Contracts MBE Tip of the Day
Welcome to our MBE tip of the day series. This “MBE tip of the day” post focuses on a Contracts MBE tip. (And it is holiday-themed for the Fourth of July!)
You will see 25 scored Contracts MBE questions on the Multistate Bar Exam. In this post, we will review a Contracts MBE 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.
Contracts MBE Tip of the Day
MBE Tip of the Day Instructions:
Do your best to answer this Contracts MBE question (before even looking at the answer choices and before looking at the answer below!) Ask yourself: What is the subject? Next, what is the legal issue? What is the rule and analysis? Finally, 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 MBE Question
An explosives manufacturer contracted with a fireworks company in a signed writing for the sale of 100 red, white, and blue-themed fireworks, 50 of them to be delivered on June 1 and the remaining 50 to be delivered on July 1. The agreement did not specify where the delivery would take place or when payment was due. On June 1, the explosives manufacturer delivered 49 fireworks and explained that one of the fireworks unexpected suffered water damage but that a replacement would be delivered within two days.
Which of the following states the rights and duties of the fireworks company?
(A)The fireworks company is entitled to accept any of the 49 fireworks, reject the rest, and cancel the contract for the remaining fireworks due on July 1
(B) The fireworks company is entitled to accept any number of the 49 fireworks and reject the rest, but may not cancel the contract as to any fireworks due on July 1.
(C) The fireworks company must accept the 49 fireworks but is may cancel the rest of the contract for the remaining fireworks due July 1.
(D) The fireworks company must accept the 49 sets and is not entitled to cancel the rest of the contract.
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 MBE Question
Legal Issue: What actions may or must the fireworks company take, given the breach?
Legal Rule and Analysis:
Under the UCC, the general rule for acceptance is the “perfect tender rule”. This rule states that the seller has to deliver perfect goods and if the goods fail to conform in any way the buyer can: reject all of them, accept all of them, or accept however many commercial units he wants and reject the rest. However, there is a special rule for installment contracts that supplants the general rule. An installment contract is any contract that requires or authorizes delivery in separate lots to be separately accepted. Here, we have an installment contract whereby there are two installments of 50 fireworks each. Under UCC § 2-612, the buyer can only reject an installment when the non-conformity substantially impairs the value of that installment and if it cannot be cured. But, if non-conformity does not substantially impair the value of that installment and the seller gives adequate assurance of its cure “the buyer must accept that installment.” Here, delivery of 49 of the 50 fireworks does not substantially impair the value of the installment and the seller gave assurances that he could cure the non-conformity by delivering the last firework promptly. Therefore, the buyer must accept the installment. Furthermore, under UCC § 2-612 “[w]henever non-conformity or default with respect to one or more installments substantially impairs the value of the whole contract there is a breach of the whole.” This breach may allow the buyer to cancel the entire contract under UCC § 2-711. However, in our facts, the buyer’s non-conformity of one firework did not substantially impair the entire contract in order to permit cancellation. Therefore, the buyer is also not permitted to cancel the contract, making answer (D) the correct answer.
Conclusion: The fireworks company must accept the 49 sets and may not cancel the rest of the contract.
Look at the answer choices provided. Choose an answer choice that matches your conclusion. Review the other answer choices provided. (D) is therefore correct. (A) and (B) are both incorrect because the perfect tender rule does not apply to installment contracts. (C) is incorrect because the buyer may not cancel the entire contract.
MBE Tip: Contracts oftentimes tests nuances of the law. One way to remember how to distinguish concepts in contracts is by making charts or mindmaps of the material (e.g., comparing UCC and common law, or comparing, say “one-shot” deals and installment contracts). Specific rules only apply to specific concepts so making charts or mindmaps of the material can be a great way to remember it.
Show Summary of the Two Key Takeaway Points for the Day
Key Takeaways and MBE Tips From Prior Posts
Takeaway for the Law: Under UCC § 2-612, the buyer can only reject an installment when the non-conformity substantially impairs the value of that installment and if it cannot be cured. But, if the non-conformity does not substantially impair the value of that installment and the seller gives adequate assurance of its cure “the buyer must accept that installment.”
MBE Tip: Contracts oftentimes tests nuances of the law. One way to remember how to distinguish concepts in contracts is by making charts (e.g., comparing UCC and common law, or comparing, say “one-shot” deals and installment contracts). Specific rules only apply to specific concepts so making charts or mindmaps of the material can be a great way to remember it.
Want to See Past MBE Tip of the Day Posts?
If you would like to see “MBE tip of the day” posts from prior days, please check out all of our past MBE tip of the day archives here! We have several of them and we list them by subject!
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MBE Tip of the Day
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