Contracts: Formation, Performance, and Remedies
The Contracts domain tests whether a paralegal can classify an agreement under common law or UCC Article 2, identify formation defects, apply the Statute of Frauds and parol evidence rule, and assess breach and remedies from a fact pattern. Expect questions that turn on which body of law governs and on precise timing rules.
Core rules and concepts
- Common law governs services, real estate, insurance, and intangibles. UCC Article 2 governs transactions in goods. For mixed contracts, apply the predominant-purpose test.
- Formation: an offer needs definite terms and present intent; acceptance must be a mirror image at common law, while UCC §2-207 handles additional or different terms. Consideration is a bargained-for exchange; UCC §2-209 allows modification without new consideration if made in good faith.
- Statute of Frauds: writing required for marriage, year, land, executor, goods at $500 or more, and surety (MY LEGS). UCC exceptions include specially manufactured goods, admission, payment and acceptance, and receipt and acceptance of goods.
- Parol evidence: a fully integrated writing bars prior or contemporaneous oral terms, with exceptions for ambiguity, fraud, condition precedent, and course of dealing or performance.
- Performance and breach: common law uses substantial performance; UCC uses perfect tender, subject to cure and acceptance. Track conditions precedent, concurrent conditions, anticipatory repudiation, and excuse doctrines.
- Remedies: expectation, reliance, and restitution; UCC cover and market-price damages; consequential damages when foreseeable; mitigation; liquidated damages only if reasonable.
Worked example
Buyer sends a purchase order for 500 widgets at $20 each. Seller's acknowledgment adds an arbitration clause and a waiver of consequential damages. Under UCC §2-207, a contract exists on the offer's terms plus additional terms that are not material. Between merchants, additional terms become part unless the offer expressly limits acceptance, the terms materially alter the contract, or the buyer objects within a reasonable time. Arbitration and consequential-damages waiver often materially alter the deal, so they are proposals, not automatic terms. The paralegal should flag the need for express assent.
Traps that cost marks
Do not apply UCC rules to service contracts or common-law rules to goods. Do not treat a price quote as an offer without intent. Watch mailbox-rule timing: acceptance is effective on dispatch, revocation on receipt. Do not assume every additional term in a merchant acknowledgment becomes part of the contract. Do not use parol evidence to contradict an integrated writing, but remember it may explain ambiguity or prove a condition precedent. Finally, do not label an unreasonable liquidated-damages clause enforceable; it is a penalty.