UCC Contracts California Bar Exam Outline

CONTRACTS

1. Which law governs? UCC if sale of goods “substantial part.” Merchant or non-merchant?

2. Formation of Contract

   1. Offer – requires (1) an expression of a promise, undertaking or commitment to enter a contract, (2) certainty and definiteness of terms, and (3) communication to an identified offeree.

      1. Output Ks are valid (where seller commits to sell all the goods it produces to the buyer)

      2. Is the offer still alive?

         1. Lapse of time

         2. Rejection by offeree

         3. Revocation by offeror (unless firm offer – signed, written promise)

   2. Acceptance – manifestation of assent to the terms of an offer in a manner prescribed or authorized in the offer.

      1. Mailbox rule: acceptance effective upon dispatch

      2. 2-207: Response that adds new terms = a seasonable expression of acceptance

         1. At least 1 non-merchant → new term = proposal

         2. 2 merchants → new terms becomes part of the contract unless (1) material change or (2) offeror objects

      3. Acceptance may be revoked if (1) non-conformity substantially impairs value; (2) excusable ignorance as to non-conformity; (3) reasonable time

   3. Consideration – bargained for legal detriment

   4. No defenses

      1. Statute of frauds – by statute, certain agreements must be evidenced by a writing and signed by the party to be charged. Satisfied by:

         1. Delivery of ordinary goods

         2. Substantial beginning if custom made goods

         3. In writing (quantity + signature of party to be bound, or lack of response)

      2. Mistake / Ambiguity

      3. Illegality / Incapacity

      4. Unconscionability / Fraud / Duress

3. Contract Terms

   1. Parol Evidence Rule

   2. Modification – need only good faith (no consideration)

   3. Risk of loss: agreement of the parties controls OR breaching party is liable OR if common carrier, shipment or destination OR if merchant seller, shifts upon receipt OR if non-merchant seller, shifts upon tender.

4. Third Parties

   1. Third party beneficiaries

   2. Assignment / Delegation

5. Performance

   1. Conditions: (1) Type; (2) Excused; (3) satisfaction

   2. Discharge of Duty

      1. Impossibility / Impracticability / Frustration of purpose

      2. Anticipatory repudiation / Mutual rescission

      3. Modification / Novation / Accord & satisfaction

6. Breach = less than perfect tender

   1. Buyer may reject or accept all or part and sue for damages.

   2. Seller may cure imperfect tender if (1) prior deals suggest it would be okay, or (2) time for performance has not yet expired.

7. Remedies

   1. Compensatory damages – remember duty to mitigate

      1. S breach; B has goods → fair mkt price if perfect – fair mkt price as is

      2. S breach; S has goods → mkt price at breach/replacement price – K price

      3. B breach; B has goods → K price

      4. B breach; S has goods → K price – mkt price /resale price + lost profits

   2. Quasi K: where K fails, the non-breaching P may recover in Q-K to prevent unjust enrichment

   3. Reclamation

   4. Consequential damages – special damages

   5. Specific performance