Contracts law principles in general are uniformly understood and applied across the United States. Contract law is governed by the common law and the Uniform Commercial Code "UCC."
Common law governs contractual transactions with real estate, services, insurance, intangible assets and employment. UCC governs contractual transactions with goods and tangible objects (such as a purchase of a car).
The Common Law and UCC have their distinct differences and it is vital to know and understand them if you are in a position where you contractually transact often.
The following are some important aspects of the common law and UCC. This is by far not an exhaustive list of information about each code of law – but a great educational start! It is highly advised that you see a licensed Attorney if you have any specific questions regarding contracts that you are unsure of or cannot make sense of.
Acceptance of an Offer With Different Terms
The common law dictates that any change to an offer is a rejection and counter offer (this creates a new offer and changes the person who was initially the offeree to the offeror). A change to an offer with UCC may still form a binding contract depending on the circ*mstances surrounding the transaction and the substance of the differing term (whether it was a major deviation or a minor one).
Contract Modification
Modification of contracts with the common law requires consideration, unlike the UCC, where consideration is not a prerequisite.
Promise to Keep an Offer Open
A promise to keep a deal open is an option contract with the common law and requires consideration. UCC calls this a firm offer and requires writing. The UCC also requires that the offer be made by a merchant as opposed to just having consideration to support the offer.
Time to Sue (Statute of Limitations)
The time to sue on a contract varies by state and is usually different for oral vs. written contracts.
Terms
The common law requires a description on the quantity, price, performance time, nature of work and identity of an offer to be part of a valid contract. UCC only specifies that quantity is a must have term in its contracts.
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FAQs
The UCC applies to the sale of goods and securities, whereas the common law of contracts generally applies to contracts for services, real estate, insurance, intangible assets, and employment.
What is a major difference between the UCC and common law's approach to contract remedies? ›
In contract law, the common law governs service contracts or land sale contracts, and the UCC governs the sale of goods.
What is the difference between the common law and the Uniform Commercial Code on issues of duress misrepresentation undue influence or mistake? ›
There is no particular difference between the common law and the UCC on issues of duress, misrepresentation, undue influence, or mistake.
In what situations does the UCC overrule common law? ›
The UCC overrules common law in scenarios where the contract is related to the sales of goods, not services. Therefore, answer A) is correct. In a mixed contract, where both goods and services are provided, the 'predominant purpose test' is used to determine if the contract is governed by the UCC or common law.
What three types of contracts fall under the UCC? ›
The UCC is a set of rules that applies to commercial transactions, sales and financial contracts.
Does the Uniform Commercial Code apply to all contracts? ›
The Uniform Commercial Code (UCC) is a comprehensive set of laws governing all commercial transactions in the United States. It is not a federal law, but a uniformly adopted state law. Uniformity of law is essential in this area for the interstate transaction of business.
What makes a contract enforceable under the UCC? ›
To be considered a firm offer, the offer must be to buy or sell goods, must be in writing and signed and must specify that it will not be revoked for either a specified time or, if it does not specify a time, for a reasonable time.
In what situations does the UCC overrule common law quizlet? ›
In what situations does the UCC overrule common law? The UCC applies to contracts that sell goods.
What is the perfect tender rule in the UCC? ›
“Perfect Tender” Rule:
A U.C.C. rule which says that, in contracts for the sale of goods, the seller must supply the buyer with goods that conform perfectly to the buyer's demands. Usually, substantial performance, as opposed to perfect performance, is enough to satisfy an implied condition of performance.
What does the Uniform Commercial Code not cover? ›
Article 2 does not cover transactions involving service contracts. In addition, the sale of real estate is not covered by Article 2, but rather by Article 9 of the Uniform Commercial Code. For example, the sale of an automobile or a computer would be covered by Article 2.
If you claim duress, it is up to you to demonstrate that you were forced. To do so, you need to prove two things: There was a serious threat of a wrongful or an unlawful action. There was no reasonable alternative to signing the contract.
What is the primary purpose of the Uniform Commercial Code? ›
The Uniform Commercial Code (UCC) was established to protect all individuals engaged in a business transaction. It was created to standardize commerce across the states.
Is the UCC more flexible than the common law? ›
However, the UCC provides more flexibility in contract formation than exists in common-law contracts, thereby accommodating the reality of business practices. The requirements for common-law contract formation would be too burdensome for merchants.
Does the UCC Trump common law? ›
UCC trumps common law: Every state except Louisiana has adopted the Uniform Commercial Code. Provisions of UCC usually trump common law. Article 2-1103: common law applies to contracts for sales of goods, unless it contradicts article 2.
Is real property UCC or common law? ›
The UCC (through Article 2) governs the sale of goods, which are defined as moveable tangible things (cars, apples, books, etc.), whereas the common law governs contracts for real estate and services.
How is the Uniform Commercial Code different from the common law statute of frauds rule? ›
In regards to the statute of frauds, the Uniform Commercial Code is different from the common law as it: requires all contracts to be in writing.
How does the position of the UCC compare with the common law in regard to the perfect tender rule? ›
How does the position of the UCC compare with the common law in regard to the perfect tender rule? The UCC and common law differ with the UCC requiring perfect tender and common law requiring the lesser standard of substantial performance.
What is the meaning of common law? ›
Common law, also known as case law, is a body of unwritten laws based on legal precedents established by the courts. Common law draws from institutionalized opinions and interpretations from judicial authorities and public juries. Common laws sometimes prove the inspiration for new legislation to be enacted.
What is the purpose of the Uniform Commercial Code UCC )? ›
The Uniform Commercial Code (UCC) is a set of business laws that regulate financial contracts and transactions across state lines. The UCC was created and championed by state officials, not federal agencies. The code consists of nine articles covering aspects of banking and loans.
