Twelve lessons on UCC Article 2 sales, common law contracts, agency, business entities, torts and employment basics.
United States private law, using the uniform text of UCC Article 2, selected federal statutes, Delaware entity statutes and landmark cases. It is not legal advice, does not cover other countries, and does not replace the enacted law and case law of a specific state. Not covered: UCC Article 9, bankruptcy, antitrust, securities, tax, intellectual property and arbitration procedure.
Basic reading of statutes and case excerpts. No law background needed.
Course outline
Which law governs: UCC Article 2 or common law
Classify a deal as a sale of goods or something else before choosing rules.
Consideration and reliance
Separate bargained-for exchange from reliance-based enforcement.
Writing rules and firm offers
Apply the sales statute of frauds and the merchant firm offer rule.
Battle of the forms
Work through UCC section 2-207 when acceptance and offer disagree.
Warranties, disclaimers and unconscionability
Identify the warranty, test the disclaimer and apply the unconscionability check.
Delivery, rejection, acceptance and cure
Choose between rejection, acceptance and revocation after a nonconforming delivery.
Remedies, limits and the four year clock
Compute buyer damages and apply contractual limits and limitation periods.
Agency: authority and the principal's liability
Decide when an agent binds a principal and when a worker is an employee.
Forming a business: partnership, LLC and corporation
Match each entity to its default personal liability rule.
Torts: negligence, product liability and employer responsibility
Apply the duty analysis in Palsgraf and the manufacturer line from MacPherson to Greenman.
Employment basics: wages, overtime and discrimination
Apply federal overtime math, the salary level and Title VII coverage and damage caps.
Putting it together: a business dispute
Combine formation, remedy and statute of frauds rules on one fact pattern.
Sources and curriculum note
Sources retrieved October 4, 2026; state enactments and federal rules may have changed since.
Read every lesson below. The interactive reader above contains the same explanations, with visual tools and quizzes.
1. Which law governs: UCC Article 2 or common law
Learning goal: Classify a deal as a sale of goods or something else before choosing rules.
This course covers United States private commercial law at the level of an introductory business law class. It uses UCC Article 2 as published in the uniform text, plus judge-made common law for everything the UCC does not displace. Each state enacts its own version, so a real dispute needs the enacted text and case law of the state whose law applies. Nothing here is legal advice.
UCC section 2-102 says Article 2 applies to transactions in goods. Section 2-105 defines goods as things movable at the time they are identified to the contract, and excludes the money used as price, investment securities and things in action. A promise to mow a lawn, to consult, or to sell land is not a sale of goods, so common law contract rules apply instead.
Why it matters: the two systems differ on formation, writing requirements, warranties and remedies. Under section 2-204 a sales contract can form in any manner showing agreement, and open terms do not defeat it if the parties intended a contract and a court can give a remedy. Under section 2-104 a merchant is someone who deals in goods of the kind or holds out special knowledge of the goods or practices, and several Article 2 rules change when both sides are merchants.
Worked example
A bakery agrees to buy 50 kg of flour at a price to be set later by a trade index. Which body of law governs, and what happens if the index is never published?
Flour is movable, so it is goods and Article 2 applies.
Section 2-305(1)(c): if the price is tied to a third-party standard that is not set, the price is a reasonable price at the time for delivery.
The deal does not fail for lack of a price, provided the parties intended to be bound. If they intended not to be bound without the price, section 2-305(4) says there is no contract.
Practice problem and solution
Hypothetical: a bakery agrees to buy 400 kg of sugar from a supplier 'at the price the industry index sets on delivery day.' The index is discontinued before delivery. Both parties intended to be bound, and a court finds the reasonable price at the time for delivery is $2.10 per kg. What total price does the court set? In the reasoning box, name the governing body of law and the subsection that fills the price.
Sugar is movable, so these are goods and UCC Article 2 applies. Section 2-305(1)(c): if the price is tied to a standard that is not set, the price is a reasonable price at the time for delivery, provided the parties intended to be bound (section 2-305(4) would give no contract if they did not). 400 x 2.10 = 840.
Mental model: Goods go to Article 2. Everything else goes to common law. Then ask whether both parties are merchants.
Common trap: Assuming the UCC covers every business contract.
2. Consideration and reliance
Learning goal: Separate bargained-for exchange from reliance-based enforcement.
