Study guide
This chapter combines two MBE subjects tested together in many jurisdictions' bar-prep organization: Contracts (governed by common law for most agreements and by UCC Article 2 for the sale of goods) and Torts (negligence, intentional torts, and strict/products liability). Contracts questions frequently require you to first identify whether common law or the UCC governs, since the two bodies diverge on offer and acceptance, the statute of frauds, and performance rules. Torts questions are built around clean elemental tests — duty, breach, causation, and damages for negligence; the five traditional intentional torts; and the strict-liability elements for abnormally dangerous activities and defective products — so identify which tort framework applies before wading into the facts.
Contract Formation
A valid contract requires offer, acceptance, and consideration. An offer creates a power of acceptance in the offeree that terminates upon rejection, counteroffer, lapse of time, death or incapacity of a party, or revocation. Ordinary offers are revocable at any time before acceptance, even if the offeror promised to hold the offer open, because a bare promise to keep an offer open is unsupported by consideration absent a separate option contract; the major exceptions are option contracts supported by consideration, and the UCC's firm-offer rule (a merchant's signed written promise to hold an offer open, without consideration, is irrevocable for the stated period up to three months). Revocation can be direct or indirect: under the majority rule, an offer is indirectly revoked when the offeree receives reliable information that the offeror has taken action clearly inconsistent with an intent to contract, such as selling the offered property to someone else — direct communication from the offeror is not required. Acceptance generally must mirror the offer's terms under the common-law mirror-image rule (a variance creates a counteroffer), while UCC Article 2 § 2-207 relaxes this rule for the sale of goods, allowing an acceptance with additional or different terms to form a contract, with those terms treated as proposals for addition between non-merchants and, between merchants, becoming part of the contract unless they materially alter it, the offer expressly limits acceptance to its terms, or the offeror objects within a reasonable time.
Defenses to Enforceability
Even a properly formed agreement may be unenforceable due to a recognized defense. The Statute of Frauds requires a signed writing for certain categories of contracts, including those for the sale of an interest in land, contracts not performable within one year, and sales of goods for $500 or more under UCC § 2-201. The UCC provides a merchant's confirmation exception: when both parties are merchants, a written confirmation sent within a reasonable time, sufficient to bind the sender, will also bind the recipient unless the recipient objects in writing within ten days of receipt — meaning a party can become bound to a contract it never personally signed. Other defenses include mistake (mutual mistake as to a basic assumption may void a contract; unilateral mistake rarely does unless the other party knew or should have known of the error, or the mistake is so material that enforcement would be unconscionable), misrepresentation and fraud, duress, undue influence, unconscionability (assessed at the time of contracting, encompassing both procedural unfairness in the bargaining process and substantive unfairness in the terms), and incapacity (minority, mental incapacity, or intoxication known to the other party). Parol evidence rules further restrict enforceability arguments premised on prior or contemporaneous oral agreements that contradict a fully integrated written contract, though evidence of a subsequent modification, a condition precedent to the writing's effectiveness, or a defense such as fraud remains admissible.
Performance, Breach, and Discharge
Under the common law, substantial performance discharges a party's duty subject to a claim for damages for any minor deviation, while material breach excuses the non-breaching party from further performance and gives rise to an immediate claim for total breach. UCC Article 2 instead applies the perfect tender rule: a buyer may reject goods that fail to conform to the contract in any respect, subject to the seller's statutory right to cure. Under UCC § 2-508, if the time for performance has not yet expired, a seller whose nonconforming tender has been rejected may seasonably notify the buyer of an intent to cure and then make a conforming delivery within the original contract time; the buyer must accept a timely, conforming cure, and a rightful rejection does not itself terminate the contract or extinguish this cure right. Conditions (express or constructive) qualify a party's duty to perform; a condition precedent must occur before performance is due, and can be excused by waiver, prevention, or impossibility. Discharge can also occur through impossibility, impracticability, or frustration of purpose (each requiring an unforeseeable supervening event that was not allocated to either party by the contract), rescission, accord and satisfaction, or novation (substituting a new party or obligation with all parties' consent).
Contract Remedies
Expectation damages are the default remedy, designed to put the non-breaching party in the position full performance would have achieved — not simply to reimburse out-of-pocket losses. In a construction context, this typically means the cost to complete the project (or the diminution in value if completion costs would be grossly disproportionate), netted against any unpaid contract balance so the plaintiff neither under- nor over-recovers; a common error is to award full completion cost without crediting the amount the plaintiff was spared from paying the breaching party, which would overcompensate the plaintiff. Consequential damages (foreseeable losses flowing from the breach, such as lost profits) are recoverable only if they were reasonably foreseeable to the breaching party at the time of contracting (the Hadley v. Baxendale foreseeability rule) and are proven with reasonable certainty; incidental damages (costs of dealing with the breach, such as cover expenses) are also recoverable. Reliance damages restore the injured party to its pre-contract position and are typically used when expectation damages are too speculative. Restitution prevents unjust enrichment and measures the benefit conferred on the breaching party. The non-breaching party has a duty to mitigate damages by taking reasonable steps to avoid loss, and specific performance is available only for unique goods or land, where money damages are inadequate.
