Contract Law Overview: What is the Gateway Issue on ALL Contracts Essays?

Summary

The video script emphasizes the crucial 'gateway issue' in contract law, which dictates whether the Uniform Commercial Code (UCC) or common law governs a contract. It warns against prematurely jumping into complex contract analysis without first determining the applicable law. The UCC typically applies to contracts involving goods, while common law governs services and real estate. The script also addresses the distinction between the strictness of common law and the more lenient, intention-focused approach of the UCC. It stresses the importance of identifying the predominant purpose of a mixed contract to correctly apply legal principles, ensuring a proper foundation for contract analysis.

Takeaways

• 🚪 The 'Gateway Issue' in contract law is crucial and should be addressed before delving into other aspects of contract analysis.
• 📚 Students often make the mistake of skipping the gateway issue, which can lead to applying the incorrect set of rules to their analysis.
• 🤝 Contract law is divided into two primary sets of rules: the Uniform Commercial Code (UCC) and the common law.
• 🛒 The UCC governs contracts dealing with goods, which are defined as items that are readily movable at the time of identification.
• 🏢 Common law applies to contracts involving services, including real estate transactions where the subject matter is not readily movable.
• ⚖️ A contract cannot be governed by both the UCC and common law at the same time, except in rare cases of divisible contracts.
• 🔍 To determine which law applies, one must assess if the predominant purpose of the contract is the sale or purchase of goods (UCC) or services (common law).
• 🏠 Contracts involving real estate are typically governed by common law, as land and buildings are not considered 'goods' under the UCC.
• 🎨 In mixed contracts with elements of both goods and services, the key is to identify which aspect is predominant based on the purpose of the contract.
• 🔑 Factors such as the required knowledge, skill, quantity, and price can indicate whether a contract is more service-based or goods-based.
• 📉 The common law is stricter and more binary compared to the UCC, which is more lenient and focused on the intent of the parties involved.
• ✍️ When writing a contract law essay, it's advised to clearly state at the beginning whether the UCC or common law governs to avoid confusion and incorrect analysis.

Q & A

What is the gateway issue in contract law analysis?

The gateway issue in contract law analysis is determining which set of rules or law governs the contract in question, either the Uniform Commercial Code (UCC) or the common law.

Why is it crucial to address the gateway issue before delving into other aspects of contract law?

Addressing the gateway issue is crucial because it determines the applicable law, which in turn dictates the analysis and interpretation of the contract. Skipping this step can lead to applying the wrong law and result in significant errors in contract analysis.

What are the two separate universes of contract law mentioned in the script?

The two separate universes of contract law mentioned are Article 2 of the Uniform Commercial Code (UCC) and the common law.

How does one determine whether a contract is governed by the UCC or the common law?

A contract is governed by the UCC if it deals with goods, as defined by the UCC. If it deals with services or real estate, it falls under the common law.

What is considered a 'good' according to the UCC?

According to the UCC, a 'good' is something that is readily movable at the time of identification.

How does the UCC define a contract involving goods?

The UCC defines a contract involving goods as one where the predominant purpose is the purchase or sale of a good, which is something readily movable at the time of identification.

What is the predominant factor in determining whether a mixed contract is governed by the UCC or the common law?

The predominant factor is the predominant purpose of the contract. If it's more about the purchase or sale of a good, the UCC governs; if it's more about services or real estate, the common law governs.

What are some factors to consider when determining the predominant purpose of a mixed contract?

Factors to consider include the knowledge, expertise, or skill required to perform the contract, the quantity of the output, and the price of the contract.

How does the script differentiate between the common law and the UCC in terms of their approach to contract interpretation?

The common law is described as very strict and binary, requiring exact conditions for a valid contract. The UCC, on the other hand, is more lenient and focused on the good-faith intent of the parties, willing to fill gaps to make the contract work.

What advice does the script give for students writing a contract law essay?

