Bar Exam (Next Generation) Quiz: Impossibility Impracticability Frustration Of Purpose And Risk Of Loss
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Impossibility Impracticability Frustration Of Purpose And Risk Of LossQuestion 1 of 5

Dana leased a storefront in a mall for three years to operate a fitness studio. Her lease did not mention the mall's anchor tenant. Seven months later, without any fault by Dana or the landlord, the anchor tenant closed its store. Foot traffic to Dana's studio dropped by more than half, and her business became unprofitable. Dana abandoned the premises and stopped paying rent. The landlord sued Dana for the remaining rent. Dana claims frustration of purpose.

Which of the following is Dana's best argument?

Her principal purpose in signing the lease was to operate a profitable fitness studio, and that purpose has now been substantially frustrated.
The anchor tenant's closing made her performance extremely expensive, so her duty to pay rent is discharged as impracticable.
The continued operation of the anchor tenant was a basic assumption underlying the lease, so her duty to pay rent is discharged.
The landlord impliedly assured her that the mall would continue to have an anchor tenant, so enforcing the lease would be inequitable.
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Bar Exam (Next Generation) Quiz

Bar Exam (Next Generation) Quiz: Impossibility Impracticability Frustration Of Purpose And Risk Of Loss

Practice Impossibility Impracticability Frustration Of Purpose And Risk Of Loss in Bar Exam (Next Generation) with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

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Question 1

Dana leased a storefront in a mall for three years to operate a fitness studio. Her lease did not mention the mall's anchor tenant. Seven months later, without any fault by Dana or the landlord, the anchor tenant closed its store. Foot traffic to Dana's studio dropped by more than half, and her business became unprofitable. Dana abandoned the premises and stopped paying rent. The landlord sued Dana for the remaining rent. Dana claims frustration of purpose.

Which of the following is Dana's best argument?

  1. Her principal purpose in signing the lease was to operate a profitable fitness studio, and that purpose has now been substantially frustrated.
  2. The anchor tenant's closing made her performance extremely expensive, so her duty to pay rent is discharged as impracticable.
  3. The continued operation of the anchor tenant was a basic assumption underlying the lease, so her duty to pay rent is discharged. (correct answer)
  4. The landlord impliedly assured her that the mall would continue to have an anchor tenant, so enforcing the lease would be inequitable.
Explanation: Frustration of purpose discharges a party's duty when an event whose non-occurrence was a basic assumption underlying the contract substantially frustrates the party's principal purpose. Dana might argue that the anchor tenant's continued operation was such a basic assumption and that its closing substantially frustrated her principal purpose of running a studio. But the defense does not succeed merely because her business became unprofitable, nor because performance became financially burdensome; ordinary business risks are assumed. Choice A fails because profitability is not the relevant test, and frustration requires a supervening event undermining a basic assumption, not simply lost expected profits. Choice B invokes impracticability, which excuses performance only when performance itself becomes extremely difficult or costly, not when anticipated benefits decline. Choice D is unsupported by any factual basis for an implied assurance. Thus only the basic-assumption framing of C states the correct doctrine.

Question 2

Seller agreed to sell Buyer 'the entire set of 500 antique ceramic tiles currently in Seller's warehouse' for $50,000. Before risk of loss passed to Buyer, a storage rack collapsed through no fault of either party and damaged 120 tiles; the remaining 380 tiles are exactly as warranted. The tiles are no longer made, and Seller refuses to supply replacements. Buyer wants all 500 tiles.

What are Buyer's rights?

  1. Buyer may require Seller to replace the 120 damaged tiles because the risk of loss had not yet passed to Buyer.
  2. Buyer may reject only the damaged 120 tiles and require delivery of the 380 undamaged tiles at the full contract price.
  3. Buyer may avoid the whole contract, or accept the tile set with a due allowance from the price, but may not require replacement. (correct answer)
  4. Buyer may treat the contract as avoided and also recover damages from Seller because Seller bore the risk of loss until Buyer received the goods.
Explanation: UCC §2-613(b) governs casualty to identified goods before risk passes: if the loss is partial, the buyer may either avoid the contract or accept the damaged goods with a due allowance in price, with no further right against the seller. Buyer therefore cannot compel replacement or keep only the undamaged portion at the full price. A and B incorrectly convert the seller's risk into an obligation to substitute, and D is wrong because avoiding the contract is the termination of duties, not a predicate for breach damages.

