Contracts: Common Law, UCC Article 2, and Guam's Civil Code
The Contracts section tests formation, defenses, performance, breach, and remedies under the common law and UCC Article 2, with Guam's Civil Code supplying statutory rules modeled on California's. Expect questions that mix common-law and sale-of-goods rules and that require you to calculate damages.
Formation and enforceability
- Mutual assent: offer, acceptance, and the mailbox rule; option contracts require consideration or a substitute.
- UCC 2-207: additional or different terms in a confirmation; material terms may drop out.
- Consideration or a substitute: promissory estoppel, detrimental reliance, moral obligation in limited cases.
- Statute of frauds: sale of goods over $500, land, surety, marriage, and contracts not performable within one year. Guam's Civil Code statute of frauds mirrors California's, so check the Guam provision rather than assuming a state variation.
- Defenses: duress, undue influence, mistake, misrepresentation, unconscionability, and illegality.
Performance and breach
- Conditions precedent, concurrent conditions, and substantial performance; a material breach excuses the other party.
- Anticipatory repudiation and demands for adequate assurances.
- UCC perfect tender versus common-law substantial performance.
Remedies
- Expectation, reliance, and restitution; consequential damages must be foreseeable; mitigation is required.
- Liquidated damages must be reasonable, not a penalty.
- Specific performance for land and unique goods.
Worked example
A Guam restaurant orders a custom refrigerator from a mainland supplier for $8,000. The supplier's confirmation adds a different warranty and a 90-day delivery term. The restaurant objects but accepts late delivery. Under UCC 2-207, the additional terms may drop out if material; the delivery term may be material. Acceptance of the goods does not waive damages for late delivery if the restaurant gives timely notice. Expectation damages include the cost of cover or the difference between market price and contract price, plus incidental and consequential damages proven with reasonable certainty. A $500-per-day liquidated damages clause may be a penalty if it is disproportionate to anticipated loss.
Traps
- Applying the UCC to services or real estate.
- Missing the statute of frauds or a Guam Civil Code variation.
- Confusing expectation with reliance damages.
- Ignoring UCC notice and cover requirements.
The highest-scoring answers state the governing law first, then apply each element to the facts and quantify the remedy.