Common law enforces a promise supported by consideration, meaning a bargained-for exchange. In Hamer v. Sidway (N.Y. 1891) an uncle promised his nephew money if he refrained from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until age 21. The court held that the promisee's forbearance from exercising a legal right was sufficient consideration, even though the change may have benefited the nephew.
Some promises have no bargain behind them but are relied on. Hoffman v. Red Owl Stores (Wis. 1965) recognized a cause of action for promissory estoppel based on section 90 of the Restatement of Contracts. Hoffman sold his grocery store fixtures and inventory, and the couple sold their bakery building, on repeated assurances that a franchise store would follow. The court approved an award of reliance losses for the bakery sale, which the franchisor had requested.
Under UCC section 2-209(1), an agreement modifying a contract within Article 2 needs no consideration to be binding. That departs from the traditional common law pre-existing duty rule, under which a promise to do only what one is already bound to do is not consideration for a new promise (Alaska Packers' Ass'n v. Domenico, 9th Cir. 1902). Section 2-209(2) and (3) add that a signed no-modification clause can bind and that the statute of frauds applies to a modified contract within its scope.
Worked example
A buyer and seller of machine parts agree to raise the price by 8 percent after the seller reports a steel cost increase. The seller gives nothing new. Is the modification binding?
The contract is a sale of goods, so Article 2 governs.
Section 2-209(1) says a modification within Article 2 needs no consideration.
So the 8 percent increase can bind, subject to other limits such as a signed no-modification clause under section 2-209(2).
Practice problem and solution
Hypothetical: (A) A landscaper under a $4,000 services contract demands $5,000 midway, and the client agrees, receiving nothing new. (B) A seller of 500 pallets at $4,000 demands $5,000 before delivery and the buyer agrees, receiving nothing new. Which case can bind the buyer without new consideration, A or B? In the reasoning box, name the rule that defeats the other case.
Case B. Pallets are goods, so section 2-209(1) says a modification within Article 2 needs no consideration (subject to limits such as a signed no-modification clause). Case A is a services contract, so the traditional pre-existing duty rule applies and the promise to pay more for the same work lacks consideration (Alaska Packers' Ass'n v. Domenico).
Common trap: Applying the UCC modification rule to services.
3. Writing rules and firm offers
Learning goal: Apply the sales statute of frauds and the merchant firm offer rule.
UCC section 2-201(1) requires a signed writing for a sale of goods for $500 or more, sufficient to indicate that a contract was made, signed by the party against whom enforcement is sought. A writing is not insufficient because it omits or misstates a term, but the contract is not enforceable beyond the quantity shown in the writing.
Exceptions: between merchants, a written confirmation received within a reasonable time that is sufficient against the sender satisfies the rule against the recipient unless written objection is given within 10 days of receipt (section 2-201(2)). A contract is also enforceable if goods are specially manufactured and the seller has made a substantial beginning, if the defendant admits the contract in court, or for goods paid for and accepted or received and accepted (section 2-201(3)).
Firm offers: under section 2-205, a merchant's signed written offer that assures it will be held open is not revocable for lack of consideration for the stated time, or a reasonable time if none is stated, but never longer than three months. If the assurance appears on a form supplied by the offeree, the offeror must separately sign that term.
Worked example
Two merchants orally agree on $2,400 of goods. The seller mails a signed confirmation. The buyer receives it and, 12 days later, objects in writing. Does the statute of frauds defense survive?
The price is over $500, so section 2-201(1) applies.
The seller's signed confirmation is received between merchants and is sufficient against the sender.
Section 2-201(2) gives the recipient 10 days to object in writing. The objection came on day 12, so the writing satisfies the rule against the buyer and the defense fails.
Practice problem and solution
Hypothetical: a hardware merchant signs a letter: 'This offer to sell 300 hinges at $4 each stays open for 8 months.' At the end of month 4 she revokes, and in month 5 the buyer tries to accept. For how many months from the letter can she not revoke the offer without consideration? In the reasoning box, say whether the month-5 acceptance binds her and why the $1,200 price does not change the answer.
