Contract Law and Commercial Transactions
What this domain tests
Contract Law and Commercial Transactions tests formation, enforceability, performance, and remedies, with the split between common law (services, real estate) and UCC Article 2 (goods). Expect merchant rules, the Statute of Frauds, and battle-of-the-forms problems.
Core rules and concepts
- Formation: offer (definite terms and intent), acceptance (mirror image at common law; UCC 2-207 allows additional terms between merchants unless material or objected to), consideration (bargained-for exchange).
- Statute of Frauds: writing required for marriage, year, land, executor, surety, goods at $500 or more (UCC 2-201). A merchant confirmation can satisfy the SOF against the recipient if it is signed, sent, and not objected to within 10 days.
- Parol evidence: bars prior or contemporaneous agreements that contradict a fully integrated writing; does not bar explaining ambiguity or proving a defense.
- Performance: common law requires substantial performance; UCC uses perfect tender, subject to cure and revocation. Risk of loss depends on shipment versus destination contract.
- Remedies: expectation damages, consequential damages (if foreseeable), specific performance (unique goods), UCC cover and incidental damages.
Worked example
Seller emails Buyer a signed memo: "10,000 widgets at $12 each, delivery May 1." Buyer is a merchant and says nothing for three weeks. Buyer later refuses. Under UCC 2-201(2), the merchant confirmation satisfies the Statute of Frauds against Buyer because both are merchants, the memo is signed by Seller, and Buyer did not object within 10 days. Buyer's silence is not acceptance of the contract's terms generally, but it blocks the SOF defense. Seller can enforce.
Traps that cost marks
- Applying common law mirror-image acceptance to a UCC goods sale.
- Assuming a merchant's silence always accepts all terms; it only satisfies the SOF.
- Using parol evidence to vary a fully integrated term.
- Forgetting that consequential damages require foreseeability at contracting.