The script advises students to identify the governing law (UCC or common law) as the gateway issue before starting their analysis. It also suggests writing a heading 'UCC versus common law' at the top of their essay to keep this issue in mind throughout their writing.

Outlines

00:00

📚 The Gateway Issue in Contract Law

This paragraph emphasizes the critical 'gateway issue' in contract law, which is determining the governing law for a contract before delving into specific elements like offer, acceptance, and consideration. It cautions against the common mistake of students skipping this step and instead jumping directly into analyzing these elements. The paragraph explains that contracts are governed either by the Uniform Commercial Code (UCC) or by common law, and it's essential to identify which applies to avoid confusion and errors in analysis. The UCC governs contracts involving goods, while common law applies to services. The distinction is crucial as the rules and analysis under each are markedly different. The speaker also mentions the rarity of 'divisible contracts' that could involve elements of both but highlights that most contracts are indivisible, requiring a clear choice between UCC and common law. The paragraph concludes with a reminder of the importance of this initial determination in contract analysis.

05:02

🏗️ Predominant Purpose in Mixed Contracts

The second paragraph delves into the complexities of 'mixed contracts' that involve both goods and services. It explains that the key to determining which law governs in such cases is identifying the 'predominant purpose' of the contract. The UCC will apply if the primary focus is on the sale or purchase of goods, whereas common law will govern if the main purpose is service-oriented. The paragraph provides examples, such as a contract to build a house, which despite involving the purchase of materials (goods), is primarily a service contract under common law because the main purpose is the construction service provided by the builder. Another example is the purchase of paper with shipping included; here, the UCC would apply because the predominant purpose is the acquisition of the goods (paper). The paragraph also introduces three factors to consider when assessing mixed contracts: the knowledge, expertise, or skill required; the quantity of the goods; and the price. These factors can help determine whether the contract is more service-based or goods-based, guiding the choice of governing law.

10:03

🔍 The Evolution and Philosophy of Contract Law

The final paragraph discusses the historical context and philosophical differences between common law and the UCC in contract law. It explains that common law, being the older system, is more rigid and binary, often leading to harsh outcomes. In contrast, the UCC was developed to address these issues by focusing on the parties' intent and allowing for more flexibility in filling gaps within a contract. The UCC is described as more lenient and willing to consider the good-faith intent of the parties, in contrast to the strict requirements of common law. The paragraph serves as a reminder of the importance of understanding the underlying principles of each system when analyzing contracts. It concludes with advice for students to always consider the 'gateway issue' of which law governs before starting their analysis, as neglecting this can lead to significant errors and loss of points in assessments.

Keywords

💡Gateway Issue

The 'Gateway Issue' in contract law refers to the initial and crucial determination of which set of legal rules will govern the contract in question. It's a term used to emphasize the importance of identifying whether the Uniform Commercial Code (UCC) or common law applies to a given contract scenario. In the video, it is stressed that failing to address this issue early in the analysis can lead to confusion and incorrect application of legal principles, potentially resulting in a flawed contract analysis.

💡Uniform Commercial Code (UCC)

The Uniform Commercial Code, often abbreviated as UCC, is a set of laws that governs all sales of goods transactions in the United States, with the exception of certain types of sales. The UCC is mentioned as one of the two main legal frameworks that could potentially govern a contract, the other being common law. The script highlights that if a contract involves goods, as defined by the UCC, then it falls under UCC jurisdiction.

💡Common Law

Common law, in the context of contracts, refers to the body of law derived from judicial decisions of courts and similar tribunals, as opposed to statutory law (like the UCC). It is one of the two primary legal frameworks that could govern a contract, the other being the UCC. The video explains that contracts dealing with services or real estate are typically governed by common law.

💡Goods

In the script, 'goods' is defined by the UCC as items that are 'readily movable at the time of identification.' This definition is pivotal in distinguishing whether a contract falls under the UCC or common law. The video provides examples such as lumber for house construction, emphasizing that the presence of goods in a contract does not automatically make the UCC applicable; rather, the predominant purpose of the contract determines the governing law.