Section 2-205 holds a merchant's signed firm offer open for the stated time but never more than three months without consideration. Her revocation at month 4 is effective because the irrevocable period ended at month 3, so the month-5 acceptance does not bind her. The $1,200 price exceeds $500, but the signed letter is a writing signed by the party against whom enforcement is sought (section 2-201(1)), so the writing requirement is not the obstacle.
Mental model: Writing and signature for $500 or more; merchant confirmation; three-month cap.
Common trap: Believing any signed promise to hold open binds forever.
4. Battle of the forms
Learning goal: Work through UCC section 2-207 when acceptance and offer disagree.
Businesses exchange purchase orders and acknowledgments with conflicting fine print. Under UCC section 2-207(1), a definite and seasonable expression of acceptance operates as an acceptance even though it states additional or different terms, unless acceptance is expressly made conditional on assent to the additional or different terms.
Section 2-207(2): additional terms are proposals for addition. Between merchants they become part of the contract unless the offer expressly limits acceptance to its terms, they materially alter it, or notice of objection has been given or is given within a reasonable time. Section 2-207(3) says conduct by both parties recognizing a contract is enough to form one, and the terms are those on which the writings agree plus UCC gap fillers.
Subsection (1) speaks of additional or different terms and subsection (2) only of additional terms. The statutory text does not say in subsection (2) how different terms are treated, so do not assume they follow the additional-term rule; check the controlling state's cases before predicting an outcome.
Worked example
A buyer's purchase order for 5,000 bolts says nothing about disputes. The seller's acknowledgment adds a clause limiting remedies and is not expressly conditional. Both are merchants and ship and accept. What controls?
Section 2-207(1): the acknowledgment is an acceptance, so a contract formed.
The new clause is a proposal under section 2-207(2) and enters unless it materially alters the contract or the buyer objects.
A remedy limit is a likely material alteration, so a court would probably exclude it unless the buyer assented.
Practice problem and solution
Hypothetical: a buyer's purchase order for 2,000 units at $6 says 'acceptance is limited to the terms of this order.' The seller's acknowledgment is not expressly conditional but adds a 15 percent restocking fee on returns and a $300 shipping surcharge. Both are merchants, the seller ships, and the buyer accepts. What total price must the buyer pay? In the reasoning box, explain why a contract exists and which clause of section 2-207(2) keeps the added terms out.
Section 2-207(1): the acknowledgment is a definite and seasonable acceptance that is not expressly conditional, so a contract forms. The added terms are proposals under section 2-207(2), and clause (a) keeps them out because the offer expressly limits acceptance to its terms. Price: 2,000 x 6 = 12,000, with no surcharge.
Mental model: Check acceptance, then filter extra terms by limitation, material alteration and objection.
Common trap: Assuming the last form sent always wins.
5. Warranties, disclaimers and unconscionability
Learning goal: Identify the warranty, test the disclaimer and apply the unconscionability check.
An express warranty arises from any affirmation of fact or promise relating to the goods that becomes part of the basis of the bargain, from a description, or from a sample or model (section 2-313(1)). No formal words are needed. A statement merely of value or the seller's opinion or commendation does not create one (section 2-313(2)).
The implied warranty of merchantability, section 2-314, arises when the seller is a merchant with respect to goods of that kind. Goods must at least pass without objection in the trade, be fit for ordinary purposes, and be adequately contained, packaged and labeled. The implied warranty of fitness, section 2-315, arises when the seller at the time of contracting has reason to know the buyer's particular purpose and that the buyer relies on the seller's skill to select suitable goods.
Disclaimers under section 2-316: to exclude merchantability the language must mention merchantability and, in a writing, be conspicuous; to exclude fitness the exclusion must be a conspicuous writing. Expressions like "as is" or "with all faults" exclude implied warranties, and a buyer who examined the goods as fully as desired has no implied warranty for defects the examination should have revealed. A court may refuse to enforce an unconscionable contract or clause under section 2-302. Williams v. Walker-Thomas (D.C. Cir. 1965) describes unconscionability as the absence of meaningful choice together with terms unreasonably favorable to the other party.
Worked example
A merchant sells a used laptop for $600. Her receipt says in bold capitals "SOLD AS IS WITH ALL FAULTS." The laptop dies in a week. Does the buyer have a merchantability claim?
The seller is a merchant, so section 2-314 would imply merchantability.
Section 2-316(3)(a): as is language excludes all implied warranties unless circumstances indicate otherwise.
