U.C.C v. common law
U.C.C. applies to only “sale of goods” while common law applies to all other transactions, such as performance of services
rule of predominance
“primary purpose” of contract; helps determine whether to apply U.C.C. or common law
What do you need for the formation of the contract
“The formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.”
What is mutual assent?
An offer by one party followed by an acceptance by another party, showing a present commitment to enter into the agreement; HOWEVER mutual assent can still be established even wo offer and acceptance and even though moment of formation cannot be determined (Restatement)
What is an offer?
“the manifestation of the willingness to enter into a bargain, so made as to justify another person in understanding that his assent to the bargain is invited and will conclude it”–> definite and complete enough; MUST express objective manifestation of intent (Lucy case v. Pepsico case)
What is an acceptance of the offer?
“manifestation of assent to the terms thereof made by the offer in a manner invited or required by the offeror”; “requires that at least part of what the offer requests be performed or tendered and includes acceptance by performance”; “acceptance by a promise requires that the offerree complete every act essential to the making of the promise.”
Does it matter if the things that are exchanges are considered or of equal value?
NO
Certainty rule
even if an offer is made, it cannot be accepted until terms of contract are reasonably certain, which have to include a “basis for existence of a breach and for giving an appropriate remedy”; If one of more terms are open/uncertain, this may indicate that the “manifestation of intention” is not to make an “offer” or “acceptance”
What are the terms for certainty?
Q-TPPPS (Quantity, Time for performance, parties, price (price quote NO), place for performance, and subject matter; QPPS essential !!
What is the general rule for special offers?
Newspaper advertisements, circulars and price quotes are not offers (Pepsico case); “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” (Restatement)
When can a special offer be considered an offer?
If a reasonable person would find the advertisement serious and that the offer was not made in “jest” –> objective reasonableness; certainty of terms (Leftkowitz case– detailed and specific); induces performance and promises for/offers award (Carlil case)
When does a letter of intent constitute a contract?
If final documentation is simply to memorialize or capture terms of the letter of intent (Restatement); “circumstances should show the agreements are preliminary negotiations”; letter of intent has to be completed (certainty of terms) and signed (Diesel case)
What are requests for bids?
In large-scale construction projects, “when a general contractor seeks bids from subcontractors, this request is an invitation for offers, and the subcontractors’ bids are offers”.
What is the manner of acceptance required for the formation of a contract?
Because the offeror is the master of the offer, an acceptance must strictly comply with the terms of the offer, including any prescribed manner of acceptance (Restatement). i.e. Kuzmeskus case
What does the old common law v. the Restatement 2d say about the presumption of a bilateral contract?
That under old common law rule – YES; however, under Restatement – NO (“in case of doubt, an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering performance, as the offeree chooses.”)
What if nothing is stated for the manner of acceptance, or the offeror only suggests a preferred method?
acceptance must be by reasonable means
What if the offerree is silent when offered?
Generally not an offer; his silence and inaction operate as an acceptance only in specific circumstances (Restatement)
How can the power of acceptance be terminated?
- rejection by offeree
- counter-offer by offeree
- lapse of time
- revocation by the offeror
- death/incapacity of offeror/offerree
When are offers irrevocable?
bilateral contract – UCC “firm offer” v. common law “option contract”; unilateral contract – an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it (Restatement)
What is the UCC firm offer?
An offer by a merchant to buy or sell goods that contains assurances that it will be held open in signed writing is not revocable and if the assurances are on a form supplied by the offeree, the assurances are separately signed by the offeror.
What is the mailbox rule?
“That acceptance is operative and completes the manifestation of mutual assent as soon as put out of the offeree’s possesesion” without regard to whether it ever reaches the offeror; must address and stamp mail for proper acceptance of offer
Under the mailbox rule, when is a rejection or counter-offer valid?
rejection and counter-offer by mail are not effective until it is received by the offeror; acceptance creates a contract only if received before the rejection.
Is an attempt to revoke acceptance by an overtaking communication effective? (Mailbox Rule)
ineffective, even though the revocation is received before the acceptance is received.
What is the rule for electronic transactions?
If you have a medium of substantially instantaneous 2-way communication, mailbox rule does not apply (i.e. email, text)
