How to Analyze a Contracts Hypo

Which body of law governs. UCC Article 2 applies to transactions in goods — things movable at the time of identification to the contract (§ 2-105). The common law, as reflected in the Restatement (Second) of Contracts, governs services, real estate, employment, and intangibles. Say this in one sentence before you analyze anything, because it changes the offer-and-acceptance rules, the statute of frauds, the modification rules, and the damages formulas.

Hybrid deals — a contract to supply and install a furnace, to write and license custom software, to sell a restaurant with equipment — are resolved under the predominant purpose test: which is the dominant thrust of the deal, goods or services? Look at how the contract describes itself, how the price is allocated, and where the value sits. A minority of courts apply a gravamen test, asking whether the complained-of defect arose from the goods or the service portion. Argue the test, then note that a court could go the other way and say what changes if it does.

Also flag merchant status. Roughly a dozen Article 2 rules turn on it: firm offers (§ 2-205), the statute of frauds confirmatory memo exception (§ 2-201(2)), the additional-terms rule in § 2-207(2), and the implied warranty of merchantability (§ 2-314). A merchant is one who deals in goods of the kind or holds herself out as having relevant skill — a homeowner selling her used car is not one.

Read the call of the question first, then the facts. The call tells you whose claims you are advising on and whether the professor wants a balanced analysis or advocacy. Then build a two-column timeline: date, event, who did what. Contracts fact patterns are almost always chronological, and each dated communication is a doctrinal trigger — an offer, a revocation, a counteroffer, a repudiation, a demand for assurance.

Next, state the claims as sentences: 'Buyer v. Seller for breach of the June 3 supply contract' and 'Seller v. Buyer in restitution for the delivered goods.' Organize your answer by claim, not by doctrine. Under each claim, run the elements in order. If a plaintiff has a contract claim and an alternative promissory estoppel or unjust enrichment theory, address the contract theory first and reach the alternatives only after you have identified the specific gap — no consideration, no writing, no definite terms — that makes them necessary.

Budget time by issue density, not by page count. Formation issues are usually quick disposals; the professor buries the hard points in the middle (terms, conditions, excuse) and at the end (remedies). Leave at least a quarter of your writing time for damages.

Offer, acceptance, consideration — but only spend words where facts are contested. An offer is a manifestation of willingness to bargain that justifies the other party in believing assent will conclude the deal (Restatement (Second) § 24), judged objectively; Lucy v. Zehmer is the standard illustration that secret intent does not control. Advertisements, price quotes, and 'I'd consider selling for $50,000' are the usual near-misses.

For acceptance, the questions are mode, timing, and mirror-image. At common law the mailbox rule makes acceptance effective on dispatch, but not for option contracts and not once a rejection has been sent first. Revocation is effective on receipt. Watch for the offeree who begins performance on a unilateral offer: § 45 creates an option contract barring revocation once performance starts, while preparation alone is not enough. In a construction-bid pattern, Drennan v. Star Paving and § 87(2) make a subcontractor's bid irrevocable where the general reasonably relied by using it.

Under Article 2 the mirror-image rule is gone. Section 2-204 lets a contract form despite open terms, § 2-206 permits acceptance by any reasonable medium, and § 2-207 governs the battle of the forms. Work § 2-207 in order: (1) does the response operate as an acceptance despite additional or different terms, or is it expressly conditional on assent; (2) if both parties are merchants, do the additional terms become part of the contract or do they materially alter it or draw a timely objection; (3) if the writings do not form a contract but the parties performed, subsection (3) gives you the shared terms plus Code gap fillers.

For consideration, ask what each side bargained for. Forbearance from a legal right counts (Hamer v. Sidway); a purely illusory promise does not, though courts imply best efforts to save a deal (Wood v. Lucy, Lady Duff-Gordon) and § 2-306 does the same for output and requirements contracts. Past consideration is not consideration (Mills v. Wyman), with the narrow material-benefit exception of § 86 and Webb v. McGowin. If consideration fails, pivot to § 90 promissory estoppel: a promise, reasonable and foreseeable reliance, detriment, and injustice absent enforcement, with a possible reliance-only recovery.

After a contract has formed, not before. A defense concedes formation and argues unenforceability, so putting it first scrambles your structure. Run the statute of frauds whenever the facts mention a handshake, a phone call, or a missing signature. The classic categories are suretyship, marriage, contracts not performable within one year, interests in land, executor promises, and goods of $500 or more under § 2-201.

Then check the exceptions, which are where the points are: part performance and improvements for land, full performance of a one-year contract, § 2-201(2)'s merchant confirmatory memo, and § 2-201(3)'s specially manufactured goods, judicial admission, and part payment or part acceptance. Section 139 allows reliance to overcome the statute in some jurisdictions. Note that the writing need not be a formal contract — a signed memo with the essential terms suffices, and under § 2-201 quantity is the term that must appear.

The substantive defenses cluster by fact pattern. Misrepresentation needs a false assertion of fact, materiality or fraud, justifiable reliance, and inducement (§§ 159-164); nondisclosure counts only in the § 161 situations. Duress requires an improper threat leaving no reasonable alternative — the economic duress pattern is a mid-project demand for more money. Unconscionability under § 2-302 and Williams v. Walker-Thomas Furniture requires both procedural and substantive unfairness. Mutual mistake (§ 152) needs a shared mistake about a basic assumption with a material effect, and the risk not allocated to the complaining party (Sherwood v. Walker). Unilateral mistake (§ 153) additionally requires unconscionability or the other party's reason to know.

