Contracts (Exam-level) Question Pack - Questions and Answers

1. A homeowner met with a landscaper at the property to discuss regrading the backyard and installing new turf. The homeowner explained that the uneven terrain made mowing hazardous and asked for a comprehensive solution, including soil leveling, drainage adjustments, and high-grade sod. After evaluating the site, the landscaper replied, “I can handle it for $6,000, start next Monday, and finish in two weeks.”

The homeowner called later that evening to confirm and the landscaper texted back, “Works for me. I’ll order materials and be there Monday at dawn.” The landscaper then mobilized his crew, rented equipment, and declined other jobs in reliance on the agreement. The following Sunday, the landscaper called to cancel, citing a more lucrative contract elsewhere.

The homeowner hired another firm for $7,500, expending more time and money, and sued the original landscaper for breach. The landscaper argued that no formal written contract existed and that handshake agreements were not binding without detailed specifications.

Is the homeowner likely to prevail in the breach of contract claim?

No, because the handshake agreement omitted detailed scope and material warranties.
No, because a service contract exceeding $500 requires a signed writing under the Statute of Frauds.
Yes, because the landscaper made a definite offer that the homeowner accepted, and the subsequent reliance confirmed a contract.
Yes, because the homeowner’s reliance estops the landscaper from denying formation.

Correct answer: C

Explanation: The landscaper’s offer contained clear essential terms: price, schedule, and scope. The homeowner accepted the offer and both parties acted in reliance, confirming mutual assent. This constitutes an enforceable contract under common law.

Why the other options are incorrect
A overlooks that key terms were agreed upon and additional details may be implied from industry practice.
B misapplies the Statute of Frauds; service contracts that can be completed within one year are enforceable without a signed writing.
D confuses formation with enforcement principles; estoppel may apply to enforce a promise, but here, a valid contract already exists.

2. A custom furniture maker contracted with a design firm to produce twenty walnut dining tables, specifying a rare sourced walnut grade presumed available. The written order detailed dimensions, finish, and assembly instructions but did not address wood provenance. Both parties assumed local mills stocked the required walnut.

Weeks later, the furniture maker discovered the walnut grade had been discontinued. Sourcing it required importing from overseas with a three-month delay and significantly higher cost. The design firm refused to wait or pay more and demanded cancellation and refunds.

The furniture maker sued for relief under mutual mistake. The design firm countered that the maker assumed risk by not confirming supply and should perform as agreed or face breach consequences.

Is the furniture maker entitled to relief under mutual mistake?

No, because the furniture maker assumed the supply risk by failing to verify availability before contracting.
No, because mutual mistake only applies when performance is impossible, not merely delayed or costlier.
Yes, because both parties shared a mistake about a basic assumption essential to the contract.
Yes, because the risk was unallocated and the mistake materially altered the agreed performance.

Correct answer: D

Explanation: Mutual mistake applies when both parties are mistaken about a basic factual assumption, and the risk was not assigned to either party. The unexpected unavailability of the walnut grade significantly altered performance, qualifying for relief.

Why the other options are incorrect
A incorrectly assigns risk without contract language or evidence of assumption.
B misstates the standard; mutual mistake applies even where performance is not impossible but commercially impracticable.
C is incomplete; a shared mistake alone does not justify relief without analyzing risk allocation.

3. A retailer under UCC Article 2 contracted to purchase 1,000 specialty light fixtures at $50 each, to be delivered in two shipments of 500 over two weeks. The seller timely delivered the first 500 fixtures, but due to a parts shortage failed to deliver the second batch. The retailer purchased substitute fixtures on the open market at $60 each and incurred $400 in expedited shipping and handling fees.

The retailer sued for breach, seeking damages for the price differential and incidental costs. The seller argued that the retailer’s choice to cover was voluntary and that only incidental damages were recoverable.

How much is the retailer likely entitled to recover under UCC §§ 2-713 and 2-715?

$400, representing only incidental shipping and handling costs.
$5,000, representing the price differential from market cover.
$5,400, combining price differential and incidental expenses.
More than $5,400, including consequential lost profits.

Correct answer: C

Explanation: Under UCC §2-713, buyers may recover the difference between the contract price and cover price ($10 × 500 = $5,000). UCC §2-715 permits recovery of reasonable incidental expenses ($400), bringing the total to $5,400.

Why the other options are incorrect
A excludes price differential, the core remedy for non-delivery.
B omits incidental expenses, which are directly tied to the breach.
D includes consequential damages, which require foreseeability and were not pleaded or established.

4. A publishing house contracted with a printer to deliver 20,000 promotional booklets by May 1 for distribution at a national conference. The contract explicitly stated “time is of the essence” and included liquidated damages of $1,000 per day late. The printer experienced a machine breakdown and delivered on May 5, after four days of repair and testing.

The publisher lost major marketing opportunities at the conference and sought both the liquidated damages and additional lost-profits damages of $25,000. The printer argued that the machine failure was unforeseeable and that liquidated damages alone should apply.

Does the publisher have a valid claim for breach and broader damages?

No, because the delay was caused by an unforeseen mechanical breakdown.
Yes, because the “time is of the essence” clause made timely delivery a condition, triggering breach.
No, because liquidated damages preclude recovery of additional lost profits.
Yes, because machine failures never excuse performance under an express deadline.

Correct answer: B

Explanation: A time-is-of-the-essence clause makes timely delivery a material condition. Late delivery constitutes breach, justifying at least the liquidated damages. Lost profits may also be recoverable if they were foreseeable and not excluded by the contract.

Why the other options are incorrect
A ignores that machinery breakdown does not excuse performance under express conditions absent a force majeure clause.
C liquidated damages only preclude additional recovery if the clause is exclusive, which was not shown.
D overstates the rule; machine failure may excuse performance depending on contract terms and foreseeability.

5. A tenant leased retail space for three years at $4,000 per month. Eighteen months in, the tenant terminated the lease early, citing business downturn, and vacated the premises without notice. The landlord immediately advertised the vacancy but did not receive a new tenant until four months later, when the space rented at $3,800 per month for the remaining three months.

The landlord sued the original tenant for three months of lost rent at $4,000 plus a $200 monthly shortfall over the subsequent three months. The tenant argued the landlord failed to mitigate by re-renting at a significantly lower rate and could only recover three months of unpaid rent.

What is the proper measure of damages in light of the landlord's duty to mitigate?

$12,000, representing only the unpaid rent during vacancy.
$12,600, combining unpaid rent and the shortfall from re-rental.
$0, because mitigation bars any recovery once the premises are re-let.
$13,000, reflecting full original rent for the entire post-abandonment period.

Correct answer: B

Explanation: The landlord took reasonable steps to mitigate. Damages include $12,000 in unpaid rent during vacancy plus $600 shortfall over the final three months ($200 × 3), totaling $12,600. Mitigation reduces damages, not eliminates them entirely.

Why the other options are incorrect
A fails to account for the rent loss after the space was re-let at a lower rate.
C misstates the rule — mitigation limits but does not nullify recovery.
D assumes the landlord can recover full contract rent despite accepting a reduced lease as part of mitigation.

6. A software firm and a client entered a written agreement for the development of a custom analytics dashboard and ongoing maintenance support. The contract detailed deliverables, milestones, and total fees, but made no reference to response‐time commitments or uptime guarantees. During pre-contract negotiations, the firm’s lead engineer emailed the client assuring “24-hour response for any critical issues.”

Over the next year, the dashboard went live and the client filed numerous tickets. When a critical outage occurred, the client sent a priority alert and did not receive a response for 72 hours, during which it lost significant sales data and faced reputational harm. The client demanded compensation for the downtime.

The software firm refused, pointing to the silence of the written agreement on response times and insisting the engineer’s emails were preliminary discussions. The client sued, seeking to introduce the negotiation emails to establish the 24-hour commitment.

Can the client introduce the engineer’s emails under the parol evidence rule?

Parol evidence is barred because the writing is fully integrated.
Parol evidence is admissible to supplement a partially integrated agreement with consistent additional terms.
Parol evidence must be excluded because it contradicts the contract’s silence on support metrics.
Parol evidence may be admitted only to prove fraud, duress, or mistake.

Correct answer: B

Explanation: The parol evidence rule prohibits prior or contemporaneous external terms that contradict a fully integrated agreement. If a contract is only partially integrated, consistent additional terms may be admitted to supplement it. Since response times were omitted, and the emails are consistent with the written agreement, they are admissible.

