Contract Formation

The noted legal scholar Roscoe obligations (such as a promise to take a are considered to be contrary to public

friend to lunch) and promises that are legally binding (such as a promise to pay for merchandise purchased).

Common law governs all contracts except when it has been modified or replaced by statutory law, such as the Uniform Commercial Code (UCC),2 or by administrative agency regulations. Contracts relating to services, real estate, employment, and insurance, for example, generally are governed by the common law of contracts.

Contract law also demonstrates which excuses our society accepts for breaking certain types of promises. In addition, it indicates which promises

Pound once said that “[t]he social

order rests upon the stability and predictability of conduct, of which keep- ing promises is a large item.”1 Contract law deals with, among other things, the formation and keeping of promises. A promise is a person’s manifestation of an intent to act or refrain from acting in a specified way.

Like other types of law, contract law reflects our social values, interests, and expectations at a given point in time. It shows, for example, to what extent our society allows people to make promises or commitments that are legally binding. It distinguishes be- tween promises that create only moral

policy—against the interests of society as a whole—and therefore legally invalid. When the person making a promise is a child or is mentally incom- petent, for example, a question will arise as to whether the promise should be enforced. Resolving such questions is the essence of contract law.

Contracts for the sale and lease of goods, however, are governed by the UCC—to the extent that the UCC has modified general contract law. The relationship between general contract law and the law governing sales and leases of goods will be explored in detail in Chapter 11. In this chapter’s discussion of general contract law, we indicate in footnotes the areas in which the UCC has significantly altered common law contract principles.

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