| Course | AC502 Business Law for Accountants |
|---|---|
| Unit | Unit 2 |
| Paper type | Contract formation analysis |
| Length | About 650 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Accounting |
| Updated | October 2026 |
Free sample paper for AC502 Unit 2
Four Documents and a Deal Made Before the Last One: A Unit 2 Contract Formation Analysis Under Article 2
[Student Name]
Purdue University Global
AC502: Business Law for Accountants
Unit 2 Contract Formation Analysis
[Instructor Name]
[Date]
The brewery, the can supplier, every document and figure are composite; the code sections, case and textbook cited are real; this is coursework analysis, not legal advice.
Document Table
1. March 3, supplier to brewery: signed quotation for 400,000 sixteen-ounce cans at $0.142 each, $56,800, stating "price held firm for 60 days."
2. March 24, supplier to brewery: email withdrawing the quotation because aluminum prices had risen.
3. March 26, brewery to supplier: purchase order for 400,000 cans at $0.142, referring to the March 3 quotation.
4. March 28, supplier to brewery: preprinted acknowledgment adding an arbitration clause and an exclusion of consequential damages.
Governing Law
Cans are movable goods, and both companies deal in goods of this kind, so they are merchants. the code's rules for sales of goods, rather than common law contract rules, decide the questions here (Clarkson et al., 2021).
The Firm Offer
Under the common law, an offer can be revoked at any time before acceptance unless the offeree paid to keep it open. Article 2 changes that for merchants. A merchant's signed written offer that by its terms gives assurance it will be held open cannot be revoked for the time stated, up to three months, even without consideration (U.C.C. § 2-205). The March 3 quotation was signed, written and stated a sixty-day hold. The March 24 withdrawal came on day 21, inside the period, so it had no effect. The brewery's March 26 purchase order accepted a live offer, and a contract was formed that day on the quotation's terms.
The acknowledgment that arrived on March 28 looks like the contract because it is the most complete document, but a contract already existed two days earlier, so the acknowledgment can only propose additions to it.
The Acknowledgment's Additional Terms
Because the contract was formed on March 26, the acknowledgment's new terms are treated as proposals for additions (U.C.C. § 2-207). Since the brewery and the supplier are both merchants, the supplier's extra terms would bind the brewery except in three situations: the brewery's order had confined acceptance to its own terms, the brewery objects in reasonable time, or the term would change the bargain materially. Only the third exception is in play here.
Arbitration clause. Courts disagree on whether arbitration is a material alteration. New York's highest court held that an arbitration clause in a seller's form is a material alteration that does not bind a buyer who never agreed to it, because it waives the right to a court (Marlene Industries Corp. v. Carnac Textiles, Inc., 1978). On that reasoning, the clause drops out.
Exclusion of consequential damages. Removing the brewery's right to recover lost profits if defective cans spoil a batch would shift a large risk to the brewery without its agreement. That is the kind of surprise and hardship that makes a term material, so it also drops out.
The Later Surcharge
On April 15 the supplier asked for an aluminum surcharge of $0.011 a can, $4,400 in all, and the brewery's purchasing manager agreed by email. Under Article 2, an agreement modifying a contract needs no consideration to be binding (U.C.C. § 2-209). It must, however, be made in good faith. A genuine rise in aluminum costs is a legitimate commercial reason; a surcharge demanded only because the supplier knew the brewery had no time to find another source would not be. On these facts the cost increase was real, so the modification binds the brewery.
Conclusion
The contract was formed March 26 at $0.142 a can, later modified by agreement to $0.153. The arbitration clause and the damages exclusion are not part of it.
References
Clarkson, K. W., Miller, R. L., & Cross, F. B. (2021). Business law: Text and cases (15th ed.). Cengage.
Marlene Industries Corp. v. Carnac Textiles, Inc., 45 N.Y.2d 327, 380 N.E.2d 239 (1978).
U.C.C. § 2-205 (Am. L. Inst. & Unif. L. Comm'n 2002).
U.C.C. § 2-207 (Am. L. Inst. & Unif. L. Comm'n 2002).
U.C.C. § 2-209 (Am. L. Inst. & Unif. L. Comm'n 2002).
