Contracts
The contracts area tests formation, defenses, interpretation, and remedies under both common law and UCC Article 2. Questions frequently turn on whether a transaction is for goods or services, because that choice selects the governing rule set.
Core rules to hold
- Common law requires offer, acceptance, consideration, and mutual assent; the mirror image rule makes a counteroffer of any different term.
- UCC 2-207 displaces the mirror image rule between merchants: a definite and seasonable expression of acceptance operates as an acceptance even with additional terms; between merchants the additional terms enter the contract unless they materially alter it, the offer expressly limits acceptance, or objection is made within a reasonable time.
- UCC 2-201: sale of goods over $500 requires a writing, but the merchant's confirmation exception and part performance can satisfy it.
- The parol evidence rule bars prior or contemporaneous terms that contradict a fully integrated writing, but not terms that explain it.
- UCC 2-601 perfect tender gives the buyer broad rejection rights; common law uses substantial performance.
Worked example
A merchant buyer sends a purchase order for 1,000 widgets with a clause requiring all disputes to be litigated in its home county. The merchant seller accepts on its own form, adding an arbitration clause. Under 2-207 the acceptance is effective. The arbitration clause is a material alteration, so it does not become part of the contract, and the buyer's forum clause survives as part of the offer that was accepted.
Traps that cost marks
Applying common law mirror-image analysis to a goods contract; calling a term a material alteration without analyzing surprise or hardship; using the parol evidence rule to exclude evidence of a separate oral agreement supported by its own consideration; and forgetting that the Statute of Frauds is a defense that must be raised.