Contract law in the United States is governed primarily by the common law and the Uniform Commercial Code (UCC). Both bodies of contract law have distinct differences vital to understand. If you regularly deal with contracts, it’s important to know which law applies — and how it will affect the transaction you’ve entered into.
Differences Between the UCC and Common Law
The common law applies to transactions that concern real estate, services, employment, and intangible assets. The UCC specifically covers transactions related to the purchase of goods. Where the contract is both for the sale of goods and services, whichever element is dominant would control which law applies.
Here are some of the main differences between the UCC and common law:
- Acceptance — One of the biggest differences between the UCC and common law is considered “acceptance” of an offer. Specifically, the common law follows the mirror image rule, which requires an acceptance to be an exact mirror image of the offer to be a legally recognized acceptance. With the common law, there can be no acceptance of an offer if any changes are made. Rather, it would become a rejection and a counteroffer. Under the UCC, only changes that have a material impact and create a conflict in the terms would void the offer.
- Modification — Modification of contracts under the common law requires additional consideration, which the UCC does not require.
- Promise to keep an offer open — A promise to keep an offer open is an option contract under the common law and requires consideration. Under the UCC, this is called a “firm offer” and requires a writing. In addition, the UCC requires the offer be made by a merchant, as opposed to having consideration to support the offer.
- Terms — The UCC only specifies quantity as a required term in its contracts. The common law requires a description on the quantity, price, time for performance, nature of work, and identity of an offer to be part of a valid contract.
Eligibility to sue for breach of contract differs under the UCC and common law. Although privity of contract is required under the common law to litigate, privity is not a prerequisite under the UCC.
Remedies for Breach of Contract Under the Common Law and UCC
A breach of contract occurs when one of the parties avoids their legal obligations under the contractual agreement. The common law provides for many flexible remedies, while the UCC provides for more standardized remedies. Under common law, the non-breaching party can ask for specific performance, compensatory damages, or remedies for unjust enrichment. The aggrieved party may also ask for equitable remedies, such as injunctive relief.
Under the UCC, the buyer has several remedies when a seller fails to deliver the goods that were promised. For example, if the seller breaches the contract, the buyer may compel specific performance of the contract, and obtain monetary damages and consequential damages. Where the buyer breaches the contract, the seller may sue for non-acceptance, pursue resale damages, or damages for the price if they cannot reasonably resell the goods in the contract. The UCC lets the seller take other steps regarding the goods, including withholding delivery, stopping the delivery, or canceling the contract.
Contact an Experienced New York Business Attorney
If you are facing a contract matter, it’s critical to have a knowledgeable business law attorney by your side who can advise you regarding the best course of action. Brinen & Associates provides skillful representation to business owners and entrepreneurs for a wide array of issues involving contracts, including drafting, negotiating, and litigating contractual agreements. Call (212) 330-8151 or send us a message to learn more about how we can help.