The language is conspicuous and plain, so the implied warranty claim fails. An express warranty, if the seller had made one, would survive.
Practice problem and solution
Hypothetical: a buyer accepts 20 chairs that the seller's catalog described as solid oak. They would be worth $90 each as warranted. They are veneer and worth $55 each as delivered. The buyer spent $60 on reasonable inspection costs. The seller's receipt says 'sold as is.' What total can she recover under section 2-714(2) and (3)? In the reasoning box, say why 'as is' does not defeat the claim.
The catalog description is an affirmation of fact about the goods that becomes part of the basis of the bargain, so it creates an express warranty (section 2-313(1)). 'As is' excludes implied warranties, but an express warranty survives. Difference in value: 20 x (90 - 55) = 700. Incidental damages: 60. Total: 760.
Mental model: Warranty comes from the statement, the seller's status or the buyer's reliance; disclaimers must follow section 2-316 form.
Common trap: Treating any sales talk as a warranty.
6. Delivery, rejection, acceptance and cure
Learning goal: Choose between rejection, acceptance and revocation after a nonconforming delivery.
Under section 2-601, if goods or the tender fail in any respect to conform to the contract, the buyer may reject the whole, accept the whole, or accept any commercial unit or units and reject the rest, subject to installment contract rules and agreed limits on remedy. Rejection must be within a reasonable time and is ineffective unless the buyer seasonably notifies the seller (section 2-602(1)).
A seller whose tender was rejected may cure. If time for performance has not expired, the seller may seasonably notify the buyer and make a conforming delivery within the contract time (section 2-508(1)). If the seller had reasonable grounds to believe the tender would be acceptable, with or without money allowance, a further reasonable time may be allowed (section 2-508(2)).
Acceptance has consequences. The buyer must pay at the contract rate for goods accepted and must notify the seller of breach within a reasonable time after discovering it, or be barred from any remedy (section 2-607(1), (3)). The buyer carries the burden of proving breach after acceptance (section 2-607(4)). Revocation of acceptance under section 2-608 requires a nonconformity that substantially impairs value and one of two grounds: acceptance on the reasonable assumption of cure, or acceptance without discovery induced by difficulty of discovery or the seller's assurances.
Worked example
A buyer ordered 8 identical commercial units at $325 each. Two arrive defective. She accepts 6 and rejects 2 under section 2-601(c). What does she owe?
Section 2-601(c) lets her accept any commercial units and reject the rest.
Section 2-607(1) requires payment at the contract rate for goods accepted.
6 units at $325 each is 6 x 325 = $1,950. She owes nothing for the two rejected units.
Practice problem and solution
Hypothetical: a buyer ordered 30 commercial units at $210 each. Six arrive nonconforming. She rejects those six and accepts 24. Before the contract time for performance ends, the seller seasonably notifies her and delivers six conforming units, which she accepts. What total does she owe under section 2-607(1)? In the reasoning box, name the section that lets the seller do this.
Section 2-508(1) lets the seller cure by notifying seasonably and making a conforming delivery within the contract time. She now accepts all 30 conforming units and owes the contract rate for goods accepted: 30 x 210 = 6,300, not the 24 x 210 = 5,040 owed before the cure.
Mental model: Reject, accept, or split; notify; sellers may cure inside the contract time.
Common trap: Believing rejection can be silent or late without effect.
7. Remedies, limits and the four year clock
Learning goal: Compute buyer damages and apply contractual limits and limitation periods.
If a seller fails to deliver, the buyer may cover by making in good faith and without unreasonable delay a reasonable substitute purchase. Damages are the cost of cover minus the contract price, plus incidental or consequential damages, less expenses saved (section 2-712). A buyer who does not cover may recover the difference between market price when the buyer learned of the breach and the contract price, plus incidental and consequential damages, less expenses saved (section 2-713).
For accepted goods, damages for breach of warranty are the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had as warranted, unless special circumstances show other proximate damages (section 2-714(2)). Incidental damages include reasonable expense of inspection, transport, care of rejected goods and effecting cover. Consequential damages include losses from requirements the seller had reason to know and which could not be prevented by cover, and injury to person or property proximately resulting from a breach of warranty (section 2-715).
