Contract Formation, Terms, and Defenses
Contract Formation, Terms, and Defenses tests whether a candidate can spot an enforceable agreement, interpret its terms, and select defenses that excuse performance.
Core rules
- Common law requires offer, acceptance, consideration, capacity, and legality. Acceptance must be a mirror image; the mailbox rule makes acceptance effective on dispatch unless an option contract applies.
- UCC Article 2 governs goods. Merchants can make a firm offer irrevocable without consideration by signed writing (UCC 2-205). Open terms are filled by default rules (2-204, 2-305).
- UCC 2-207 allows a definite expression of acceptance even with additional terms; between merchants, additional terms enter unless material, objected to, or already refused.
- Statute of frauds: sale of goods at $500 or more (2-201), land, surety, marriage, one year, executor.
- Defenses: fraud, duress, undue influence, mistake, unconscionability (2-302), incapacity, illegality.
Worked example
On June 1, a merchant signs a writing offering to sell 500 units and promises to hold the offer open for 60 days. On June 10 it revokes. The revocation is ineffective: UCC 2-205 makes the firm offer irrevocable for the stated time, even without consideration, because the offer is by a merchant, in a signed writing, and gives assurance it will be held open.
Traps
Do not apply mirror-image acceptance to UCC sales. Do not confuse option consideration with a firm offer. Past consideration is not consideration. A statute-of-frauds defect may be overcome by admissions, part performance, or estoppel.