Study guide
This chapter pairs Contracts and Torts, two subjects that together supply 50 of the 175 scored MBE questions. Contracts questions assume Articles 1 and 2 of the Uniform Commercial Code are in effect, with roughly a quarter of Contracts questions built on UCC sales-of-goods rules; the rest apply common-law contract doctrine. Torts questions assume joint and several liability and pure comparative fault apply unless a question says otherwise, and about half of Torts questions come from negligence.
Contract Formation: Common Law and the UCC
A contract requires mutual assent, normally an offer and acceptance, and consideration, meaning a bargained-for exchange of legal value. An offer must show present intent to contract, definite and certain terms, and communication to the offeree. Common law requires acceptance to mirror the offer's terms exactly under the mirror-image rule; a reply that adds or changes terms is a counteroffer, not an acceptance. The UCC relaxes this for the sale of goods: under Section 2-207, a definite and seasonable expression of acceptance forms a contract even if it states additional or different terms, unless acceptance is expressly made conditional on those terms. Between merchants, additional terms become part of the contract unless they materially alter it, the offer limited acceptance to its own terms, or the offeror objects within a reasonable time. Consideration requires a bargained-for legal detriment; past consideration and pre-existing legal duties generally do not count, though the UCC permits contract modifications without new consideration if made in good faith. Where a bargain is missing, promissory estoppel enforces a promise the promisor should reasonably have expected to induce reliance, if the promisee did rely to their detriment and injustice can only be avoided by enforcement. Example: A hardware store sends a purchase order for 500 bolts; the seller ships and returns an acknowledgment adding a clause requiring arbitration. Between these merchants, that clause likely becomes part of the contract unless it materially alters the deal or the buyer objects within a reasonable time.
Defenses to Enforceability and Contract Content
Even a properly formed agreement may be unenforceable. Capacity defenses apply to minors and those with severe mental incapacity, and generally the party lacking capacity may void the contract. Duress (an improper threat leaving no reasonable alternative) and undue influence (unfair persuasion exploiting a relationship of trust) render a contract voidable. A mutual mistake about a basic assumption on which the contract was made allows rescission if it materially affects the exchange and the adversely affected party did not bear the risk; a unilateral mistake rarely allows rescission unless the other party knew or should have known of it, or enforcement would be unconscionable. Fraud in the inducement and material misrepresentation, whether intentional or negligent, make a contract voidable by the deceived party, while fraud in the factum, where the party does not know they are signing a contract at all, makes the agreement void from the start. The statute of frauds requires certain contracts to be evidenced by a signed writing, commonly remembered by contracts for marriage, contracts not performable within one year, contracts for an interest in land, executor promises to pay estate debts, and contracts for the sale of goods priced at 500 dollars or more under the UCC. Once a contract exists, the parol evidence rule limits the use of prior or contemporaneous statements to contradict a fully integrated final written agreement, though such evidence remains admissible to explain ambiguous terms, show a defense like fraud, or establish a later modification. Example: Tomás orally agrees to sell his lake house to Priya for 300,000 dollars; because this is a contract for an interest in land, it falls within the statute of frauds and is unenforceable without a signed writing, absent an exception like part performance.
Performance, Breach, and Excuse
A condition is an event that must occur before a duty to perform arises; express conditions must be strictly satisfied, while constructive conditions of exchange require only substantial performance. A material breach excuses the non-breaching party from further performance and allows damages, while a minor or partial breach requires continued performance but still allows damages for the resulting loss. Anticipatory repudiation, a clear statement or voluntary act indicating the party cannot or will not perform before performance is due, lets the non-breaching party treat the contract as breached immediately, suspend its own performance, and seek other options, though a repudiation can be retracted if the non-breaching party has not yet materially relied on it. In sale-of-goods contracts, the UCC implies a warranty of merchantability, meaning goods sold by a merchant dealing in goods of that kind are fit for their ordinary purpose, and, where the seller knows the buyer's particular purpose and the buyer relies on the seller's skill, a warranty of fitness for a particular purpose. The doctrines of impossibility, impracticability, and frustration of purpose can excuse performance when an unforeseen event, not the fault of either party, makes performance objectively impossible, makes it impracticable at excessive and unreasonable cost, or destroys the principal purpose for which a party bargained, even though performance remains literally possible. Example: A caterer contracts to serve a wedding at a specific venue, and the venue burns down before the wedding without either party's fault; performance is likely excused under impossibility or frustration of purpose because the very thing needed to perform no longer exists.
