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Sample Question 1
Sample Question 2
Sample Question 3
Sample Question 4
Sample Question 5
Question 2
XYZ Corporation entered into an agreement over the telephone to purchase 100 reams of paper from Acme Paper Company at a purchase price of $4.00 per ream. The written confirmation sent by Acme stated that the seller’s base cost has increased since the telephone conversation and, consequently, the purchase price per ream was $4.40. XYZ Corporation reluctantly agrees to the increased price.
A) No, because the contract modification was not supported by consideration.
B) No, because of the pre-existing legal duty rule.
C) Yes, even in the absence of consideration.
D) Yes, because the modification was in writing to conform with the Statute of Frauds requirement.
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Answer
(C) is the best answer
At common law a contract modification had to be supported by consideration in order to be enforced under the pre-existing legal duty rule. This contract, however, is for the sale of goods and thus covered by Article 2 of the U.C.C. Section 2-209 provides that contract modification sought in good faith is binding without consideration.
(A) and (B) would be correct answers if this were governed by common law pre-existing legal duty rule rather than by the U.C.C. Remember, it is important for you at the start of any Contracts question to determine whether the common law applies or whether the U.C.C. applies. You can generally eliminate a couple of answers immediately, after making that initial decision.
(D) is incorrect. Even though it is a tempting answer unless you calculate the total purchase price of the paper. At $4.40 a ream, the paper will only cost $440. Therefore, this contract modification is not within the Statute of Frauds. U.C.C 2-201(1) provides that contracts for the sale of goods for $500 or more are not enforced in the absence of a writing.
TEST TIP:Section 2-209 provides: "Modification, Rescission, Waiver"
1) An agreement modifying a contract within this Article needs no consideration to be binding.
2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.
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