Contracts can limit remedies (section 2-719(1)), but if an exclusive remedy fails of its essential purpose, the Article's remedies apply (section 2-719(2)). Consequential damages may be limited unless unconscionable; limiting them for personal injury from consumer goods is prima facie unconscionable, while a commercial loss limit is not (section 2-719(3)). The limitation period is four years from accrual, reducible to not less than one year by agreement, never extended (section 2-725(1)). A warranty breach accrues at tender of delivery unless the warranty explicitly extends to future performance (section 2-725(2)).
Worked example
A seller breaches a contract for 1,000 units at $12 each. The buyer covers in good faith at $14.50 each and pays $300 of incidental costs. No expenses were saved. What are the damages?
Section 2-712(2): cover price minus contract price, plus incidental damages, less expenses saved.
(14.50 - 12.00) x 1,000 = $2,500.
Add $300 incidental damages: $2,800.
Practice problem and solution
Hypothetical: a seller fails to deliver 500 units at $8.40 each. The buyer does not cover. When she learns of the breach the market price is $10.15 each. Her incidental damages are $75 and she saved $30 in freight. What damages under section 2-713? In the reasoning box, say how the measure differs from section 2-712.
Section 2-713 measures market price when the buyer learned of the breach minus contract price, plus incidentals, less expenses saved. (10.15 - 8.40) x 500 = 875. Add 75 and subtract 30: 920. Section 2-712 would instead use the cost of a good-faith substitute purchase (cover) minus contract price.
Mental model: Cover or market difference, plus incidentals and consequentials, minus savings; limits and four year clock.
Common trap: Forgetting expenses saved.
8. Agency: authority and the principal's liability
Learning goal: Decide when an agent binds a principal and when a worker is an employee.
A principal is bound by an agent's acts within the agent's authority. Hoddeson v. Koos Bros. (N.J. Super. App. Div. 1957) describes three bases: express or real authority definitely granted, implied authority to do what is proper, customarily incidental and reasonably appropriate to the authority granted, and apparent authority, where the principal by words, conduct or other manifestations has held out the person as agent. The court also noted that evidence limited to the supposed agent's own activities does not show the principal's manifestations.
Employee versus independent contractor matters for many statutes. Nationwide Mutual v. Darden (U.S. 1992) applied the general common law of agency and listed factors: the hiring party's right to control the manner and means of the work, the skill required, the source of tools, the location, the duration of the relationship, the right to assign additional projects, the hired party's discretion over when and how long to work, the method of payment, and the hired party's role in hiring and paying assistants, among others.
Consequence: the control factor favors employee status. A person who sets no hours of her own, uses the firm's tools and is paid for time on a long relationship looks like an employee. A label alone does not decide.
Worked example
A store owner lets a stranger stand behind the counter in a store apron and take payments. A customer pays $200 as a deposit. The stranger leaves with the cash. Can the customer argue apparent authority?
Apparent authority rests on the principal's own manifestations.
Letting the stranger stand behind the counter in an apron is the owner's conduct, shown to the customer.
The customer can argue apparent authority and a court may bind the principal, depending on the reasonableness of reliance.
Practice problem and solution
Hypothetical: a worker sets her own hours, uses her own tools, is paid per finished project and has a single one-off job. Using the Darden common law factors, which classification do most factors point to: employee or independent contractor? In the reasoning box, name two factors you used and say what the hiring party's label would add.
Control over hours, own tools, per project pay and a single project all favor contractor status under the Darden list. A label alone does not decide; the factors do.
Mental model: Authority comes from grant, job custom, or principal conduct; classification follows the control factors.
Common trap: Relying on a title or label alone.
9. Forming a business: partnership, LLC and corporation
Learning goal: Match each entity to its default personal liability rule.
These examples use Delaware statutes as the legal text, because the code is freely available. They are one state's rules, not a national rule, and every state has its own entity statutes.
General partnership: under 6 Del. C. section 15-306(a), all partners are liable jointly and severally for all obligations of the partnership unless otherwise agreed by the claimant or provided by law. A person admitted into an existing partnership is not personally liable for obligations incurred before admission (section 15-306(b)). For a limited liability partnership, obligations arising while it is an LLP are solely the partnership's, and a partner is not personally liable solely by reason of being a partner (section 15-306(c)).
