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§5.10 Contract Law—Some Basics

Lesson 5: Tort & Contract Law

The basic rules governing the formation, interpretation, and enforcement of contracts are contained in both the Civil Code, which applies to all contracts, and the Commercial Code, which applies to sale of goods. A “contract” is an agreement to do or not to do a certain thing. [CC §1549.] It gives rise to a legal duty, enforceable in an action at law. [CC §§1427, 1428.]

It is essential to the existence of a contract that there should be [CC §1550]:

  • Parties capable of contracting,
  • Consent of the parties,
  • A lawful object, and
  • A sufficient cause or consideration.

Every contract requires mutual assent accomplished through an offer and an absolute and unqualified acceptance. [CC §§1565, 1566, 1585.] A qualified acceptance constitutes a new proposal, or a counteroffer. [CC §1585.] A counteroffer is considered to be a rejection of the original offer, and the offeree cannot thereafter accept the original offer.

Caution Click

When the transaction is for the sale of goods, the Commercial Code changes the general rule that a qualified acceptance constitutes a rejection. If both parties are merchants, the additional terms automatically become part of the contract unless [Com C §2207(2)]:

  • The offer expressly limited acceptance to its terms;
  • The contract would be materially altered by these terms; or
  • The offeror had previously objected to the terms, or gives notice of objection with a reasonable time after receiving them.

Click here for a table of common statutes of limitation, including for contract actions.

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