This is brief recap of the general problem in the First Restatement that I pointed out in class. The triggering fact, which identifies the law that applies to a transaction, is generally itself a legal fact. In determining that fact one that must therefore presume some background law. This is clearly a problem with the validity of contracts. The law of the place of contracting determines a would-be contract's validity, but the place of contracting is itself a legal question.
The same problem arises concerning the place of the harm for torts. What is a (compensable) harm is a legal question. Imagine that a certain form of psychological harm is not compensable under the law of New York but is under the law of Pennsylvania. If the plaintiff suffers the psychological harm in Pennsylvania and a later physical harm in New York, by New York lights the place of the harm is New York and by Pennsylvania lights the place of the harm is Pennsylvania.
Here the First Restatement simply relies on the common law of torts. The new-fangled Pennsylvania harm will be recognized as compensable only if the first harm recognized under the common law occurred in that state. Since that isn't true here, New York law on the measure of damages will apply.
The same bootstrapping problem occurs with respect to whether property is a movable or an immovable. Intestate succession with respect to a movable is determined by the law of the domicile of the decedent. For an immovable it is determined by the law of the situs. But what if under forum law something is a fixure and so an immovable, whereas under the law of the situs it is a movable? Here the First Restatement solves the bootstrapping problem by relying on the law of the situs. Its law determines the character of the property at issue.
Finally there is domicile. Domicile determines many choice-of-law questions under the First Restatement, but it too is a legal issue. When spelling out what domicile is, the First Restatement relies upon the common law. But what if some state's view about domicile differs from the common law? Here the First Restatement allows the forum to use its own law on what counts as domicile.
It is an interesting question what the bookstrapping problem tells us about the how the First Restatement views choice-of-law questions, but I'll leave that for later.