Limited liability company: under 6 Del. C. section 18-303(a), debts, obligations and liabilities of an LLC are solely the LLC's, and no member or manager is obligated personally for them solely by reason of being a member or acting as manager. Corporation: 8 Del. C. section 102(b)(7) lets a certificate of incorporation limit a director's or officer's personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duty, but not for breach of the duty of loyalty. These provisions address liability for the entity's obligations and fiduciary duty damages; they are not a license to commit wrongs.
Worked example
Three people run a general partnership with no written agreement. The partnership owes a $90,000 judgment debt. Who can the creditor pursue under the section text?
No agreement and no LLP status, so the default rule applies.
Section 15-306(a): partners are jointly and severally liable for partnership obligations.
So the creditor may pursue any of the three partners for the obligation, as the joint and several wording provides.
Practice problem and solution
Hypothetical: a person joins an existing Delaware general partnership on June 1. The partnership owes a $25,000 claim from a March contract and a $60,000 claim from a contract it signs in July. Under section 15-306, how many dollars of claims can a creditor collect from the new partner personally? In the reasoning box, explain the two rules you used.
Section 15-306(b): a person admitted into an existing partnership is not personally liable for obligations incurred before admission, so the March $25,000 claim is out. Section 15-306(a): partners are jointly and severally liable for partnership obligations, so the July $60,000 claim can be pursued against the new partner for the full amount. Answer: 60,000.
Mental model: Pick the entity by its default liability rule, then check who signs what.
Common trap: Assuming any entity form shields an owner from his own wrongdoing.
10. Torts: negligence, product liability and employer responsibility
Learning goal: Apply the duty analysis in Palsgraf and the manufacturer line from MacPherson to Greenman.
Negligence requires a duty owed to the plaintiff. Palsgraf v. Long Island Railroad (N.Y. 1928) denied recovery to a bystander injured by a chain of events that began when railroad employees helped a passenger board with a package. The majority said that the risk reasonably to be perceived defines the duty to be obeyed, and that the plaintiff must show a wrong to herself, not merely a wrong to someone else.
MacPherson v. Buick (N.Y. 1916) held that a manufacturer that negligently builds a car owes a duty to the ultimate purchaser even without a contract between them. The court said that if the nature of a thing is such that it is reasonably certain to place life and limb in peril when negligently made, it is a thing of danger, and that the case did not turn on labels such as inherently or imminently dangerous.
Greenman v. Yuba Power Products (Cal. 1963) states that a manufacturer is strictly liable in tort when an article it places on the market, knowing that it is to be used without inspection for defects, proves to have a defect that causes injury to a human being. The court held that strict liability did not require proof of an express warranty as defined in the state's sales statute. These are holdings of one New York and one California court; other states differ on details such as the scope of strict liability.
Worked example
A tool is built with a defective handle that breaks in ordinary use and injures the buyer. The buyer never dealt with the manufacturer. What theories fit?
MacPherson supports a negligence claim against a manufacturer without a direct contract.
Greenman supports strict liability if the article had a defect that caused injury and was expected to be used without inspection.
Both theories fit; which one is stronger depends on the evidence and on the state's law.
Practice problem and solution
Hypothetical: a shop owner hired carefully, trained her staff and was at home when an employee, acting within the scope of his job, negligently injured a customer. Name the common law doctrine that makes the owner answerable anyway, in two words, and say in the reasoning box why her own care does not matter.
Traditional vicarious liability rules ordinarily make employers liable for acts of their employees within the scope of employment (Meyer v. Holley, 537 U.S. 280, 2003, citing Burlington Industries v. Ellerth). The doctrine is respondeat superior; the owner's liability rests on the employment relationship and scope, not on her own fault.
Mental model: Duty from foreseeable risk; manufacturers owe duties without a direct contract; defects can bring strict liability.
Common trap: Treating every injury as automatically giving rise to liability.
11. Employment basics: wages, overtime and discrimination
Learning goal: Apply federal overtime math, the salary level and Title VII coverage and damage caps.
Federal wage rules sit in the Fair Labor Standards Act. Under 29 U.S.C. section 207, an employee covered by the Act may not be employed more than 40 hours in a workweek unless paid at least one and one-half times the regular rate for the hours over 40. The regular rate is the rate at which the employee is actually employed and may not be less than the statutory minimum (29 C.F.R. section 778.107). Section 206 states $7.25 an hour as a federal rate. State laws can set higher rates.
