Video: Sources of Contract Law

In this lesson, Nick Palazzolo, CPA, delves into the foundational elements of contract law, offering a clear breakdown of its two primary sources: common law and the Uniform Commercial Code (UCC). He provides historical context to common law, explaining how judicial decisions set precedents that shape the governance of service agreements, real estate, and employment contracts. Nick also introduces the UCC as a modern framework created to streamline commercial transactions in the post-World War II business landscape, focusing on sales of tangible goods. With enthusiasm, he compares and contrasts these sources, shedding light on their unique origins, scope, and flexibility. Nick's insights help demystify the legal concepts, making them accessible and indicative of how they influence the interpretation and enforcement of various contracts across the United States.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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All right, so what are our sources of contract law? We've got pretty much two sources of contract law. So everything we're learning here comes from two places, whereas everything we learned with tax comes from the IRC, the Internal Revenue Code. Here, everything we're going to see in this lesson comes from common law, which we'll talk about what that is, and then the Uniform Commercial Code. Contract law governs the formation, performance, and enforcement of agreements between parties. The two sources, we'll start with common law, and these are important. I know it's a little history lesson, but that kind of comes with the nature of the topic. What is common law? And this is going to dictate how most types of contracts are going to play out. It's a legal system that was based on the accumulation of judicial decisions, customs, and practices over time. So if you know anything about law, if there's a decision made, that decision stands. And even if another judge disagrees, well, if the decision was made by a judge with a higher authority than that judge, that is the decision and there's no changing it. That's kind of how the court system works, generally speaking. It originated in England, so way back, all the way back, Magna Carta times, was brought to the U.S. by the early colonists. Under the common law system, courts follow the precedents set by earlier judicial decisions, known as stare decisis, to ensure consistency and predictability in legal matters. Common law is the primary source of contract law for most types of contracts, such as service agreements, real estate transactions, and employment contracts. So where does this come into play? So if you're suing someone because they broke the window in your house, that had to

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