Subject outline

Contracts / Sales

10 core rule statements and a 226-line detailed rule bank, organized the way the California Bar tests them.

• Contract Formation

  A contract requires mutual assent and consideration, with sufficiently definite terms and no defense to enforcement.

  Elements / Factors

  1. 1Offer.
  2. 2Acceptance.
  3. 3Consideration or enforceable substitute.
  4. 4Definite essential terms.
  5. 5No applicable formation defense.

  Exceptions / Limitations

  • •UCC Article
  • •governs transactions in goods; common law governs services, real property, and other contracts. Mixed contracts use the predominant-purpose test.

  California distinction

  • California generally follows objective manifestation and recognizes electronic transactions and signatures under statute.

• Offer

  An offer is an objective manifestation of present intent to contract with definite terms communicated to the offeree.

  Elements / Factors

  1. 1Present commitment rather than invitation to negotiate.
  2. 2Reasonably certain essential terms.
  3. 3Communication to an identified or ascertainable offeree.

  Exceptions / Limitations

  • •Advertisements are ordinarily invitations unless specific, definite, and leaving nothing open.
  • •An offer terminates by lapse, revocation, rejection, counteroffer, death/incapacity, destruction, or illegality.
  • •An option, firm offer, beginning performance of a unilateral contract, or detrimental reliance may limit revocation.

• Acceptance

  Acceptance is an objective manifestation of assent in the manner invited or required by the offer.

  Elements / Factors

  1. 1Knowledge of the offer.
  2. 2Unequivocal assent.
  3. 3Proper method and timeliness.
  4. 4Communication when required.

  Exceptions / Limitations

  • •Common-law mirror-image rule treats changed terms as counteroffer.
  • •Under the UCC, a definite and seasonable expression can accept despite additional terms unless expressly conditional.
  • •Mailbox rule generally makes acceptance effective on dispatch, subject to option contracts, improper means, and offer terms.

• Consideration

  Consideration is a bargained-for exchange of legal value.

  Elements / Factors

  1. 1Promisor seeks the performance or return promise in exchange.
  2. 2Promisee gives performance, forbearance, or a return promise.
  3. 3No preexisting-duty or illusory-promise defect.

  Exceptions / Limitations

  • •Courts generally do not assess adequacy.
  • •Past or moral consideration is ordinarily insufficient.
  • •Promissory estoppel may enforce a promise causing reasonable, foreseeable, detrimental reliance when necessary to avoid injustice.

• Statute of Frauds

  Specified contracts are unenforceable unless evidenced by a signed writing identifying the parties, subject matter, and essential terms.

  Elements / Factors

  1. 1Marriage consideration.
  2. 2Contracts not performable within one year.
  3. 3Transfers of interests in land.
  4. 4Executor’s promise to pay estate debt personally.
  5. 5Suretyship.
  6. 6Sale of goods for $500 or more.

  Exceptions / Limitations

  • •Main-purpose exception to suretyship.
  • •Part performance, admission, specially manufactured goods, or merchant confirmation where applicable.
  • •Full performance by one party may remove a one-year issue.

  California distinction

  • California’s statute includes additional categories and electronic writings may satisfy signature requirements.

• Parol Evidence

  A final integrated writing bars prior or contemporaneous evidence that contradicts its terms; a complete integration also bars consistent additional terms.

  Elements / Factors

  1. 1Determine whether writing is final.
  2. 2Determine complete or partial integration.
  3. 3Determine whether evidence contradicts or supplements.
  4. 4Apply an exception.

  Exceptions / Limitations

  • •Evidence may show formation defects, fraud, mistake, ambiguity, condition precedent, later modification, or collateral agreement where permitted.

  California distinction

  • California follows a contextual approach to ambiguity and generally permits extrinsic evidence to prove a meaning to which contractual language is reasonably susceptible.

• Conditions

  A condition is an event, other than lapse of time, that must occur before performance becomes due unless excused.

  Elements / Factors

  1. 1Identify express, implied, or constructive condition.
  2. 2Determine strict or substantial compliance standard.
  3. 3Determine excuse: waiver, estoppel, prevention, anticipatory repudiation, impossibility, or forfeiture avoidance.

  Exceptions / Limitations

  • •Express conditions ordinarily require strict compliance. Constructive conditions generally require substantial performance.

• Material Breach and Substantial Performance

  A material breach excuses the other party’s remaining duties; substantial performance creates a right to payment minus damages.

  Elements / Factors

  1. 1Extent of deprivation of expected benefit.
  2. 2Adequacy of compensation.
  3. 3Forfeiture to breaching party.
  4. 4Likelihood of cure.
  5. 5Good faith and fair dealing.

  Exceptions / Limitations

  • •Under perfect-tender UCC rules, a buyer may reject nonconforming goods subject to cure, installment-contract, and acceptance rules.

• Anticipatory Repudiation

  An unequivocal statement or voluntary act indicating inability or unwillingness to perform before performance is due permits the nonbreaching party to suspend and sue.

  Elements / Factors

  1. 1Executory duties remain on both sides.
  2. 2Clear and unequivocal repudiation.
  3. 3Repudiation occurs before performance is due.

  Exceptions / Limitations

  • •Repudiation may be retracted before material reliance, cancellation, or indication that it is final.
  • •Reasonable grounds for insecurity permit demand for adequate assurances under the UCC.

• Contract Damages

  Expectation damages place the injured party where full performance would have placed that party.

  Elements / Factors

  1. 1Loss in value plus incidental and consequential losses.
  2. 2Subtract costs or losses avoided.
  3. 3Causation.
  4. 4Foreseeability at formation.
  5. 5Reasonable certainty.
  6. 6Reasonable mitigation.

  Exceptions / Limitations

  • •Specific performance requires inadequate legal remedy, definite terms, satisfied conditions, and equitable fairness.
  • •Punitive damages ordinarily are unavailable for breach alone.

  California distinction

  • California generally bars emotional-distress and punitive damages for ordinary contract breach absent an independent tort or statutory basis.