PACO 501 EXAM 3 EXAM SCRIPT 2026 FULL
QUESTIONS WITH CORRECT ANSWERS
◉ Output contract. Answer: States the buyer will buy all of the
output of the seller
◉ Requirements Contract. Answer: States the seller will sell the
buyer all the required goods the buyer needs
◉ material. Answer: Under the common law all _________ terms had to
be present for mutual assent (agreement) to occur
◉ Duty to Act In Good Faith. Answer: - UCC 1-203: requires parties
to a contract to act in good faith
- UCC 1-201: Defines good faith as "honesty in fact and the
observance of reasonable commercial standards of fair dealing"
◉ Shelton v. Oscar Meyer Foods Corp. Answer: - Plaintiff was
accused of smoking marijuana on the job at Oscar Meyer
- Plaintiff had received several handbooks
- Plaintiff alleged the firing was not in accordance with the
handbook
,- South Carolina Appellate Court states there is a duty of good faith
and fair dealing required in this situation even though it was an
employment contract
◉ Consideration. Answer: Legal value given in return for a promise
- Promise to do something
- Promise of an action
- Refraining from an action
◉ Hamer v. Sidway. Answer: - Uncle becomes indebted to nephew
after uncle promises nephew $5,000 if he can refrain from drinking,
using tobacco, swearing and playing cards or billiards for money
until age 21
- Nephew fulfills promise to refrain
- Nephew gives the right to receive the money to receive the money
to Louisa Hamer. - Uncle Dies
- Sidway, executor for the Estate of the Uncle refuses to pay Hamer
- Executor argues there was no consideration given in exchange for
the promise to pay $5,000
- Court disagrees and says the action of refraining from a legal right
is consideration
◉ Consideration. Answer: Courts not interested in ____________ unless
it is a peppercorn
, ◉ Pre-existing duty (lacks consideration). Answer: A duty that on
already is required to perform (lacks consideration)
Exception: Unforeseen circumstances
◉ Past Consideration (lacks consideration). Answer: Consideration
provided before the agreement was reached (lacks consideration)
◉ Illusory Promises (lacks consideration). Answer: Do not obligate
the person making the promise to suffer a detriment
"I may or may not do something" (Lacks consideration)
◉ Doctrine of Unforeseen Circumstances. Answer: Allows parties to
agree to an increase in consideration if an unforeseen circumstance
arises
◉ consideration. Answer: UCC 2-209(1) allows parties to a contract
governed by the UCC to change the duties required by a contract
without the need to provide additional ____________
◉ Mutual Rescission. Answer: Both parties to a contract under
which they still both have duties to perform (executory) agree to
return to their pre-contracting positions
QUESTIONS WITH CORRECT ANSWERS
◉ Output contract. Answer: States the buyer will buy all of the
output of the seller
◉ Requirements Contract. Answer: States the seller will sell the
buyer all the required goods the buyer needs
◉ material. Answer: Under the common law all _________ terms had to
be present for mutual assent (agreement) to occur
◉ Duty to Act In Good Faith. Answer: - UCC 1-203: requires parties
to a contract to act in good faith
- UCC 1-201: Defines good faith as "honesty in fact and the
observance of reasonable commercial standards of fair dealing"
◉ Shelton v. Oscar Meyer Foods Corp. Answer: - Plaintiff was
accused of smoking marijuana on the job at Oscar Meyer
- Plaintiff had received several handbooks
- Plaintiff alleged the firing was not in accordance with the
handbook
,- South Carolina Appellate Court states there is a duty of good faith
and fair dealing required in this situation even though it was an
employment contract
◉ Consideration. Answer: Legal value given in return for a promise
- Promise to do something
- Promise of an action
- Refraining from an action
◉ Hamer v. Sidway. Answer: - Uncle becomes indebted to nephew
after uncle promises nephew $5,000 if he can refrain from drinking,
using tobacco, swearing and playing cards or billiards for money
until age 21
- Nephew fulfills promise to refrain
- Nephew gives the right to receive the money to receive the money
to Louisa Hamer. - Uncle Dies
- Sidway, executor for the Estate of the Uncle refuses to pay Hamer
- Executor argues there was no consideration given in exchange for
the promise to pay $5,000
- Court disagrees and says the action of refraining from a legal right
is consideration
◉ Consideration. Answer: Courts not interested in ____________ unless
it is a peppercorn
, ◉ Pre-existing duty (lacks consideration). Answer: A duty that on
already is required to perform (lacks consideration)
Exception: Unforeseen circumstances
◉ Past Consideration (lacks consideration). Answer: Consideration
provided before the agreement was reached (lacks consideration)
◉ Illusory Promises (lacks consideration). Answer: Do not obligate
the person making the promise to suffer a detriment
"I may or may not do something" (Lacks consideration)
◉ Doctrine of Unforeseen Circumstances. Answer: Allows parties to
agree to an increase in consideration if an unforeseen circumstance
arises
◉ consideration. Answer: UCC 2-209(1) allows parties to a contract
governed by the UCC to change the duties required by a contract
without the need to provide additional ____________
◉ Mutual Rescission. Answer: Both parties to a contract under
which they still both have duties to perform (executory) agree to
return to their pre-contracting positions
