The traditional bilateral contract is one consisting of the exchange of
mutual promises, i.e., a promise for a promise, in which each party is both a
promisor and a promisee.
Example: Sidney promises to sell Blackacre to Bertram for $6,000, and Bertram
promises to purchase Blackacre at that price.
Unilateral Contracts—Acceptance by Performance
Ans: The traditional unilateral contract is one in which the offeror requests
performance rather than a promise. Here, the offeror-promisor promises to pay
upon the completion of the requested act by the promisee. Once the act is
completed, a contract is formed. In such contracts, there is one promisor and one
promisee.
Example: Susan promises to pay Charles $5 if he will deliver a textbook to Rick.
Charles is not obligated to deliver the book, but if he does in fact deliver it, Susan
is obligated to pay him the $5.
1) Acceptance by Promise or Start of Performance
© 2025/ 2026 | ® All rights reserved