Salary basis for the executive, administrative and professional exemptions: the regulation text retrieved for 29 C.F.R. section 541.600 states $684 per week, with equivalents of $1,368 biweekly, $1,482 semimonthly and $2,964 monthly. Duties tests also apply under part 541. This threshold has been the subject of rulemaking, so check the current regulation before relying on a figure.
Title VII, 42 U.S.C. section 2000e-2, makes it unlawful to discriminate in employment on the basis of race, color, religion, sex or national origin. Under section 2000e(b) an employer must have fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year. Under 42 U.S.C. section 1981a(b)(3), compensatory plus punitive damages are capped per complaining party by employer size: $50,000 for 15 to 100 employees, $100,000 for 101 to 200, $200,000 for 201 to 500, and $300,000 for more than 500. Montana's statute, Mont. Code Ann. section 39-2-904, sets out when a discharge is wrongful, for example retaliation for refusing to violate public policy.
Worked example
A non-exempt employee earns $20 an hour and works 44 hours in a workweek. What are her gross wages under section 207, ignoring other pay?
Regular rate: $20.
Overtime rate: 1.5 x 20 = $30.
Pay: 40 x 20 + 4 x 30 = 800 + 120 = $920.
Practice problem and solution
Hypothetical: employer A has 190 employees in each of 20 or more weeks. A jury awards a Title VII plaintiff $80,000 in compensatory and $70,000 in punitive damages. Employer B has 12 employees in every week. What is the maximum combined award the plaintiff can recover from A under section 1981a(b)(3)? In the reasoning box, say why Title VII does not reach B.
A has 190 employees, in the 101 to 200 bracket capped at $100,000. The $150,000 award exceeds that cap, so the maximum is $100,000. Under section 2000e(b) an employer needs fifteen or more employees for each working day in each of twenty or more calendar weeks, so B with 12 is not covered.
Mental model: Overtime is 1.5 times the regular rate over 40; Title VII needs 15 employees and the cap depends on size.
Common trap: Applying the overtime rule to exempt employees without checking duties and salary.
12. Putting it together: a business dispute
Learning goal: Combine formation, remedy and statute of frauds rules on one fact pattern.
This closing lesson walks through one fact pattern with the tools from earlier lessons. The parties and amounts are a toy scenario, not real parties.
Step one is classification: goods or common law. Step two is formation, including the statute of frauds and any form conflict. Step three is performance and breach: conformity, rejection, acceptance and notice. Step four is the remedy: cover or market difference, incidentals, limits and the limitation period. Throughout, ask who has authority to bind each party and whether an entity shield applies.
Practice the habit of naming the controlling rule in each step before computing anything. If the controlling state's enactment differs from the uniform text, say so rather than assuming the uniform text.
Worked example
Two merchants orally agree on a $3,000 order. The seller sends a signed confirmation received on day 3. The buyer says nothing for 15 days. The seller fails to deliver and the buyer covers at $600 more than the contract price with $80 incidental costs. What can the buyer recover and can the seller assert the statute of frauds?
The confirmation was received and the buyer did not object in writing within 10 days, so section 2-201(2) removes the statute of frauds defense against the buyer.
The buyer can recover cover minus contract price, plus incidentals: 600 + 80 = $680 under section 2-712(2).
The buyer must still prove the seller's breach and that the cover was in good faith.
Practice problem and solution
Hypothetical: two merchants orally agree to 800 units at $5.00. The seller sends a signed confirmation showing 800 units, and fails to deliver. The buyer covers in good faith at $6.30 per unit, with $90 of incidental costs and $40 of freight saved. What damages under section 2-712(2)? In the reasoning box, name the rule set and say why the statute of frauds does not defeat the claim.
Units are goods, so Article 2 governs. The price exceeds $500, but the seller's own signed confirmation shows quantity 800, so section 2-201(1) is satisfied against the seller up to that quantity. Cover difference: (6.30 - 5.00) x 800 = 1,040. Add 90 and subtract 40: 1,090.
Mental model: Classify, form, breach, remedy, and check the entity and authority at each stage.
Common trap: Skipping classification and applying the wrong rule set.