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.
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.
MBE Tip of the Day: Contracts and Sales
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, 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 and Sales MBE Question
A man was flipping through a manufacturer’s catalogue one day and noticed that the manufacturer produces deck chairs. Interested in a set of four for his house, the man called the manufacturer and spoke with the salesperson. The parties orally agreed that the man would purchase four standard chairs for $600. The man said he might be able to come pick them up, and the salesperson replied that they would “make the necessary arrangements with a shipping company.” Nothing else regarding delivery was mentioned.
The manufacture immediately began work on the chairs. The next day, the man found different chairs that he liked better from another source. He sent an email to the manufacturer, stating the following: “I am no longer interested in purchasing the four chairs from you that we agreed upon yesterday. I am sorry for the inconvenience.” He signed his name at the bottom of the email. While the manufacturer saw that he had an email from the man, it didn’t get opened before the chairs were completed. The manufacturer arranged with a local shipping company to have the chairs shipped to the man’s billing address, delivered the chairs to the shipping company, and sent the man a new email stating that the chairs were on the way. The email from the man was then read, but it was too late as the chairs had already been shipped.
Unfortunately the chairs were damaged while in the shipping company’s possession. When they were delivered to the man, he refused to pay for them. The manufacturer brought a claim for breach of contract.
Who is likely to prevail?
(A) The manufacturer, because the manufacturer relied on the man’s promise to buy the chairs.
(B) The manufacturer, because the risk of loss had shifted to the man.
(C) The man, because there is no enforceable contract.
(D) The man, because the chairs were damaged in transit.
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
Subject: Contracts and Sales
Legal Issue: Statute of Frauds and Risk of Loss
Legal Rule and Analysis:
All contracts for the sale of goods greater than $500 must be in writing. This means that there needs to be some writing that evidences the existence of a contract, including a quantity term, signed by the party to be charged. If this is present, then we don’t need to consider any of the exceptions to the Statute of Frauds. Once an enforceable contract has been established, the risk of loss must be considered.In this case, the man and the manufacturer orally agreed that the man would purchase four chairs for $600. Since this is a contract for the sale of goods greater than $500, it needs to be in writing, signed by the party to be charged, in order to be enforceable. When the man sent the email to the manufacturer, he clearly indicated the presence of a contract between the parties, included a quantity term, and signed the email. An electronic signature is valid. Thus, this writing was sufficient to satisfy the Statute of Frauds and make the contract enforceable, even though the man was trying to back out of the contract.
We next consider risk of loss. A carrier contract is formed when a third party carrier delivers the goods. Carrier contracts can be either shipment or destination contracts, which affects the risk of loss. A shipment contract generally does not require the seller to deliver the goods to a specific destination, and it is the default when the contract is silent regarding other terms of delivery. In a shipment contract, the seller must get the goods to the carrier, make appropriate arrangements for shipping, and notify the buyer of the shipment. If the seller does this, it is not liable for any damage occurring during transit.
This contract would be a carrier contract because a third party is delivering the goods. It would also be a shipment contract as opposed to a destination contract because the contract is silent in regards to any delivery destination. The manufacturer got the goods to the carrier, made all the arrangements, and notified the man of the shipment. Thus, the manufacturer would not be responsible for any losses that occurred during transit.
Conclusion: The manufacturer will prevail because there is a valid, enforceable contract against the man and the risk of loss has passed to the man.
Look at the answer choices provided. Choose an answer choice that matches your conclusion. Review the other answer choices provided.
The answer choice (B) is therefore correct. (A) is incorrect because we do not need to use any sort of detrimental reliance equity theories when there is a valid and enforceable contract. (C) is incorrect because there is an enforceable contract as the man signed a writing (the email) that evidenced the existence of the contract and contained a quantity term. The Statute of Frauds has been satisfied. (D) is incorrect because the risk of loss has already transferred to the man. The manufacturer is not responsible for any losses that occur during transit.
MBE Tip: Try not to get distracted by things meant to confuse you! The Examiners love to try to trick you into picking the wrong answer. In the above question, it would be all too easy to say that there is no enforceable contract since it looks like the man tries to back out of an oral agreement. However, the way he did so actually sealed his fate. He created a signed writing that evidences the existence of a contract, making it enforceable against him. Focus on the law and try not to fall for the Examiners’ tricks!
Show Summary of the Two Key Takeaway Points for the Day
Key Takeaways and MBE Tips From Prior Posts
Takeaway for the Law: Any writing that evidences the existence of a contract, contains a quantity term, and is signed by the party to be charged can satisfy the Statute of Frauds. Further, in a shipment contract, as long as the seller has met its obligations in getting the goods to the third party carrier, it will not be responsible for any losses that occur during transit.
MBE Tip: Don’t get distracted by the Examiners’ tricks in the fact pattern!
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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