Contracts
What the exam tests
Contracts tests common-law formation and UCC Article 2 sale-of-goods rules, with emphasis on offer and acceptance, consideration, statute of frauds, parol evidence, excuse, and remedies.
Core rules
- Formation. Common law requires mutual assent and consideration; UCC § 2-204 allows formation by any manner showing agreement, and § 2-206 permits acceptance by prompt promise or shipment. An offer can be accepted only by the offeree; option contracts require consideration or a UCC firm offer.
- UCC battle of the forms. Under § 2-207, a definite expression of acceptance creates a contract even with additional terms; between merchants, additional terms become part of the contract unless they materially alter it, are objected to, or the offer limited acceptance.
- Statute of frauds. Covered: marriage, year, land, executor, surety, sale of goods over $500. UCC merchant confirmatory memo under § 2-201(2) binds the recipient if it has reason to know its contents.
- Parol evidence. Bars prior or contemporaneous terms that contradict a fully integrated writing; consistent additional terms may be admitted if not integrated.
- Remedies. Expectation damages protect the benefit of the bargain; consequential damages must be foreseeable under Hadley; liquidated damages must be reasonable and not a penalty.
Worked example
Merchant A sends Merchant B a signed writing for 1,000 widgets at $10 each. B does not reply. B later refuses to deliver, arguing no contract because B never signed. Under UCC § 2-201(2), A’s signed confirmatory memo binds B if B had reason to know its contents and did not object within 10 days. The statute of frauds is satisfied against B. A may recover expectation damages.
Traps
Do not apply UCC § 2-207 to non-goods contracts; do not treat a promise as consideration if it is illusory; do not ignore the UCC’s firm-offer rule; do not admit contradictory parol evidence; do not award unforeseeable consequential damages.