Why the other options are incorrect
A assumes full integration, which is not established—omitted material terms suggest partial integration.
C misunderstands that silence is not contradiction; adding a term consistent with silence is allowed.
D overstates the limitations of parol evidence—it is not limited solely to fraud or invalidity claims.

7. A landscape maintenance company contracted to perform weekly lawn care for a homeowner, including mowing, edging, and hedge trimming. The company owned a specialized commercial mower critical to service quality. One evening, the mower was destroyed in an accidental warehouse fire.

Upon learning of the loss, the company immediately notified the homeowner and offered to rent a comparable mower at additional daily cost to fulfill the weekly schedule. The homeowner refused any surcharge and sued for breach when the company did not return.

The maintenance company argued performance was excused by impossibility because its unique equipment was destroyed by an unforeseen event beyond its control.

Is the company excused from performance based on impossibility?

Yes, because destruction of unique equipment makes performance impossible and excuses duty.
No, because the company could have rented substitute equipment to perform.
Yes, because frustration of purpose applies when an unforeseen event destroys underlying assumptions.
No, because the company assumed the risk of damage to its own equipment.

Correct answer: B

Explanation: Under the doctrine of impossibility, performance may be excused only when no reasonable substitute exists. Here, the company could rent similar equipment—even if more costly—and still fulfill its obligation. Thus, performance was not objectively impossible.

Why the other options are incorrect
A fails to acknowledge the availability of a feasible alternative.
C misapplies frustration of purpose, which is typically invoked by the recipient of performance, not the performing party.
D incorrectly presumes risk allocation without supporting contract language.

8. A homeowner contracted with a tiling contractor to install slate flooring throughout the entry, kitchen, and powder room for $18,000, with completion required by July 1. The written contract included a liquidated-damages clause providing “$500 per calendar day for each day installation extends beyond July 1, a reasonable estimate of homeowner’s losses.”

The contractor completed the work on July 6. The homeowner withheld $2,500 from the final payment, applying the liquidated-damages provision. The contractor sued for the balance, contending the clause was an unenforceable penalty.

Is the $500-per-day provision likely enforceable as liquidated damages?

The clause is unenforceable because it exceeds the contractor’s expected profit.
The clause is unenforceable because it penalizes rather than compensates.
The clause is enforceable because it reflects a reasonable pre-estimate of actual harm from delay.
The clause is enforceable only if the homeowner proves actual daily losses.

Correct answer: C

Explanation: Liquidated-damages clauses are valid when actual damages would be difficult to quantify and the agreed amount reasonably approximates expected loss. The clause here meets that standard and is not a penalty.

Why the other options are incorrect
A focuses on contractor profit rather than anticipated harm to the non-breaching party.
B assumes without evidence that the amount is excessive or punitive.
D misstates the rule—actual proof of damages is unnecessary when liquidated damages are reasonably forecasted.

9. A publishing startup signed a written contract with a paper supplier after the supplier’s sales representative orally represented that its recycled cardstock met required fire-safety standards. The contract contained a complete-integration clause stating it embodied “the entire agreement between the parties.” After delivery, the startup discovered the paper lacked certification and could not be used, incurring facility compliance costs.

The supplier insisted the integration clause barred any claim based on pre-contract statements. The startup countered that fraud in the inducement is an exception to the parol-evidence rule and sought to introduce the rep’s false assurances.

Can the startup introduce the rep’s pre-contract statement to support its claim?

No, because the integration clause bars any prior inconsistent statements.
Yes, because fraudulent inducement claims fall outside the parol-evidence rule.
No, because misrepresentation claims must be supported by a separate written guarantee.
Yes, because UCC integration rules do not preclude fraud exceptions.

Correct answer: B

Explanation: The parol-evidence rule excludes prior inconsistent statements only for purposes of altering or supplementing contract terms. It does not block evidence offered to prove fraudulent inducement. Even with a full integration clause, pre-contract misrepresentations may be admitted to invalidate the contract.

Why the other options are incorrect
A ignores the fraud exception to the rule.
C incorrectly demands written evidence to support a fraud claim, which can be proven through oral testimony.
D misstates the source of the exception—fraud exception is recognized in both UCC and common law, not limited to the UCC.

10. A real-estate developer hired an architect under a written agreement to draft plans for a mixed-use building. The contract did not address construction-phase supervision. Midway through construction, the developer requested the architect provide on-site supervision and review contractor change orders for an additional $15,000. The architect agreed orally and performed three months of supervision.

When billed, the developer refused to pay, claiming the supervision was within the architect’s original duties and no new consideration supported the promise. The architect sued for breach of the supplemental promise.

Is the oral agreement for additional compensation enforceable?

No, because supervision was implied in the original contract scope.
No, because modifications to service agreements require a signed writing under the Statute of Frauds.
Yes, because the architect provided new services beyond the original contract scope in exchange for the additional fee.
Yes, because UCC principles allow modifications without consideration.

Correct answer: C

Explanation: Under common law, a valid modification requires new consideration. The additional services—construction supervision and review of change orders—were not part of the original drafting duty, thus supporting the supplemental agreement.

Why the other options are incorrect
A inaccurately assumes supervision was implied; architectural drafting and oversight are separate functions.
B misapplies the Statute of Frauds, which generally does not apply to service contracts that are capable of completion within a year.
D improperly relies on UCC rules, which govern sale of goods—not service contracts like architecture.

11. A homeowner contracted with a security-system installer to outfit his residence with sensors, cameras, and monitoring service. The written contract stated “installation shall provide safety benefits to the homeowner and his elderly mother-in-law residing on the premises, for whose security the homeowner acts.” After a break-in, the monitoring system failed to alert authorities and the mother-in-law suffered harm.

The mother-in-law sued the installer for breach of contract. The installer argued she lacked privity and was only an incidental beneficiary. The mother-in-law contended she was an intended third-party beneficiary entitled to enforce the contract’s security obligations.

Does the mother-in-law have standing to enforce the contract as an intended third-party beneficiary?

No, because the mother-in-law was only indirectly benefited and not specifically named.
No, because privity is required in all contract actions.
Yes, because the contract expressly identified her as a protected beneficiary.
Yes, because all occupants automatically qualify as intended beneficiaries of security contracts.

Correct answer: C

Explanation: An intended third-party beneficiary may enforce a contract when the agreement clearly reflects the parties’ intent to benefit that individual. Here, the mother-in-law is explicitly named in the contract and her safety is described as a purpose of the agreement, establishing enforceable rights.

Why the other options are incorrect
A overlooks the direct reference to the mother-in-law and her safety in the contract language.
B misstates the rule — third-party beneficiaries can enforce contracts despite lack of privity when intent is clear.
D overgeneralizes the rule; occupancy alone does not create intended-beneficiary status absent expressed intent.

12. A museum contracted with a restoration specialist to refurbish several historical canvases before the launch of a major exhibit. The written agreement stated that the specialist would complete all restoration work by March 15 and that any delay would result in a $5,000 deduction from the final payment. The specialist agreed, noting that she would begin work immediately and deliver all items by the deadline.

Six weeks into the project, a rare pigment she needed for one of the pieces became unavailable due to supply-chain issues. She informed the museum and proposed substituting a nearly identical compound used in other high-grade restorations. The museum refused, stating that its curatorial board had approved the exhibit based on historically accurate techniques and that the substitution was unacceptable.

The museum then canceled the contract, citing breach and refusing payment for the work completed. The specialist sued, arguing that her performance was excused under impracticability and that she was entitled to restitution for restoration work already performed on the other canvases.

Was the specialist’s failure to use the rare pigment excused under the doctrine of impracticability?

No, because the pigment shortage was foreseeable and does not excuse the specialist’s performance.
Yes, because the museum’s refusal to accept reasonable substitution made completion impracticable.
No, because restoration contracts require strict compliance with original terms.
Yes, because she substantially performed and may recover in restitution for the completed restorations.

Correct answer: B

Explanation: Impracticability applies when an unforeseen event substantially increases the difficulty or burden of performance. Here, the rare pigment became unavailable unexpectedly, and the museum rejected a commercially reasonable substitute. That refusal made it impracticable for the specialist to complete the contract as agreed.

Why the other options are incorrect
A incorrectly assumes the shortage was foreseeable; the specialist’s prompt notification supports its unexpected nature.
C mischaracterizes the flexibility of performance standards in restoration — strict compliance is not always required when alternatives exist.
D confuses the issue — while restitution may be available, the primary issue is excuse from breach, not quantum recovery.

