Contracts: MBE Topics to Understand

Contracts MBE Topics to Understand

Contracts covers many of the more relevant first year material for anyone considering life as a transactional attorney, and it is a vast subject. Many of the cases explaining important contract principles have likely stuck with you – does the “hairy hand” case sound familiar? How about the the difference between stewing hens and broiler chickens? Surely you remember carbolic smoke balls!

Whether you recall a few facts from these silly cases or not, it’s important for the contracts mbe portion to know the concepts involved. Here is a comprehensive outline of MBE testable subjects provided by the NCBE, with contracts outlined briefly below.

I. Contract Formation

How a contract comes into being is immensely important for contract mbe purposes. This includes offer and acceptance, what happens in the face of indefiniteness or the absence of certain terms, contracts that are implied-in-fact, and any obligations in the “pre-contract” stage based on reliance.

Additionally, the element of consideration is key to contract formation. This includes analyzing a bargained-for exchange and substitutes, “moral obligation,” reliance, and statutory consideration substitutes. Modification of contracts is also important, including how preexisting duties fit into the consideration analysis, compromise, and settlement of claims.

II. Defenses to Enforceability and Parol Evidence

The various defenses to the enforceability of a contract are also tested on the MBE. These include the defenses of incapacity, duress, undue influence, mistake and/or misunderstanding (and the differences), fraud, misrepresentation, nondisclosure, illegality, unconscionability, and public policy considerations. Additionally, the statute of frauds as a defense to enforceability of a contract is relevant.

Further, you will need to be familiar with the parol evidence rule, and its various manners of applicability and interpretation.

III. Performance, Breach, and Discharge

Conditions placed on a contract are important to know, such as express conditions, constructive conditions, and the obligations of good faith and fair dealing in the performance and enforcement of a contract. The suspension or excuse of these conditions, whether by waiver, election, or estoppel, is also relevant. Additionally, you’ll need to know the effect of prospective inability to perform the obligations of a contract.

Additional concepts in the realm of breach and discharge include impracticability, frustration of purpose, discharge of contractual duties, express and implied warranties concerning sale-of-goods contracts, the nuances between substantial and partial breach, and the concept of anticipatory repudiation.

IV. Remedies

Remedies for breach will naturally be a significant part of the contracts mbe portion. This includes measure of damages for breach, and protecting expectation interests. Consequential damages will also be relevant, and how causation, certainty, and foreseeability play into the concept of consequential damages. You should know about liquidated damages and penalty clauses as well (such as when they may or may not be enforceable). The duty to mitigate damages, and avoidable consequences, also play into calculating damages.

Additional remedies include rescission and reformation of a contract, specific performance, injunction against breach, declaratory judgments, recovery based on restitutionary or reliance circumstances, and the remedial rights of breaching parties.

V. Third-Party Rights

Finally, the concept of third party beneficiaries will be important, such as the differences between intended and incidental beneficiaries. The impairment or extinguishment of third-party rights, enforcement by the promisee, and the assignment of rights or delegation of duties are also need-to-know sub parts of third-party rights.

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