CONTRACTS & SALES — BAR ONE-SHEET (ELEMENTS & MNEMONICS)
Lean issue-spotting checklist — elements and mnemonics only. Pair with the full Contracts Master Outline for depth, then drill questions at MBEMax.
KEY PRINCIPLE #1 — APPLICABLE LAW
- UCC Art. 2 = sale of goods (movable). Common law = services, land, intangibles.
- Mixed contract → PREDOMINANT PURPOSE test (which predominates governs whole). Minority: gravamen test.
- Merchant = deals in goods of the kind / holds out special knowledge. Triggers: firm offer, 2-207(2), merchantability, confirmatory memo.
KEY PRINCIPLE #2 — FORMATION (offer + acceptance + consideration)
OFFER = intent + definite terms + communicated. (UCC needs only quantity.)
Offer dies: revocation (on receipt; indirect by reliable info) · rejection/counteroffer · lapse · death/incapacity · destruction/illegality.
Irrevocable offers — mnemonic "OF PR": Option (consideration) · Firm offer (UCC: merchant + signed writing, ≤3 mo., no consideration) · Part performance of unilateral · Reliance (foreseeable — sub's bid).
ACCEPTANCE: common law = mirror image (variance = counteroffer). UCC 2-207 = acceptance despite new terms unless expressly conditional; between merchants additional terms IN unless (a) offer limits, (b) material alteration, (c) objection; conflicting terms → knockout.
MAILBOX RULE: acceptance effective on dispatch; everything else on receipt. Options = on receipt. Rejection-then-acceptance = first received wins.
CONSIDERATION = bargained-for legal detriment. Past consideration = none. Pre-existing duty rule (common law: modification needs NEW consideration); UCC modification = good faith only. Substitutes: promissory estoppel (§90), material benefit.
KEY PRINCIPLE #3 — DEFENSES TO FORMATION
STATUTE OF FRAUDS — mnemonic "MY LEGS": Marriage · Year (can't be performed within 1 yr) · Land · Executor (own funds) · Goods ≥$500 · Suretyship.
- Writing: signed by party to be charged; UCC needs quantity.
- UCC SoF exceptions — mnemonic "SWAP": Specially manufactured · Written merchant confirmation (10 days) · Admission · Performance (part).
- Land exception: part performance (2 of payment/possession/improvements).
Other defenses: incapacity (minor/mental/intoxication) · duress · undue influence · misrepresentation/fraud · mistake (mutual: basic assumption + material + risk not borne; unilateral: only if other knew) · illegality · unconscionability (procedural + substantive @ formation).
KEY PRINCIPLE #4 — TERMS
PAROL EVIDENCE RULE: bars prior/contemporaneous terms contradicting an integration. Never bars: defenses, condition precedent to effectiveness, ambiguity, subsequent modifications, reformation, trade usage/course of dealing/performance.
WARRANTIES (UCC): express (basis of bargain) · implied merchantability (merchant; fit ordinary purpose) · implied fitness (knows purpose + reliance). Disclaim: "AS IS" kills both implieds; merchantability orally w/ word "merchantability"; fitness only conspicuous writing; express can't be disclaimed.
RISK OF LOSS: agreement → carrier (shipment [default] passes on delivery to carrier; destination on tender) → bailee → else merchant seller = on receipt, non-merchant = on tender. Breach: stays on breacher.
KEY PRINCIPLE #5 — PERFORMANCE & BREACH
Conditions: express = strict compliance; constructive = substantial performance. Excused by waiver, prevention, estoppel, forfeiture.
Common law: material breach → suspend/terminate; minor → perform + damages (substantial performance).
UCC PERFECT TENDER: single delivery — any defect → reject all/part/accept. Seller cure (before deadline as of right; after, if reasonable grounds). Revocation of acceptance = substantial impairment + hidden defect/assurances. Installment = substantial impairment.
ANTICIPATORY REPUDIATION: unequivocal refusal before due → sue now / wait / urge / ignore. Retractable until reliance/suit. Insecurity → written demand for assurances (UCC 30 days).
KEY PRINCIPLE #6 — EXCUSE OF PERFORMANCE
Basic assumption + no fault + risk not allocated: impossibility (death of essential person, destruction of subject, illegality) · impracticability (extreme unforeseen cost — mere price rise ≠) · frustration (purpose destroyed). Discharge: rescission · accord & satisfaction · novation · release.
KEY PRINCIPLE #7 — REMEDIES
Expectation = position if performed. Limits — mnemonic "FCM": Foreseeability (Hadley) · Certainty · Mitigation. No punitives. Liquidated damages: difficult to estimate + reasonable forecast (else penalty).