13. A local charity and a printing company entered into a written contract for the design and delivery of 10,000 event posters at $2 per poster, to be delivered no later than May 1. The charity specified during negotiations that it needed the posters by that date for street distribution ahead of a major fundraiser. The printing company delivered the posters on May 4, citing a mechanical breakdown that delayed production.

The charity had already missed its window for promotional distribution and claimed it lost significant donor engagement due to the delay. It sued for breach of contract and sought $20,000 in lost contributions that its board estimated were tied to the missed promotional opportunity.

The printing company argued that it fulfilled the contract as best it could and that the charity had never made clear the scope of consequences tied to late delivery.

Are the charity’s claimed consequential damages recoverable?

No, because delayed performance does not warrant consequential damages absent knowledge of special harm.
Yes, because the printer breached a delivery deadline in a time-sensitive contract.
No, because the charity could have mitigated its loss with alternate outreach methods.
Yes, because all losses from late delivery are recoverable if delay exceeds three days.

Correct answer: A

Explanation: Consequential damages are recoverable only when the breaching party was made aware of special circumstances at the time of contracting. Although the printer knew about the delivery deadline, it lacked knowledge that late delivery would result in specific financial harm from missed donations.

Why the other options are incorrect
B overstates liability — breach alone doesn’t justify consequential damages without foreseeable loss.
C conflates foreseeability with mitigation; even if the charity could mitigate, lack of notice defeats recovery.
D imposes an arbitrary three-day rule not supported by contract law.

14. A nonprofit theater company hired a designer to create promotional posters for its spring festival, with an agreed fee of $8,000. The contract required delivery of digital files by February 1 and included no contingency language. In mid-January, the designer informed the company that she was recovering from a car accident and wouldn’t be able to complete the posters until late February. The company responded that it couldn’t wait and hired another designer for $9,500.

In early February, the original designer completed the posters and delivered them, requesting payment. The theater refused, citing breach due to late performance. The designer sued, arguing that her delay was justified by medical necessity and that the theater suffered minimal harm.

Did the designer’s late performance constitute a breach that excuses the theater from payment?

Yes, because the delay deprived the theater of timely materials and required replacement.
No, because illness and injury excuse delay if performance is still possible.
Yes, because time was of the essence and no extension was negotiated.
No, because the theater accepted delivery of the completed posters.

Correct answer: C

Explanation: When a contract includes a firm deadline for performance and no flexibility is built in, courts treat time as material—especially for event-related services. The designer’s failure to request a formal extension, coupled with the theater’s need to replace her, justifies nonpayment for late performance.

Why the other options are incorrect
A is plausible but less precise—C clearly invokes the legal principle tied to time-sensitive performance.
B improperly assumes medical hardship automatically excuses delay, even when the other party acts reasonably to preserve their interests.
D inaccurately suggests acceptance; the theater had already secured and paid for a replacement designer before delivery.

15. A homeowner entered into a contract with a contractor to install a patio for $16,000, with work to begin on June 10 and completion expected by July 1. On June 8, the contractor called to say that his crew was tied up on another job and that they would begin on June 20 instead. The homeowner responded: “That won’t work — the patio is for a July 4 party. I’m canceling and finding someone else.” The contractor sued for breach of contract.

The homeowner argued that the contractor’s delay amounted to repudiation, entitling him to cancel and seek other arrangements. The contractor insisted that a 10-day delay was minor and that he never indicated refusal to perform.

Should the court find the homeowner’s cancellation a breach?

Yes, because the contractor's proposed start date was still within a reasonable window.
No, because the delay interfered with the homeowner’s intended use and justified cancellation.
Yes, because the homeowner had no evidence that the contractor would fail to complete in time.
No, because timing of performance is not considered material in construction contracts.

Correct Answer: B

Explanation: When timing of performance is essential to the purpose of the contract — such as preparing for a planned event — a proposed delay may materially breach the agreement. The contractor's notice of late start reasonably justified the homeowner’s decision to cancel. No clear assurance was given that completion by July 1 remained possible.

Why the other options are incorrect:
A What’s “reasonable” depends on the contract’s purpose — here, timing was essential.
C The contractor's vague postponement raised fair doubt about timely completion.
D Construction timelines may be flexible generally, but not when bound to event-based deadlines.

16. A university bookstore entered into a written agreement with a printer to produce 10,000 course catalogs for $35,000, with delivery scheduled for August 1 before the fall semester. On July 25, the printer contacted the bookstore and said, “We’re running behind — earliest we can deliver is August 15.” The bookstore canceled the order and hired another printer at $42,000 to meet the deadline.

The original printer delivered the catalogs on August 15 and demanded payment. The bookstore refused, and the printer sued for breach of contract, claiming that delay was minor and non-material.

Should the court find that the bookstore acted within its rights in canceling?

No, because the delay was slight and did not prevent final performance.
Yes, because the timing of delivery was essential to the contract’s purpose.
No, because the printer eventually fulfilled the original order.
Yes, because the bookstore suffered financial harm due to delayed delivery.

Correct Answer: B

Explanation: When timing is critical to a contract’s purpose — especially for time-sensitive materials — late performance may constitute a material breach. The catalogs were needed before the semester began, and the delay defeated the contract’s central purpose. Cancellation was justified.

Why the other options are incorrect:
A “Slight” delay must be evaluated in context — here, it interfered with school operations.
C Tender after cancellation does not revive an extinguished obligation.
D Financial harm may support damages, but the right to cancel stems from breach.

17. A seller agreed to deliver 500 units of a specialized industrial valve to a buyer by May 1. The written contract stated that “all terms herein shall be strictly enforced.” On April 28, the seller informed the buyer that only 400 valves would be available due to a supplier disruption. The buyer responded, “We’re cancelling. We need full delivery by our stated deadline.” The seller sued for breach.

At trial, the buyer argued that the shortfall was material and interfered with scheduled equipment installation across multiple factories. The seller claimed that partial delivery was reasonable and would have minimized waste.

Should the court hold the buyer liable for breach?

Yes, because partial delivery substantially fulfilled the seller’s obligation.
No, because the buyer’s right to strict performance was contractually preserved.
Yes, because minor deviations in quantity do not excuse the buyer’s rejection.
No, because the buyer had no duty to accept nonconforming goods.

Correct Answer: B

Explanation: The contract explicitly called for strict enforcement of terms. Under the UCC, buyers may reject goods that deviate from agreed quantity or specifications if the deviation is material and affects usage. Here, the shortfall disrupted essential performance, and the buyer's rejection was contractually supported.

Why the other options are incorrect:
A Substantial fulfillment is not enough when strict performance is expressly required.
C Minor deviations may be tolerable, but 20% shortfall in mission-critical goods isn’t minor.
D Rejection must be justified — here, it's based on terms, not blanket refusal.

18. A manager agreed to hire a chef for one year at $80,000 to run a new restaurant location. Before the chef started work, the manager learned the location’s permits were delayed and canceled the contract, offering $10,000 in compensation. The chef declined, stating that she had turned down other offers and was entitled to full contractual recovery.

The chef remained unemployed for three months before accepting a different position that paid $75,000 annually. She sued the manager for breach.

What amount is the chef likely to recover?

$5,000.
$10,000.
$15,000.
$80,000.

Correct Answer: A

Explanation: The chef mitigated damages by securing comparable employment at $75,000. The original contract was for $80,000, so her loss amounts to $5,000. Courts allow recovery for net losses caused by breach, reduced by replacement income.

Why the other options are incorrect:
B The offered compensation was declined — recovery is based on actual loss, not proposals.
C She was unemployed for only three months — annual salaries must be pro-rated.
D Full recovery is not permitted when the breaching party proves mitigation occurred.

19. A homeowner agreed in writing to sell his antique table to a neighbor for $3,000. Before pickup, the neighbor visited the house and said, “It looks smaller than I remembered. I’ll pass.” The homeowner replied, “We have a written agreement — you can’t just back out.” The neighbor refused to pay, and the homeowner sued.

At trial, the neighbor argued that the agreement lacked specificity and that no contract was formed due to uncertainty. The homeowner pointed to the written offer, signed acceptance, and clear identification of the table.

Should the court find that a valid contract existed?

No, because physical inspection revealed ambiguity in subject matter.
No, because the neighbor did not accept delivery or make payment.
Yes, because the agreement identified the item, price, and terms of sale.
Yes, because contracts do not require physical inspection to be binding.

