LAW AND PUBLIC POLICY

• Common law


  Applies to goods = tangible, movable property
• UCC (Uniform Commercial Code)


  Applies to goods = tangible, movable property
• Quasi-Contract

  (1) a party confers a benefit on another; (2) the other accepts and retains the benefit; and (3) fairness requires that the party pay the reasonable market value for it
• Promissory Estoppel


  (1) a party makes a promise that they know or should know another will rely on; and (2) the other party reasonably relies on the promise to their detriment
• Requirements of an Offer

  • Present Intent to Contract
  • Sufficiently Definite Terms
  • Communicated to offeree
• Common law: Offer


  Must state all essential terms
• UCC: Offer


  Need only (1) indicate intent to contract, and (2) provide a reasonable basis for enforcing a contract (using agreed terms and "gap filling" rules)
• Advertisements


  Ads are not offers unless they specify limited quantities or words that limit potential liability (e.g., "while supplies last," "first come, first serve")
• Rewards


  Offers for unilateral contracts that can be accepted only by performing. Person must know about reward before beginning or completing performance (depending on the state)
• Auctions


  Bids are offers. Seller can withdraw item without accepting bid, unless auction is "without reserve" (to highest bidder) (if so bidders must be given reasonable time to bid)
• Bids


  Bids are offers that can be withdrawn before acceptance. Bidding rules can alter the ability to make or accept offers (e.g., by promising contract to lowest bidder)
• Termination of Offer


  • (1) terms of offer; (2) lapse of reasonable time; (3) revocation; (4) rejection; (5) death or insanity of a party; (6) destruction of subject of offer; (7) intervening illegality
• Revocation


  Offers can be revoked at any time, except for: Option contracts, Offers for unilateral contracts, Promissory estoppel, "Firm offers" for goods (UCC), Revocation is effective when received, except for offers made to public (effective when sent by same means)
• Rejection


  Effective when received. Rejection may not terminate an offer with an option contract (varies by state).
• Requirements for Acceptance


  • Present intent to contract
  • Acceptance matches terms of the offer
  • Communication of acceptance to the offeror
• Common Law: Acceptance


  Must mirror the material terms in the offer, or it is a counteroffer
• UCC: Acceptance


  A "definite expression of acceptance" is an acceptance, even if acceptance form includes different or additional terms in preprinted language
• Unilateral Contract


  Can only accept by performing
• Bilateral Contract


  Acceptance must be by method and time specified in offer. If not specified, can accept by (1) reasonable means of communication (effective when sent); or (2) unreasonable means of communication (effective when received)
• Acceptance by Silence


  Silence cannot be acceptance, except where: (1) customary trade practice; (2) prior dealings between parties; (3) offeree indicates silence means acceptance; or (4) offeree accepts performance knowing what's expected in return
• Acceptance by Writing


  Only required where parties' actions indicate intent to be bound only when reduced to writing
• Accepting Offers Requesting Prompt Shipment of Goods

  Can accept by (1) promptly shipping goods or (2) promptly promising to ship goods. Prompt shipment of non-conforming goods without notifying offeror is acceptance of offer and breach of contract, but is a counteroffer if shipper notifies offeror of non-conforming goods within a reasonable time ("accommodation")
• Who can accept?


  Only person to whom offer is made
• Consideration


  Each party must receive consideration (i.e., a bargained-for exchange of "legal value": (1) agreeing to do something you don't already have a legal obligation to do, or (2) agreeing to refrain from doing something you have the legal right to do)
• Cancellation termination clauses


  Consideration only if they require notice or restrict time or reasons for a party to cancel
• "Output," "requirement," and "exclusive dealing" contracts


  Law imposes duty to act reasonably and in good faith
• Preexisting duties & Past Consideration


  Are not consideration
• Common Law: Modified contract

  Requires new consideration for all parties
• UCC: Modified contract


  Does not require new consideration
• Unliquidated debt


  Disputed debt
• Liquidated debt


  Undisputed debt
• Exceptions where consideration is not required

  • Firm offers (UCC)
  • Modifications to contracts for goods (UCC)
  • Promissory estoppel
• Innocent Misrepresentation


  • False assertion of fact (false statement; active concealment; or failure to disclose facts where [1] person gives partial information that is misleading, [2] parties have a relationship of trust and confidence, or [3] person has information not readily available to others)
  • The false assertion was material
  • The other party reasonably relied on false assertion
• Fraud


  • False assertion of fact (see above) that was fraudulent (knowingly false and intended to deceive)
  • Other party reasonably relied on the false assertion to enter the contract
• Mutual Mistake


  • Both parties are mistaken about a material fact
  • The adversely affected person does not bear the risk of mistake (not "as is," person not knowingly ignorant)
• Unilateral Mistake


  • One person is mistaken about a material fact
  • The person does not bear risk of mistake (above)
  • Other person knew/had reason to know of the mistake
• Duress


  • A wrongful threat or act that coerces a person to contract
  • The person has no reasonable alternative but to contract
• Undue Influence


  Unfair persuasion (grossly unfair terms or unusual circumstances) by a person in a relationship of trust and confidence or who dominates a vulnerable person
• Ratification


  Non-consenting parties can ratify contracts by (1) unreasonably delaying in rescinding; (2) continuing to perform contract; or (3) accepting benefits under contract
• Types of illegal contracts


  • Agreements to perform illegal acts (crimes, torts)
  • Agreements prohibited by law (regulatory statutes that are not purely revenue-raising)
  • Agreements that are contrary to public policy
  • Exculpatory clauses (relieve liability for wrongdoing, e.g., negligence, recklessness, willful misconduct)
  • Agreements in restraint of trade (non-compete agreements for an unreasonable time, geography, and/or scope of prohibited activities)