What are the four types of contracts that must be in writing in the state of Missouri?

Missouri breach of contract claims are governed by Missouri common law, by Article II of Missouri’s Uniform Commercial Code (UCC), and by other Missouri statutes. Common law develops over time from opinions of the Missouri Court of Appeals and the Missouri Supreme Court. On the other hand, the UCC was drafted by various national law organizations for the purpose of creating uniformity in the laws that control interstate commercial transactions. All of the states, except Louisiana, have by statute adopted the UCC. Although the intention is to harmonize the laws of the various states, in practice, UCC provisions can vary from state to state, as can the interpretation of the UCC by the courts of the various states.

A breach of contract lawsuit might need to be filed in a state other than Missouri. As discussed below, determining the correct forum for filing a breach of contract action is a critical first step. Another key preliminary determination is to see if the contract, or state law, allows a party to recover their attorney’s fees in the event they win a lawsuit involving a breach of the contract. Finally, a careful assessment of the merits of the claim and of the ability to collect on a judgment are also critical considerations.

Forum

Most written contracts provide for which state’s law applies to disputes related to the contract and in which state a lawsuit concerning the contract must be filed. If this information is not included in the contract, then the aggrieved party must look to state law to determine which state has jurisdiction over the parties. This is typically a concern for a Missouri plaintiff only if a defendant is not a Missouri resident or if a defendant is a business that does not have an office in Missouri. If the case can be filed in Missouri, then the specific court where the case can be filed, called venue, must be identified.

Amount in Controversy

The amount of money sought by the plaintiff determines where within a court the claim can be filed. A breach of contract claim seeking $5,000.00 or less may be filed in a Missouri small claims court. Missouri associate circuit court cases are limited to claims of $25,000.00 or less, and all other breach of contract claims filed in a Missouri state court must be filed in the circuit court. Breach of contract actions filed in small claims courts are typically handled quickly and at the lowest cost. Associate circuit cases are the second most efficiently handled cases, while breach of contract cases filed in the circuit court can take multiple years before going to trial, and the legal fees can be extensive.

The amount sought by the plaintiff also determines whether a federal court possesses what’s called “diversity jurisdiction” over the parties to the lawsuit, and thus whether the lawsuit can be filed in, or transferred to, a federal court. A defendant in a different state might, under diversity jurisdiction, remove a state court breach of contract claim to a federal court. Finally, the owner of a legal entity, like a corporation or a limited liability company, can represent such entity in a small claims court matter. However, such entity may only be represented by a Missouri attorney in a breach of contract claim filed in any other Missouri state court.

Contract Formation

A contract is simply an agreement between two or more parties. Except as otherwise required by law, a contract may be either oral or written. The first question in any breach of contract claim is whether the contract was validly formed. A valid contract requires both an offer and an acceptance. Many breach of contract claims are litigated over whether the offer or the acceptance was sufficient to form a binding contract. For example, an offer might not include certain terms necessary for a binding contract, such as the price or quantity of the goods to be sold. A party might also assert that he or she never accepted the offer.

Bilateral and Unilateral Contracts

A contact can be either bilateral or unilateral. A bilateral contract requires mutual promises by the parties. This is the typical type of contract, where one party communicates an offer and the other party communicates his or her acceptance of the offer. The parties are then obligated to fully perform their obligations under the contract.

A unilateral contract offer is accepted when the party to whom the offer is made begins to substantially perform the offer. For example, if Paul tells David that he will pay David $500 if he paints the interior of his house, the contract is formed when David begins to paint. David did not need to sign a written agreement or to verbalize his acceptance of the offer in order to form a valid contract between Paul and David. Beginning the work obligated David to complete the work and obligated Paul to pay David $500 upon completion of the work.

Consideration

Missouri law also requires the parties to the contract to be competent, meaning that they are at least 18 years of age and that they are capable of understanding the terms of the agreement. Additionally, the contract terms must require a promise by each party to provide a benefit to another party to the contract. This is called “consideration” and typically includes either money or the performance of some service. Consideration can also include an agreement by a party to forebear from exercising some right that the party has against another party to the contract. If Paul offers to ship 100 hammers to David, and David accepts the offer, but he does not agree to provide any benefit to Paul in exchange for the hammers, then generally no contract has been formed.

Breach of Contract Law Under Missouri’s UCC

Missouri’s Uniform Commercial Code applies to transactions in “goods”, defined as anything, except money, that is movable. Under Missouri’s UCC, with some exceptions, a contract for the sale of goods in the amount of $500.00 or more is not enforceable unless it is in writing and signed by the party against whom enforcement is sought. One exception is a contract between merchants (a merchant is generally a person who deals in goods of the kind involved in the transaction at issue). An oral contract for the sale of goods in the amount of $500.00 or more is enforceable if one merchant, within a reasonable time, sends written confirmation of the contract to the other merchant, who does not object in writing to the terms in the confirmation within ten days after receiving the confirmation.

Other exceptions to the requirement that a contract for the sale of goods of $500 or more must be in writing and signed is: (i) when the goods, under certain circumstances, are specially made, (ii) when the party against whom the breach of contract claim is filed admits to the formation of the contract, and (iii) when payment has been made and accepted or when the goods are received and accepted.

Finally, course of performance, course of dealing, and usage of trade are all concepts defined by the UCC that apply when certain terms of a contract for the sale of goods are missing or when a term is ambiguous.

This article is for general informational purposes only, and it is not intended as legal advice. Sewell Law provides professional litigation services in the areas of business and real estate. Please contact Michael Sewell, MBA, JD at (314) 942-3232 or at to discuss your real estate or business matters.

The choice of a lawyer is an important decision and should not be based solely upon advertisements.

© 2017 Sewell Law, LC

What are four types of contracts that require a writing?

What types of contracts are required to be in writing?

What are the four types of legal contracts valid?

What are the 4 most important elements of a contract?