> ## Documentation Index
> Fetch the complete documentation index at: https://lawmaxxing.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Session 02 - Mutual Assent, Objective Theory, UCC - Sale of Goods, Formation, Gap Fillers, Types of Contracts

> Mutual Assent and Objective Theory of Contract; UCC - Sales of Goods; Mixed/Hybrid Contracts; Types of Contracts; UCC Gap Filler Provisions

## I. Governing Law for Contracts

### A. General Rule

* **Common law** governs all contracts
* **Exception**: Sales of goods are governed by the **Uniform Commercial Code (UCC)**

### B. Key Definitions

#### 1. Agreement vs. Contract

* **Agreement**: Not necessarily a contract
* **Contract**: An **enforceable** agreement

#### 2. Agreement (Restatement Second of Contracts)

* A **manifestation of mutual assent**
* Sufficiently definite to conclude a bargain
* Parties need only agree on **essential terms**, not all terms

#### 3. Contract Defined

* **Restatement Second § 1**: A contract is a **set of promises** (at least two) that the law will enforce
* A promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law recognizes as a duty

#### 4. Simple Definition of Contract

* **Offer + Acceptance + Consideration + Lack of Defenses**
* This comprehensive definition helps ensure all issues are spotted on exams

## II. Mutual Assent and Objective Theory of Contract

### A. Mutual Assent

* Parties must reach an agreement
* Required for contract formation

### B. Objective Theory of Contract

* Courts focus on **outward manifestation** of parties' intent
* What parties thought in their minds is irrelevant
* **Test**: What would a reasonable person in the eyes of the opposing party conclude?

### C. Key Case: *Lucy v. Zehmer*

* Prime example of objective theory
* Outward manifestation controls over internal thoughts
* Court looks at what parties said and did, not what they were thinking
* Even drinking/joking may not negate contract if objective manifestations show intent

### D. Intent - Most Important Aspect

* Intent is the most important element in contract law (like in criminal law)
* Did parties intend to be serious or joking?

## III. UCC - Sales of Goods

### A. Definition of "Sale" (UCC § 2-106(1))

* A sale is a contract in which **title to goods passes**
* From the seller to the buyer
* For a price

### B. Definition of "Goods" (UCC § 2-105(1))

* **All things movable** at the time they are identified as the goods to be sold under the contract
* Must be **tangible and movable**

### C. Goods Associated with Real Estate

#### 1. Growing Crops and Timber (UCC § 2-107(1))

* **Growing crops** - always considered goods (UCC applies)
* **Timber to be cut** - always considered goods (UCC applies)
* **No matter who cuts them**

#### 2. Fixtures (UCC § 2-107(2))

* **Rule**: If removed **without material harm** to the land AND **severed by the seller**, UCC applies
* **General principle**: Anything affixed to land is part of the land
  * Even if attached by one pipe or one screw
  * Once affixed = not goods until properly severed

#### 3. Important Note

* Light bulbs screwed into sockets connected to land = part of land
* Cannot be removed when selling home
* Barbecue affixed to land/wall = part of land, not goods

## IV. Mixed/Hybrid Contracts

### A. Severability Test

* Contracts are **severable** if promises are:
  1. **Independent** AND
  2. **Apportionable**

#### 1. Independent

* Promises are independent if parties' intent evidences they would have contracted for the promises separately
* **Example**: Hire painter for $1,000 to paint living room by March 1, and $800 to paint dining room by March 15
* Focuses on whether obligations are separate

#### 2. Apportionable

* The consideration can be split proportionally for partial performance
* **Example**: Pool cleaning for \$50/month for whole year - can sever into individual months
* Focuses on whether consideration can be divided

### B. When Not Severable

* Apply **predominant purpose test**
* **Example**: Domino's pizza delivery - cannot separate price for delivery vs. pizza
* Apply law governing the predominant purpose of the contract

## V. Types of Contracts - Formation

### A. Express Contracts

* A contract in which the **offer, acceptance, AND consideration** are **ALL expressly stated** by the parties
* Can be stated **orally OR in writing**
* **Common mistake**: Express does NOT mean written
* **Example**: *Lucy v. Zehmer* - everything said and wrote was expressed

### B. Implied-in-Fact Contracts

* A contract in which the offer, acceptance, OR consideration is evidenced by the **parties' actions rather than words**

### C. Implied-in-Law Contracts (Quasi-Contracts)

#### 1. Key Point: NOT A CONTRACT

* **First rule**: An implied-in-law contract is **NOT a contract**
* It is an **equitable remedy** created by the courts

#### 2. Three Elements Required:

1. The **moving party** (plaintiff) had an **expectation of receiving a benefit** in return for performance
   * Expectation must be **reasonable** (objective standard)
2. The moving party had, in fact, **conferred a benefit**
3. It would be **unjust** to allow the other party to **retain that benefit without compensation**
   * Called **unjust enrichment**

#### 3. Important Notes

* Equitable remedy, not legal remedy
* Contract formation defenses do not apply (because it's not a contract)
* **Statute of Frauds is NOT a defense** to quasi-contract
* **Application**: Family law - innocent spouse treated as having quasi community property rights

## VI. Offer

### A. Definition

* An **offer** is an **intent to be bound** by **certain definite terms** which are **communicated to the offeree**

### B. Three Key Elements

#### 1. Intent

* **Present intent** to be bound (not future intent)
* "Here and now" - not "I will at some point"
* Judged by **objective standard** of contract law
* Most important element - offer literally "is an intent"

