9-1 Common Law Contract v. Uniform Commercial Code Contract

Article 2 of the Uniform Commercial Code (UCC) regulates agreements between a vendor and goods’ sale. According to Rasmussen (2002) UCC has two sets of rules: for everyone; and for merchants. For this comparison of conditions under UCC and common law, the most appropriate approach is to focus on its application to merchants. Common law controls contracts regulated by UCC and of other services beyond UCC. Therefore, the requirements for formation of common-law-based contracts tend to be more stringent than those demanded by UCC.

Common law requires definition of all the essential terms while UCC only demands definition of quantity terms. Yonjan (2019) defined a contract as a set or promises by at least two parties to accomplish some given tasks. It is formed in the presence of an offer, acceptance, capability, voluntary consent, and consideration. Only common law contract fulfills these requirements. Mutual consent is formed after combining offer and acceptance. Before enforcement, however, it has to be ensured that the parties are after a legal undertaking, and all parties should have capability to into the concerned contract. For the offer and acceptance phase, a seller has to mention the price and the person to whom the offer applies along with object of offer. For the consideration phase, common law also requires the bargained-for trade-offs of promises and/or acts. A new legal obligation emerges with this. The primary dissimilarity between UCC and common law, here, is its significant relaxation of the contract formation elements demanded by common law.

Next, common law demands for the mirror image acceptance. This implies that the offer and acceptance have to be precisely identical. The acceptance stage is not completed without this element. It becomes invalid. In other words, the offeree should state his/her agreement to purchase the concerned object at the stated price. Unlike common law, UCC can work with any evidence (words, writings or actions) that proves contact agreement. Contracts between merchants rarely includes offers with definite terms. Also the acceptance may not be mirror image. What happens here is that a merchant effects an order purchase whenever they want to buy materials, and the vendor will send invoice when shipping the order. With this, UCC has increased flexibility in the formation of contracts. Unlike common law, therefore, it captures the business practices as they happen in the real world. Merchants also find common laws burdensome, with the possibility of increasing contract disputes.  

Lastly, common law covers contracts that relate to services and real property interests while UCC focuses on contracts between merchants (and is for goods worth five hundred dollars and above). UCC directs sale of movable goods except for securities and money. This also means that contracts on land or houses are excluded from UCC contracts. Common law is, however, more general and its contacts cover all these areas.

9-3 The 3 Requirements for a Valid Acceptance

In contract formation, acceptance refers to the demonstration of assent to terms of an offer. For validity of acceptance, the offeree should be aware of the involved offer and express intention to accept. The primary requirements for valid acceptance include:

1. It should come from the offeree

The most appropriate person to accept an offer is the one for whom it was established. A different person may only accept it after receiving consent from its issuer.

2. It should be absolute and without conditions

 An offer will only turn into a contract if the acceptance is free from conditions and is absolute. If the response from offeree is conditional, the acceptance turns into a counter offer (which is not valid).

3. It should address the offerer

Contract formation necessitates communicating the acceptance to the party that sent the offer, or to their authorized agents. Communication is essential because no validity results from simply expressing the willingness to agree to an offer.

9-4 The 3 Requirements for a Valid Offer

An offer refers to a promise hence is conditional and should contain a return promise upon its completion. Yonjan (2019) argued that an offer should illustrate the interest in entering into a bargain in order to justify the understanding of the other party. Therefore, any offer should have a statement of an existing desire to enter into a contract, a proposal with definite terms, and consistent explanation of the offer. The required conditions include:

1.   Offer communication

The vendor should express willingness to either enter into a contract or refuse to do so. Communication is a fundamental as simply showing desire for or against is not enough. The communication process may involve words, that is, letters, emails, or adverts. This oral offer procedure may happen face-to-face or through phone call. A second way is conduct. Here, positive actions or signs are expressed to the offeree. A party’s silence cannot effect an effect an order.

2.    Definite and clear terms of offer

The court easily determines the activities that parties intend to engage in when the parties’ intentions are known. This calls for the avoidance of loose and vague terms when forming an offer.

3.    Involve a legal relationship

The intention to develop a legal relationship should be evident, otherwise the offer remains an invitation. An offer must result in a contract that establishes legal obligations. It should also indicate the legal consequences for violating the contract terms.