Reading the AC 502 Unit 2 instructions
Unit 2 of AC502 asks you to determine whether, when and on what terms a contract was formed. Start with a document table in date order, giving sender, key wording and legal effect. Decide which body of law governs, the code or the common law, and why. Test any offer for irrevocability, then decide which document accepted it and on what date. Treat later forms according to whether a contract already existed when they arrived, and test each added term for material alteration with authority. Address any later change in price or terms as a possible modification and apply its requirements, including good faith. Conclude with the final terms the parties are bound by. Cite the relevant code sections, a case on material alteration and the course text in APA 7.
How the AC 502 Unit 2 example is put together
The sample's document table lists the March 3 quotation for 400,000 cans at $0.142, the March 24 withdrawal, the March 26 purchase order and the March 28 acknowledgment. Governing law is settled in two sentences: goods and merchants. The firm offer section applies section 2-205 to defeat the day-21 revocation and finds acceptance on March 26. The highlighted sentence explains why the last form cannot be the contract. Section 2-207 analysis drops the arbitration clause, citing Marlene Industries, and the consequential damages exclusion as material alterations. The surcharge section applies section 2-209 and good faith to a $4,400 aluminum surcharge, and the conclusion states the final price of $0.153 per can.
Where the points sit in the AC502 Unit 2 rubric
AC502 formation analyses earn points for correct sequencing and correct application of each code section. Graders check that the governing law is identified, the firm offer rule is applied to the stated period, and the formation date is fixed before later documents are analyzed. Material alteration should be tested term by term with authority, acknowledging where courts differ. Modifications must be analyzed for consideration and good faith. The rubric rewards a clear document table and a conclusion listing the binding terms. Analyses that treat the most complete form as the contract, or that apply common law revocation rules to a merchant's firm offer, are marked down hard. Code sections and cases belong in APA 7 form.
Common AC502 Unit 2 mistakes, and how to avoid them
The commonest Unit 2 mistake is assuming the last document sent is the contract. Students apply the common law rule that offers can be revoked any time, missing the merchant firm offer. Added terms are accepted or rejected without a material alteration test. Arbitration clauses are treated as clearly material or clearly not, without acknowledging the split. Modifications are rejected for lack of consideration, which Article 2 does not require. The analysis never states the final terms. If your section supplied a different set of forms or a services contract, our writers can build the document table and analysis from your facts.
Get an AC502 Unit 2 example written to your instructions
Upload the documents, or the facts, that the Unit 2 scenario provides, with their dates, along with the rubric and any required format. Governing law is settled first, every document gets a legal effect in date order, and the analysis commits to a formation date, within 24-48h. A first sample carries no charge, and both companies in it are invented. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC502 Unit 2 questions, answered
Why does the supplier's acknowledgment not form the contract?
Because the contract already existed. The quotation was an irrevocable offer, and the brewery's purchase order accepted it on March 26. A document sent two days later cannot accept an offer that has already been accepted, so the example treats its extra clauses as proposals for addition under 2-207(2), the merchant rule that decides whether each one joins the agreement.
Is an arbitration clause always a material alteration?
Courts divide. New York decisions have long treated an added arbitration clause as material, so it drops out unless expressly accepted, while other courts ask case by case whether it would cause surprise or hardship. The AC502 example states that split, applies the stricter view because the scenario names no jurisdiction, and says in a sentence what the other approach would change.
Where does an accountant meet this analysis in practice?
In purchase commitments and cost estimates. If the sixty-day price binds, the brewery's controller budgets and discloses the commitment at that price; if the revocation had worked, the cost would be higher and the timing different. The example closes with a sentence tying the formation answer to that consequence, which keeps it inside a course built for accountants rather than litigators.
Where can I find a free AC502 Unit 2 sample paper?
This page holds a full AC502 Unit 2 contract formation analysis of four documents between a composite brewery and its can supplier, applying the firm offer, battle of the forms and modification rules, with APA 7 references.
Why was the surcharge binding without new consideration?
Article 2 lets parties modify a sales contract without consideration, as long as the change is made in good faith. A genuine rise in aluminum costs gave the supplier a legitimate reason, and the brewery agreed in writing.