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.