Contract Law - Part 1: Formation and Performance

BUL 2241Activity 8·9 min read

Why it Matters

Contracts turn promises into obligations a court will enforce, and every deal, sale, and job in business depends on one. Knowing when an agreement became binding, which body of law governs it, and whether a party has really performed is the difference between getting paid and getting sued. Courts answer those questions with a small set of rules applied to messy facts. This activity has you apply the same rules to four disputes drawn from real Florida and federal cases.

Current Context

In June 2026, a presidential executive order directed the Justice Department to prioritize enforcement against people who use AI agents to break into data and systems, and federal cybersecurity agencies issued guidance telling companies to govern and monitor what their agents do, developments summarized in a July 2026 Baker McKenzie analysis of legal accountability for AI agents. The contract question sits underneath: the federal E-SIGN Act says an agreement cannot be denied effect because an electronic agent formed it, so long as the agent’s action is “legally attributable to the person to be bound.” As Proskauer explained when agentic tools first started clicking accept, that language makes the deploying company the party on the hook even if no human read the terms. Each fact pattern below turns on whether a reasonable person would read the words as an offer or an acceptance, and the same objective test is now being applied to parties that are not people.

Key Concepts

Common Law versus UCC Article 2

Contract law comes in two bodies. The common law, built from court decisions, governs contracts for services, real estate, and employment; Article 2 of the Uniform Commercial Code governs contracts for the sale of goods, meaning tangible, movable things. Deciding which applies is the first step in every contract analysis, because the UCC is more flexible than the common law on formation and performance.

Offer and Acceptance

The mechanism that creates mutual assent. An offer is a specific proposal made with the intent to be bound, judged by how a reasonable person would read it, and an acceptance is an unqualified agreement to its terms. Under the common law mirror image rule a changed term is a counteroffer, while the UCC allows a contract for goods to form despite some variation in the terms.

Consideration

Something of value that each side gives up in the exchange, such as money, a service, or a promise not to do something one has a right to do. A promise to make a gift is not enforceable because nothing comes back for it. Consideration is how courts separate real bargains from social promises.

Substantial Performance

Under the common law, a party that fulfills the essential purpose of the contract has performed even if minor details are incomplete or imperfect. A builder who follows the plans but installs a comparable brand of pipe has substantially performed and must be paid, less the difference in value. The doctrine keeps a small deviation from wiping out a large obligation.

The Perfect Tender Rule

Under the UCC, a seller of goods must deliver exactly what the contract requires, and a buyer may reject a shipment that fails in any respect: wrong color, wrong quantity, or a day late. The Code balances that strictness with the seller’s right to cure by fixing the defect within the time for performance. The two doctrines in these fact patterns, substantial performance and perfect tender, apply to different kinds of contracts.

Assignment and Third-Party Beneficiaries

A party can usually transfer its rights under a contract to someone else by assignment and its duties by delegation, and a contract made for the benefit of an outsider can give that person the right to enforce it. These rules decide who can sue and who can be sued when a contract changes hands. They matter because business contracts are bought, sold, and passed along all the time.

Resources

Very Brief Introduction: Contract Formation (Professor Nate’s short overview of how a contract is formed; watch it first.)
Very Brief Introduction: Contract Performance (Professor Nate’s short overview of performance and breach.)
Basics of Contract Law, LawShelf (A free video course covering formation through performance.)
Textbook: 53.2 Contract Formation (The assigned reading on offer, acceptance, and consideration.)
Textbook: Chapter 14 Third-Party Rights (The assigned reading on assignment, delegation, and third-party beneficiaries.)
Textbook: Chapter 15 Discharge of Obligations (The assigned reading on performance, substantial performance, and discharge.)
Assignment, Delegation, and Third-Party Beneficiaries (A lecture video on how contract rights and duties transfer.)
UCC Article 2, Sales, Cornell LII (The full text of Article 2; start here for any fact pattern involving goods.)
UCC § 2-601, Buyer’s Rights on Improper Delivery, Cornell LII (The perfect tender rule as written.)
UCC § 2-508, Cure by Seller, Cornell LII (The seller’s right to cure that softens perfect tender.)
Chapter 672, Uniform Commercial Code: Sales, Florida Statutes (Florida’s enactment of Article 2, which is the version a Florida court applies.)
Consideration, Cornell Wex (A short explanation of the consideration requirement with examples.)
Substantial performance, Cornell Wex (The common law doctrine at issue in the kitchen remodel fact pattern.)

What to Do

This activity uses an adversarial AI workflow to analyze four disputes drawn from real cases. For each fact pattern you decide whether a valid contract was formed and whether the required performance was met, using general contract principles and the cited opinion. The four prompts take you from concepts to a tested conclusion, and your written explanations are what you post.

