Contracts and Sales Multistate Bar Practice Exam

In a discharge by substituted contract, what must the second contract do?

1. Explicitly revoke the first contract

2. Remain silent about the first contract

3. Be formed before the first contract is executed

4. Be created with additional parties involved

The correct answer is: Explicitly revoke the first contract

In a discharge by substituted contract, the essential requirement is that the second contract must explicitly revoke the first contract. This means that in order for the initial obligations to be discharged through a new agreement, the new contract must clearly indicate that the prior contract is no longer in effect. This explicit revocation ensures that all parties understand that the first contract is no longer binding, thereby preventing any confusion regarding their obligations. A substituted contract typically replaces the original contract's terms with new ones, and without a clear revocation, there could be ambiguity about which agreement is valid. If the second contract does not explicitly state that it is revoking the earlier agreement, both contracts might be seen as valid, potentially leading to conflicting obligations. This necessity for explicitness helps in maintaining clarity in contractual relationships and prevents disputes over which contract should govern the parties' rights and responsibilities.