Correct Answer: C

Explanation: A contract for the sale of goods requires mutual assent, identified subject matter, and consideration. Here, the written agreement clearly described the item and price, and the neighbor’s change of mind after inspection does not invalidate the contract.

Why the other options are incorrect:
A Subjective reaction to appearance doesn’t defeat clear identification.
B Acceptance may be formed without performance — contract existed prior to pickup.
D Technically true, but C captures the required contract elements more directly.

20. A flooring company entered into two contracts with a builder — one to install hardwood flooring in a model home and another to supply tiles for bathrooms in three homes. After completing the tile delivery, the company informed the builder it would not perform the hardwood installation due to staffing constraints. The builder refused payment for the tiles, citing overall breach.

At trial, the flooring company demanded payment for the completed tile contract. The builder argued that the two contracts were interdependent and formed part of a unified project.

Should the court require the builder to pay for the tile contract?

No, because breach of one contract voids related obligations.
Yes, because performance under one contract entitles payment despite failure elsewhere.
No, because simultaneous negotiation creates a presumption of interdependence.
Yes, because the contracts had separate scopes, terms, and consideration.

Correct Answer: D

Explanation: Unless contracts are expressly conditional upon each other or clearly part of a single agreement, each stands independently. Here, the builder received tile delivery under a separate agreement. Payment is owed despite breach of the hardwood contract.

Why the other options are incorrect:
A Breach in one contract does not extinguish separate obligations unless stated.
B True in effect, but D better explains the basis of legal separation.
C Negotiation timing alone doesn’t establish integration without express linkage.

21. A startup marketing agency hired a software developer to create a custom CRM system tailored to its client onboarding process. The written contract stated that the final product must be delivered by July 1, with payment of $25,000 due upon satisfactory completion. The contract also contained a clause stating, “All modifications must be in writing and signed by both parties.”

On June 1, the developer emailed the agency requesting an extension to July 15, citing delays in testing new features. A partner at the agency replied, “No worries — July 15 works.” The developer delivered the software on July 14, but the agency refused to pay, claiming the late delivery voided the contract. The developer sued for breach.

At trial, the agency argues that the delivery date was contractually binding and that the extension was invalid without a signed writing.

Should the developer prevail?

Yes, because the agency waived timely delivery by agreeing to the extension.
No, because the modification violated the contract’s signed-writing clause.
No, because time was of the essence and the breach was material.
Yes, because substantial performance occurred and delay was minimal.

Correct Answer: A

Explanation: Even when a contract requires signed writings for modification, parties may waive strict performance informally — especially if the modification is acknowledged and relied upon. The agency's email expressing agreement to the new date operates as a waiver, preventing it from claiming breach solely due to the revised delivery.

Why the other options are incorrect:
B While the contract called for written modifications, waiver is a separate doctrine and doesn’t require a signature.
C The agency agreed to the new date, so it can’t claim time was of the essence retroactively.
D Substantial performance may reduce damages, but it doesn’t override express breach unless excused.

22. A manufacturing company agreed to purchase 20 industrial compressors from a supplier at $7,000 apiece, with delivery scheduled over two months. The contract required payment within five days of each delivery. After the first delivery of five units, the manufacturer sent payment eight days later. The supplier complained about the delay but continued with the second delivery.

The manufacturer was then late again with payment — sending funds ten days after the second shipment. The supplier immediately notified the manufacturer that it would cancel the remainder of the contract due to repeated late payments and sued to enforce the cancellation.

Is the supplier entitled to cancel the contract?

Yes, because the manufacturer’s repeated late payments constituted a material breach.
No, because the supplier accepted late payment without enforcing the deadline previously.
Yes, because payment terms are strictly construed under commercial contracts.
No, because partial performance prohibits cancellation without notice and opportunity to cure.

Correct Answer: A

Explanation: Repeated failure to make timely payments under an installment contract can constitute a material breach, justifying cancellation of future obligations. The supplier’s prior complaint and continued shipment do not require permanent tolerance, and courts recognize cumulative late performance as grounds for termination.

Why the other options are incorrect:
B A single waiver does not imply indefinite tolerance for future breaches.
C Strict construction applies when parties enforce terms — the supplier allowed one delay, but cumulative breaches matter more.
D The supplier’s cancellation was based on multiple breaches — not mere failure to provide cure notice.

23. A publisher hired a freelance designer to format ten travel books, with payment of $1,200 per book upon completion. The written contract allowed the designer to subcontract work with publisher approval. The designer assigned four books to another designer without informing the publisher, who discovered the change after publication. The substitute designer had completed quality work, and all deadlines were met.

The publisher refused payment for those four books, citing unauthorized delegation in breach of contract. The freelancer sued for full payment.

Which statement best describes the legal effect of the delegation?

The freelancer may recover for all ten books, because performance was properly completed.
The freelancer breached the agreement and is entitled only to payment for the six undisputed books.
The freelancer cannot recover at all due to material breach of a nondelegable obligation.
The freelancer breached the agreement, but restitution may be available for the four delivered books.

Correct Answer: D

Explanation: When a party breaches a contract by delegating work without consent, the breaching party may still recover the value conferred through restitution. The publisher received formatted books and used them commercially, so payment may be due even though contract damages could apply.

Why the other options are incorrect:
A Delegation violated express terms requiring approval — full recovery isn’t warranted.
B Payment for the six may be owed under contract — but the four may require restitution analysis.
C The publisher received benefit — denying all recovery would result in unjust enrichment.

24. A sports arena hired a lighting technician to install an upgraded system ahead of a concert, for $18,000. The technician completed half the work but missed a critical deadline, leading the arena to hire another team at $15,000 to finish the job. The arena refused to pay the technician anything, claiming breach. The technician sued for partial payment.

At trial, evidence showed that the technician’s work was properly installed and used during the event. The court must calculate a reasonable remedy based on contract breach and quantum meruit principles.

What amount is the technician most likely to recover?

$9,000.
$7,500.
$0.
$3,000.

Correct Answer: B

Explanation: The technician breached by failing to complete performance but may recover in quantum meruit for the value of the work conferred. If half was completed and used, and replacement cost for the rest was $15,000, the total project value was $24,000. The technician contributed roughly $9,000 worth but is owed only net benefit after breach adjustments — most reasonably $7,500.

Why the other options are incorrect:
A Full value for half performance ignores breach.
C Total denial ignores value conferred and unjust enrichment principles.
D Too low given the arena’s use and benefit received.

25. A small business signed a contract with a web developer to build a new site for $6,000, payable in two $3,000 installments — one at project start and one upon completion. After beginning work, the developer learned that the business had misrepresented its budget and planned to delay final payment indefinitely. The developer stopped work after three weeks and refused to continue unless payment was guaranteed. The business sued for breach.

The developer claimed that the misrepresentation and uncertain payment created insecurity, justifying suspension of performance. The business argued that no breach had occurred, and the developer was obligated to finish.

Should the court find the developer breached the contract?

No, because the developer was entitled to demand assurance after learning of financial uncertainty.
Yes, because the developer walked away before completing the agreed scope of work.
Yes, because payment disputes do not excuse performance without notice.
No, because partial performance automatically extends the payment deadline.

Correct Answer: A

Explanation: Under the doctrine of anticipatory repudiation and insecurity, a party may suspend performance if reasonable grounds exist to believe the other will not perform. Misrepresentation of budget and refusal to confirm final payment justify the developer’s request for assurance — and refusal to proceed without it was legally permissible.

Why the other options are incorrect:
B Refusal to continue may be justified when assurance is denied.
C Developer gave notice by pausing work — demand for assurance is recognized under the UCC and common law.
D Payment terms are governed by the contract — partial work doesn’t shift timing automatically.

26. A real estate developer hired an architect to design a mixed-use building, agreeing to pay $60,000 in three installments tied to completion milestones: initial concept ($20,000), structural drawings ($20,000), and final permitting plans ($20,000). The contract also contained a clause requiring written approval for subcontracting. After completing the initial concept and receiving payment, the architect learned that a specialist was needed to complete the structural drawings. Without informing the developer, she hired a third-party engineer to produce those plans.

The developer accepted and paid for the second milestone without raising concerns. However, when he discovered that the engineer had completed a significant portion of the structural work, he refused to pay the final installment, claiming breach of the non-subcontracting clause. The architect sued for breach, stating that the developer received everything he paid for and had raised no objections previously.

