Annoying BARBRI Contracts Question Forum

[amk110]

I've burned through about 1600 BARBRI MBE questions by this point. Of all the stupid and ridiculous questions and answers I've been frustrated by, this one is the first that's compelled me to make a post to ask what the hell I'm missing here.

The offending question, appearing in my MPQ from S'15 / W'16, Contracts Set #4, Question #1.

"A builder and a landowner entered into a valid written contract under which the builder agreed to erect a house on the landowner's land according to certain plans and specifications and the landowner agreed to pay the sum of $200,000 upon completion. During the course of construction, building costs increased significantly. The builder informed the landowner of the increased costs, and the parties agreed in writing that the builder could omit installing the air conditioning unit called for by the specifications (thus saving the builder approximately $10,000) and nevertheless receive the full construction contract price.

Under the general rule, this subsequent written agreement is:

(A) Unenforceable for lack of consideration, even though in writing.

(B) Enforceable as a novation, which superseded the original construction contract.

(C) Enforceable, because an agreement modifying a contract for the sale of goods (the air conditioning unit) needs no consideration to be binding.

(D) Enforceable, on the theory that the builder gave up his right to breach the contract (walking off the job and refusing to complete the building) in reliance on the landowner's modification."

Now, I'm no contracts expert. It's far from my best MBE subject. But I felt pretty certain that the answer here was (A), because this was a contract for services, governed by the common law, which requires consideration for a contract modification. The builder isn't giving any for this modification.

The answer was in fact (C). The explanation provides: "Under the traditional preexisting duty rule, the agreement would be unenforceable because modification of the contract must be supported by consideration, and the builder has given no consideration. Consideration is usually found to exist where the obligations of both parties are varied, but a modification solely for the benefit of one of the parties is usually unenforceable for lack of consideration. The modification here is solely for the benefit of the builder because he receives the same amount of money from the landowner even though the air conditioning unit will not be installed. The builder is not giving any new or different consideration because he was already obligated to finish the house, and the performance of an existing legal duty is usually not sufficient consideration. However, under the modern view, a modification is enforceable without consideration if it is fair and equitable in view of the unanticipated circumstances. Here, there was an unexpected shortage of materials and an increase in costs. The $10,000 savings is fair in view of these circumstances. Thus, a court will enforce the modification. Hence, (C) is correct, and (A) is incorrect."

Now, I ruled out choice (C) quite early on in the process of elimination, because it referred to the contract as one for the sale of goods. How is this a contract for the sale of goods? Am I missing something about divisibility? The question states that the builder was to "install" the air conditioner. There's nothing here to indicate a sale of goods, and everything to indicate a contract for installation services and construction.

The explanation never actually specifies one way or the other if this is governed by the common law or the UCC.

On top of that, the question prompt asks you for the outcome "under the general rule" and then the explanation tells you the answer is (C) because the "modern view" applies?


If anyone can explain this to me, I'd be most appreciative.

[FinallyPassedTheBar]

On the given facts it is unclear which party was originally going to supply the ac unit. It's entirely possible that the landowner was going to supply the ac unit, and just have the builder install it.

But on the given facts for MBE purposes, I always just assume the builder is also supplying all the materials unless the facts specify otherwise. So according to the given facts, common law is appropriate since the sale of the materials is incidental to the builder's service obligation.

[amk110]

I also thought the common law was appropriate. That's why I picked choice (A) and purposely avoided (C), which explicitly calls this a contract for the sale of goods. Indeed the fact pattern even states that "the builder could omit installation of the air conditioner" -- lending support to the conclusion that this is a contract for services.

The entire answer explanation also seems to confirm that this is a contract for services (by stating that consideration would ordinarily be required for modification of the contract)...

So this "modern view" rule is an exception to the common law requirement that consideration is required for modification of a contract? If so, why the hell did the question prompt ask for the answer "under the general rule"?

Semantics is pretty important in this profession. I would think "general rule" is synonymous with "traditional rule."

And if this is indeed a contract for services, as the facts suggest, and the answer explanation supports, why on earth is the correct answer one that calls this a contract for the sale of goods?

My brains hurt.

[FinallyPassedTheBar]

I also thought the common law was appropriate. That's why I picked choice (A) and purposely avoided (C), which explicitly calls this a contract for the sale of goods. Indeed the fact pattern even states that "the builder could omit installation of the air conditioner" -- lending support to the conclusion that this is a contract for services.

yeah I agree, now I am confused too.

