Contracts: Formation, Defenses, and Remedies
Formation
A contract requires mutual assent (offer plus acceptance), consideration, capacity, and legality of purpose. An offer must be sufficiently definite to enforce and ends by rejection, revocation, lapse, or death. Acceptance is generally effective on dispatch under the mailbox rule unless the offer says otherwise or an option contract is involved. Article 2 of the UCC governs sales of goods; the common law governs services, land, and everything else.
Formalities and Defenses
Statute of Frauds categories requiring a signed writing: marriage, year (cannot be performed within one year), land, executor, surety, and goods of $500 or more. The signature needed is that of the party to be charged. Parol evidence may not vary a fully integrated writing, but it may explain ambiguity, show fraud, or establish a condition precedent. Other defenses include duress, undue influence, mistake, unconscionability, and lack of capacity.
Breach and Remedies
Expectation damages place the injured party where performance would have put them; reliance and restitution are alternatives. The plaintiff must mitigate. Liquidated damages are enforceable if reasonable and not a penalty.
Traps
Watch for the preexisting duty rule, the UCC firm offer (merchant, signed writing, up to three months), promissory estoppel as a substitute for consideration, and the difference between a condition precedent and a promise.
Worked Example
An oral agreement to sell a used car for $4,000 is unenforceable under the Statute of Frauds because goods priced at $500 or more need a writing. Check the exceptions: specially manufactured goods, admission in pleadings or court, and payment plus acceptance of goods.