At trial, the developer argued that the unauthorized delegation invalidated the contract and released him from paying the final $20,000, even though the final plans had been delivered on time. The architect maintained that she remained responsible and that delegation caused no harm.

Should the court find that the developer breached the contract?

Yes, because the developer received full performance and suffered no prejudice.
No, because the architect breached a material term by subcontracting without approval.
No, because the developer never expressly accepted the final plans.
Yes, because the delegation occurred only after the developer had already approved the prior work.

Correct Answer: A

Explanation: Contract delegation is generally allowed unless the contract prohibits it or the performance is uniquely personal. Even where approval is required, courts may find that delegation without harm or prejudice — especially where the work was accepted — does not bar recovery. The developer used the work, paid two installments, and suffered no measurable loss.

Why the other options are incorrect:
B Breach of the approval clause may be technical, but does not justify withholding payment for fully rendered services.
C The developer used the final plans and never objected — silence after delivery may constitute acceptance.
D Prior approval doesn’t impact the later breach — the focus is whether the breach justified refusal to pay for final work.

27. A small firm hired a consultant to help prepare and submit a grant application to a government agency. They agreed to a fee of $10,000, payable upon submission. The consultant began work and communicated regularly. Two weeks before the deadline, the firm’s manager emailed, “We’re too busy internally — we’re going to pause and handle this in-house instead.” The consultant responded, “Understood — let me know if you change your mind.”

The firm never submitted an application and never paid the consultant. Six weeks later, the consultant sued for breach of contract, claiming she had performed substantial preliminary work and cleared her schedule for this engagement. The firm argued that no formal proposal had been submitted and therefore no payment was triggered.

At trial, evidence showed that the consultant had spent over 40 hours preparing materials, drafted portions of the application, and provided a full framework for submission. She never received notice that her services were no longer needed, aside from the manager’s vague email.

Is the consultant likely to recover?

Yes, because the firm breached by cancelling the agreement without cause.
No, because the contract required full submission before payment.
Yes, because part performance creates a claim for quantum meruit even absent full completion.
No, because the consultant did not explicitly object or continue working.

Correct Answer: C

Explanation: When a party performs substantial work before a contract is repudiated, courts may allow recovery under quantum meruit — the value of services rendered. Though submission didn’t occur, the consultant provided significant preparatory value and lost other income opportunities. Her recovery is based on unjust enrichment, not contract enforcement.

Why the other options are incorrect:
A The firm’s vague email wasn’t a clear breach — but withholding payment after receiving benefit is actionable.
B The payment term applies to full contract enforcement, but quantum meruit bypasses unmet conditions.
D Objection is not required — recovery is based on reasonable reliance and delivered benefit.

28. A distillery ordered 3,000 custom glass bottles from a supplier for an upcoming product launch, with delivery scheduled for June 1 and payment due within ten days of delivery. The written agreement stated that “timely delivery is essential due to seasonal release.” On May 29, the supplier emailed: “We’re facing a production delay — earliest we can ship is June 10.” The distillery replied, “That’s too late — we’ll have to cancel.”

The supplier shipped the bottles on June 10 anyway and demanded payment. The distillery refused, citing breach of the delivery deadline and claiming that the bottles arrived too late for their launch. The supplier sued for breach, arguing that the distillery suffered no loss and had not incurred actual damages from the delay.

Should the court require the distillery to pay?

No, because late delivery breached an essential term of the contract.
Yes, because the supplier ultimately performed and the bottles were usable.
No, because shipment after cancellation is not valid tender.
Yes, because the distillery failed to mitigate losses by using the bottles.

Correct Answer: A

Explanation: Where timing is deemed “essential” in a contract, failure to deliver on time is a material breach. If the buyer cancels before the goods arrive and the seller ships anyway, the buyer is under no obligation to accept or pay. Tender after cancellation does not obligate the buyer to mitigate or accept nonconforming performance.

Why the other options are incorrect:
B Performance after cancellation cannot revive obligation unless agreed to.
C Technically accurate, but A better captures the full legal context including the material breach.
D Mitigation applies to damages — not buyer’s right to reject materially late goods.

29. A business entered into a contract with an IT company to install a new digital security system in exchange for a $24,000 flat fee. The contract included a clause stating, “Work to be completed by December 1, subject to standard installation delays.” During the installation process, the IT company encountered unforeseen wiring issues and requested a two-week extension. The business agreed by email.

Work was completed December 15, and the business began using the new system immediately. However, when the IT company invoiced for $24,000, the business responded that late completion and unexpected equipment costs had caused disruption and refused to pay more than $16,000. The IT company sued for full payment.

At trial, the business claimed that the agreed extension didn’t cover the total delay and that performance was defective. The IT company showed that all promised features were installed, operational, and used daily.

Should the court find the business liable for the remaining $8,000?

No, because the business suffered economic loss due to delay.
Yes, because the company completed installation and the business accepted and used the system.
No, because performance occurred after the amended deadline.
Yes, because the business never objected to specific equipment costs at the time.

Correct Answer: B

Explanation: Acceptance and use of delivered services creates a presumption of satisfaction and obligation to pay, absent express reservation or protest. The business used the system and never rejected it or demanded repairs. The agreed extension covered the delay, and performance was otherwise adequate.

Why the other options are incorrect:
A Economic harm doesn’t cancel payment obligations absent breach.
C Amended timeline extended the original deadline — no breach occurred.
D Equipment cost concerns weren’t raised — but the legal issue hinges on performance and acceptance.

30. A father promised to pay $50,000 to his adult son if the son “avoids all alcohol for one year.” The son accepted and abstained completely for 12 months. At the end of the year, he requested payment, and the father replied, “You didn’t do anything — just avoided something. I’m not paying.” The son sued for breach of contract.

At trial, the father argued that the son did not perform any affirmative act or provide a benefit, so there was no consideration. The son presented testimony showing how he changed habits, withdrew from social groups, and made life adjustments to comply with the agreement.

Is the agreement enforceable?

Yes, because abstaining from a legal activity is valid consideration.
No, because unilateral promises are not enforceable without mutual benefit.
Yes, because the son’s reliance makes the promise binding.
No, because family agreements lack intent to create legal obligations.

Correct Answer: A

Explanation: Under traditional contract doctrine — confirmed in cases such as Hamer v. Sidway — a promise conditioned on forbearance from a legal right constitutes valid consideration. The son gave up a personal liberty (drinking alcohol) for a defined period in exchange for the father’s promise. Even though the act involved refraining rather than doing, it counts as legal detriment and fulfills the requirement for a binding contract.

Why the other options are incorrect:
B Unilateral contracts are enforceable when one party performs as requested — mutual benefit is not the standard.
C Reliance may support promissory estoppel, but here, actual forbearance fulfills a bargained-for exchange.
D While some family promises may lack legal intent, this offer was specific, quantifiable, and accepted with performance.

31. A contractor and a homeowner entered into a written agreement for the renovation of a guest house at a price of $80,000. The contract specified that work would begin on March 15 and end by May 15, with payments scheduled in thirds—at the start, midpoint, and completion. On March 1, the contractor informed the homeowner that supply delays might push the start date back by several weeks. The homeowner responded, “Then I’m going to cancel. I need this done before summer.”

The contractor replied that supplies would likely arrive in time to begin by April 1 and complete the project by June. The homeowner did not respond. The contractor received the materials March 28 and attempted to begin work on April 1, but was refused access to the property. The contractor sued, claiming breach and lost profits.

At trial, the homeowner argued that no contract existed because the delay constituted a failure to perform. The contractor asserted that communication never confirmed cancellation and that there had been no definitive repudiation.

Is the contractor likely to prevail?

Yes, because the homeowner failed to formally revoke the agreement.
No, because the homeowner’s email constituted clear cancellation.
No, because delays in performance relieve both parties.
Yes, because the contractor attempted timely performance and received no response.

Correct Answer: B

Explanation: A party may communicate cancellation in response to anticipated breach. Here, the homeowner clearly stated intent to cancel due to projected delay, which can be treated as anticipatory repudiation. The contractor’s failure to respond or negotiate a new timeline does not override that cancellation. Courts may view the homeowner's message as terminating the agreement before breach occurred.

Why the other options are incorrect:
A Formal revocation is not required if the message clearly indicates intent to cancel.
C Delays may excuse one party, but not permit unilateral revival of contract rights.
D Attempted performance after cancellation does not reestablish agreement.

