Contracts Essentials — Bar Exam

The MBE rarely asks “was this an offer?” head-on. The tell is a fact pattern lacking a definite price or quantity term, where everything turns on whether a definite, communicated commitment existed at all. An unpriced “Would you be interested?” is mere preliminary negotiation, so no power of acceptance ever arose and the later “acceptance” is itself the first offer. Watch the revocation-timing trap: because acceptance is effective on dispatch (the mailbox rule), while a revocation takes effect only on receipt, an offeree who mails acceptance before the revocation arrives still forms a contract.

Do not confuse the offer’s existence with whether the resulting bargain is enforceable — that is consideration’s job, so a valid offer can still yield an unenforceable (e.g., gratuitous) promise. Students also conflate a counteroffer with a UCC § 2-207 “acceptance” adding terms: the counteroffer kills the original power of acceptance, but a § 2-207 expression of acceptance can still form a contract (and between merchants, additional terms may even enter unless they materially alter the deal).

The classic MBE fact pattern is a timing race: the offeree mails an acceptance, then something crosses it in the mail. Your answer hinges on remembering that the mailbox rule does not apply to option contracts (Restatement § 63(b)) — there acceptance is effective only on receipt. Watch the overtaking scenarios: if the offeree dispatches a rejection first and then an acceptance, the mailbox rule is suspended, and whichever the offeror receives first controls. (If acceptance is sent first, a later-arriving rejection still loses unless the offeror receives it first and detrimentally relies, estopping the offeree.) Because the offeror is master of the offer, an offer making a specific method the exclusive way to accept renders any other method ineffective.

Don’t confuse acceptance with mutuality: beginning performance on a unilateral offer (Restatement § 45) creates an option making the offer temporarily irrevocable, but is not yet acceptance — only completed performance accepts.

The MBE tests consideration through fact patterns that look like contracts but secretly lack a true bargain. The “tell” is a recital with no real exchange: watch for nominal or “sham” consideration (a token $1 recited for a house to disguise a gift), gift promises dressed as deals, and illusory promises where one side reserves an unfettered escape (“I’ll buy if I feel like it”). The answer hinges on whether the detriment was sought in exchange, not on adequacy — courts will not weigh fairness (a sham figure fails because it is a pretense, not because the sum is small).

Distinguish consideration from an offer, which only creates a power of acceptance and needs no exchange to exist, and from promissory estoppel, the fallback when consideration is missing entirely. The classic trap is treating a conditional gift (“come to my house and I’ll give you a coat”) as a bargain — walking over is a condition, not the price. Memory hook: the promisor must seek the detriment as the price, not merely tolerate it.

The MBE fact pattern usually hides the issue in the language of the promise: watch for “as much as I want,” “if I choose,” or a right to cancel at any time” — these “tells” signal an illusory promise. The answer typically hinges on whether some external limit binds the discretionary party: good faith, exclusive-dealing (Wood v. Lucy implies a best-efforts duty), or a UCC requirements/output term. An unfettered right to terminate is illusory, but a clause requiring reasonable notice (a defined period like 30 days works) supplies enough commitment to save it. Favor the answer that finds consideration when good faith fills the gap.

The classic trap is conflating mutuality with consideration generally — courts treat mutuality as just consideration applied to bilateral promises (Restatement (Second) § 79 drops it as a separate requirement), so “no consideration” is often the distractor when the better answer is “saved by an implied good-faith duty.” Don’t confuse this with acceptance: a conditional or non-committal acceptance is a counteroffer or rejection problem, not a mutuality defect. Memory hook: “a promise that promises nothing is no promise at all.”

The MBE tell is a belief that was wrong at the moment of contracting — a mislabeled gem, a mismapped acreage, a tract everyone assumed was buildable. The trap answer treats every bad guess as a mistake, but the doctrine reaches only a present fact, never a prediction about future value or the market. And even a qualifying mutual mistake yields no relief if the adversely affected party bore the risk — most often because they contracted with conscious awareness that their knowledge was limited (the “as is” or “this stone, whatever it is” deal). Watch for the buyer who knew the seller was mistaken: analyze that as unilateral mistake, voidable only on the other party’s knowledge or reason to know, or if enforcement would be unconscionable.

Don’t confuse the timeline. Mistake = a fact wrong when signed; frustration and impracticability = a supervening event after formation. Avoidance (rescission) is the relief mistake unlocks, not a separate ground — and reformation, not rescission, fixes a mere scrivener’s error where the parties agreed but the writing botched it. Hook: mistake looks backward, excuse doctrines look forward.

