Contract Formation Flashcards
The issue is whether UCC or Common Law Govern?
A contract is a legally enforceable agreement. UCC contracts covers the sale of goods for a price. UCC 2-106 A “sale” consists in the passing of title from the seller to the buyer for a price …” UCC 2-106 “Goods” means all things movable, tangible and identifiable at the time of contract. Does not included money by which the price is to be paid. “Goods” also includes the unborn young animals and growing crops.” “UCC may apply to contracts involving both services and goods. UCC applicability for these hybrid sales and services contracts is determined by analyzing the predominant purpose of the agreement.” (1) Amount of labor; (2) Service w/ good incidentally involved; (3) Goods w/ service incidentally involved; (4) terms of the contract. Software is a good. Common law contracts govern services and all other forms of exchange. [Here, therefore, because, conclude]
The issue is whether a contract was formed.
“A legally enforceable contract requires a manifestation of mutual assent which includes an offer and acceptance. It must also have consideration. The offer must be both definite and certain. Definiteness is the unequivocal intent to be bound. “An illusory promise appears to be a promise but upon closer examination is not. For example, when a performance is entirely optional.” An illusory promise does not have definiteness. Certainty is the terms are such that a third part y can determine both breach and remedy. Consideration is the bargained for exchange of something of value. “A promise to do something, (or refrain from doing something) that the promisor is already obligated to do, (or not to do) does not constitute consideration. This is considered a pre-existing duty. The offer creates the power of acceptance. An offer is accepted, if the mirror image of the offer, and in accordance with any requirements of acceptance made by the offeror. The offer may be accepted by oral/written acceptance, silence, or performance. The offer can be terminated by counter-offer, rejection, revocation or lapse of time.
The issue is whether this is a Firm Offer under the UCC or and option contract or firm offer under Common Law?
UCC Section 2-205: An offer by a merchant to buy or sell goods in a signed writing by both parties, stating the offer is held open is not revocable for lack of consideration, if the time does not exceed 90 days.
Under common law the options contract or firm offer, must be in writing, signed by the offerer, and recite a consideration, be a fair exchange, and completed in a reasonable time. In common law, in exchange for something the offeror promises to keep the offer open.
Whether a contract is formed under UCC?
Under UCC 2-204 “(1)A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.
(2)An agreement sufficient even though the moment of its making is undetermined. (3)Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy"
The issue is whether either party can make an equitable claim?
“Promissory estoppel allows recovery even though the traditional markers of contract liability, consideration and mutual assent, are lacking. Under promissory estoppel, reasonable and foreseeable reliance on a promise constitutes the basis for liability.
Promissory Estopple:
1.There must be a promise;
2.The promisor should reasonably expect the promisee to either act or refrain from acting in reliance on the promise;
3.The promisee must in fact act or refrain from acting in reliance on the promise, and not for some unrelated reason; and
4.Injustice can only be avoided by enforcing the promise, in whole or part.”
Unjust enrichment does not require a promise. Instead, liability is based on one party rendering a benefit in circumstances where it would be unjust for the other party to retain the benefit without paying for it.”
Unjust enrichment:
A party is liable in unjust enrichment
1. receive a benefit in circumstances where it is
2. unfair for her to retain it without compensating the person who provided the benefit.
3. Equity will not allow one person to be unjustly enriched at another person’s expense.
The issue is whether the Statute of Fraud applies and makes the contract invalid?
“Once you know that a particular agreement falls within the Statute of Frauds, you must determine whether a writing exists that satisfies the statute.” The writing must:
(a)reasonably identifies the subject matter of the contract,
(b)is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and
(c)states with reasonable certainty the essential terms of the unperformed promises in the contract.”
The One-Year Provision
Restatement (2d) § 130(1) provides: “Where any promise in a contract cannot be fully performed within a year from the time the contract is made, all promises in the contract are within the Statute of Frauds until one party to the contract completes his performance.”
Exception for Statute of Frauds:
“1.Reliance
Reliance can substitute for consideration in contract formation or even substitute for the contract itself. Legal rules ought not to result in injustice. Detrimental reliance can substitute for a signed writing in the context of the Statute of Frauds.”
2. Admit to the court that the contract exist.
Whether this is a UCC Statute of Fraud Case?
UCC 2-201 (1) “A contract for the sale of goods for the price of $500 or more is not enforceable unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought.
The contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.
(2)Between merchants if within a reasonable time a writing in confirmation of the contract is received, and no written objection to its contents is given within 10 days after it is received.
(a)if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller’s business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or
(b)if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made,
Whether there is a valid modification
“A promise modifying a duty under a contract not fully performed on either side is binding
(a)if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or
(b)to the extent provided by statute; or
(c)to the extent that justice requires enforcement in view of material change of position in reliance on the promise”