32. A musician agreed to record vocals for a commercial jingle in exchange for a $3,000 fee, payable after final delivery. The agreement stated that the client would provide instrumental tracks by June 1 and the artist would return completed vocals by June 15. The client delivered tracks on June 3, and the artist returned the vocals on June 17. The client accepted them and ran the jingle in online ads but refused to pay, citing late delivery.

The artist sued for breach, claiming that the delay was minor and had not caused any harm. The client argued that the late vocals voided the agreement and justified nonpayment. Evidence showed that the client never communicated dissatisfaction and used the recording without reservation.

At trial, the client maintained that strict performance was required under the original deadline. The artist presented communications showing the client approved the final track and expressed excitement over the campaign.

Should the court find that the artist is owed payment?

No, because the vocals were delivered late and violated the agreement.
Yes, because the client accepted and used the recording without objection.
No, because failure to meet a deadline voids consideration.
Yes, because slight delay does not negate commercial performance obligations.

Correct Answer: B

Explanation: When a party accepts performance, uses it commercially, and raises no timely objection, courts consider the work accepted and payment owed. The delay was slight and did not interfere with the client’s ability to use the vocals, which were actively employed in advertising. Acceptance and use of services create an obligation to compensate.

Why the other options are incorrect:
A Minor delay without harm does not void payment.
C Consideration remains valid — performance occurred, even slightly late.
D Technically true, but B better addresses the legal effect of client acceptance and use.

33. A clothing retailer agreed to purchase 5,000 jackets from a manufacturer for $30 per unit, delivery set for September 1 to coincide with fall inventory. The contract stated “full delivery required by deadline.” On August 30, the manufacturer delivered 4,200 jackets and indicated the remainder would arrive in one week. The retailer refused the partial shipment and terminated the contract.

The manufacturer sued, arguing that the retailer should have accepted the initial delivery and permitted reasonable delay for the remainder. The retailer pointed to the strict deadline and the fact that promotional materials and inventory planning depended on the full shipment arriving at once.

The court was asked to determine whether the retailer’s refusal and cancellation constituted breach or proper rejection under the UCC.

Which statement best describes the retailer’s rights?

The retailer breached by rejecting otherwise reasonable performance.
The retailer was required to accept the partial shipment and demand cure.
The retailer properly rejected the delivery under the UCC’s perfect tender rule.
The retailer cannot cancel unless damages are proven.

Correct Answer: C

Explanation: Under the UCC, buyers may reject goods that fail to conform to the contract in any respect. The “perfect tender” rule entitles the buyer to reject partial deliveries when full delivery is specified. If full shipment was essential to the retailer’s seasonal rollout, rejection was permissible.

Why the other options are incorrect:
A Reasonableness does not override express delivery requirements under the UCC.
B The buyer may reject outright instead of demanding cure.
D Rejection is allowed even if damages are not proven, though they may affect remedy.

34. A restaurant owner orally promised to pay a vendor $10,000 if the vendor would exclusively supply produce to the restaurant for six months. The vendor agreed and began weekly deliveries starting June 1. No written contract was signed, but both parties referred to the exclusive agreement in emails and shared invoices identifying the restaurant as the sole customer.

Four months later, the restaurant began buying from other suppliers, citing concerns about rising costs. The vendor sued for breach of contract, pointing to lost expected profits and investments made to accommodate the restaurant’s orders. The restaurant argued that the agreement was unenforceable under the Statute of Frauds because it wasn’t in writing.

At trial, the vendor presented emails and records showing performance, exclusivity, and reliance. The restaurant claimed that the agreement could not be proven beyond oral statements.

Is the vendor likely to succeed?

Yes, because full performance removes the need for written proof.
No, because exclusivity agreements over one month must be in writing.
Yes, because partial performance and written references make the agreement enforceable.
No, because oral contracts are unenforceable when future duration exceeds three months.

Correct Answer: C

Explanation: The Statute of Frauds typically requires writing for contracts not performable within one year. However, partial performance and written confirmations (like emails and invoices) can satisfy the writing requirement or support enforcement under promissory estoppel or reliance. The vendor showed action and documentation consistent with an exclusive agreement.

Why the other options are incorrect:
A Full performance helps, but delivery hadn’t yet completed — partial performance applies.
B One-month threshold is not the standard — one-year duration governs Statute of Frauds.
D The duration here (six months) is within one year and does not trigger strict writing requirements automatically.

35. A security firm agreed to provide overnight guards for a factory for $4,000 per week over a six-month period. After three months, the factory’s manager notified the firm that budget cuts required reducing shifts and requested that one less guard be provided per night. The firm agreed, and both parties continued under the new arrangement without modifying payment terms.

At the end of the contract, the factory refused to pay the final month’s invoice, arguing that reduced staffing meant the firm had not performed its obligations and overcharged for services. The firm sued for breach of contract and enforcement of the final invoice.

At trial, the factory argued that the original contract required two guards per shift, and reduction was not formally approved. The firm responded that performance matched what the factory requested, and no objection to payment terms was raised at the time.

Should the court enforce the final invoice?

No, because performance differed from original terms without written modification.
Yes, because both parties voluntarily adjusted performance and continued under the existing rate.
No, because payment terms were implicitly altered by reduced service.
Yes, because the original contract was vague and oral discussions clarified duties.

Correct Answer: B

Explanation: Under contract principles, modifications may occur through conduct and mutual understanding. If both parties adjusted obligations and continued performance without protest, courts may infer modification or waiver. Here, the factory accepted reduced staffing while continuing to pay, supporting enforcement of the agreed rate.

Why the other options are incorrect:
A Writing may be required in some cases, but oral modifications supported by performance can be valid.
C Payment was never adjusted — and factory did not object during the arrangement.
D The contract was not vague — modification, not clarification, is the key legal issue.

36. A startup contracted with a design firm to create a suite of visual assets for its launch campaign, including logo work, infographics, and animated videos. The agreement set a total payment of $25,000, with installments due every two weeks based on the firm's internal progress schedule. The startup paid the first $5,000 but missed the second payment entirely. The design firm continued work for another week before halting performance and demanding immediate payment of the missed installment.

The startup responded that it was securing new funding and would make the payment the following month. The firm declined to continue without payment and sued for breach, claiming that the late payment materially undermined its ability to deliver the remaining work. The startup argued that a short delay was not sufficient to justify canceling the contract.

At trial, the court examined whether the missed payment justified the firm’s decision to stop work and whether refusal to continue amounted to breach or a valid suspension.

Should the design firm be found in breach for halting performance?

No, because the missed payment gave the firm grounds to suspend work.
Yes, because the firm stopped before confirming that the client would not pay.
No, because short payment delays are common and excused in creative contracts.
Yes, because performance must continue unless failure to pay causes total impossibility.

Correct Answer: A

Explanation: Under contract law, failure to pay in accordance with agreed terms can justify suspension, especially when payments fund ongoing performance. If a party materially breaches by failing to make timely payments, the other party may stop work until assurances or payments are made. The firm did not breach — it responded reasonably.

Why the other options are incorrect:
B Suspension does not require confirmation of permanent nonpayment — the missed installment was material.
C Common practice does not override specific contractual expectations.
D Suspension is permitted before total impossibility if there’s material breach.

37. A specialty contractor entered into an agreement to fabricate custom signage for a museum exhibit, with the museum agreeing to pay $4,000 for design and installation. The contract allowed the contractor to delegate work to third parties with written notice. Midway through the project, the contractor subcontracted the manufacturing phase to a firm he had used before, but failed to notify the museum.

The museum accepted delivery and paid the first $2,000 upon installation. Later, the exhibit’s signage malfunctioned, and an investigation revealed that the subcontracted firm used cheaper components not disclosed in the design specs. The museum refused to pay the remaining $2,000, claiming breach of contract due to unauthorized delegation and defective materials.

Which of the following statements best describes the contractor’s legal position?

He may recover full payment because the museum accepted and used the signage.
He materially breached and cannot recover due to unauthorized delegation.
He may be entitled to restitution for partial performance, even if in breach.
He may enforce the contract only if delegation was immaterial and museum suffered no harm.

Correct Answer: C

Explanation: Although the contractor breached by failing to notify the museum of the delegation and delivering non-spec components, he may still recover under restitution for the value provided, minus damages. Courts recognize unjust enrichment even when contract terms are violated, so long as performance had measurable benefit.

