Contracts
Contracts tests formation, enforceability, performance, breach, and remedies. Common law governs services and real estate; UCC Article 2 governs transactions in goods.
Formation and consideration
- Mutual assent requires a definite offer and acceptance. Common law uses the mirror-image rule; UCC 2-207 allows additional or different terms between merchants unless material or objected to.
- Consideration is a bargained-for exchange. Preexisting duty is not consideration. Promissory estoppel can enforce a promise without consideration.
- Defenses include Statute of Frauds, incapacity, duress, misrepresentation, and unconscionability.
Statute of Frauds
- Common law categories: marriage, year, land, executor, surety, sale of goods over $500 (MY LEGS).
- UCC 2-201 requires a writing signed by the party to be charged. A merchant confirmatory memo binds the recipient unless objection within 10 days.
- Exceptions: specially manufactured goods, admission, part performance, payment.
Performance and breach
- A material breach excuses the other party; substantial performance permits recovery minus damages.
- UCC perfect tender allows rejection unless cure is available.
- Anticipatory repudiation permits suspension or a breach claim.
- Impracticability, frustration, and impossibility excuse performance in narrow cases.
Remedies
- Expectation damages put the plaintiff in the position of performance.
- Consequential damages require foreseeability (Hadley) and mitigation.
- Liquidated damages are enforceable if reasonable and difficult to estimate.
- Specific performance is available for land and unique goods.
Worked example
A merchant seller orally agrees to sell $8,000 of custom parts to a merchant buyer. The seller sends a signed memo stating the quantity and price; the buyer does not respond. Under UCC 2-201, the merchant confirmatory memo binds the buyer unless the buyer objects within 10 days. The buyer's silence allows enforcement.
Traps
- The mirror-image rule does not apply to UCC sales.
- The Statute of Frauds makes a contract unenforceable, not void.
- Do not award expectation and reliance damages together.
- A minor breach does not excuse the other party's performance.