Part 1: Analyze the Fact Patterns

Read the four fact patterns below. For each one, run the four-prompt sequence in order. Start with the Concept Primer to identify the contract concepts in play and whether the common law or UCC Article 2 governs. Use the Issue Spotter to state the exact legal question in one sentence. Use the Case Analyst to learn the rule from the cited opinion, pasting the opinion text from the Google Scholar link so the AI works from the real case rather than its memory of it. Finish with the Draft Challenger to test your conclusion before you write it up.

Fact Pattern 1: During a televised interview, John Doe offered a reward of $1,000,000 to anyone who could retrieve his wedding ring from the shark that bit off his hand. The interviewer asked if he was joking, but John asserted he was serious. Jane Smith went fishing, caught the shark, found the ring, and demanded the reward. John refused to pay, claiming it was a joke. Jane filed a lawsuit for breach of contract. During discovery, unedited footage showed John laughing and admitting he was joking. Kolodziej v. Mason, 774 F.3d 736 (11th Cir. 2014).

Fact Pattern 2: Jack carefully drafts an online advertisement: “For Sale: 1967 Ford Mustang, excellent condition, $6500.” He made a typographical error and meant to set the price at $65,000. Jill spots the ad, gathers $6,500 in cash, and heads to Jack’s address. She presents the cash and asks for the keys. Jack refuses to sell, explaining the typo. Jill insists the advertisement was an offer she accepted and sues for breach of contract. Jackson v. Investment Corp., 585 So. 2d 949 (Fla. Dist. Ct. App. 1991).

Fact Pattern 3: Mr. Taylor wanted a greenhouse built and approached Build-It-Right Construction. The company sent a detailed proposal specifying pressure-treated lumber. Mr. Taylor signed to indicate acceptance but wrote in a request to use cypress wood instead. Build-It-Right never responded or commenced work. Mr. Taylor sued for breach of contract. Pena v. Fox, 198 So. 3d 61 (Fla. 2d DCA 2015).

Fact Pattern 4: Acme Construction entered a $50,000 contract to remodel Harry’s kitchen, specifying an imported Italian marble backsplash. Due to a global shortage, Acme substituted a nearly identical, high-quality domestic marble that cost Acme $500 less than the Italian version. Harry loved the kitchen but refused to pay the remaining $10,000 of the contract price upon learning about the substitution, arguing Acme failed to fully perform. Ocean Ridge Develop. Corp. v. Quality Plastering, Inc., 247 So. 2d 72 (Fla. 4th DCA 1971).

Part 2: Draft Your Responses

After working through all four fact patterns, write a clear, step-by-step explanation of at least 100 words for each one, stating how the dispute should be resolved and why. Do not just announce the winner. Show your reasoning, name the rules that apply, and say which body of law governs. Post all four responses together as a single discussion post.

Include one AI chat link with a 1–2 sentence explanation of what the conversation shows and why you chose to share it.

Suggested AI Prompts

Use these prompts as a starting point, then adjust them to fit your goal. Strong prompting develops through trial, revision, and testing. It’s a foundational skill that grows into more advanced AI work such as context engineering and agent-based workflows.

Concept Primer

Act as a law professor. I am going to give you a short fact pattern about a contract dispute. Before we analyze who wins, identify the core contract concepts at play, such as offer, acceptance, consideration, or substantial performance. Define each in plain English and explain whether this scenario is governed by the common law or by UCC Article 2, and why. Confirm that you understand and ask me for the first fact pattern.

Sequencing the analysis. Asking for concepts and the governing body of law before any conclusion mirrors how a lawyer works and stops the model from jumping to a verdict it then reasons backward to justify.

Issue Spotter

Act as an analytical legal tutor. Now that I understand the basic concepts, help me spot the specific legal issue in the fact pattern we are discussing. What is the exact legal question a court must answer to resolve this dispute? State the issue as one clear question in a single sentence, then explain in two or three sentences why that is the question and not a broader one.

Forced precision. Requiring a single-sentence issue statement is the IRAC discipline in miniature; a vague issue produces a vague analysis, and the one-sentence limit makes vagueness impossible to hide.

Case Analyst

Act as a legal researcher. I am going to paste the text of the actual court opinion that matches this fact pattern, taken from the Google Scholar link in the activity. Working only from that text, summarize the legal rule the court applied and how it applied the rule to the facts. If the opinion does not address something I ask about, say so rather than filling it in from memory, because I will check your summary against the opinion. Tell me when you are ready for the text.

Source grounding on the primary authority. Pasting the opinion and confining the model to it is the responsible-use move: models misremember holdings, and a rule you can trace to a paragraph of the actual case is the only kind worth citing.

Draft Challenger

Act as a strict grading assistant. I am going to paste my 100-word explanation of how this fact pattern should be resolved, based on our earlier discussion. Read it and challenge it aggressively. Point out gaps in my logic, missing legal terminology, and any place where my reasoning does not match the court’s actual holding. Do not rewrite it; give me pointed feedback so my final post is stronger.

Red-teaming your own draft. Asking the model to attack rather than praise counters its tendency to agree, and the no-rewrite rule keeps the improved version in your words.