Inquiries to Make for Each Problem
1. What law applies?
2. Has a contract been formed?
· Was there apparent assent?
· Is there a legal basis for enforcement?
· Does it fall in the statute of frauds?
· Are the terms sufficiently definite?
3. If not, has there been precontractual reliance that can be used as a substitute for contract?
· Was there a promise?
· Was there at least a representation?
· Was there actual reliance?
4. Is there a Battle of the Forms situation?
5. If there is writing, is a party trying to introduce terms not in the written agreement?
6. What kind of contract is this?
· One-off contract
· Installment contract
· Requirements contract
· Output contract
7. Have the terms of the contract changed?
· Has there been a modification?
o Is there a NOM clause?
o Does the modification pass question 2 above?
· Are there any conditions that have not been fulfilled?
· Have any of them been waived?
8. Is the contract void or voidable? Was there:
· Mutual misunderstanding
· Mutual mistake in the expression
· Fraud
· Duress
· Misrepresentation
· Illegality
9. Has there been a breach?
· Is this a normal contract or an installments contract?
· How many potential breaches are there?
· Is the breach material? (§ 241)
· Is the breach total?
· If a party refused performance (payment), was it justified in doing so?
· Was there a duty to mitigate?
I. What Law Applies: The UCC vs. Common Law
A. The Uniform Commercial Code [1 – 2 | 25]
1. General Remarks
a. Article 1: General principles and definitions
· Revised Article 1 has been passed almost universally
b. Article 2: Only applies for sales of goods
· 2-100s: Definitions
· 2-200s: Contract formations
· 2-300s: Deals with the “gap fillers”
· 2-500s: Performance
· 2-600s: Problems with performance (breach, repudiation, and excuse)
· 2-700s: Remedies for problems with performance
c. Standards over rules: Llewellyn’s vision for realism called to abandon the rule when the reason for it was no longer transparent; he wanted contract law to reflect what was actually going on
2. Scope of Article 2
a. It is only necessary to go through this analysis if it matters to the answer; look first at the contract provisions to see if they overrule the differences between the UCC and CL
b. UCC § 2-102: Discusses which kinds of sales of goods are covered (excludes security transactions)
c. UCC § 2-105(1): Includes all things (including specially manufactured goods) which are moveable at the time of identification to the contract for sale
· Includes: Unborn young of animals and growing crops and other identified things attached to realty
· Does not include: Money, investment securities, security transactions (futures), or “things in action”
d. UCC § 2-107
(1) Minerals or the like to be severed from realty are considered goods if severed by the seller
(2) Growing crops and other things attached to but severable from real estate without material harm to the land (i.e. timber) are considered goods regardless of who does the severing
e. The Bonebrake Test: Deals with mixed goods and asks which of the two (goods vs. labor) is incidental to the other or which of the two predominates (CB 35)
· Specially manufactured car is a good because the labor is incidental to the essential purpose of the contract, i.e. to get a car that can be driven
o May be a non-good if the car is merely a prototype and the real transaction is for the plans
· Will is not a good because the paper is not the purpose of the contract (intangible)
· Plumber installing a water heater (buyer is buying a water heater and labor is incidental)
· Sale of washer when fixing drain is non-good (washer is incidental to service of fixing sink)
f. Examples of Goods
· Goods to be installed by seller (Stereo sold with installation)
g. Examples of Non-Goods
· Service
· Tract of l
invites the other party to form a contract by responding with an acceptance (can be made via a promise); an offer gives the recipient the power to make a K by responding with an acceptance.
o Moulton v. Kershaw (CB 343): Seller sent telegram stating “we are authorized to offer” salt at a specified price in unspecified quantities. The court holds no K. Buyer tried to introduce evidence of an implied quantity from prior dealings and trade practice but court rejected because businessmen would not want to expose themselves to the uncertainty of a jury trial to determine if there was an offer.
o Sharp’s Example: Vendor asked for $50,000, B offers $49,000, vendor replies “I will not sell for less than $56,000.” NO offer.
· Acceptance: An acceptance of the offer (subject to the rules of law listed above)
· Meeting of the minds: This was the old standard and is no longer required because it is subjective and has been replaced with objective assent (although it is a term of art frequently used)
f. Termination of the Power of Acceptance – R2 § 36 (CB 377)
· Caldwell v. Cline (CB 368) – relies on the rule that the offer isn’t effective until received; courts invoke rules to justify decisions that probably are reached on a ground that is independent of the rule. R2 §36(2) is not decisive in this case.
· Textron (CB 368) – an offer is good only for a “reasonable time,” generally the day or day after it was made.
· Davis v. Jacoby (CB 372) – an offer lapses upon the death of the offeror even if the offeree acts in reasonable reliance on the continued validity of the offer. R2 §36(1)(d).
· Power to revoke the offer – R2 §36(1)(c)
o Generally, an offeror has the power to revoke anytime before acceptance.
