21Contracts

Formation Under the UCC

This week examines contract formation under UCC Article 2 — the rules governing sales of goods. The UCC is more flexible than common law: it permits formation despite open terms, validates firm offers without consideration, allows acceptance in any reasonable manner, and supplies gap-fillers for missing terms. You will compare UCC formation rules to common law side-by-side, mastering the differences that are heavily tested on bar exams.

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Learning Objectives

Determine when UCC Article 2 applies vs. common law based on the subject matter of the transaction (goods vs. services)
Apply UCC's flexible formation rules: open terms, indefiniteness, and gap-filler provisions
Analyze UCC firm offers (section 2-205): irrevocable without consideration when made by a merchant in a signed writing
Apply UCC section 2-206: acceptance in any manner reasonable under the circumstances
Compare UCC and common law formation rules side-by-side for offer, acceptance, consideration, and Statute of Frauds
Apply the UCC Statute of Frauds (section 2-201): contracts for goods over $500 require a writing; identify exceptions

Key Rules

UCC Article 2 governs contracts for the SALE OF GOODS. Goods are movable, tangible personal property. Services, real estate, and employment are governed by common law.
UCC Firm Offer (2-205): An offer by a MERCHANT in a SIGNED WRITING that gives assurance it will be held open is irrevocable for the stated time (or reasonable time, max 3 months) WITHOUT consideration.
UCC Gap Fillers: Missing terms do not prevent formation if parties intended a contract. UCC supplies: reasonable price (2-305), reasonable time for delivery (2-309), seller's place of business for delivery (2-308), payment due at delivery (2-310).
UCC Statute of Frauds (2-201): Contracts for goods priced at $500+ require a signed writing indicating quantity. Exceptions: (1) specially manufactured goods, (2) admission in court, (3) goods received and accepted, (4) merchant confirmation rule.
UCC 2-206: Unless otherwise unambiguously indicated, an offer to buy goods for prompt shipment may be accepted by either a promise to ship or by prompt shipment (including non-conforming goods as an accommodation).
Mixed transactions (goods + services): Apply the predominant purpose test — if the predominant purpose is the sale of goods, UCC governs the entire transaction.

Formation Under the UCC

When Does the UCC Apply?

| UCC Article 2 | Common Law | |---|---| | Sale of goods (tangible, movable property) | Services | | Example: car, computer, lumber, inventory | Example: consulting, construction labor | | | Real estate, employment, IP licenses |

Mixed Transactions

Predominant purpose test: What is the PRIMARY purpose of the transaction? - Restaurant meal = goods (food) — UCC likely applies - Custom software + hardware = depends on which predominates

UCC vs. Common Law: Key Differences

| Issue | Common Law | UCC | |-------|-----------|-----| | Open terms | Fatal — must have definite terms | OK — gap-fillers supply missing terms | | Firm offer | Requires consideration (option K) | 2-205: merchant + signed writing = irrevocable without consideration | | Acceptance | Mirror image rule | 2-207: acceptance valid despite additional terms | | Modification | Requires new consideration | 2-209: no consideration needed, only good faith | | Statute of Frauds | Varies by type | $500+ goods requires signed writing with quantity | | Battle of Forms | Last shot rule | 2-207: first shot + additional terms analysis |

UCC Firm Offers (2-205)

Requirements: 1. Made by a merchant 2. In a signed writing 3. Gives assurance the offer will be held open

Effect: Irrevocable for stated time (or reasonable time, max 3 months) WITHOUT consideration

UCC Gap-Fillers

The UCC will SUPPLY missing terms if parties intended to contract: - Price: Reasonable price at time of delivery (2-305) - Place of delivery: Seller's place of business (2-308) - Time of delivery: Reasonable time (2-309) - Payment: Due at time and place of delivery (2-310)

The ONE term that cannot be gap-filled: QUANTITY

UCC Statute of Frauds (2-201)

Contracts for goods $500+ must be evidenced by a signed writing that indicates quantity.

Exceptions:

1. Specially manufactured goods — substantial beginning of manufacture 2. Admission in pleading/testimony that contract exists 3. Performance — goods received and accepted (enforceable to extent of goods received) 4. Merchant confirmation — written confirmation between merchants; if recipient doesn't object within 10 days, SOF satisfied against recipient

Baby Bar Connection

UCC formation is tested whenever the fact pattern involves a sale of goods. The key distinctions from common law (firm offers, gap-fillers, modification without consideration, battle of forms) are classic exam questions. Always identify whether UCC or common law applies as your FIRST step in any contracts analysis.

Cases to Know

ProCD v. Zeidenberg (1996) — formation by conduct in shrink-wrap/click-wrap context under UCC
Dorton v. Collins & Aikman (1972) — UCC 2-207 applied to conflicting purchase order and acknowledgment forms
Southwest Engineering v. Martin Tractor (1970) — UCC gap-fillers permit enforcement despite missing price term

California Codes — Official Authority

The statutes SofAI ties to this topic. Use them as your IRAC rule block, then verify the current text on the official leginfo link.