Why the other options are incorrect:
A Use doesn’t guarantee full payment when breach results in harm.
B Breach may bar contract enforcement, but restitution is a separate remedy.
D The harm was proven — enforcement isn’t allowed, but restitution may apply.

38. A distributor entered into a contract with a beverage company to stock 10,000 cases of a new drink across multiple regional stores. The contract specified full delivery by August 1 to coincide with national launch. On July 15, the distributor emailed, “Due to warehouse constraints, we’ll only be able to stock half the product.” The beverage company replied, “If you can’t meet our needs, we’ll cancel and find someone else.”

The distributor responded the next day, saying it would try to improve capacity, but it was unlikely it could meet the full order. The beverage company terminated the contract on July 20 and secured another distributor. The first distributor sued for breach, claiming it was never formally given time to cure performance concerns.

At trial, the company argued that the distributor’s initial message constituted anticipatory breach and justified cancellation.

Did the beverage company act within its rights in terminating the contract?

No, because the distributor had not definitively repudiated the contract.
Yes, because email statements are considered binding under the UCC.
No, because the company was required to allow time for cure.
Yes, because the distributor's statement created reasonable insecurity and justified cancellation.

Correct Answer: D

Explanation: Under the UCC, a party may suspend or cancel performance if the other party’s statements create reasonable grounds for insecurity or indicate nonperformance. The distributor’s message suggested it could not fulfill obligations, and no timely assurances followed. The beverage company was entitled to terminate.

Why the other options are incorrect:
A Repudiation may be inferred from uncertainty and lack of reassurance.
B Email statements can be relevant, but the issue here is performance assurance.
C Cure rights apply after breach — insecurity triggers different remedies.

39. A tenant leased commercial space for three years, with a clause allowing assignment upon landlord approval, “which shall not be unreasonably withheld.” After 18 months, the tenant sought to assign the lease to a bakery, which had strong credit and prior business experience. The landlord refused, stating that he preferred only non-food tenants in the building.

The tenant sued for breach of lease terms, seeking specific performance of the assignment clause and damages for lost opportunity. The landlord maintained that his preference was based on property aesthetics and avoided odors associated with baking.

Which of the following best describes the legal effect of the landlord’s refusal?

The landlord was entitled to deny assignment for aesthetic reasons.
The refusal violated the lease because it lacked commercially reasonable justification.
The landlord was permitted to reject based on property type and internal policy.
The lease created no enforceable obligation unless assignment harmed the property.

Correct Answer: B

Explanation: A clause requiring approval “not to be unreasonably withheld” creates an enforceable obligation. Courts apply commercial reasonableness standards — aesthetic preferences are generally insufficient unless tied to objective property impact. The bakery’s qualifications supported approval, making the landlord’s refusal unreasonable.

Why the other options are incorrect:
A Aesthetic concerns don’t justify denial unless harm or loss is shown.
C Internal policy isn’t binding unless incorporated into the lease.
D Lease clauses create enforceable obligations regardless of actual harm.

40. A publishing company offered an author $50,000 for the exclusive rights to adapt her novel into a graphic format. The parties exchanged emails, and the author replied, “I’m thrilled — let’s finalize this next week.” Before signing, the author received a better offer from a second publisher for $70,000 and accepted it. The first publisher sued, claiming breach and seeking specific performance or damages.

In court, the author argued that the original exchange lacked binding terms and expressed only intent to negotiate. The publisher pointed to past deals formed over email and industry custom supporting such exchanges as contracts.

Which of the following statements best describes the likely outcome?

The author is liable because her reply constituted acceptance.
The publisher has no claim because there was no final signed agreement.
The author’s message did not form a contract because it conditioned finalization on future steps.
The publisher is entitled to damages based on reliance and lost expectation.

Correct Answer: C

Explanation: Courts evaluate contract formation based on intent and clarity of terms. Here, the author’s reply stated “let’s finalize,” indicating that essential terms remained unresolved. Without a meeting of the minds, the message did not create a binding agreement.

Why the other options are incorrect:
A Acceptance must be unconditional — this reply suggested future negotiation.
B A signed document isn’t always required, but formation must be complete.
D Reliance damages apply only when there’s a contract or enforceable promise; not present here.

41. A contractor agreed to build a custom deck for a homeowner for $12,000, with payment due in two equal installments—half at the start and half upon completion. After completing 75% of the work, the contractor discovered that the homeowner had begun hiring another crew to finish the deck, citing delays and dissatisfaction. The homeowner refused to pay the second installment, stating that the contractor had breached by failing to meet expected progress.

The contractor sued, asserting that the work was on track and nearly complete when the homeowner refused further cooperation. The homeowner argued that her dissatisfaction and concern over the timeline justified bringing in a replacement team and withholding payment.

At trial, the court considered whether the homeowner's actions constituted breach or permissible termination based on anticipated failure to perform.

Did the homeowner breach the contract?

Yes, because hiring another crew interfered with the contractor’s right to complete performance.
No, because dissatisfaction with progress justified partial termination.
Yes, because refusal to pay and blocking access occurred before actual breach.
No, because the contractor did not complete the job within a reasonable timeframe.

Correct Answer: A

Explanation: Once performance is underway and not materially deficient, the client must allow the contractor an opportunity to complete. Premature termination, especially by hiring a replacement and withholding payment, constitutes anticipatory breach. The contractor was progressing and had not defaulted at the time of interference.

Why the other options are incorrect:
B Subjective dissatisfaction is not sufficient unless tied to material breach.
C Anticipatory breach matters here, but this answer overlaps with A and lacks precision.
D No formal complaint or cure opportunity was offered — timeline concerns alone don’t justify termination.

42. A company entered into a contract with an audio engineer to provide sound services for three weekend festivals. The contract specified $2,000 per event, for a total of $6,000, with a $1,000 advance payable up front. After performing the first event, the engineer was hospitalized and unable to complete the remaining two. The company hired a replacement engineer for $2,500 per event and refused to pay anything further to the original engineer.

At trial, the engineer sued for partial compensation based on completed work and argued that the replacement costs should not affect his recovery. The company countered that hiring a more expensive replacement justified offsetting all amounts and withholding payment.

How much is the engineer likely entitled to recover?

$1,000.
$2,000.
$3,500.
$4,000.

Correct Answer: C

Explanation: The engineer performed one event ($2,000 value), and the company paid a $1,000 advance. Replacement cost for two events exceeded the original budget by $1,000 total. The company may offset damages ($1,000) from the full amount owed ($4,000), resulting in recovery of $3,000 — plus the prepaid $1,000 already received — for a total of $4,000. Since only $1,000 was already paid, the engineer should receive $3,000 more.

Why the other options are incorrect:
A Undervalues completed work — breach occurred after partial performance.
B Ignores offset logic — doesn’t account for replacement cost.
D Overstates recovery — fails to subtract cost increase from damages.

43. A homeowner hired a painter to repaint the exterior of her home. The written agreement stated that payment would be made only upon “full and satisfactory completion.” The painter finished the work but was denied payment because the homeowner felt that the color looked too “flat and uneven.” The painter insisted that the paint was applied evenly and that the selected color had a matte finish by design.

The homeowner refused to allow the painter to adjust or touch up the work and did not point to any specific areas of noncompliance. The painter sued, arguing that the work met industry standards and the dissatisfaction was aesthetic, not contractual.

The court was asked to determine whether “satisfactory completion” was a subjective or objective standard in this context.

Which statement best reflects the proper legal standard?

Satisfaction clauses always require subjective approval.
The painter must meet the homeowner’s personal preferences under the clause.
Objective industry standards govern unless the contract ties payment to personal taste.
Courts presume satisfaction clauses are unenforceable unless defined in writing.

Correct Answer: C

Explanation: Satisfaction clauses may be interpreted either subjectively or objectively. In commercial and construction contexts, courts lean toward objective interpretation — i.e., whether performance meets professional standards. Absent specific language tying approval to personal aesthetic taste, dissatisfaction is not a defense if the work conforms to expected quality.

Why the other options are incorrect:
A Not always — context matters.
B Subjective standards apply when dealing with taste-sensitive services (e.g., art, custom music).
D Satisfaction clauses are enforceable if framed properly — no writing limitation applies here.

44. A printing company assigned a contract to produce event programs for a theater to a subcontractor after entering a separate agreement to focus on larger accounts. The assignment included all rights and obligations and was made without express notice to the theater. The subcontractor completed all work and billed the theater directly, which paid for the first half of the season. When a misprint occurred during the second event, the theater refused further payment, stating that it never approved the change in contractor.