UCC Buyer: cover − K · market − K · accepted goods (warranted − accepted; notice!) · SP if unique.
UCC Seller: K − resale · K − market · lost-volume → lost profit · action for price (accepted / risk-passed loss / unresellable).
Equity: SP — land always, goods if unique, services never (negative injunction OK).
KEY PRINCIPLE #8 — THIRD PARTIES
TPB: intended (creditor/donee) can sue promisor (subject to defenses); incidental = none. Vests on reliance/suit/assent.
Assignment (rights): effective unless materially changes risk; assignee takes subject to defenses; after notice obligor pays assignee; first-in-time among successive (exceptions: payment/judgment/novation/token).
Delegation (duties): OK except personal-skill; delegator stays liable (no novation); delegate liable if assumed for consideration.
ADDITIONAL HIGH-YIELD POINTS
Output & requirements contracts. Quantity measured by seller's actual output or buyer's good-faith needs — not illusory because limited by good faith; no quantity unreasonably disproportionate to any stated estimate or prior demand.
Illusory promises. A promise that reserves an unlimited right to back out (“I'll buy if I feel like it”) is no consideration. Cured by good-faith, best-efforts, or notice-of-termination limits.
Auctions. With reserve (default) — auctioneer may withdraw before the hammer; each bid is an offer. Without reserve — goods cannot be withdrawn once bidding opens. Bidder may retract until the hammer falls.
Shipment of nonconforming goods. Treated as an acceptance forming a contract AND a simultaneous breach — unless seller seasonably notifies it is an accommodation, which makes it a counteroffer the buyer may accept or reject.
Modification mechanics. UCC needs only good faith (no new consideration). A signed no-oral-modification (NOM) clause is enforceable; against a non-merchant on a consumer form it must be separately signed. Failed oral mod can still operate as a waiver.
Accord & satisfaction. Agreement to accept a different performance; original duty suspended until the accord is performed, then discharged. Good-faith cashing of a conspicuously marked “payment in full” check on a genuinely disputed claim discharges the debt.
UCC gap-fillers. Missing price = reasonable price at delivery; place = seller's place of business; time = reasonable time; payment = due on delivery. Open terms are fine if parties intended to contract — only quantity is essential.
Voidable title & entrustment. A good-faith purchaser for value takes good title from one who got the goods by fraud (voidable title). Entrusting goods to a merchant who deals in that kind lets the merchant pass title to a buyer in the ordinary course. Void title (theft) passes nothing.
Buyer's inspection, rejection & acceptance. Right to inspect before payment/acceptance. Rejection must be within a reasonable time with notice; merchant buyer must follow seller's reasonable disposal instructions. Acceptance = words, retention after chance to inspect, or use inconsistent with seller's ownership; once accepted, buyer must pay and loses the right to reject.
Seller's reclamation & insolvency. Cash-sale seller may reclaim on a bounced check; credit seller may reclaim within 10 days of delivery if buyer was insolvent (no limit if buyer misrepresented solvency in writing within 3 months). On buyer's insolvency seller may refuse delivery except for cash and stop goods in transit.
Divisible (installment) contracts. If performance is split into agreed pairs of equivalents, breach of one unit does not necessarily breach the whole; recovery is allowed for substantially performed units even by a breaching party.
Restitution & quasi-contract. Where no enforceable contract exists, recover the reasonable value of a benefit conferred to prevent unjust enrichment. Also available to a breaching party for benefit beyond damages, and to the non-breacher as an alternative to expectation.
Reliance & restitution measures. Reliance = out-of-pocket costs to put P back where she started (used when expectation is too uncertain). Restitution = value of the benefit conferred on the breaching party.
Buyer's incidental & consequential damages. Incidental = costs of cover/inspection/storage. Consequential = lost profits/foreseeable losses (Hadley) — recoverable by buyer only, subject to mitigation; seller generally gets no consequential damages under the UCC.
Statute of limitations (UCC). Four years from breach (tender, or for future-performance warranties when the breach is or should be discovered); parties may shorten to one year but not extend.
Defenses & the third party. A promisor sued by an intended beneficiary or an assignee may raise all defenses arising from the contract itself; an assignee for value who took without notice may cut off some personal defenses (waiver-of-defense / holder-in-due-course concepts).
★ ONE-LINE ATTACK ORDER
Law (goods/CL?) → Formation (offer-acceptance-consideration) → Defenses (MY LEGS + capacity/mistake/etc.) → Terms (PER/warranties/risk) → Performance (conditions; perfect tender vs substantial performance) → Breach/repudiation → Excuse → Remedies → Third parties.