💡Services

Services, as discussed in the video, are a key differentiator between contracts governed by common law and those by the UCC. If the predominant purpose of a contract is the provision of a service, such as hiring a painter or a builder to construct a house, common law applies. The video uses the example of a painter creating a unique artwork to illustrate how services are distinguished from goods under common law.

💡Consideration

Although not deeply explored in the script, 'consideration' is a fundamental concept in contract law, referring to something of value that induces a party to enter into a contract. It is one of the elements that students are eager to discuss, but the video emphasizes that consideration should not be analyzed until after determining the governing law (UCC or common law).

💡Offer and Acceptance

The terms 'offer' and 'acceptance' are integral to the formation of a contract, representing the proposal made by one party and its agreement by another. The video mentions these concepts as part of the bigger topics that students often rush to analyze without first determining the correct legal framework (UCC or common law) for their contract analysis.

💡Divisible Contract

A 'divisible contract' is a rare type of contract that contains elements of both goods and services, allowing for the possibility of it being governed by both the UCC and common law. The video script mentions this as an exception to the general rule that a contract is governed by either the UCC or common law, but not both.

💡Predominant Purpose

The 'predominant purpose' of a contract is a determining factor in whether the UCC or common law applies. The video explains that in mixed contracts, which involve both goods and services, the predominant purpose will dictate the governing law. For instance, if the main focus of the contract is the sale of goods, the UCC would apply, whereas if it's more about the service provided, common law would be the governing law.

💡Knowledge, Expertise, or Skill

In the context of the video, 'knowledge, expertise, or skill' are factors that can indicate whether a contract is service-oriented and thus governed by common law. The video gives the example of hiring an expert painter, where the high level of skill and low quantity of output (one painting) points to a service contract under common law.

💡Real Estate

The term 'real estate' is used in the script to illustrate a type of contract that is typically governed by common law rather than the UCC. The video clarifies that contracts involving real estate, such as land or buildings, are not considered 'goods' under the UCC and therefore fall under common law jurisdiction.

Highlights

The importance of identifying the governing law before analyzing a contract.

The concept of a 'gateway issue' in contract law analysis.

Two separate legal frameworks: the Uniform Commercial Code (UCC) and common law.

A contract cannot be governed by both UCC and common law simultaneously.

The rare case of a divisible contract with multiple forms of consideration.

The general rule: UCC governs contracts dealing with goods, common law governs services.

The definition of 'goods' under the UCC: something readily movable at the time of identification.

Real estate contracts fall under common law due to immovability.

The process of determining whether a mixed contract is governed by UCC or common law.

Predominant purpose of a contract as the key factor in mixed cases.

Examples of contracts involving both goods and services, and how they are analyzed.

Three factors to consider in mixed contracts: knowledge, quantity, and price.

The difference between common law and UCC in terms of strictness and intent consideration.

Common law's strict and binary approach versus UCC's more lenient and intent-focused approach.

The historical context of common law preceding the UCC.

The role of the 'gateway issue' in structuring a contract law essay.

The potential catastrophic results of neglecting the gateway issue in contract law analysis.

