Spring 2016- Fenster
UCC v. CL
When UCC Applies
Goods (see §§ 2-105)
Hybrid goods and services: Most states use a predominant purpose or factor test.
Mainly goods/services merely incidental [U.C.C.] Mainly services/goods merely incidental [CL]
When UCC Applies, but doesn’t cover the issue….
UCC 1-103: “Unless displaced by the particular provisions of the UCC,” the principles of law and equity (i.e., common law) supplement the UCC’s provisions.”
Transactions in goods:
START with the UCC
But if the UCC does not address the point in issue we DEFAULT BACK to the common law
The UCC is therefore not an entirely separate and distinctive body of law!
Determined on an objective standard where both a reasonable person in the position of each party believes, based on the other person’s words and conduct, a present commitment to form a contract—-Need both manifested intent and actual belief by the other party.
§ 17 Requirement of a Bargain
(1) the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.
§ 22 Mode of Assent: Offer and Acceptance
(1) The manifestation of mutual assent to an exchange ordinarily takes the form of an offer or proposal by one party followed by an acceptance by the other party or parties.
(2) A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined.
§ 50 Acceptance of Offer Defined; Acceptance by Performance; Acceptance by Promise
(1) 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 offer.
(2) Acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise.
(3) Acceptance by a promise requires that the offeree complete every act essential to the making of the promise.
§ 59 Purported Acceptance Which Adds Qualifications
A reply to an offer which purports to accept it but is conditional on the offeror's assent to terms additional to or different from those offered is not an acceptance but is a counter-offer.
Certainty of Terms
Requirement that parties set out in reasonable certainty what they are agreeing to (quantity, time for performance, parties to contract, price, place of performance, subject matter)
§ 33 Certainty
(1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.
(2) The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.
(3) The fact that one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.
Special Offer Rules
Generally, advertisements, are not offers but rather invitations for offers due to lack of specific offeree nor specific quantity but could be deemed an offer if it ruled to be a limited offering with certain terms (Pepsico- reasonable person must view the ad and think it was a serious offer)
Generally, price quotes are not offers but rather invitations for offers but could be deemed an offer if the quotes include a manifestation of a present offer—words such as “for immediate acceptance”
Generally, general contractor seeking bids from subs is an invitation for offers while a sub’s bid is considered to be an offer;
Letters of Intent
Letters of intent may or may not be binding must make an inquiry into the intentions of the parties
§ 26 Preliminary Negotiations
A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.
§ 27 Existence of Contract Where Written Memorial Is Contemplated
Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations.
Manner of Acceptance
Offeror is the master of the offer and therefore has the right to dictate the manner of acceptance. However, any reasonable means may be used to accept offer unless the offer clearly and unambiguously indicated that the designated manner of assent i
ctive intends to accept the offer.
(c) Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept.
(2) An offeree who does any act inconsistent with the offeror's ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable. But if the act is wrongful as against the offeror it is an acceptance only if ratified by him.
Options contracts make a bilateral contract irrevocable- need consideration
§ 37 Termination of Power of Acceptance Under Option Contract
Notwithstanding §§ 38-49, the power of acceptance under an option contract is not terminated by rejection or counter-offer, by revocation, or by death or incapacity of the offeror, unless the requirements are met for the discharge of a contractual duty.
§ 45 Option Contract Created by Part Performance or Tender
Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it.
(2) The offeror's duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer.
§ 87 Option Contract
(1) An offer is binding as an option contract if it
(a) is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or
(b) is made irrevocable by statute.
(2) An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.