Cohen v. Cowles Media: Moral and ethical obligation alone does not create a contract. Not every promise is a K. The lack of belief by either party that they had entered into a legally binding K is why this is not a K.
The Enforcement of Contracts: Introduction to Remedies
Most Ks are governed by rules and principles of common law (when UCC does not apply); there are some areas in which legislatures have enacted statutory rules for Ks in general or particular types of Ks
Uniform state commercial laws were desirable b/c variations (1) created confusion and uncertainty in interstate transactions; and (2) impeded interstate commerce
Uniform model statutes were drafted and recommended to state legislatures; first model law was enacted by many state legislature and needed updating, which led to promulgation of the UCC (actual law) in the ‘50s
UCC Article 2
Applies to sale of goods but not services (some transactions include both)
Where UCC does not apply, state’s common law of contracts would apply (or common law of torts). Statutory law and UCC are mandatory rules; common law rules are default rules
Pass v. Shelby
UCC would not apply if K was primarily for services rather than goods (contract for sale of goods would protect warranty)
Gravaman test – looks to portion of transaction upon which the complaint is based. (Problem with gravaman test the case will be the same every time; P will win b/c he can point to faulty part of transaction)
Predominant purpose test – looks at the transaction as a whole to determine whether the predominant purpose of the transaction was the provision of services or the sale of goods
In this case the court found that the predominant purpose test was better (as have most courts).
Custom Communications Engineering, Inc. v. E.F. Johnson Co.
Issue: 4-year statute of limitations applies to this dealership agreement b/c it falls under the UCC. If not, the 6-year statute of limitations under common law would apply.
Uses predominant purpose test in deciding whether K deals w/ the sale of goods or services.
Gatekeeping function of UCC
Courts can strategically use UCC to determine whether case will go forward (does it merit a trial?). Increases court system efficiency, saves time and resources.
Some rules become so fact-fact-specific in their application that they give judge ultimate discretion in what goes forward
II.Contractual Assent and the Objective Test
A.Objective Standard for Determining Assent
Ks are formed by mutual consent; both parties must intend to enter the K and agree on its terms. Legal assent is determined by apparent intent shown by overt acts and words (obj. test), rather than subjective state of mind.
Economic efficiency is achieved by using the objective test (allows for reasonable reliance). You discourage people from entering contracts if they cannot rely on outward manifestations.
Toward the end of the 19th century, the objective standard became more widely used (along with the formalist classical conception of contract law). As classicism passed its apex, more flexibility was allowed into the system to reflect how people act and gives effect to reasonable expectations
Kabil Development Corp. v. Mignot: Subjective evidence is admissible as support for objective test of K (testimony re state of mind is acceptable)