NextGen Bar Exam Contracts and Sales Syllabus

Contracts and Sales syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Contracts and Sales in NextGen Bar Exam, not a summary of it.

1. 1

   Formation and Governing Law

   4 topics

   • Sources of Contract Law
     • Common law versus UCC Article 2 scope
     • Predominant purpose test for mixed contracts
   • Offer and Acceptance
     • Definiteness and intent to be bound
     • Mailbox rule and methods of acceptance
     • UCC battle of the forms under Section 2-207
   • Consideration and Substitutes
     • Bargained-for exchange
     • Promissory estoppel and reliance
   • Firm Offers and Option Contracts
2. 2

   Defenses to Formation and Enforcement

   6 topics

   • Capacity and Minority
   • Misrepresentation, Fraud, and Nondisclosure
   • Mistake
     • Mutual versus unilateral mistake
   • Duress and Undue Influence
   • Unconscionability and Public Policy
   • Statute of Frauds
     • Categories of contracts requiring a writing
     • Satisfaction and exceptions
3. 3

   Contract Terms and Performance

   6 topics

   • Parol Evidence Rule
   • Interpretation and Gap-Filling
   • Conditions
     • Express conditions and substantial performance
     • Excuse and waiver of conditions
   • UCC Warranties
     • Express warranties and warranties of merchantability
     • Fitness for a particular purpose and disclaimers
   • Risk of Loss and Delivery Obligations
   • Excuse of Performance
     • Impossibility and impracticability
     • Frustration of purpose
4. 4

   Breach, Remedies, and Third Parties

   6 topics

   • Material Breach and Anticipatory Repudiation
   • Perfect Tender Rule and Cure
   • Expectation, Reliance, and Restitution Damages
   • Limitations on Damages
     • Foreseeability, certainty, and mitigation
     • Liquidated damages clauses
   • UCC Buyer and Seller Remedies
     • Cover and market-price differential
     • Resale and incidental and consequential damages
   • Third-Party Beneficiaries, Assignment, and Delegation

Contracts and Sales flashcards for NextGen Bar Exam

23 of 53 cards from the Contracts and Sales deck — real questions with worked answers.

1. What body of law governs contracts for the sale of goods, and what governs contracts for services, real estate, and intangibles?

   UCC Article 2 governs contracts for the sale of goods (movable, tangible property). The common law governs contracts for services, real estate, employment, and intangibles.

2. In a mixed contract involving both goods and services, which law applies?

   The predominant purpose (predominant factor) test applies: if the contract is predominantly for goods, the UCC governs the whole contract; if predominantly for services, the common law governs. (Exception: some courts apply the 'gravamen' test to the part at issue.)

3. Under the UCC, who qualifies as a 'merchant'?

   A merchant is one who deals in goods of the kind, or otherwise by occupation holds himself out as having knowledge or skill peculiar to the goods or practices involved (or who employs an agent with such knowledge). Some UCC rules (e.g., good faith standard, firm offers, 2-207) apply only to merchants.

4. What are the elements of a valid offer?

   An offer is a manifestation of present willingness to enter a bargain, made so that the offeree understands his assent will conclude the deal. It requires: (1) intent to be bound (objectively), (2) reasonably definite/certain terms, and (3) communication to the offeree.

5. State the mirror image rule and identify the body of law where it applies.

   Under the common law mirror image rule, an acceptance must mirror the offer exactly; any addition or change makes the response a counteroffer (a rejection) rather than an acceptance. It applies to common-law contracts, not UCC sale-of-goods contracts.

6. Under UCC 2-207, when does an additional term in an acceptance between merchants become part of the contract?

   Between merchants, additional terms automatically become part of the contract unless: (1) the offer expressly limits acceptance to its terms, (2) the additional term materially alters the deal, or (3) the offeror objects within a reasonable time. If a party is a non-merchant, additional terms are mere proposals.

7. State the mailbox rule and its key exceptions.

   An acceptance is effective when dispatched (sent), not when received. Exceptions: (1) the offer states otherwise; (2) option contracts—acceptance effective only on receipt; (3) if a rejection is sent first, then an acceptance, whichever arrives first controls; (4) revocations, rejections, and counteroffers are effective on receipt.

8. How is a unilateral contract accepted, and when may the offeror revoke once performance has begun?

   A unilateral contract is accepted only by completed performance. Once the offeree begins performance, the offer becomes temporarily irrevocable (an option contract is created) for a reasonable time to complete; mere preparation does not lock it in.

