Many contracts questions become easy once you classify the transaction correctly. This page turns UCC-versus-common-law sorting into a repeatable first move before you analyze formation, modification, or remedies.
Many contracts questions become easy once you classify the transaction correctly. This page turns UCC-versus-common-law sorting into a repeatable first move before you analyze formation, modification, or remedies.
The FIRST question on any contracts essay: Does UCC Article 2 or common law apply? This determines almost everything else.
GOODS = tangible, movable personal property at the time of identification to the contract. Cars, furniture, food, livestock, crops when severed = GOODS. Services, real estate, intellectual property = NOT goods (common law).
THE PREDOMINANT PURPOSE TEST for mixed transactions: Ask: What is the MAIN PURPOSE of the contract? - Contract to buy a furnace with installation → UCC (furnace is main purpose) - Contract for house painting that includes paint → Common law (service is main purpose) - Restaurant meal → UCC in most jurisdictions (food is the product)
MERCHANTS matter a lot under the UCC. A merchant is someone who: (1) Deals in goods of the kind, OR (2) Holds themselves out as having special knowledge about the goods
Many UCC rules only apply to merchants (firm offers, merchantability warranty, risk of loss rules).
HYPO: HomeOwner hires ContractorCo to build a custom deck for $15,000. The contract includes $5,000 in lumber and materials (supplied by ContractorCo) and $10,000 in labor.
ANALYSIS: Is this UCC or common law?
Apply the PREDOMINANT PURPOSE TEST: - Total contract: $15,000 - Goods (lumber/materials): $5,000 (33%) - Services (labor): $10,000 (67%)
The PRIMARY PURPOSE is the SERVICE of building the deck. The materials are incidental to achieving that purpose. You're not really buying lumber—you're buying a deck-building service.
RESULT: COMMON LAW applies. Even though goods are involved, the predominant purpose is services.
This matters because: If ContractorCo does a "pretty good" job but not perfect, substantial performance doctrine (common law) applies—they can still recover, minus damages. Under UCC's perfect tender rule, buyer could reject for any defect.
Section sources
The UCC is MUCH more flexible about contract formation than common law.
COMMON LAW requires definite essential terms: parties, subject matter, price, quantity, time for performance. Missing essentials = no contract.
UCC APPROACH: A contract exists if parties INTEND to contract and there's a REASONABLY CERTAIN basis for giving a remedy. The UCC provides GAP FILLERS: - No price stated → Reasonable price at time of delivery - No place of delivery → Seller's place of business - No time for payment → Due at time/place of delivery - No time for delivery → Reasonable time
THE ONE TERM UCC WON'T FILL IN: QUANTITY. You must specify quantity (or have a requirements/output contract).
OPEN PRICE TERM (§2-305): Price can be left open if parties intend to contract. But if one party has power to fix price, they must do so in GOOD FAITH.
HYPO: Buyer emails Seller: "I'll take those widgets we discussed at your warehouse. Ship when ready." Seller ships 100 widgets. No price was ever mentioned.
ANALYSIS: Under common law, this would likely FAIL for indefiniteness—no price term is a fatal defect.
Under UCC: Is there INTENT to contract? Yes—"I'll take those widgets" shows intent. Is there a REASONABLY CERTAIN basis for remedy? Yes—courts can look at market price for widgets at time of delivery.
The UCC fills in the gaps: - Price: Reasonable price at delivery (§2-305) - Delivery: Seller's place of business (warehouse) (§2-308) - Time: Reasonable time (§2-309) - Payment: Due at delivery (§2-310)
RESULT: Valid contract under UCC. Buyer owes reasonable market price for 100 widgets.
TRAP: What if Buyer said "I'll take whatever widgets you want to send"? NO CONTRACT—quantity cannot be left open (unless requirements/output contract).