The subcontractor sued, asserting that performance had been accepted and that the theater had benefited without objection. The theater argued that the original contract prohibited assignment without mutual consent.

Should the subcontractor prevail?

No, because the original contract expressly prohibited assignment.
Yes, because the theater accepted and paid for initial performance without protest.
No, because performance under an invalid assignment is unenforceable.
Yes, because assignment of contract rights does not require notice if duties are performed.

Correct Answer: B

Explanation: When a party accepts performance under an assignment and pays without objecting, it may be deemed to have waived consent. Courts often enforce assignments where the party receiving performance suffers no prejudice and has already accepted delivery or services.

Why the other options are incorrect:
A The clause may bar assignment — but waiver through conduct overrides.
C Performance can still support enforcement even without formal assignment.
D Legal duties may require notice or consent depending on contract terms — performance alone doesn’t cure all defects.

45. A vendor agreed to supply seasonal inventory to a garden center, with a clause stating, “Delivery subject to weather conditions affecting crop availability.” In late March, heavy frost damaged early spring crops, and the vendor emailed, “We may be delayed — assessing losses.” On April 10, the vendor shipped only half the agreed quantity. The garden center refused to pay, citing breach and revenue loss during peak season.

At trial, the vendor argued that the clause excused performance due to frost damage and that partial delivery was the best it could manage. The garden center claimed that the clause did not excuse delivery of unaffected items and that more notice was required.

Should the vendor be excused from full performance?

No, because the clause was too vague to excuse breach.
Yes, because the clause tied delivery to crop conditions and seasonal damage occurred.
No, because partial performance does not satisfy commercial contracts absent agreement.
Yes, because weather-related limitations are recognized under UCC commercial impracticability.

Correct Answer: C

Explanation: Under the UCC, partial delivery due to impracticability is allowed only if the seller fairly allocates and communicates limitations. The clause references weather but doesn’t define precise scope. The garden center did not receive adequate notice or allocation plan, and partial delivery failed to meet contract expectations.

Why the other options are incorrect:
A Vague clauses may still support partial excuse — not full breach denial.
B Clause references weather, but no specifics or communication about allocation were given.
D Impracticability requires fair allocation and timely notice — neither occurred.

46. A nonprofit organization hired an independent grant writer to prepare three proposals in advance of a major donor summit. The contract stated that the grant writer would be paid $10,000 upon submission of all three proposals. The writer completed and submitted two by the deadline, but became ill and did not submit the third. The nonprofit used the first two proposals successfully at the summit and refused payment, claiming incomplete performance.

The writer sued for breach, arguing that the organization accepted and benefitted from her work. The nonprofit responded that the full payment was contingent on submission of all three proposals and that partial performance was contractually insufficient.

Should the court order the nonprofit to pay?

Yes, because quantum meruit allows partial recovery for accepted work.
No, because the contract clearly conditioned payment on full submission.
Yes, because illness excuses strict performance in service contracts.
No, because acceptance does not override a failed condition precedent.

Correct Answer: D

Explanation: When a contract conditions payment on full completion of performance, courts enforce that condition unless waived or modified. Partial acceptance does not override express payment terms. Quantum meruit might allow recovery separately, but under this contract, the organization is not obligated to pay without delivery of all three proposals.

Why the other options are incorrect:
A Acceptance alone doesn’t override a failed condition precedent.
B Technically accurate, but lacks nuance — D better highlights the legal mechanism.
C Illness may excuse breach, but doesn’t alter express conditions without mutual adjustment.

47. A bakery signed a contract to receive 20 crates of organic strawberries from a local farm at $150 per crate. The delivery was scheduled for June 1 to align with seasonal recipes. On June 3, the farm delivered only 16 crates, citing a poor harvest. The bakery accepted the shipment but sued to recover the cost of purchasing four additional crates from another supplier at $180 each.

The farm argued that acceptance waived any right to damages. The bakery replied that the delivery failed to meet quantity and price expectations, and that the farm breached by underdelivering despite accepting a fixed-volume contract.

What amount is the bakery most likely to recover?

$0.
$120.
$600.
$720.

Correct Answer: C

Explanation: The bakery received 16 crates as promised, but had to purchase 4 additional crates at $180 each, compared to the contract rate of $150. The difference is $30 per crate. $30 × 4 = $120. Acceptance does not waive the right to claim damages for nonconforming quantity under the UCC.

Why the other options are incorrect:
A Acceptance does not eliminate damage recovery.
B Miscalculates the price differential.
D Overstates recovery by assuming full replacement cost — damages reflect difference, not total value.

48. A law student hired a tutor to provide weekly sessions for her bar exam preparation for four months. Their contract included a provision that allowed cancellation “with two weeks’ notice” by either party. After eight weeks, the tutor notified the student that she had accepted a teaching job and would discontinue tutoring immediately. The student sued, alleging breach and damages due to lost preparation time and cost of finding a replacement.

The tutor argued that professional opportunity justified early departure and that the student could find another tutor on short notice. Evidence showed the student missed a critical prep window and hired a less experienced substitute at a higher rate.

Is the student likely to prevail?

Yes, because the tutor breached the cancellation clause by failing to provide notice.
No, because professional change excuses obligations under service contracts.
Yes, because timing and reliance created foreseeable harm.
No, because no damages can be proven with certainty.

Correct Answer: A

Explanation: The tutor agreed to provide two weeks’ notice prior to termination. Sudden withdrawal violates the agreed provision and constitutes breach. The student relied on the sessions and suffered disruption in preparation. Damages may be recoverable based on cost differential and exam performance impact.

Why the other options are incorrect:
B Career moves do not override agreed notice terms.
C True in substance, but A identifies the mechanism of breach.
D Certainty of damages may affect amount — but breach liability remains.

49. A vintage car owner agreed to sell his restored 1967 convertible to a longtime friend, stating “You can have it for $30,000 — it’s been waiting for someone who appreciates it.” The friend replied, “I accept — I’ll bring a check this weekend.” Before the weekend arrived, another buyer offered $35,000, and the owner sold the car to them instead.

The friend sued, claiming breach of contract. The owner argued that no formal agreement had been signed and that until money changed hands, no deal was binding. Both parties presented their messages and timestamps in court.

Did the friend’s response create a binding agreement?

No, because no consideration was exchanged.
Yes, because the friend's acceptance formed a valid contract.
No, because the offer was vague and invited further negotiation.
Yes, because oral contracts for goods are enforceable under the Statute of Frauds.

Correct Answer: B

Explanation: The offer was definite, and the friend’s message was a clear acceptance. Under contract law, consideration does not require immediate exchange of money — a promise to pay is sufficient. Even though the sale was for personal property, the agreement was definite, and the Statute of Frauds does not block enforcement where partial performance or clear terms exist.

Why the other options are incorrect:
A Consideration was offered — promise to pay is enough.
C The language did not suggest negotiation — it was specific and accepted without condition.
D Statute of Frauds may require writing over $500, but exceptions apply when performance or reliance exists.

50. A retail distributor hired a marketing firm to rebrand its image, including packaging, slogans, and social media campaigns. The contract specified a payment of $20,000 contingent on delivery of all assets by April 1. The firm delivered the packaging and slogan by April 1 but completed the social media materials on April 10. The distributor accepted all materials and launched its campaign using the full set.

Two weeks later, the distributor refused payment, stating that the missed deadline violated the contract. The firm sued for breach, presenting correspondence showing that the distributor had reviewed and approved the late materials without objection.

Which of the following best supports the firm’s claim?

Late performance excuses payment if use occurs without objection.
Contract enforcement depends only on economic benefit received.
Acceptance and use of delivered materials may waive timing requirements.
Deadlines are binding only if marked “time is of the essence.”

Correct Answer: C

Explanation: Courts often find that when a party accepts and uses late performance without complaint, they may be deemed to have waived any right to reject based on delay. Especially in commercial relationships, conduct after breach can imply modification or forgiveness. Here, the distributor’s actions support waiver of strict timing.

Why the other options are incorrect:
A Use may imply waiver — but doesn’t automatically excuse payment.
B Economic benefit helps damages arguments, not contract formation or breach logic.
D Time clauses matter — but waiver by conduct overrides unless reasserted.

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Contracts (Exam-level) Question Pack - Questions and Answers

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