9. What is consideration, and what is the modern test for it?

   Consideration is a bargained-for exchange in which each party incurs legal detriment or confers legal benefit. The modern test is the 'bargained-for exchange'—the promise must induce the detriment and the detriment must induce the promise. Adequacy of value is generally not examined.

10. List the elements of promissory estoppel (detrimental reliance).

    (1) A promise the promisor should reasonably expect to induce reliance; (2) the promisee actually and reasonably (justifiably) relies; (3) the reliance is detrimental; and (4) injustice can be avoided only by enforcement. It substitutes for consideration; recovery may be limited to reliance damages.

11. State the pre-existing duty rule and a major exception.

    A promise to do something one is already legally obligated to do is not valid consideration. Exceptions: (1) new or different consideration; (2) a third party owes the duty; (3) unforeseen difficulties making performance impractical (honest dispute/modification); (4) the UCC, which needs no new consideration to modify.

12. Compare the consideration requirement for contract modification under common law versus the UCC.

    Common law: a modification generally requires new consideration (pre-existing duty rule). UCC 2-209: a good-faith modification of a goods contract needs no new consideration to be binding.

13. What is a firm offer under UCC 2-205, and how long is it irrevocable?

    A firm offer is an offer by a merchant, in a signed writing, giving assurance it will be held open. It is irrevocable without consideration for the time stated, or if none is stated, for a reasonable time—but in no event longer than 3 months.

14. What is an option contract and how is it created at common law?

    An option contract is a separate promise to keep an offer open, making it irrevocable for the stated period. At common law it requires consideration paid for the promise to hold the offer open (or partial performance of a unilateral offer).

15. What is the legal status of a contract made by a minor, and what are the rules for disaffirmance and ratification?

    A minor's contract is voidable at the minor's option. The minor may disaffirm during minority or within a reasonable time after reaching majority. Failing to disaffirm, or expressly affirming after majority, ratifies it. Minors remain liable for the reasonable value of necessaries.

16. When does mental illness or intoxication make a contract voidable?

    A contract is voidable if a party lacked capacity to understand the nature and consequences of the transaction (cognitive test) or, under the Restatement, could not act reasonably and the other party had reason to know of the condition. Intoxication makes a contract voidable only if the other party had reason to know the party was so intoxicated as to be unable to understand the transaction.

17. What are the elements of actionable misrepresentation?

    (1) A misrepresentation of a present fact (or fraudulent/material one), (2) that is fraudulent (knowing/reckless) or material, (3) made to induce assent, on which (4) the recipient justifiably relies. It renders the contract voidable by the misled party (and supports rescission).

18. Distinguish fraud in the inducement from fraud in the factum (in the execution).

    Fraud in the inducement: a party is tricked into agreeing by false statements about the deal; the contract is voidable. Fraud in the factum: a party is deceived about the very nature of what they are signing (didn't know it was a contract); the contract is void.

19. When does silence/nondisclosure amount to misrepresentation?

    Nondisclosure is actionable when there is a duty to disclose, such as: (1) a fiduciary/confidential relationship; (2) a half-truth that needs correction; (3) a known mistake about a basic assumption where disclosure is required by good faith; or (4) active concealment, or a previous statement later discovered to be false.

20. State the elements for rescission based on mutual mistake.

    (1) A mistake by both parties (2) about a basic assumption of fact existing at the time of contracting, (3) that has a material effect on the agreed exchange, and (4) the adversely affected party did not bear the risk of the mistake. Then that party may rescind/avoid.

21. When can a party avoid a contract for a unilateral mistake?

    A unilateral mistake about a basic assumption with material effect, where the mistaken party did not bear the risk, AND either (1) enforcement would be unconscionable, or (2) the other party knew or had reason to know of (or caused) the mistake.

22. What is duress in contract law, and what is its effect?

    Duress is an improper threat that leaves the victim no reasonable alternative but to assent. Physical compulsion (e.g., forced signature) makes a contract void; other wrongful threats (including economic duress) make it voidable by the victim.

23. What are the elements of undue influence?

    Undue influence is unfair persuasion of a party who is (1) under the domination of the persuader, or (2) by virtue of the relationship is justified in assuming the persuader will not act inconsistently with his welfare. The resulting contract is voidable.

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