MBE Tip of the Day: Contracts and Sales
Welcome to our MBE tip of the day series. This “MBE tip of the day” post focuses on Contracts and Sales MBE questions.
You will see 25 scored Contracts and Sales MBE questions on the Multistate Bar Exam. There are more Contracts questions than Sales questions. In this post, we will review a contracts 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.
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? What is the legal issue? Next, 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 MBE Question
A man entered into a valid contract with Painter A to touch up the paint on his house. The man agreed to pay Painter A $400, as well as supply the paint for the job. Payment was due after the job was completed. The paint would have cost the man $50. Before the man purchased the paint, Painter A breached the contract and refused to paint the man’s house. The man subsequently entered into a second valid contract with Painter B to complete the same work that Painter A was going to do. The man agreed to pay Painter B $600 and Painter B provided her own paint. Painter B completed the job and the man promptly paid the $600. The man then timely filed suit against Painter A for breach of contract.
How much will the man recover from Painter A?
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: Expectation Damages
Legal Rule and Analysis: Under the common law, the general measure of damages is expectation damages. The goal is to put the non-breaching party in the same spot they would have been if the contract had been fully performed and the other party had not breached. The formula for expectation damages is the loss of value of the breaching party’s performance + incidental costs + consequential costs – any expenses saved as a result of the breach. A non-breaching party must mitigate damages when possible.
In this question, the goal would be to put the man in the same position he would have been in had Painter A not breached the contract. If Painter A had fully performed, the man would have had a painted house and he would have been out $450 ($400 for the paint job and $50 for the paint that the man was required to provide). This is the situation we are attempting to replicate through expectation damages, as this is the position the man would have been in if the contract had been performed. The man properly attempted to mitigate damages by having someone else complete the paint job. Painter B painted the man’s house for $600. Therefore in the end, the man ended up with a painted house and was out $600. This means that the man is entitled to $150 in damages from Painter A in order to put himself in the position he would have been had the original contract been fully performed. In other words, the man expected to have the job done for a total of $450. Here, it cost him $600. Thus, $150 puts him in the place he expected to be in — that is, only spending $450 total.
Conclusion: The man will recover $150 from Painter A.
Look at the answer choices provided. Choose an answer choice that matches your conclusion. Review the other answer choices provided. The answer choice (A) is therefore correct. (B) is incorrect because it does not recognize that the man saved $50 by not having to purchase the paint that Painter A would have used to complete the job. (C) is incorrect because while it does acknowledge that the man saved $50 by not having to provide paint, it does not account for the fact that the man ended up with his house paid after all. An award of $350 would be compensating the man for the value of the breaching party’s performance (assuming the value of performance equals the contract price) – costs saved. But since the man did end up with his house painted, it would be unfair to compensate him for this “value” twice. (D) is incorrect for the same reason as (C), as well as the fact that it doesn’t account for the $50 that the man saved by not having to purchase the paint.
MBE Tip: It’s a good idea to try to answer the question in your mind before you read the answer choices. A lot of times the incorrect answer choices will try to trick you or lure you into a trap. You can avoid this trap by doing your best to answer the question yourself before you let the choices influence you. In the question above, the incorrect answer choices common traps that one might fall into if they haven’t really thought the question through. Before looking at the choices, you should have calculated the position that the man would have been in if Painter A had performed and then compared it to the position he was in after Painter B performed. You would then have been able to come up with the correct number and avoided being sent down the wrong path by distracting answer choices.
Show Summary of the Two Key Takeaway Points for the Day
Key Takeaways and MBE Tips From Prior Posts:
Takeaway for the Law: The goal of expectation damages is to put the non-breaching party in the place it would have been had the contract been properly performed.
MBE Tip: Try to answer multiple choice questions in your head before you actually read the answer choices.
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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