Transcripts

what is the gateway issue on a contracts

essay question before you do any type of

analysis about whether a contract was

formed and offer acceptance

consideration all the big subjects I

know everyone wants to jump into and

immediately start discussing in their

contracts analysis there's a very

important determination you have to make

before you jump into any of that stuff

this is a mistake I see made all of the

time because students are excited to get

into the discussion of the bigger topics

like offer acceptance consideration

whatever it is they want to jump into

that stuff so they skip the Gateway

issue and it can end up being

catastrophic so it's really important

that we understand that contract law has

a very important gateway issue you have

to determine what set of rules or what

law governs the contract that you're

dealing with in your back pattern you

think if this is two separate universes

article 2 of the Uniform Commercial Code

which we lovingly refer to as the UCC

and also the common law the common law

and your contract and your fact pattern

is going to be either governed by the

Uniform Commercial Code or the common

law it cannot fall into both at the same

time unless you're dealing with a very

rare fact pattern where it's a divisible

contract where you have multiple forms

of consideration being executed in one

instrument one contract that could be

divisible and broken up into separate

contracts but that's rare assuming that

you're dealing with a contract that's

indivisible which is 99 percent of the

time you're either going to be applying

the Uniform Commercial Code or the

common law you can't apply both at the

same time and I see students do this all

the time right they apply elements of

the UCC elements of the common law

because they forgot to make this their

gateway issue when they started their

analysis they forgot to run through this

very brief analysis and ends up costing

of a ton of points the one caveat here

is

if you're dealing with the contracts si

question and the call of the question

somehow asks you to apply both the

common law and UCC which I have seen

then of course do with the cob the

question tells you but assuming that the

cob the question doesn't specifically

ask you to discuss both you have to

choose one or the other

how do you make that determination if

the contract deals with goods then the

UCC governs that contract what is a good

the UCC defines a good something that is

readily movable at the time of

identification common law is going to be

services so if the contract deals with

services the common law is going to

govern that contract and remember the

rules under the UCC and Comm are going

to be very different so depending on

what you find here your analysis is

likely going to be completely different

so it's very important we make the

correct determination here so off the

top one thing I like to note about

services as under the common law is UCC

defines a good is something that is

readily movable so is land or buildings

or a house is any of that stuff readily

movable no so any contract that's

dealing with real estate so I put a big

real estate is going to fall under the

common ball so in your head just as

you're reading a fact pattern you can

think services or real estate common law

goods UCC that's how easy this analysis

should be the only time it can get a

little bit tricky a little bit dicey

would be in a situation where you have a

mixed contract that has elements of both

goods and services in the same contract

for example and most of the time most

contracts do have elements of both but

it's going to be very easy to establish

which control so

the rule here by the way if you're

dealing with a mixed contract that has

elements of services and goods in the

same contract the question is going to

be what is the predominant purpose of

the contract is the product is the

predominant purchase more about the

purchase or sale of a good or is the

predominant purpose of the contract more

about services or real estate so for

example say you have a contract you're

hiring a builder to build you a house to

construct you a house from scratch

well that builders gonna have to

purchase raw materials goods things like

lumber and whatever else that it takes

to build a house so there's gonna be

some goods involved but what's the

predominant purpose of that contract

obviously you're hiring this builder to

build you a house that's more of a

service more of a real estate contract

that's gonna fall under the common law

common law is going to govern that

contract to build a home right so the

question if you have a mixed contract so

it deals with both goods and services he

asked what's the predominant purpose of

the contract so another common example

would be something that is the purchase

or sale of a good plus shipment so say

you're buying 100 reams of paper from a

paper supply company but they're also

agreeing in that contract to ship that

paper to you well shipping something is

a service right so it does have elements

that contract you're purchasing goods

but they're also in the same contract

agreeing to ship those goods to you

which is a service so what controls will

ask what is the predominant purpose of

the contract and typically they're the

predominant purchase is the goods you're

purchasing reams of paper yeah they're

shipping it to you but the predominant

purpose you want that paper you're

entering that contract to obtain the

good of paper so UCC is going to be the

predominant purpose here the goods

aspect of it is going to be the

predominant purpose so the UCC

is going to govern that contract so one

other if you just want to have some

factors in your head there's three

factors that I kind of put under the

common law that you can think about if

you're dealing with a mixed contract you

want to think about I won't write them