Negligence
A negligence claim requires duty, breach, actual (but-for) causation, proximate (legal) causation, and damages. A defendant generally owes a duty of reasonable care to all foreseeable plaintiffs; the standard of care is that of a reasonably prudent person under the circumstances, adjusted for relevant physical characteristics but not for the defendant's own subjective mental deficiencies, and heightened for professionals to the customary standard of the profession. Negligence per se substitutes a statute's specific standard for the common-law reasonable-person standard when the plaintiff is a member of the class of persons the statute was designed to protect and the harm suffered is of the type the statute was designed to prevent; if the plaintiff falls outside the protected class or the harm is of a different type than the statute addressed, the doctrine simply does not apply and ordinary negligence principles govern instead, meaning the plaintiff is not barred from recovery but must prove breach through ordinary means. Proximate cause requires that the harm be a foreseeable result of the breach, cutting off liability for genuinely unforeseeable, highly extraordinary intervening causes, though foreseeable intervening forces (including many instances of medical malpractice treating an initial injury, or foreseeable rescue efforts) do not break the causal chain. Defenses include contributory negligence (a complete bar in the minority of jurisdictions retaining it), comparative negligence (reducing or apportioning damages by fault in the majority of jurisdictions), and assumption of risk (express or implied acceptance of a known specific risk).
Intentional Torts and Strict/Products Liability
The intentional torts tested include battery (harmful or offensive contact), assault (apprehension of imminent harmful or offensive contact), false imprisonment (confinement within fixed boundaries without reasonable means of escape), intentional infliction of emotional distress (extreme and outrageous conduct causing severe emotional distress), and trespass to land or chattels, plus conversion. All require intent, which can be either purpose or knowledge with substantial certainty, and which transfers under the doctrine of transferred intent both among the five traditional trespass-based torts (assault, battery, false imprisonment, trespass to land, and trespass to chattels) and between the intended and actually injured victim — meaning a defendant who intends only to frighten one person but instead makes harmful contact with a bystander is liable for battery to the bystander. Strict liability applies to abnormally dangerous activities (assessed by factors including high risk of serious harm even with reasonable care and the activity's inappropriateness to its location) and, separately, to defective products under products liability doctrine: every commercial seller in the chain of distribution — manufacturer, distributor, and retailer alike — is strictly liable for a product that is defective (through a manufacturing defect, design defect, or failure to warn) when it leaves that seller's hands and causes physical harm, even if that particular seller exercised all possible care and had no opportunity to inspect a sealed product; a non-negligent retailer remains liable to the injured consumer, though it typically may seek indemnification from the manufacturer up the chain.
Key terms
- Mirror-image rule
- — The common-law requirement that an acceptance match the offer's terms exactly, with any variance treated as a counteroffer; relaxed for goods contracts under UCC § 2-207.
- UCC firm-offer rule
- — The rule making a merchant's signed written promise to hold an offer open irrevocable for the stated period (up to three months) without any consideration.
- Merchant's confirmation exception
- — The UCC § 2-201(2) rule binding a merchant recipient of a signed written confirmation to a prior oral agreement unless the recipient objects in writing within ten days.
- Perfect tender rule
- — The UCC rule allowing a buyer to reject goods that fail to conform to the contract in any respect, subject to the seller's statutory right to cure under § 2-508.
- Expectation damages
- — The default contract remedy putting the non-breaching party in the position full performance would have achieved, net of amounts the plaintiff is spared from paying.
- Hadley v. Baxendale foreseeability rule
- — The limitation restricting recovery of consequential damages to losses that were reasonably foreseeable to the breaching party at the time of contracting.
- Negligence per se
- — A doctrine substituting a statute's standard for the reasonable-person standard, applicable only when the plaintiff is within the protected class and the harm is of the type the statute addressed.
- Transferred intent
- — The doctrine transferring a defendant's intent to commit one trespass-based tort against one person to the actual tort committed and the actual victim harmed.
- Strict products liability
- — Liability imposed on every commercial seller in a product's chain of distribution for physical harm caused by a product that was defective when it left that seller's hands, regardless of the seller's own care.
- Comparative vs. contributory negligence
- — Comparative negligence apportions damages by relative fault (majority rule); contributory negligence completely bars recovery for any plaintiff fault (minority rule).
Exam tips
- Always determine first whether the contract is for goods (UCC Article 2) or something else, such as services or real estate (common law) — the formation, statute of frauds, and performance rules diverge in ways that flip the correct answer.
- On revocation questions, remember a promise to hold an offer open is not binding without consideration or the UCC firm-offer rule, but indirect revocation through reliable third-party information about an inconsistent sale is fully effective even without direct communication.
- For statute-of-frauds/UCC problems between merchants, check whether a written confirmation was sent and whether the recipient objected within ten days before concluding there is no enforceable writing.
- On expectation-damages math questions, always net out amounts already paid or amounts saved by not completing payment to the breaching party; a wrong-answer trap awards either the full completion cost or the full unpaid balance without netting.
- For negligence-per-se fact patterns, check both the protected-class and type-of-harm requirements — a plaintiff outside the statute's intended protected class loses the per se shortcut entirely, though ordinary negligence may still apply.
- On products-liability questions, remember that a non-negligent, careful retailer of a sealed, defective product is still strictly liable to the injured consumer; lack of fault or inspection opportunity is a negligence-law defense, not a defense to strict liability.