Start with the parol evidence rule, which is a rule of substantive law, not evidence. Ask whether the writing is integrated and, if so, whether it is complete or partial. A completely integrated writing bars prior or contemporaneous agreements entirely; a partially integrated one bars contradiction but allows consistent additional terms. A merger clause is strong evidence of complete integration but not conclusive. The rule never bars evidence offered to show fraud, duress, mistake, illegality, a condition precedent to effectiveness, or the meaning of an ambiguous term, and under § 2-202 course of performance, course of dealing, and usage of trade come in even against a final writing.

For interpretation, apply the objective standard and the familiar canons: specific over general, handwritten over printed, interpret against the drafter, and construe the contract as a whole to give each term effect. Every contract carries an implied duty of good faith and fair dealing (§ 205; UCC § 1-304), which polices discretion rather than adding substantive terms.

Distinguish promises from conditions. Nonperformance of a promise is breach; nonoccurrence of a condition means the duty never becomes due. Words like 'if,' 'provided that,' and 'on condition that' signal express conditions, which require strict compliance; courts excuse them to avoid disproportionate forfeiture, or find waiver or estoppel. Constructive conditions of exchange — substantial performance by one side as a condition of the other's duty — are governed by the material breach analysis below.

At common law, the question is whether the breach is material. Restatement § 241 gives the factors, and Jacob & Youngs v. Kent is the substantial-performance case: an unintentional, trivial deviation lets the breaching party recover the contract price minus the diminution in value. Total breach — a material breach not cured within a reasonable time — discharges the other side's remaining duties and permits suit for the whole contract. Partial breach permits damages only.

Under Article 2 the default is the perfect tender rule of § 2-601: the buyer may reject goods that fail in any respect to conform. Immediately check the counterweights — the seller's right to cure under § 2-508 (within the time for performance, or after it if the seller had reasonable grounds to believe the tender would be acceptable), the installment-contract standard of substantial impairment under § 2-612, revocation of acceptance under § 2-608, and the buyer's obligation to particularize defects.

Anticipatory repudiation requires an unequivocal statement or voluntary affirmative act making performance impossible (§ 250; UCC § 2-610). The aggrieved party may await performance for a commercially reasonable time, resort to remedies, or suspend performance; retraction is possible until the other side materially changes position. Reasonable grounds for insecurity short of repudiation trigger § 2-609's demand for adequate assurance, with failure to respond in 30 days treated as repudiation.

Excuse doctrines share a structure: an event occurring after formation, whose nonoccurrence was a basic assumption, without the fault of the party seeking excuse, and with the risk not allocated by the agreement. Impracticability (§ 261; UCC § 2-615) covers destruction of the subject matter (Taylor v. Caldwell) and radical cost increases, not mere unprofitability. Frustration of purpose (§ 265; Krell v. Henry) applies where performance is still possible but its principal purpose is substantially destroyed.

Compute a number, or at least state the formula and plug in the facts. The default is expectation: put the nonbreaching party where full performance would have. At common law that is loss in value plus other loss, minus cost avoided and loss avoided (§ 347). For a defective-construction case, add the cost-of-completion versus diminution-in-value fight, with Peevyhouse v. Garland Coal on the diminution side and Jacob & Youngs on economic waste.

Under Article 2, pick the right section and name it. A buyer covers under § 2-712 (cover price minus contract price) or takes market damages under § 2-713 (market price at the time the buyer learned of the breach minus contract price), plus incidental and consequential damages under § 2-715; an accepting buyer with nonconforming goods uses § 2-714(2), value as warranted minus value as accepted. A seller resells under § 2-706, takes market damages under § 2-708(1), or, if a lost-volume dealer, recovers lost profit under § 2-708(2). Section 2-709 gives the price where the buyer accepted or the goods cannot be resold.

Then run the three limits every time: foreseeability at contracting (Hadley v. Baxendale; § 351), reasonable certainty (§ 352 — the new-business problem), and avoidability (§ 350; Rockingham County v. Luten Bridge; Parker v. Twentieth Century-Fox for comparable employment). Add liquidated damages when the contract has a stipulated sum: enforceable only if damages were difficult to estimate and the amount is a reasonable forecast, not a penalty (§ 356; UCC § 2-718).

Close with the alternatives when expectation fails. Reliance damages (§ 349) reimburse out-of-pocket expenditures less losses the breaching party proves the plaintiff would have suffered anyway. Restitution (§§ 370-373) recovers the benefit conferred and is available even to a breaching party for the excess over the injured party's damages. Specific performance requires inadequate damages and definite terms — routine for land, available for unique or scarce goods under § 2-716 — and courts will not order personal services, though a negative injunction may issue.

Two habits distinguish strong answers. First, argue the close calls both ways with the facts attached: 'The two-week delay is likely immaterial because the contract set no time-is-of-the-essence clause and the buyer suffered no lost resale, but if the goods were seasonal the delay deprives the buyer of the expected benefit.' Second, never resolve a threshold issue in a way that lets you skip the rest — say 'even if no contract formed' and keep going, because the points are downstream.