#### 2. Certain Definite Terms

##### a. Common Law

* **Material terms** are required
* Material terms = those terms necessary for the court to:
  * Determine if there was a breach, AND
  * Create a remedy if breach occurred

##### b. UCC

* Only **two requirements**:
  1. **Intent to be bound**
  2. **Quantity**
* Everything else supplied by **UCC gap fillers**

#### 3. Communicated to Offeree

* The offeree must **receive and understand** the offer

## VII. UCC Gap Filler Provisions

### A. General Rule

* Gap fillers apply when there is **both intent and quantity**
* UCC is **pro-contract enforcement**
* Designed to make it easier for parties to form valid contracts

### B. Price (UCC § 2-305)

#### 1. General Rule (§ 2-305(1))

* Parties can conclude contract even though price is not settled
* Price = **reasonable price at time of delivery**

#### 2. Three Scenarios for Reasonable Price

* **(A)** Nothing is said about price
* **(B)** Price left to be agreed by parties, and they fail to agree
* **(C)** Price fixed in terms of agreed market/standard or set by third party/agency
  * **Example**: Crude oil at market price at time of delivery

#### 3. Good Faith Requirement (§ 2-305(2))

* Price fixed by seller or buyer means price fixed in **good faith**
* Every agreement requires **good faith and fair dealing**
* Cannot hide known defects or material information

#### 4. No Fault Provision (§ 2-305(3))

* When price left to be fixed fails through **fault of no party**
* Other party may:
  * Treat contract as canceled, OR
  * Fix a reasonable price

#### 5. Conditional Intent (§ 2-305(4))

* **TESTED PROVISION**
* If parties intend **NOT to be bound unless** price is fixed or agreed
* And price is not fixed or agreed
* **Result**: There is **NO contract**
* "Agreement to agree" is not enforceable
* The word "**unless**" is key

### C. Place of Delivery (UCC § 2-308)

#### 1. General Rule (§ 2-308(a))

* Unless otherwise agreed, place of delivery = **seller's place of business**
* If no place of business, then **seller's residence**

#### 2. Identified Goods (§ 2-308(b))

* For identified goods which parties know are at another location at time of contracting
* **That location** is the place of delivery
* **Example**: Yacht in Florida - delivery must occur in Florida, not seller's residence

### D. Time of Delivery (UCC § 2-309)

#### 1. General Rule (§ 2-309(1))

* Time for shipment, delivery, or other action if not agreed = **reasonable time**
* **Example**: Goods from US = perhaps 30 days reasonable
* **Example**: Goods from China through customs = perhaps 3 months reasonable

#### 2. Successive Performances (§ 2-309(2))

* Contract for successive performances but indefinite in duration
* Valid for reasonable time
* May be terminated at any time by either party
* **Example**: Monthly water delivery with no end date

### E. Time of Payment (UCC § 2-310)

* Unless otherwise agreed, payment due at **time and place buyer receives goods**
* Even if place of shipment is place of delivery
* **Simple rule**: Get the goods = pay at that time

## VIII. Types of Contracts - Acceptance

### A. Bilateral Contracts

* **Mutual promises are exchanged**
* Promise to promise
* A promises to B, B promises to A
* **Example**: "I promise to sell you my Mustang for $30,000" + "You promise to buy my Mustang for $30,000"
* Contract formed upon exchange of promises

### B. Unilateral Contracts

#### 1. Definition

* Traditional unilateral contract = offeror requests **performance rather than a promise**
* Offeror promises to pay upon **completion** of requested act
* "I don't want your promise, I want your performance"

#### 2. Key Rule

* **Contract formed ONLY upon completion of performance**
* **NOT before completion**
* No contract exists until act is fully completed
* **Example**: "I will pay you \$10 if you walk across Brooklyn Bridge Saturday at noon"
  * Saying "I promise to walk" = no contract
  * Walking halfway = no contract
  * Arriving at 12:02pm = no contract (too late)
  * Completing walk at proper time = contract formed

#### 3. Timing Issues

* Master of offer sets terms
* Must complete performance exactly as specified
* Once completed, contract exists and offeror owes payment

## IX. Exam Tips

### A. Issue Spotting

* Issue spotting = approximately 25-30% of grade
* Analysis = 50-60% of grade
* Conclusion = minimal importance

### B. Definitions

* **Never get definitions wrong**
* Especially problematic on take-home exams
* Wrong definition = entire analysis will be wrong
* Use commercial outlines and class notes

### C. Formatting Tips

* **Underline and bold key phrases**
  * Intent, certain definite terms, communicated, etc.
* Helps bar graders see important points
* Makes key elements stand out

### D. UCC Code Sections

* **Do NOT memorize UCC section numbers**
* **Never put wrong number on exam** - graders will penalize
* Exception: UCC § 2-207 (Battle of Forms) commonly referenced
* Better to describe provision than risk wrong number

### E. Study Approach

* Understand concepts, don't just memorize
* Make your own outlines starting now
* Read assigned cases before each session
* Be prepared to brief cases when called upon

## X. Important Reminders

### A. Case Reading

* Read all assigned cases through end of each session
* Be ready to brief cases at any time
* *Lucy v. Zehmer* is critical - will definitely appear on final

### B. Bar Preparation

* Start building study habits now
* Practice is essential
* Commercial outlines helpful but make your own
* Time management crucial on bar exam (approximately 1 hour per essay)

### C. Study Tips

* Intent of parties = most important aspect
* Objective theory applies throughout
* Court enforces parties' intent when clear
* Gap fillers only apply when terms are missing