On the MBE, the tell is that performance is still perfectly doable but worthless to one party because some outside event gutted the reason for contracting. Watch the call: the exam wants you to choose between frustration of purpose and impracticability, and the hinge is whether performance became pointless (frustration) or impossible/extremely burdensome (impracticability). On foreseeability, the modern Restatement treats it as one factor in whether the event was a basic assumption — not an automatic bar — though older banks still phrase it as “foreseeable = assumed the risk = no excuse.” A mere drop in profitability never frustrates.

Don’t confuse it with mistake, which concerns a fact already wrong at the moment of contracting, not a later supervening event — frustration always points forward. And frustration is a defense excusing nonperformance, so the excused party has not committed a breach; if the doctrine fails, that same nonperformance flips into a breach. Hook: frustration means the deal still works but no longer matters.

MBE fact patterns rarely ask “was there a breach?” — they ask what the breach lets you do next, so the answer hinges on whether the breach is material (total) or minor, and, for goods, on whether the UCC (Article 2) or common law governs. The classic tell is the builder who finishes a house with the wrong brand of identical-quality pipe (Jacob & Youngs v. Kent) — that is substantial performance, so the owner who refuses to pay is himself in breach and owes the price less damages for the trivial defect. Distinguish a divisible common-law contract from a UCC installment contract: under 2-612, rejecting an installment requires substantial impairment — a narrower test than perfect tender — and the seller may still cure (2-508).

The trap is confusing breach with its remedies. Breach is the wrong; rescission is one elective response that unwinds the deal and demands mutual restoration — you cannot keep the bargain’s benefit and also rescind. Reliance is a damages measure, not a cause of action. Pick the remedy the facts support, not the first one that sounds plausible.

The MBE rarely tests “promise” in the abstract; it buries the issue in a single clause and makes you decide whether that clause is a promise, a condition, or both. The classic pattern: a buyer “promises to pay within 30 days of delivery.” Read that event as a pure condition and its non-occurrence merely suspends a duty — no breach, no remedy. Read it as a promise and the broken commitment gives a cause of action for damages. When wording is genuinely doubtful, courts read it as a promise (constructive condition) rather than an express condition to avoid forfeiture — but not when the language is unmistakably conditional.

The trap is conflating the promise with the doctrines that make it enforceable. A promise is just the commitment; consideration (or detrimental reliance) supplies enforceability — not every promise binds. An offer is a promise conditioned on the offeree’s assent, so it is freely revocable before acceptance unless an option contract or UCC firm offer locks it open. Remember: “a condition you fail; a promise you break.”

On the MBE the tell is a plaintiff who has already cancelled and now wants money: bar answers treat rescission and damages as inconsistent, so they force an election of remedies—a party who rescinds disavows the deal and recovers restitution (the value of benefits conferred), not lost expectancy. Watch the affirmation trap: a party who knows of fraud or a defense yet keeps performing or accepts benefits waives the right to rescind and is stuck enforcing the bargain. Mutual rescission is itself a contract; the consideration is each side’s surrender of remaining duties, so where one party has fully performed, look for a separate accord or release.

Don’t confuse rescission with reformation, which keeps the bargain alive, or with mistake—mistake is the ground, rescission the remedy. Against breach, a non-breaching party rescinds only for material breach; a minor breach yields only damages and both sides must still perform. Memory hook: rescission rewinds, reformation rewrites.

The MBE pattern is a fact stem where the plaintiff sank money into preparing to perform, then the deal collapsed before any profit accrued — and the call asks for the recoverable amount, not the theory. The “tell” is that lost profits are too speculative to prove with reasonable certainty (a new venture, no track record), which steers you away from expectation. Watch the cap: under Restatement (Second) § 349, reliance recovery is reduced by any loss the breaching party proves with reasonable certainty the plaintiff would have suffered had the contract been performed — so a “losing contract” can shrink recovery toward zero. The limit is that offset, not the contract price.

Don’t confuse reliance with restitution, which measures the benefit conferred on the defendant, not the plaintiff’s wasted expenditures — and a non-breaching party’s restitution is generally not capped at the contract price (Algernon Blair). Reliance is the usual estoppel remedy when consideration is missing (§ 90 — though the court may limit relief “as justice requires”). You elect one measure; the “add them together” choice is the classic trap.