Cal. Com. Code §2201 — Statute of Frauds — sale of goodsleginfo
A contract to sell goods for $500 or more generally must be in a signed writing, with special rules for merchants and for goods already made or accepted.
Exam hook: First decide UCC vs. common law (goods vs. services); the Statute of Frauds threshold and merchant rules turn on it.
Cal. Com. Code §2204 — Formation in general (sale of goods)leginfo
A contract for the sale of goods can be made in any way that shows agreement, even if the moment of making is undetermined or a term is left open.
Cal. Com. Code §2207 — Additional terms in acceptance (battle of the forms)leginfo
Under the UCC, an acceptance with additional or different terms can still form a contract, unlike the strict common-law mirror-image rule.
Exam hook: §2207 is a classic UCC essay trigger whenever two merchants exchange non-identical forms.

Explore all California Codes

Baby Bar Relevance

UCC formation rules appear whenever a Baby Bar contracts essay involves goods. The threshold question (UCC vs. common law?) and the key differences (firm offers, gap-fillers, modification, 2-207) are heavily tested. Always identify the governing body of law as your first analytical step.

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21Contracts

Formation Under the UCC

Prev Next

Learning Objectives

Determine when UCC Article 2 applies vs. common law based on the subject matter of the transaction (goods vs. services)
Apply UCC's flexible formation rules: open terms, indefiniteness, and gap-filler provisions
Analyze UCC firm offers (section 2-205): irrevocable without consideration when made by a merchant in a signed writing
Apply UCC section 2-206: acceptance in any manner reasonable under the circumstances
Compare UCC and common law formation rules side-by-side for offer, acceptance, consideration, and Statute of Frauds
Apply the UCC Statute of Frauds (section 2-201): contracts for goods over $500 require a writing; identify exceptions

Key Rules

UCC Article 2 governs contracts for the SALE OF GOODS. Goods are movable, tangible personal property. Services, real estate, and employment are governed by common law.
UCC Firm Offer (2-205): An offer by a MERCHANT in a SIGNED WRITING that gives assurance it will be held open is irrevocable for the stated time (or reasonable time, max 3 months) WITHOUT consideration.
UCC Gap Fillers: Missing terms do not prevent formation if parties intended a contract. UCC supplies: reasonable price (2-305), reasonable time for delivery (2-309), seller's place of business for delivery (2-308), payment due at delivery (2-310).
UCC Statute of Frauds (2-201): Contracts for goods priced at $500+ require a signed writing indicating quantity. Exceptions: (1) specially manufactured goods, (2) admission in court, (3) goods received and accepted, (4) merchant confirmation rule.
UCC 2-206: Unless otherwise unambiguously indicated, an offer to buy goods for prompt shipment may be accepted by either a promise to ship or by prompt shipment (including non-conforming goods as an accommodation).
Mixed transactions (goods + services): Apply the predominant purpose test — if the predominant purpose is the sale of goods, UCC governs the entire transaction.

Formation Under the UCC

When Does the UCC Apply?

Mixed Transactions

Predominant purpose test: What is the PRIMARY purpose of the transaction? - Restaurant meal = goods (food) — UCC likely applies - Custom software + hardware = depends on which predominates

UCC vs. Common Law: Key Differences

UCC Firm Offers (2-205)

Requirements: 1. Made by a merchant 2. In a signed writing 3. Gives assurance the offer will be held open

Effect: Irrevocable for stated time (or reasonable time, max 3 months) WITHOUT consideration

UCC Gap-Fillers

The ONE term that cannot be gap-filled: QUANTITY

UCC Statute of Frauds (2-201)

Contracts for goods $500+ must be evidenced by a signed writing that indicates quantity.

Exceptions:

Baby Bar Connection

Cases to Know

ProCD v. Zeidenberg (1996) — formation by conduct in shrink-wrap/click-wrap context under UCC
Dorton v. Collins & Aikman (1972) — UCC 2-207 applied to conflicting purchase order and acknowledgment forms
Southwest Engineering v. Martin Tractor (1970) — UCC gap-fillers permit enforcement despite missing price term

California Codes — Official Authority

The statutes SofAI ties to this topic. Use them as your IRAC rule block, then verify the current text on the official leginfo link.

Cal. Com. Code §2201 — Statute of Frauds — sale of goodsleginfo
A contract to sell goods for $500 or more generally must be in a signed writing, with special rules for merchants and for goods already made or accepted.
Exam hook: First decide UCC vs. common law (goods vs. services); the Statute of Frauds threshold and merchant rules turn on it.
Cal. Com. Code §2204 — Formation in general (sale of goods)leginfo
A contract for the sale of goods can be made in any way that shows agreement, even if the moment of making is undetermined or a term is left open.
Cal. Com. Code §2207 — Additional terms in acceptance (battle of the forms)leginfo
Under the UCC, an acceptance with additional or different terms can still form a contract, unlike the strict common-law mirror-image rule.
Exam hook: §2207 is a classic UCC essay trigger whenever two merchants exchange non-identical forms.

Explore all California Codes

Baby Bar Relevance

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