NCBE Contracts Questions and
Correct Answers
A general contractor about to bid on a construction job for an office building invited a carpenter
and several others to bid on the carpentry work. The carpenter agreed to bid if the general
contractor would agree to give the carpenter the job provided that his bid was lowest and the
general contractor was awarded the main contract. The general contractor so agreed. The
carpenter, incurring time and expense in preparing his bid, submitted the lowest carpentry bid.
The general contractor used the carpenter's bid in calculating its own bid, which was successful.
Which of the following best supports the carpenter's position that the general contractor is
obligated to award the carpentry subcontract to the carpenter? - <CORRECT ANSWER >>The
carpenter gave consideration for the general contractor's conditional promise to award the
carpentry subcontract to the carpenter.
- The carpenter's bid was consideration for the general contractor's promise to award the
carpentry subcontract to the carpenter if his bid was the lowest and the general contractor was
awarded the main contract. Thus, the general contractor and the carpenter formed a contract.
- The carpenter's bid was bargained for and was a benefit to the general contractor, so it
constitutes consideration sufficient to support the general contractor's conditional promise to
award the subcontract to the carpenter. Conditional promises are enforceable, but the duty to
perform does not become absolute until the condition has been met or is legally excused. The
conditions in this contract were met-the carpenter's bid was the lowest and the general
contractor was awarded the main contract. Thus, the general contractor is under a duty to
perform his promise to award the subcontract to the carpenter.
A homeowner and a contractor entered into a contract under which the homeowner agreed to
pay the contractor $50,000 for remodeling the homeowner's basement according to a set of
plans.
After the work was completed, the homeowner honestly believed that there were defects in
the contractor's work as well as departures from the plans. In fact, the contractor had fully
performed. The homeowner offered to pay the contractor $35,000 in full settlement in
exchange for the contractor's promise to surrender his entire claim. The contractor accepted
, the homeowner's offer, and the homeowner paid the contractor $35,000. The reasonable value
of the work was $35,000.
Is the contractor likely to succeed in an action challenging the validity of the settlement
agreement? - <CORRECT ANSWER >>No, because the homeowner honestly disputed the
amount he owed the contractor.
- The homeowner's promise to surrender his claim against the contractor was sufficient
consideration for a modification of the contract price. A common law contract (such as the one
here - for services) can be modified if the modification is supported by new consideration. The
promise to refrain from suing on a claim may constitute consideration. Even if the claim is
invalid, in law or in fact, if the claimant reasonably and in good faith believes his claim to be
valid, forbearance of the legal right to have the claim adjudicated constitutes a detriment and
consideration. Here, the homeowner honestly believed that there were defects in the
contractor's work and departures from the plans. Even though the homeowner's belief is
incorrect, and thus he is unlikely to win a suit against the contractor, this belief is in good faith,
so a surrender of his right to sue on the claim constitutes valid consideration sufficient to
modify the contract price.
An engineer signed a two-year contract to serve as the chief safety engineer for a coal mine at a
salary of $7,000 per month. The position required the engineer to work underground each
workday. After one week on the job, the engineer became very ill. He requested testing of the
mine air system, which revealed the presence of a chemical agent to which the engineer had a
rare allergic reaction. The engineer promptly quit. The coal mine then hired a qualified
replacement for the remainder of the engineer's contract at a salary of $7,500 per month.
Assume that no statute or regulation applies.
If the coal mine sues the engineer for breach of contract, is the coal mine likely to recover
damages? - <CORRECT ANSWER >>No, because the risk to the engineer's health excused his
nonperformance of the contract.
- The occurrence of an unanticipated or extraordinary event may make contractual duties
impossible or impracticable to perform. Where the nonoccurrence of the event was a basic
assumption of the parties in making the contract and neither party has expressly or impliedly
assumed the risk of the event occurring, contractual duties may be discharged. The test for a
finding of impracticability is that the party to perform has encountered: (i) extreme and
unreasonable difficulty and/or expense; and (ii) its nonoccurrence was a basic assumption of
the parties. The engineer's rare allergic reaction to a chemical found in the mine air system was
Correct Answers
A general contractor about to bid on a construction job for an office building invited a carpenter
and several others to bid on the carpentry work. The carpenter agreed to bid if the general
contractor would agree to give the carpenter the job provided that his bid was lowest and the
general contractor was awarded the main contract. The general contractor so agreed. The
carpenter, incurring time and expense in preparing his bid, submitted the lowest carpentry bid.
