Contracts
Overview
Contracts is the largest domain. Know common-law formation cold, then layer on UCC Article 2, which governs sales of goods and displaces common law where the two conflict.
Common-law formation
- Offer: definite terms, intent to be bound, communicated to the offeree. Advertisements are generally invitations to negotiate.
- Acceptance: mirror-image rule at common law; effective on dispatch under the mailbox rule unless the offer provides otherwise.
- Consideration: a bargained-for exchange of legal detriment. A preexisting duty is not consideration; part payment of a debt is not consideration absent a writing or a new element.
- Defenses: incapacity (minors, intoxication, mental incapacity), duress, undue influence, misrepresentation, unconscionability, illegality, mistake, and the Statute of Frauds - marriage, year, land, executor, goods $500 or more, surety (MY LEGS).
- Promissory estoppel enforces a promise without consideration where injustice can be avoided only by enforcement.
UCC Article 2 adjustments
- Formation may occur in any manner showing agreement; open price, delivery, and payment terms can be filled by the Code, but quantity must be reasonably certain.
- A merchant's firm offer is irrevocable without consideration if made in a signed writing, for up to three months (§2-205).
- §2-207 replaces the mirror-image rule: a definite and seasonable expression of acceptance operates as acceptance even with additional terms; between merchants, additional terms enter unless objected to, materially altered, or the offer limited acceptance.
- Perfect tender: the buyer may reject goods failing in any respect unless the seller cures within the contract time.
Worked example
Merchant A sends a signed offer to sell 1,000 widgets at $10 and promises to hold it open for 60 days. Merchant B accepts on day 40. Even without consideration, the offer is irrevocable under §2-205 for up to three months, so B has an enforceable contract at $10.
Traps
- The UCC firm offer requires a merchant, a signed writing, and no consideration.
- The mailbox rule does not apply to option contracts.
- Implied-in-fact contracts are true contracts; quasi-contract is a restitution remedy, not a contract.
- The Statute of Frauds requires a writing signed by the party to be charged.