Governing law
What is covered under Common Law?
What is a contract?
In order for there to be a valid contract there needs to be sufficient offer, acceptance, and consideration.
What does "Intent to be Bound" mean?
You cannot be force into a contract or forced to contract with a party or someone you do not want to.
Contracting is an exercise of personal liberty, no one may be bound by contract in the absence of personal assent.
When is there a sufficient offer?
A statement is an offer when all that is needed for an agreement is acceptance and there is no need for further negotiations. It could be oral without any written record of it and still be legally binding.
What is Battle of the Forms under UCC? What restatement governs Battle of the Forms?
Raised when there are competing forms in offer and acceptance. 2-207(1)
A definite and seasonable expression of acceptance even though it states terms additional to or different from those offered or agreed upon.
What is the UCC and what does it govern?
What is an option contract?
This is an offer PLUS a promise to keep the offer open for a certain period of time.
The promise to hold an offer MUST have its own consideration separate from the consideration that would be given under the contract.
We use an objective manifestation of assent. No one cares what you thought it meant.
What is not an offer?
Ads/Gifts/Dares or Jokes
When do we rely on battle of the forms?
We look to battle of the forms when there are competing forms in an offer and acceptance.
What is a hybrid transaction?
A hybrid transaction combines a sale of goods with the sale of other property or services.
You need to conduct the predominant purpose test to help determine which law should govern.
If the sale is a more significant aspect and the other part of the seller's performance is incidental to the sale, Article 2 governs.
If the sale of goods supports the services, the common law applies.
What is a Unilateral Contract?
This is an exchange of a promise for an act. It is an offer that can only be accepted by beginning or completing of performance.
What actions are considered NOT to be sufficient for an "Intent to be bound?"
Not social promises casual promises or promises that do not entail a legal obligation. § Example: An acceptance of a dinner invitation or promise to clean the house.
Not gift promises because there is no consideration.
What are the different forms of acceptance under Common Law?
Mirror Image Rule: To constitute an acceptance, the response to the offer must correspond EXACTLY with the offer. Any variation of terms in response disqualifies all acceptance.
Last Shot Rule: The terms of the last counteroffer govern. If you dicker back and forth and then there performance, whoever sent the terms last wins.
Mailbox Rule: An acceptance takes effect when sent out of the offeree’s possession, not when the offeror receives it.
What does 2-207(2) require us to consider?
We are in 2-207(2) when there are additional terms. A term is additional if it adds a new matter not covered in the offer.
Between merchants, additional terms become part of the contract UNLESS:
1. Acceptance is limited to its terms only.
2. Terms materially alter the contract. OR
3. Notification of objection to new terms is given within a reasonable time.
What test do we apply to figure out what law governs?
You need to conduct the predominant purpose test to help determine which law should govern.
If the sale is a more significant aspect and the other part of the seller's performance is incidental to the sale, Article 2 governs.
If the sale of goods supports the services, the common law applies.
What is Consideration? What are the types of Consideration we can have?
A promise is not valid and enforceable contractually unless the person making the promise received consideration from the person to whom the promise was in exchange.
Peppercorn Theory: No requirement of adequacy for consideration.
Sham: A consideration that clearly lacks value in comparison to the promise.
Benefit-Detriment Theory: It must be bargained for. Each party must suffer a legal detriment and be exchanged for each other. You BOTH need to do something that the other wants.
Illusory Promises: This is NOT good consideration. A promise is illusory when the promisor retains discretion over their promise. It must be made in good faith.
Can you be bound by a contract that you signed even if you are unaware of the terms?
Yes. One can be bound by a contract he signs even though he may not know the terms of the contract or its proper intentions.
Intent when interpreting a contract doesn't matter, looking at what the clearly expressed language shows.
Can an Ad be an offer?
Most Ads are not offers BUT they can be.They become offers if they are sufficiently definite and leave nothing to negotiation.
If it IS AN OFFER, the advertiser is bound to a recipient of the communication as soon as that recipient signifies assent to its terms.
If it is NOT AN OFFER but merely a solicitation, a recipient makes an offer by responding and the advertiser has the discretion to accept or reject that offer.
What does 2-207(3) require us to consider?
Different terms bring us here. This is the happy place. A term is different if it varies or contradicts something provided in the offer.
If the writings do not establish a contract, conduct that recognizes the existence of establishes the contract. Terms are those established plus whatever the UCC provides.
Knock-Out Rule: Both terms should fall away and be replaced by whatever term the common law would supply in the absence of agreement. o We will only keep the terms that they agreed to and everything else falls.
Things that normally fall: Arbitration Clauses/Limitations on Remedies/ Warranty Exclusions
What is the holding in Princes Cruises v. General Electric?
The UCC does not apply to services, only sale of goods. The contract involved both goods and services, but goods were less important. (Incidental)
The contract was predominantly for services.
What does Modification look like for Common Law vs. UCC?
NOTE: Pre-Existing Duty Rule - An agreement to modify an existing contract is a contract that NEEDS NEW CONSIDERATION separate from the consideration given under the ORIGINAL contract.
For UCC, we dont require consideration for additional or different terms because we want to be able to make changes on the fly. It needs to be made in Good Faith and it cannot materially modify or bring unexpected hardship or surprise.
What was the holding in Ray v. Eurice Bros?
One can be bound by a contract he signs even though he may not know the terms of the contract or its proper intentions.
Intent when interpreting a contract doesn’t matter, looking at what the clearly expressed language shows.
How can you revoke an Offer?
Notice of Revocation: Unless the offer qualifies as an option or as a firm offer, an undertaking to keep it open for a particular time is not binding, therefore the offeror has the power to revoke any time before acceptance.
Expiration of Time: The offeror is entitled to specify the time at which the acceptance must be made. § If no time is listed, it must be accepted within a reasonable time, 3 months.
Death or Mental Disability: An offer lapses automatically if the offeror dies or becomes mentally incapacitated before the offer is accepted.
Counteroffer: This is an offer by the offeree to the offeror, relating to the same matter as the original offer and proposing a different substitute bargain.
What was the holding in Klocek v. Gateway and why?
The additional terms were not enforceable because Klocek did not expressly agree to them. Klocek is not a merchant, so the terms are merely proposals.