[ReachTheBar79]

I've burned through about 1600 BARBRI MBE questions by this point. Of all the stupid and ridiculous questions and answers I've been frustrated by, this one is the first that's compelled me to make a post to ask what the hell I'm missing here.

The offending question, appearing in my MPQ from S'15 / W'16, Contracts Set #4, Question #1.

"A builder and a landowner entered into a valid written contract under which the builder agreed to erect a house on the landowner's land according to certain plans and specifications and the landowner agreed to pay the sum of $200,000 upon completion. During the course of construction, building costs increased significantly. The builder informed the landowner of the increased costs, and the parties agreed in writing that the builder could omit installing the air conditioning unit called for by the specifications (thus saving the builder approximately $10,000) and nevertheless receive the full construction contract price.

Under the general rule, this subsequent written agreement is:

(A) Unenforceable for lack of consideration, even though in writing.

(B) Enforceable as a novation, which superseded the original construction contract.

(C) Enforceable, because an agreement modifying a contract for the sale of goods (the air conditioning unit) needs no consideration to be binding.

(D) Enforceable, on the theory that the builder gave up his right to breach the contract (walking off the job and refusing to complete the building) in reliance on the landowner's modification."

Now, I'm no contracts expert. It's far from my best MBE subject. But I felt pretty certain that the answer here was (A), because this was a contract for services, governed by the common law, which requires consideration for a contract modification. The builder isn't giving any for this modification.

The answer was in fact (C). The explanation provides: "Under the traditional preexisting duty rule, the agreement would be unenforceable because modification of the contract must be supported by consideration, and the builder has given no consideration. Consideration is usually found to exist where the obligations of both parties are varied, but a modification solely for the benefit of one of the parties is usually unenforceable for lack of consideration. The modification here is solely for the benefit of the builder because he receives the same amount of money from the landowner even though the air conditioning unit will not be installed. The builder is not giving any new or different consideration because he was already obligated to finish the house, and the performance of an existing legal duty is usually not sufficient consideration. However, under the modern view, a modification is enforceable without consideration if it is fair and equitable in view of the unanticipated circumstances. Here, there was an unexpected shortage of materials and an increase in costs. The $10,000 savings is fair in view of these circumstances. Thus, a court will enforce the modification. Hence, (C) is correct, and (A) is incorrect."

Now, I ruled out choice (C) quite early on in the process of elimination, because it referred to the contract as one for the sale of goods. How is this a contract for the sale of goods? Am I missing something about divisibility? The question states that the builder was to "install" the air conditioner. There's nothing here to indicate a sale of goods, and everything to indicate a contract for installation services and construction.

The explanation never actually specifies one way or the other if this is governed by the common law or the UCC.

On top of that, the question prompt asks you for the outcome "under the general rule" and then the explanation tells you the answer is (C) because the "modern view" applies?


If anyone can explain this to me, I'd be most appreciative.

I picked A, too. So we now know that generally a modification to a contract for services requires consideration, but if the question tells us that there was an economic suffering of some kind on the party who wants to modify, then consider an answer like C.

Do you know the rule for modification to a contract under the UCC? Or between merchants?

[amk110]

Yep. No consideration required if made in good faith.

All I now know from this question is that, where there is a contract for services attempting to be modified by the parties, and one of them experiences trouble completing performance, the contract is apparently magically transformed into one for the sale of goods, governed by the U.C.C., and consideration is no longer required for a modification.

I'd also like to add that I've gotten many BARBRI questions wrong on the grounds that the answer I selected, while technically correct, is "too broad of a rule statement."

So you'd think answer choice (C) should state "contracts for the sale of goods require no consideration... if made in good faith"


EDIT:

I still can't find an exception to the pre-existing duty rule that would apply to this question.

https://en.wikipedia.org/wiki/Pre-existing_duty_rule

The only thing even close is this:

"The pre-existing duty rule has been abrogated under the Restatement, Second of Contracts § 89, which does not require independent consideration if the parties mutually and voluntarily agree to the modification (see Angel v. Murray for an early application of the Restatement).[3] The restatement, however, will not always be followed, as evidenced by the decision in Labriola v. Pollard Group, Inc..[4]"

Perhaps this is the "modern view" the question explanation is getting at?