Question 3

Ava, a rare-book dealer, agreed in writing to sell Ben a specifically identified first-edition novel. The contract stated that Ben would pay the $10,000 price and pick up the book at Ava's shop the following week. Before Ben arrived, a fire caused by an electrical fault destroyed Ava's shop and the novel. Neither party was at fault, and Ava had no other copy of the novel.

If Ben refuses to pay the price, will Ava succeed in an action for the price?

  1. Yes, because once the parties identified the specific novel and signed the contract, Ben became the owner of the novel and must bear the loss.
  2. Yes, because Ava is excused from delivering only if she had expressly conditioned the contract on the novel's continued availability.
  3. No, because Ben's failure to take delivery before the fire means he assumed the risk of loss for the goods.
  4. No, because the specific novel was destroyed through no fault of either party before risk of loss passed to Ben, so the contract is avoided. (correct answer)
Explanation: Under UCC Article 2, when identified goods are destroyed through no fault of either party before the risk of loss has passed to the buyer, total loss avoids the contract. Here, the contract was for the sale of a specifically identified book, and Ben had not yet received it. Because Ava is a merchant-seller, risk of loss would not pass to Ben until he received the book at her shop. The fire was not Ben's fault, so he did not assume the risk by failing to take delivery before the agreed pickup time. Thus Ava cannot recover the price. Choice A is wrong because ownership transfer is not the UCC's risk-of-loss test. Choice B is wrong because casualty to identified goods is an excuse even without an express condition. Choice C is wrong because Ben had not breached; his performance was not yet due.

Question 4

AgriCo has fixed contracts to sell 100,000 bushels of corn to FeedCo and 100,000 bushels to CerealCo. A government order reduces AgriCo's available crop to 120,000 bushels. For years, AgriCo has also regularly supplied Grain Mill, although Grain Mill has no existing contract with AgriCo. AgriCo cannot fully perform all of its obligations.

Which allocation of the 120,000 bushels is proper?

  1. AgriCo may allocate the corn in a fair and reasonable manner and may include Grain Mill as a regular customer even though Grain Mill has no contract. (correct answer)
  2. AgriCo must allocate the corn ratably between FeedCo and CerealCo because they alone have enforceable contracts that can be the basis of a claim.
  3. AgriCo may choose to perform only the most profitable contracts because the government order made full performance impracticable and partial performance is at its discretion.
  4. AgriCo is excused from all delivery obligations because it cannot fully perform every contract, and the shortage was beyond its control.
Explanation: Under UCC §2-615(b), when a seller can make only partial deliveries, it must allocate production and deliveries among customers in a fair and reasonable manner and may include regular customers not under contract as well as its existing contract customers. A is correct. B is too rigid; fair allocation is not necessarily only among contract customers. C is wrong because arbitrary favoritism based on profitability is not fair and reasonable. D is wrong because partial impracticability does not wholly discharge the seller; it must allocate what it can supply.

Question 5

Artisan, a famous muralist, contracted to paint a one-of-a-kind mural on Buyer's wall for $50,000. Buyer paid $20,000 in advance. Before Artisan began the mural, Artisan died. Buyer demands that the estate either complete the mural using another artist or refund the advance.

Which statement is correct?

  1. The estate must complete the mural, because contractual duties survive death and the work could be delegated to another artist.
  2. The estate may refuse to complete the mural, but it must refund the $20,000 advance to prevent unjust enrichment. (correct answer)
  3. The estate may refuse to complete the mural and keep the advance because death was not Artisan's fault.
  4. The estate must either complete the mural or return the advance, at Buyer's option, because death made the contract voidable by Buyer.
Explanation: Death discharges a contractual duty only when the contract is for personal services requiring the special skill, taste, or judgment of the deceased. Artisan's painting a one-of-a-kind mural was such a contract, so the estate is discharged from completing it. However, because the contract was discharged by supervening impracticability, restitution requires the estate to return the unearned advance. A is wrong because the contract was personal and could not be delegated without consent. C is wrong because discharge does not forfeit the buyer's payment. D is wrong because the contract is discharged, not voidable.