Section sources
COMMON LAW RULE: Offers are freely revocable ANYTIME before acceptance—even if offeror promised to keep it open. The only exceptions are: 1. OPTION CONTRACT: Offeree paid consideration to keep offer open 2. PROMISSORY ESTOPPEL: Offeree reasonably relied to their detriment
UCC §2-205 FIRM OFFER changes this for goods. An offer is IRREVOCABLE without consideration if: 1. Offeror is a MERCHANT (deals in goods of the kind OR has special knowledge) 2. Offer is in a SIGNED WRITING 3. Writing gives ASSURANCES the offer will be held open
TIME LIMITS: - If offer states time period → Irrevocable for that time (but max 3 months) - If no time stated → Irrevocable for reasonable time (but max 3 months) - After 3 months → Need new consideration to extend
TRAP: If offeree supplies the firm offer form (not offeror's own form), the firm offer term must be SEPARATELY SIGNED by the offeror. This prevents form contracts from trapping people.
HYPO: On March 1, Merchant Seller emails Buyer: "I'll sell you 500 units at $10 each. This offer is firm until June 1." On April 15, Seller sends another email: "I revoke my offer." On April 20, Buyer replies: "I accept."
ANALYSIS: Is Seller bound?
Check UCC §2-205 requirements: ✓ Offeror (Seller) is a merchant ✓ Offer is in signed writing (email can count as signed under E-SIGN) ✓ Writing assures offer will be held open ("firm until June 1")
BUT: The offer purports to be open for 3 MONTHS (March 1 - June 1). Under §2-205, firm offers are capped at 3 months MAX.
From March 1 to April 15 (revocation attempt) = about 6 weeks, well under 3 months. From March 1 to April 20 (acceptance) = about 7 weeks, still under 3 months.
RESULT: Seller's attempted revocation is INEFFECTIVE. The firm offer was irrevocable through June 1 (within 3-month limit). Buyer's acceptance on April 20 created a binding contract.
DIFFERENT RESULT if acceptance was on June 5? Then beyond 3 months—offer would have lapsed and no contract.
Section sources
Under COMMON LAW MIRROR IMAGE RULE: Acceptance must match offer exactly. Any different or additional terms = rejection + counteroffer. This created the "LAST SHOT DOCTRINE"—whoever sent the last form before performance "won."
UCC §2-207 changes everything for goods. A definite expression of acceptance creates a CONTRACT even if it has different or additional terms.
THE 2-207 ANALYSIS: Step 1: Is it a definite acceptance? (If expressly conditional on assent to new terms, it's a counteroffer) Step 2: Contract formed? Yes, on offeror's terms PLUS... Step 3: What happens to the additional/different terms?
ADDITIONAL TERMS (terms not in offer): - Between NON-MERCHANTS: Proposals only; not part of contract unless accepted - Between MERCHANTS: Automatically IN unless: (a) Offer expressly limits acceptance to its terms (b) Terms materially alter the contract (c) Offeror objects within reasonable time
DIFFERENT TERMS (contradict offer): Courts split: - Knockout rule: Both terms knocked out, UCC fills gap - Offeror's terms control - Treat like additional terms
HYPO: BuyerCorp (merchant) sends purchase order for 1,000 widgets at $5 each with standard terms. SellerCorp (merchant) sends acknowledgment form accepting, but adds: "All disputes subject to arbitration in New York."
ANALYSIS: Battle of the Forms under §2-207.
Step 1: Is SellerCorp's response a definite acceptance? YES—it accepts the quantity, price, and goods. The arbitration clause is additional, not a condition of acceptance.
Step 2: Contract formed? YES—on BuyerCorp's basic terms (1,000 widgets, $5 each).
Step 3: Is the arbitration clause part of the contract? Both parties are MERCHANTS, so additional terms are automatically IN unless: (a) Offer limits acceptance → Not indicated (b) Materially alters contract → Arbitration clauses are generally MATERIAL alterations (they change dispute resolution significantly) (c) Objection → No objection mentioned
RESULT: CONTRACT exists for 1,000 widgets at $5 each, but the arbitration clause is probably NOT included because it materially alters the deal. Disputes would go to court, not arbitration.
Section sources
Ask whether the transaction is predominantly for goods or for services. That classification controls which formation, modification, and performance rules govern the rest of the analysis.
Students often import common-law requirements into Article 2, especially mirror-image acceptance and consideration for modifications. The UCC is more flexible on both.