Contracts and Sales MBE Tip of the Day
Contracts and Sales MBE Tip of the Day
Welcome to our MBE tip of the day series. This “MBE tip of the day” post focuses on contracts and sales.
You will see 25 scored contracts and sales MBE questions on the Multistate Bar Exam. In this post, we will review a contracts and sales question together. Note that we have posted several MBE tips (which you can find links to at the bottom of this post) that focus on a specific multiple-choice question that many students answer incorrectly. If you can master these questions, it could increase your MBE score by that many points if you see any of these issues tested again (which, by the way, you will!). These posts of MBE tips and tricks will not only cover substantive law but also strategy. So each “MBE tip of the day” post covers one highly-tested area of substantive law as well as an important MBE strategy. You can sign up to receive these posts directly to your inbox for the upcoming administration at the bottom of this page.
You can also review these MBE tips for FREE using the free subscription of our new MBE platform here!
MBE Tip of the Day Instructions
Do your best to answer this contracts and sales MBE question (before even looking at the answer choices and before looking at the answer below!) Ask yourself: What is the subject? What is the legal issue? What is the rule and analysis? What is the conclusion? Try to answer these beginning questions before even reading the answer choices. Then, uncover the answer as well as read more about our MBE tip of the day.
Show the MBE Question...
Contracts and Sales MBE Question
A man recently purchased a plot of land and wanted to have a large house constructed on it. He and a designer worked on some plans for the house and the designer estimated that it would cost about $750,000. On May 1st the man called a contractor and offered him the job for $750,000 and requested that the work be completed within 14 months. The contractor said he would review the plans and get back to the man with a decision. The man gave the contractor 14 days to make a decision.
On May 13th, the contractor mailed the following note to the man: “I accept the offer we discussed over the phone.” Nothing else was said. On May 14th, the contractor discovered a significant cost calculation error and promptly mailed a new note to the man, which stated “I am so sorry but I can no longer do this job for the price you offered. Please disregard the acceptance I mailed to you on the 13th and contact me so that we can discuss a new price if you are still interested.”
The man received the rejection note on May 16th. He then received the acceptance note on May 17th. The man had taken no action related to the house in between receiving both letters.
Is there a valid contract between the parties?
(A) No, because the contractor’s rejection was sent and received before the man received the acceptance.
(B) No, because the man received the acceptance outside of the 14-day window.
(C) No, because the statute of frauds is not satisfied.
(D) Yes, because the man’s acceptance was timely and effective.
Legal Rule and Analysis:
Choose an answer choice that most closely matches your conclusion and explain why the others are incorrect:
Show the Answer to the MBE Question...
Answer to the Contracts and Sales MBE Question
Legal Issue: Contract Formation
Legal Rule and Analysis: This question tests the application of the mailbox rule, as well as the timeliness of acceptance. The mailbox rule states that an acceptance is effective as soon as it is out of the offeree’s possession, i.e. when it is sent. When an acceptance is mailed first and then a rejection is sent, the mailbox rule will apply and the acceptance will be effective unless the offeror relied on the letter of rejection before receiving the acceptance.
In this case, the acceptance was mailed on May 13th. This is a timely acceptance since the contractor had 14 days from the 1st to accept, and acceptance is effective when it is sent. Although the rejection was then subsequently mailed and received by the man before the acceptance, the man never relied on the rejection and thus the acceptance was effective.
Conclusion: The contract is valid since we have an offer, acceptance, and consideration.
Look at the answer choices provided. Choose an answer choice that matches your conclusion. Review the other answer choices provided.
The answer choice (D) is therefore correct. (A) is incorrect because, as explained above, the mailbox rule dictates that an acceptance is effective when it is sent. Even though there was also a rejection that was received first, there was no reliance and thus the acceptance prevails. (B) is incorrect because it is the date that the acceptance is mailed, not the date that the acceptance is received, that is the relevant date. (C) is incorrect because this contract does not fall under the statute of frauds. Although one type of contract that would need to be in writing is a contract for longer than one year, this contract could possibly be completed in under one year. There is nothing guaranteeing that it will last longer than a year. The statute of frauds only applies to contracts that cannot be performed in under one year.
MBE Tip: The use of several dates in a fact pattern should lead you to diagram out that pattern. The NCBE typically gives dates for a reason, and so they are likely important. When you see a date, start making some sort of list or diagram in the margins so that you can easily keep track of what happens when. List when the parties interact, when each makes a specific communication when performances are due, etc. This will help you get a visual idea of what is happening and whether a contract was properly formed.
Show Summary of the Two Key Takeaway Points for the Day
Key Takeaways and MBE Tips From Prior Posts
Takeaway for the Law: The mailbox rule dictates that an acceptance is effective when it is sent. If an acceptance is mailed followed by a rejection, the acceptance will still be effective unless the offeror relies upon the rejection letter received before the acceptance.
MBE Tip: When multiple dates show up in the fact pattern, diagram it out to get a visual picture of the situation.
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MBE Tip of the Day
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