· Choice of Law
o R.2d Conflict
§ § 6 Choice-of-law Principles
· Factors:
o Needs of interstate and international systems
o Relevant policies of the forum
o Relevant policies of other interested states and the relative interests of those states in the determination of the particular issue
o Protection of justified expectations
o basic policies underlying the particular field of law
o certainty and predictability of result
o ease in determining and applying law
§ § 187 Law of the State Chosen by the Parties
· Law that parties stipulated will be honored unless:
o State has no substantial relationship, or there is no discernable rationale for the choice
o Application of law of chosen state would be contrary to the polices of a state who has a substantial interest in the matter
§ § 188 Law Governing in Absence of Effective Choice by the Parties
· Most Significant Contacts
o Place on contracting
o Place of negotiations
o Location of subject mater
o Residence / place of incorporation / business of parties
· If performance and negotiation are in the same state, then that state’s law usually applies
o Palmer
§ Common law choice-of-law doctrine is lex loci contractus: the law governs wherever the last step necessary to create the contract took place.
§ Court adopts the most significant contacts criteria from R.2d Conflicts
· Place of contracting, negotiation, performance, subject matter, and residence / incorporation locus
o Nortek
§ lex loci contractuswith telephones; “accept” over the phone would complete the contact, causing that state’s law to apply, unless the contract has a view of performance in another state
§ policy Considerations for significant contacts
· needs of interstate
· relevant policies of the forum
· policies of other affected states and their interest in the outcome
· protection of justified expectations
· uniformity and predictability of results
· ease in determining and applying different laws
· Mutual Assent
o § 17 Requirement of a Bargain
§ Except as stated in Subsection (2), the formation of a contract requires a bargain in which there is manifestation of mutual assent to the exchange and a consideration
§ Whether or not there is a bargain a contract may be formed under special rules applicable to formal contracts or under rules states in §§ 82-94
o § 18 Manifestation of Mutual Assent
§ Manifestation of mutual assent to an exchange requires that each party either make a promise or begin or render a performance
§ Comment C: Sham or Jest
· If one party is deceived and has no reason to know of the joke the law takes the joker at his word
o § 19 Conduct as a Manifestation of Assent
§ The manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act
§ The conduct of a party is not effective as manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents
§ The conduct of a party may manifest assent even though he does not in fact assent. In such cases a resulting contract may be voidable because of fraud, duress, mistake, or other invalidating cause.
§ Comment A: Conduct other than words
· Purely negative conduct is sometimes, though not usually, a sufficient manifestation of assent
· The problem is illustrated in cases of claims against a decedent’s estate for services rendered.
o § 20 Effect of Misunderstanding:
§ There is manifestation of mutual assent to an exchange is the parties attach materially different meanings to their manifestations and
· Neither party knows or has reason to know the meaning attached by the other party; or
· Each party know or has reason to know the meaning attached by the other
§ The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if
· That party does not know of any different meanings attached by the other, and the other know the meaning attached by the first party; or
· That party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party.
§ Comment B: The need for interpretation
· It is enough that there is a core of common meaning sufficient to determine their performances with reasonable certainty or to give a reasonably certain basis for an appropriate remedy
§ Comment D: Error in expression
· No contract is formed if neither party is at fault or if both arties are equally at fault.
· If one party knows the other’s meaning and manifests assent intending to insist on a different meaning, he ay be guilty of misrepresentation
o § 21 Intention to be Legally Bound:
§ Neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract, but a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract.
§ Comment A: Intent to be legally bound
· The parties are often quite mistaken about particular rules of law, but such mistakes do not necessarily deprive their legal effect
§ Comment C: Social engagement and domestic arrangements
· In some situations the normal understanding is that no legal obligation arises, and some unusual manifestation of intention is necessary to create a contract.
o Social engagements
o Agreements within a family group
o § 22 Mode of Assent: Offer and Acceptance
§ The manifestation of mutual assent to an exchange ordinarily take the form of an offer or proposal by one party followed by an acceptance by the other party or parties.
§ A manifestation of mutual assent may be made even though neither the offer nor acceptance can be identified and even though the moment of formation cannot be determined.
o § 23 Necessity that Manifestations Have Reference to Each Other
§ It is essential to a bargain that each party manifest assent with reference to the manifestations of the other.
o Implied in fact
§ Parties agree to deal
o Quasi-Contract
§ Law requires enforcement when one party may not be aware
o Hotchkiss
§ A contract has nothing to do with the person or individual intent of the parties.
§ If there is a peculiar meaning associate with a term it will only be enforced as such if the parties make it known through express conduct or speech
o Ricketts
§ Duty to read can be exempt where party relies on their attorney, where the attorney is acting only within the scope of his authority.
§ Duty to read if injured and cannot read
o Schillachi
§ One has a duty to read a contract before they sign it, and if they don’t the court is not in a position to absolve them of their own gross negligence
o Morales
§ A person is bound, in the absence of fraud, if the person does not require the document to be read to him
§ If contract is in another language, a party has a duty to either have the document translated or read to him, because he will be bound by the terms of the agreement he signs
o American Building Supply Corp.
§ Illegible print in a consumer agreement is not admissible in court, b
e the parties have intended to conclude a bargain, uncertainty as to the incidental or collateral matters is seldom fatal to the existence of a contract. If the essential terms are so uncertain that there is no basis for deciding whether the agreement has been kept or broken, there is no contract
§ Comment B: Certainty in basis for remedy
· In some cases greater definiteness may be required for specific performance than for award of damages
§ Comment C: Preliminary negotiations
· Incompleteness of terms is one the principal reasons why advertisements and price quotations are ordinarily not interpreted as offers. Similarly, if the parties to negotiations for sale manifested an intention not to be bound until the price is fixed or agreed, the law gives effect to that intention. The more terms the parties leave open, the less likely it is that they have intended to conclude a binding agreement.
§ Comment D: Uncertain time of performance
· Unless otherwise specified, the time for performance is a reasonable amount of time. When the contract calls for successive performances but is indefinite in duration, it is commonly terminable by either party, with or without a requirement of reasonable notice.
§ Comment E: Indefinite Price
· Where they intend to conclude a contract for the sale of goods, however, and the price is not settled, the price is a reasonable price at the time of delivery if: (a) nothing is said as to the price, (b) the price is left to be agreed by the parties and they fail to agree, (c) the price to be fixed in terms of some agreed market or other standard as set or recorded by a third party or agency and it is not so set or recorded.
§ Comment F: Other indefinite terms
· Thus a promise by A to give B employment, even though consideration is paid for it, does not provide a basis for any remedy if neither the character of the employment nor the compensation therefor is stated. In such cases the consideration paid, or its value, can be recovered.
o UCC § 2-305 Open Price Term.
§ (1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if
· (a) nothing is said as to price; or
· (b) the price is left to be agreed by the parties and they fail to agree; or
· (c) the price is to be fixed in terms of some agreed market or other standard as set or recorded by a third person or agency and it is not so set or recorded.
§ (2) A price to be fixed by the seller or by the buyer means a price for him to fix in good faith.
§ (3) When a price left to be fixed otherwise than by agreement of the parties fails to be fixed through fault of one party the other may at his option treat the contract as cancelled or himself fix a reasonable price.
(4) Where, however, the parties intend not to be bound unless the price be fixed or agreed and it is not fixed or agreed there is no contract. In such a case the buyer must return any
