Contracts & Sales—Mini Outline

Step zero on every question: is this a sale of goods? If yes, UCC Article 2; if not, common law. Then, ordered by testing weight, formation and performance/breach/discharge lead (about half the MBE questions), with defenses, terms, remedies, and third-party rights behind them.

Governing law (ask first)

• UCC Article 2 governs the sale of goods (movable things); everything else—services, real estate—is common law. For mixed contracts, apply the law of the predominant purpose. About a quarter of MBE Contracts questions turn on Article 1/2.

1. Formation

• Mutual assent—offer: a manifestation of present intent with reasonably certain terms. The UCC fills gaps (price, time) but needs a quantity. Advertisements are usually invitations, not offers.
• Acceptance: common law requires the mirror image rule; UCC §2-207 forms a contract despite additional/different terms—between merchants, additional terms join unless they materially alter, are objected to, or the offer limits acceptance. The mailbox rule: acceptance is effective on dispatch (not for options).
• Offer termination: revocation (effective on receipt), rejection/counteroffer, lapse, death. Irrevocable offers: option contracts (paid-for), UCC firm offers, and part performance of a unilateral contract.
• Consideration: a bargained-for exchange of legal value. The pre-existing duty rule bars common-law modification without new consideration; the UCC allows good-faith modification without it. Substitutes: promissory estoppel (reasonable, detrimental reliance) and, in some cases, moral obligation/restitution.
• Indefiniteness and missing terms can defeat formation at common law.

2. Performance, breach & discharge

• Conditions (precedent, concurrent, subsequent)—strictly complied with, but excused by waiver, estoppel, prevention, or where enforcement causes forfeiture.
• Common law: a party who renders substantial performance can recover (minus damages); only a material breach excuses the other side. UCC perfect tender: the buyer may reject goods that fail to conform in any respect—subject to cure, installment-contract rules (substantial impairment), and revocation of acceptance.
• Anticipatory repudiation: a clear, unequivocal refusal lets the other party sue now or await performance; a party with reasonable grounds for insecurity may demand adequate assurance and suspend performance.
• Discharge: performance, rescission, accord and satisfaction, novation, and the excuses of impossibility, impracticability, and frustration of purpose. Risk of loss (UCC): on a shipment contract, it passes to the buyer on delivery to the carrier; on a destination contract, on tender at the destination; a breaching seller keeps the risk.

3. Defenses to enforceability

• Statute of Frauds—a signed writing for: land interests, contracts not performable within a year, suretyship, marriage-consideration, and goods $500+. Exceptions: part performance (land), specially manufactured goods, merchant confirmatory memo, admission, and full performance.
• Capacity (minority, mental incapacity, intoxication), mistake (mutual mistake of a basic assumption; unilateral mistake if the other party knew), misrepresentation/fraud, duress and undue influence, illegality, and unconscionability.

4. Contract content & the parol evidence rule

• The parol evidence rule bars prior/contemporaneous evidence that contradicts a fully integrated writing—but admits evidence to interpret an ambiguity, prove a defense (fraud, mistake), show a condition precedent, or add consistent terms to a partial integration. Course of dealing, usage of trade, and course of performance always come in under the UCC.
• Warranties (UCC): express; implied merchantability (from a merchant seller); and implied fitness for a particular purpose (seller knows the buyer's purpose and reliance). Disclaimers must be conspicuous ("as is").

5. Remedies

• Expectation damages give the benefit of the bargain, plus consequential (foreseeable—Hadley) and incidental damages, minus avoidable loss (duty to mitigate). Reliance and restitution are alternatives.
• Liquidated damages are enforceable if a reasonable forecast of hard-to-estimate loss and not a penalty.
• UCC buyer: cover (and get the difference), market-price differential, and—for unique goods—specific performance. UCC seller: resell and recover the difference, or lost profits (lost-volume seller).
• Specific performance for land and unique goods; not for personal-service contracts.

6. Third-party rights

• Third-party beneficiaries: an intended beneficiary can enforce once rights vest (assent, reliance, or suit); incidental beneficiaries can't.
• Assignment of rights (revocable if gratuitous) and delegation of duties—barred where they materially change the obligor's risk or the duty is personal; the delegator remains liable unless there's a novation.