AR Bar Contracts 2 — Questions and Answers
Question 1: Under Arkansas law, which remedy seeks to return non-breaching parties to the position they were in before the contract was formed?
- Expectation damages
- Restitution (Correct answer)
- Specific performance
- Nominal damages
Correct answer: Restitution
Restitution is designed to restore the plaintiff to the pre-contract position by recovering the benefit conferred on the breaching party.
Question 2: In Arkansas, the parol evidence rule generally prevents introduction of prior oral agreements to:
- Supplement a partially integrated written contract
- Contradict the express terms of a fully integrated written contract (Correct answer)
- Establish fraud in the inducement
- Show a condition precedent
Correct answer: Contradict the express terms of a fully integrated written contract
The parol evidence rule bars extrinsic evidence that contradicts the unambiguous terms of a fully integrated written contract.
Question 3: Under the Arkansas UCC, the perfect tender rule applies to contracts for the:
- Sale of real estate
- Performance of personal services
- Sale of goods (Correct answer)
- Lease of commercial property
Correct answer: Sale of goods
The UCC's perfect tender rule applies to contracts for the sale of goods, allowing rejection if delivery deviates in any way.
Question 4: Which contract defense excuses performance in Arkansas when an unforeseen event makes performance impractical, not just more expensive?
- Duress
- Misrepresentation
- Commercial impracticability (Correct answer)
- Accord and satisfaction
Correct answer: Commercial impracticability
Commercial impracticability excuses performance when an unforeseeable event makes performance impractical, even if not literally impossible.
Question 5: Under Arkansas law, liquidated damages clauses are enforceable if they:
- Constitute a penalty designed to punish the breaching party
- Represent a reasonable estimate of actual damages at the time of contracting (Correct answer)
- Are set at an amount higher than actual losses suffered
- Are agreed to after the breach occurs
Correct answer: Represent a reasonable estimate of actual damages at the time of contracting
Liquidated damages are enforceable in Arkansas when they represent a reasonable forecast of actual harm and actual damages are difficult to estimate.
Question 6: Under Arkansas contract law, which of the following is an example of a valid accord and satisfaction?
- A creditor accepts a lesser sum in full satisfaction of a disputed debt (Correct answer)
- A creditor accepts a lesser sum of an undisputed debt
- Two parties agree to modify a contract without new consideration
- A party assigns its rights without the obligor's consent
Correct answer: A creditor accepts a lesser sum in full satisfaction of a disputed debt
Accord and satisfaction requires a bona fide dispute; accepting less than an undisputed amount does not extinguish the original obligation.
AR Bar Contracts 2
Under Arkansas law, which remedy seeks to return non-breaching parties to the position they were in before the contract was formed?