just to briefly go over these under the

common log you want to think about what

is the knowledge expertise or skill

required to perform this contract what's

the quantity we're dealing with and

what's the price the lower the quantity

the higher the price and the higher the

knowledge or skill requirement that's

going to typically be factors that point

to something that's more service-based

for example say you're hiring a painter

a painter to paint a painting of you

right you're spending thousands of

dollars hiring an expert painter to make

a artist rendition painting of you well

you're actually entering a contract to

purchase a good painting under the

definition of the UCC is a good it's

readily movable at the time of

identification so a painting the

purchase of a painting could be a good

but here in this situation you're

spending thousands of dollars hiring an

expert to make something very low in

quantity one single painting those

factors are gonna point to a service

contract the predominant purpose of that

contract is more about the knowledge

skill expertise of that painter painting

that painting the actual act of the

service of creating the painting is more

of the predominant purpose under those

backs so again the predominant purpose

can be a little bit tricky sometimes if

you're dealing with a mixed contract but

those are some of the main factors you

want to think about how much knowledge

and skill is required here what quantity

output are we dealing with if you're

dealing with something where someone's

going you're hiring a painter to make

hundreds and hundreds of

and you're buying to a quantity of 200

paintings that might be a different

analysis right especially if there's

less of a skill requirement and it's

less of a you know and the price goes up

less of a still requirement and the

price goes down I mean then you could be

dealing with a Goods contract there

right so it's gonna be very

fact-specific those are going to change

a lot those factors are not conclusive

but just something to think about in

your head obviously you could be dealing

with a contract for the purchase of some

sort of specially manufactured good that

would still be a good but does require

knowledge and skill to make that good so

again it's going to be very

fact-specific but if you're dealing with

a mixed flow of contract the question is

going to be what is the predominant

purpose of this contract is this more

about the purchase or sale of a good or

is this more about the service aspect of

the contract once you determine that you

will determine whether the UCC or common

law governs and you're ready to move on

in your analysis and one more note to

make on the common law versus the UCC is

simply going to be this and this is

something I just like to note that the

common law if you're ever wondering what

the difference between common law and

UCC is something just to remember in

your head is that the common law came

first right the common law has been

around since the beginning of time since

beginning of law and formation common

law was but was around long before the

UCC was written so the common law is

what contracts were based off of this is

what the law governing contracts was for

many many decades and years right and so

what happened over time though as

contract law evolved as a subject what

you had was very harsh results the

common law tends to lean towards very

binary findings the common law is very

strict it says things like you know we

have to have in order for there to be a

valid

forcible contract XY and Z have to

happen exactly like this and if there's

anything wrong with that no contract so

in common law a lot of times you get

very harsh results so what happened the

drafters of the UCC came along and said

okay look the common law is leading some

to some very harsh results let's look at

the actual intent of the parties to the

contract the UCC is much more willing to

plug the gaps consider the parties

intending the good-faith intent of the

parties so the common law is going to be

very strict very binary very it has to

be exactly this or nothing the UCC is

going to say well let's look at the

good-faith intent of the parties and if

we need to plug in some gaps here and

there to make this work that's gonna be

okay but we really want to think about

the intent of the parties

so just remember common-law was around

first it's very harsh very strict very

formal so the drafters of the UCC came

along to try and mitigate some of this I

would say harshness so just the only

last minute to think about as we

continue and you can see the differences

between the common law and UCC it's

typically going to be con Maas very

strict very harsh you see C's a little

bit more lenient okay so basically that

is going to be everything you need to

know for your gateway issue when you sit

down to write a contract law s a very

important that you hit this gateway it

should you knock this out before you

even read the back pattern I tell

students to put this heading down on

your essay if nothing else you see you

have a contracts essay to write before

you even read the back cutter at the

very top put this heading UCC versus

common law something that you're going

to see is you begin to write your essay

so it's in your head as you're going and

that's going to help because if you

forget to cover this day way issue the

results are often catastrophic because

you're going to end up applying the

wrong law to the back pad ER and

and you're gonna get no points so all

that you have to remember is this is

your gateway issue you want to run

through this but then once you get past

this gateway issue you know what law

governs your fact pattern you're gonna

be ready to go get into the more

exciting topics of contract law which

we're gonna be covering in our next

videos until then I wish you all the

absolute best and I'll see you at our

next video