Contracts Law: UCC and Common Law Principles

Vocabulary flashcards reviewing core contract law definitions, rules under the UCC and Common Law, formation requirements, defenses, breach, and remedies.

Goods

Anything that is movable at the time of sale, which falls under the governance of the Uniform Commercial Code (UCC).

Mixed Transaction

A transaction that involves both goods and services.

Predominant Purpose Test

The majority test used to determine whether mixed transactions fall under the UCC, which evaluates what the majority of the transaction was in dollars.

Gravamen of the Complaint

The minority test for mixed transactions, which looks at what part of the transaction gave rise to the problem to determine applicable law.

Merchant

A person who deals in goods of the kind involved in the transaction or holds themself out as having specialized knowledge or skill regarding those goods.

Offer

Manifesting willingness to bargain and inviting the other party's assent to conclude it.

UCC Gap Fillers

Statutory default terms that fill in missing terms (except quantity) under the UCC, providing a reasonable price at delivery, the seller's place of business or home as delivery place, delivery within a reasonable time, and payment due upon receipt of goods.

Unilateral Contract

An exchange of the offeror's promise for the offeree's act.

Bilateral Contract

An exchange of a promise for a promise.

Option Contract

A promise to keep an offer open for a specified period of time.

UCC Firm Offer Rule

A rule under which an option contract does not require consideration on both sides if: (1) the offeror is a merchant, (2) the offer is in a signed writing, and (3) the writing explicitly states that the offer will be held open.

Common Law Option Contract

An option contract under common law that requires consideration on both sides to remain binding.

Acceptance

A manifestation of assent to the terms of the offer made by the offeree in a manner invited or required by the offer.

Mutual Assent

Exists when the parties objectively manifest an intent to be bound through a valid offer and acceptance.

Mailbox Rule

The rule establishing that acceptance is effective when sent (if using a reasonable or authorized means of communication), whereas rejection, revocation, and counteroffers are effective upon receipt.

Mirror Image Rule

A common law rule requiring that offer and acceptance contain exactly the same terms; any difference prevents acceptance and creates a counteroffer.

Defective Acceptance

An acceptance that is not in accord with the terms of the offer, which the offeror (as master of the offer) can nevertheless choose to accept.

Battle of the Forms (UCC 2-207)

The UCC rule allowing an acceptance with additional terms to be valid (if not conditional on them); new terms control if both parties are merchants, the terms do not materially alter the deal, the offer did not limit acceptance, and no objection is made in a reasonable time.

Consideration

A bargained-for exchange in which each party incurs a legal detriment or confers a legal benefit.

Peppercorn Rule

The principle that courts generally do not look at the adequacy of consideration unless an agreement is so unequal that it becomes unconscionable.

Counteroffer

A response to an offer that acts as a rejection of the original offer.

Trade Usage

Defined under UCC 1-303(c) as a practice or method of dealing that is so common in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question.

Merger Clause

A contract clause stating that no outside evidence should be used to interpret the contract and only what is inside the contract should be used.

Breach

Occurs when an enforceable promise was made, the defendant's performance was due, and the defendant failed to perform without a valid excuse or defense.

Anticipatory Repudiation

Occurs when a party clearly and unequivocally communicates their intent to breach the contract before performance is due, allowing the damaged party to immediately sue without waiting.

Unilateral Mistake

A defense rendering a contract voidable if it affects a basic assumption, materially impacts the deal, the party seeking relief did not bear the risk, and enforcement would be unconscionable OR the other party caused or had reason to know of the mistake.

Duress

A defense occurring when a party's assent is induced by a threat that leaves the victim with no other choice.

Misrepresentation

A false statement of material fact that was reasonably relied upon and caused loss or harm.

Excuse

A defense brought when there is no defect in the formation of the contract, but the non-performing party had a valid reason not to perform.

Impossibility

An excuse where performance is discharged by the court because it was rendered impossible by events occurring after the contract was entered into.

Punitive Damages

Damages that seek to deter a party from acting in a certain way.

Reliance Damages

Damages that seek to place the nonbreaching party in the position they were in before the contract was formed.

Restitution Damages

Damages that seek to pay the plaintiff an amount equal to the benefit the defendant received from the plaintiff's performance.

Expectation Damages

Damages that seek to place the nonbreaching party in the position they would have been in had the contract been performed.

Duty to Mitigate

The requirement that adversely affected parties minimize damages; failing to do so bars recovery of any damages resulting from that failure.

Specific Performance

An equitable remedy available when monetary damages would be inadequate to protect the injured party.

Injunction

An equitable remedy consisting of a court order preventing a party from doing something.

Promissory Estoppel

A non-contractual remedy applied when there is no contract, but there is a clear and definite promise, reasonable and foreseeable reliance, substantial detriment to the promisee, and unjust enrichment.

Liquidated Damages

Damages stated in the agreement itself, which must bear a relationship to the loss incurred by the breach and cannot be punitive.

Common Law Modification

Under common law, an alteration to an existing contract requiring consideration on both sides unless the modification is fair and equitable due to unanticipated circumstances.

Caveat Emptor

A Latin legal phrase meaning 'buyer beware.'

Parole Evidence

Evidence of agreements outside the contract, which is generally excluded unless showing a separate contract, a condition precedent, fraud, mistake, or repudiation.