CHOICE OF LAW
Contract RS 1 – A K is a promise or set of promises for the breach of which the law provides a remedy or the performance of which the law in some way recognizes as a duty [to keep].
C/L or UCC
The UCC will apply to contracts for the sale of Goods.
The common law will apply to contracts for the sale of services but goods when the UCC is silent.
Goods – Goods are things that are moveable at the time of the identification of the contract, not to include the monies to be paid, securities, and things in action (intangible rights). Goods also include: timber, crops, and the unborn young of animals.
*If the contract is a mixture of goods and services, we will apply the “predominate factor” or “bone break” test, to determine which predominates, goods or services.
*A minority of jurisdictions will attempt to sever the contract and apply the UCC to the portion dealing with goods, and common law for services.
Offer RS 24 – An offer is a manifestation of a willingness to enter into a bargain so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. The objective theory of K measures intent by what a reasonably prudent person would believe the offeror’s/offeree’s true manifested intent to be.
Offer Still Open?
Duration (the life of the offer for power of acceptance) – if not an option contract, an offer will remain open for a reasonable time, and is freely revocable by the offeror anytime prior to acceptance by the offeree.
Direct Revocation RS 42 – An offeree’s power of acceptance is terminated when the offeree receives from the offeror a manifestation of an intent not to enter into the proposed contract.
Indirect Revocation RS 43 – An offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect from a reliable 3rd party. (parking lot/building)
Options – Generally, an offer is freely revocable even when the offeror has agreed to keep it open for a fixed period. However, where a party has paid consideration to keep an offer open for a fixed period, an option contract is created and the offeror may not revoke the offer during that period. Nor is the offeree’s power of acceptance terminated by a rejection and/or counteroffer unless the offeror has detrimentally relied on an unequivocal rejection prior to the offeree’s acceptance before expiration of the option period. An option contract is irrevocable by the offeror for the stated time, survives the death of either party, and is transferable.
Paid Consideration – a dollar will suffice to create the option.
Promissory Estoppel Based Option RS 87(2) – An enforceable option contract is formed when it is reasonably foreseeable that the offeree would rely on the offeror’s promise, and the offeree does in fact justifiably rely to his detriment. The offeree’s reliance and sometimes expectancy interests are protected. This applies to both bilateral and unilateral contracts. The detrimental reliance is a substitute for consideration. (A general contractor/subcontractor relationship, here, preparation is enough.)
Unilateral Contract RS 45 – Under a unilateral contract, the offeror is bargaining for the offeree’s return performance. An irrevocable unilateral option contract is created when the offeree commences performance, thus assuring the offeree a reasonable time to complete the contract. The remedy for the offeror’s breach is expectancy. The contract is accepted and formed only when performance is complete and the offeree may withdraw at any time prior to completion and cannot be sued for breach.
UCC 2-205 Firm Offer – The UCC allows an option contract without consideration where there is a signed writing by a merchant to keep an offer open to buy or sell goods for a stated time, not to exceed 3 months. The merchant may not withdraw this offer during the stated time. After the 3 months the offer may remain open, but the merchant may now withdraw.
Bids/request for bids – A bid is an offer. A request for bids is a request for offers.
UCC 2-104 Merchant – Person who deals in goods of the kind or otherwise by occupation having or holding himself out as having skill to deal with goods involved in the transaction or to whom such skill is attributed by employment as agent/broker.
Acceptance RS 50 – Acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offeror. The objective theory of intent to K applies.
*Acceptance by performance – requires at least part of what the offer requests be performed or tendered and includes acceptance by performance (as a return promise).
*Acceptance by a promise – requires that the offeree complete every act essential to the making of the promise.
Ambiguity of Offer – Both the UCC and the C/L provide that if the terms of an offer are ambiguous as to the method of acceptance, the law will interpret the offer in the light that is most favorable to the offeree. Put another way, the law will resolve ambiguity against the party who drafted the offer.
Choice by Offeree RS 62 – Where the offeror gives the offeree a choice between promising to perform or commencement of performance, than either mode of acceptance by the offeree will form a bilateral contract.
ther party is innocent (doesn’t know,) then court will use equity to determine what is equitable to both parties.
Duress-if a party is coerced (improper threat sufficient to induce assent) into a K, the K is voidable.
Undue influence-a combination of the victim’s weakness and the other party’s conscience taking advantage of that condition is sufficient to provide a defense to the enforcement of the K.
Fraud/misrepresentation-A K entered into by the fraudulent inducement or material misrepresentation to another party.
Fraudulent inducement-party is induced by a misrepresentation
Fraudulent infactum-tampering of a document to get party to sign something they did not agree to.
These K’s are voidable, and can be rescinded based on fraud, or defend a suit by P for breach, using this defense.
Illegal K – K that is illegal is not enforceable. If K is legal (aerosol cheese case) but contrary to public policy, the court will not enforce it. Tell court “these guys are just as bad as we are.”
Statute of Frauds – A contract that is within the statute of frauds is barred if not in writing. Statute of frauds includes: (MY LEGS)
1) A promise in consideration of MARRIAGE.
2) Contracts not performed in 1 YEAR.
3) Interest in LAND.
5) Sale of GOODS $500+
6) SURETY agreements.
* Must indicate parties
* Signature of defendant is the only one needed
* Have to state a quantity
* $500 or above. * Mixture of goods and services (if services predominate don’t apply SOF)
* Between merchants use written confirmation. Only sender needs to have sent signed confirmation. Unless other party gives a written notice of objection within 10 days.
Mutual mistake-Where a mistake of both parties has occurred about a basic assumption underlying the K at the time the K was made, where the mistake has a material affect on the agreed exchange of performances, the K is voidable by the adversely affected party unless he bears the risk of the mistake.
Unilateral mistake-Where a mistake is by one party about the basic assumption underlying the K at the time the K was made, where the mistake has a material affect on the agreed exchange of