Contract Remedies and Third-Party Rights
The default contract remedy is expectation damages, putting the non-breaching party in the position they would have occupied had the contract been performed, including direct, incidental, and consequential damages, so long as the loss was foreseeable at the time of contracting, reasonably certain, and caused by the breach. A non-breaching party must take reasonable steps to mitigate damages; losses that could have been avoided are not recoverable. Liquidated damages clauses are enforceable if the amount was a reasonable forecast of actual damages at the time of contracting and actual damages would be difficult to estimate; a clause operating as a penalty is unenforceable. Where damages are inadequate, equitable remedies such as specific performance (available for unique goods or land, but rarely for personal services) or rescission and reformation may be available. Reliance damages and restitution protect a party who cannot prove expectation damages with reasonable certainty, or who conferred a benefit under a contract that fails. Beyond the two original contracting parties, a third-party beneficiary who was intended, rather than merely incidental, to benefit from the contract can enforce it once their rights vest. Contract rights are generally freely assignable and duties generally freely delegable, except where assignment or delegation would materially change the obligor's duty or risk, is validly prohibited by the contract, or involves a personal services contract requiring particular skill or judgment. Example: A homeowner hires a contractor to build a custom deck for 20,000 dollars; the contractor abandons the project halfway through, and the homeowner hires a replacement for an additional 12,000 dollars to finish it. The homeowner's expectation damages are measured by the reasonable cost to complete the work beyond the original contract price.
Torts: Intentional Torts, Negligence, and Strict Liability
Intentional torts require intent to bring about the harmful or offensive consequence, or knowledge with substantial certainty that it will result; transferred intent lets intent aimed at one person or tort satisfy intent for another victim or another intentional tort among battery, assault, false imprisonment, and trespass to land or chattels. Defenses include consent, self-defense and defense of others using proportionate force, defense of property, necessity, and privileges tied to law enforcement or parental discipline. Negligence requires duty, breach, causation, and damages. Duty runs to foreseeable plaintiffs and is measured by the reasonably prudent person standard, adjusted for a defendant's professional expertise but generally not lowered for a defendant's own mental deficiencies; violation of a relevant safety statute can establish negligence per se if the plaintiff is in the class the statute protects and suffered the type of harm it was designed to prevent. Causation requires both actual cause, the but-for test or substantial factor when multiple causes suffice independently, and proximate cause, which cuts off liability for unforeseeable superseding causes but not merely because the extent of harm was unforeseeable, under the eggshell-plaintiff rule. Res ipsa loquitur allows an inference of negligence from circumstantial evidence when the harm ordinarily does not occur without negligence and the instrumentality was within the defendant's exclusive control. Comparative fault reduces, rather than bars, a negligent plaintiff's recovery by the plaintiff's percentage of fault under the pure comparative fault rule the MBE assumes applies. Strict liability applies to abnormally dangerous activities and to defective products, covering manufacturing, design, and failure-to-warn defects, without regard to fault. Example: A trucking company transports dynamite through a residential area and a nearby building is damaged by vibrations despite every precaution; the company is strictly liable because transporting explosives is an abnormally dangerous activity.
Key terms
- Mirror-image rule
- — The common-law rule that an acceptance must match the offer's terms exactly, or else it operates as a counteroffer.
- UCC 2-207 (battle of the forms)
- — The UCC rule allowing a contract to form despite additional or different terms in the acceptance, with special rules for merchants.
- Promissory estoppel
- — A doctrine enforcing a promise without consideration when the promisee reasonably and detrimentally relied on it and injustice would otherwise result.
- Statute of frauds
- — The requirement that certain contracts (land, one-year, goods priced at $500 or more under the UCC, among others) be evidenced by a signed writing to be enforceable.
- Anticipatory repudiation
- — A clear indication before performance is due that a party will not perform, allowing the other party to treat the contract as immediately breached.
- Warranty of merchantability
- — An implied UCC warranty that goods sold by a merchant are fit for their ordinary purpose.
- Expectation damages
- — The default contract remedy putting the non-breaching party in the position performance would have created.
- Third-party beneficiary
- — A non-party to a contract who was intended to benefit from it and may enforce the contract once rights vest.
- Transferred intent
- — The doctrine carrying a defendant's intent from the intended victim or tort to the actual victim or a different qualifying intentional tort.
- Negligence per se
- — Using a statutory violation to establish the duty and breach elements of negligence, if the plaintiff is in the protected class and harm is the protected type.
- Proximate cause
- — The limitation on liability to harms that were a foreseeable result of the defendant's conduct, absent an unforeseeable superseding cause.
- Strict products liability
- — Liability without fault for manufacturing, design, or warning defects in a product that render it unreasonably dangerous.
Exam tips
- When goods are involved, check whether the UCC changes the common-law answer, especially on formation (2-207), warranties, and the statute of frauds dollar threshold.
- On breach questions, classify the breach first (material versus minor, or repudiation) before selecting a remedy; the available remedy depends entirely on that classification.
- For negligence fact patterns, work the four elements in strict order: duty, breach, causation (actual and proximate), and damages; many wrong answers skip straight to causation.
- Distinguish transferred intent (moves between intentional torts and victims) from negligence causation concepts; do not import a reasonableness standard into intentional tort analysis.
- Remember the MBE assumes pure comparative fault and joint and several liability apply unless the question states otherwise; do not default to contributory negligence bars.