The general contractor used the carpenter's bid in calculating its own bid, which was successful.
Which of the following best supports the carpenter's position that the general contractor is
obligated to award the carpentry subcontract to the carpenter? - <CORRECT ANSWER >>The
carpenter gave consideration for the general contractor's conditional promise to award the
carpentry subcontract to the carpenter.
- The carpenter's bid was consideration for the general contractor's promise to award the
carpentry subcontract to the carpenter if his bid was the lowest and the general contractor was
awarded the main contract. Thus, the general contractor and the carpenter formed a contract.
- The carpenter's bid was bargained for and was a benefit to the general contractor, so it
constitutes consideration sufficient to support the general contractor's conditional promise to
award the subcontract to the carpenter. Conditional promises are enforceable, but the duty to
perform does not become absolute until the condition has been met or is legally excused. The
conditions in this contract were met-the carpenter's bid was the lowest and the general
contractor was awarded the main contract. Thus, the general contractor is under a duty to
perform his promise to award the subcontract to the carpenter.
A homeowner and a contractor entered into a contract under which the homeowner agreed to
pay the contractor $50,000 for remodeling the homeowner's basement according to a set of
plans.
After the work was completed, the homeowner honestly believed that there were defects in
the contractor's work as well as departures from the plans. In fact, the contractor had fully
performed. The homeowner offered to pay the contractor $35,000 in full settlement in
exchange for the contractor's promise to surrender his entire claim. The contractor accepted
, the homeowner's offer, and the homeowner paid the contractor $35,000. The reasonable value
of the work was $35,000.
Is the contractor likely to succeed in an action challenging the validity of the settlement
agreement? - <CORRECT ANSWER >>No, because the homeowner honestly disputed the
amount he owed the contractor.
- The homeowner's promise to surrender his claim against the contractor was sufficient
consideration for a modification of the contract price. A common law contract (such as the one
here - for services) can be modified if the modification is supported by new consideration. The
promise to refrain from suing on a claim may constitute consideration. Even if the claim is
invalid, in law or in fact, if the claimant reasonably and in good faith believes his claim to be
valid, forbearance of the legal right to have the claim adjudicated constitutes a detriment and
consideration. Here, the homeowner honestly believed that there were defects in the
contractor's work and departures from the plans. Even though the homeowner's belief is
incorrect, and thus he is unlikely to win a suit against the contractor, this belief is in good faith,
so a surrender of his right to sue on the claim constitutes valid consideration sufficient to
modify the contract price.
An engineer signed a two-year contract to serve as the chief safety engineer for a coal mine at a
salary of $7,000 per month. The position required the engineer to work underground each
workday. After one week on the job, the engineer became very ill. He requested testing of the
mine air system, which revealed the presence of a chemical agent to which the engineer had a
rare allergic reaction. The engineer promptly quit. The coal mine then hired a qualified
replacement for the remainder of the engineer's contract at a salary of $7,500 per month.
Assume that no statute or regulation applies.
If the coal mine sues the engineer for breach of contract, is the coal mine likely to recover
damages? - <CORRECT ANSWER >>No, because the risk to the engineer's health excused his
nonperformance of the contract.
- The occurrence of an unanticipated or extraordinary event may make contractual duties
impossible or impracticable to perform. Where the nonoccurrence of the event was a basic
assumption of the parties in making the contract and neither party has expressly or impliedly
assumed the risk of the event occurring, contractual duties may be discharged. The test for a
finding of impracticability is that the party to perform has encountered: (i) extreme and
unreasonable difficulty and/or expense; and (ii) its nonoccurrence was a basic assumption of
the parties. The engineer's rare allergic reaction to a chemical found in the mine air system was