Still wouldn't excuse the question prompt asking you for the result under the "general rule."

We need a contracts expert.

[ReachTheBar79]

Yep. No consideration required if made in good faith.

All I now know from this question is that, where there is a contract for services attempting to be modified by the parties, and one of them experiences trouble completing performance, the contract is apparently magically transformed into one for the sale of goods, governed by the U.C.C., and consideration is no longer required for a modification.

I'd also like to add that I've gotten many BARBRI questions wrong on the grounds that the answer I selected, while technically correct, is "too broad of a rule statement."

So you'd think answer choice (C) should state "contracts for the sale of goods require no consideration... if made in good faith"


EDIT:

I still can't find an exception to the pre-existing duty rule that would apply to this question.

https://en.wikipedia.org/wiki/Pre-existing_duty_rule

The only thing even close is this:

"The pre-existing duty rule has been abrogated under the Restatement, Second of Contracts § 89, which does not require independent consideration if the parties mutually and voluntarily agree to the modification (see Angel v. Murray for an early application of the Restatement).[3] The restatement, however, will not always be followed, as evidenced by the decision in Labriola v. Pollard Group, Inc..[4]"

Perhaps this is the "modern view" the question explanation is getting at?

Still wouldn't excuse the question prompt asking you for the result under the "general rule."

We need a contracts expert.

You should email this to barbri and get back to us! It doesn't add up!

[banjo]

(c) is just clearly wrong. Barbri seems bad.

[THE_U]

And this right here is why I can't stand Barbri.

I understand the exception to the usual CL rule of needing consideration for a modification, but the answer choice itself calling the K a sale of goods is flat out wrong. I don't see how anyone would choose "C"

[DaydreamBeliever]

Interesting.

I have a 2013 MPQ1 that I'm going through and last night I was randomly on Set 3 Q1

Same question but different answers...

Answer to Question 1

(A) The agreement is unenforceable because modification of the contract must be supported by consideration, and the builder has given no consideration. While consideration is generally necessary to modify a contract, even when the modification is in writing, consideration is usually found to exist where the obligations of both parties are varied. However, a modification solely for the benefit of one of the parties is unenforceable. The modification here is solely for the benefit of the builder because he receives the same amount of money from the landowner even though the air conditioning unit will not be installed. The builder is not giving any new or different consideration because he was already obligated to finish the house, and the performance of an existing legal duty is not sufficient consideration. While courts will sometimes find consideration where severe and unforeseen hardships make full performance impracticable, increased construction costs are not within that category. Therefore, the subsequent written agreement is unenforceable.

It appears that the view has shifted recently towards a more equitable solution but I'm still not understanding the fairness and equity of him saving $10K. Maybe, $10k was his increase in expenses but I don't think that's clear.

[amk110]

BARBRI dropped the ball on this one.

Even if the modern trend is toward a more equitable solution, the f'ing question prompt asked what would happen under the "general rule."

Did the 2013 question have the same answer choice (C) available? If so, did the explanation explain why it was wrong?


EDIT: The first time I took the exam I was using those 2013 materials. There are more than a few questions I recognize that I swear have new answers, but I no longer have the old materials to confirm.

[run26.2]

I'm not a BARBRI evangelist but I think it does just fine in prepping people. Sounds like they had a question for which the answer changed over time and they neglected to update the answer choices. Pat yourself on the back for reading carefully enough. I would be wary of building a habit of second-guessing answer choices owing to occasional screw ups by BARBRI. You don't want to over think the answer choices before you on the MBE. They will test rules you know if you do all the work.

[DaydreamBeliever]

BARBRI dropped the ball on this one.

Even if the modern trend is toward a more equitable solution, the f'ing question prompt asked what would happen under the "general rule."

Did the 2013 question have the same answer choice (C) available? If so, did the explanation explain why it was wrong?


EDIT: The first time I took the exam I was using those 2013 materials. There are more than a few questions I recognize that I swear have new answers, but I no longer have the old materials to confirm.

My apologies. I should have added that.

It did have the same answer choice (C) and this was the explanation.

(C) is incorrect because consideration is required for modification of a construction contract. Modification of a contract for the sale of goods under the U.C.C. may be effective without consideration [U.C.C. §2-209(1)], but the contract here only incidentally involves the sale of goods. Primarily, the contract is a construction contract and is not subject to the U.C.C. rule.

[sublime]

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