Acceptance

Meaning of acceptance:
declaration of intention

Conformity of mutual

Manner of acceptance Effectiveness of acceptance Pre-contractual liabilities

Conformity of mutual declaration of intention

Contract Formed upon Effectiveness of Acceptance

PRC CL Article 13: A contract is concluded by the exchange of an offer and an acceptance. PRC CL Article 25:A contract is formed once the acceptance becomes effective.

Conformity of mutual declaration of intention

If the parties agree on all the essential elements of the contract but have expressed no intent as to the non-essential elements, the contract shall be presumed to be constituted. In the absence of an agreement on the above-mentioned nonessential elements, the court shall decide them according to the nature of the affair.(RCC153II)

Indeterminate Terms; Supplementary Agreement

PRC CL Article 61

If a term such as quality, price or remuneration, or place of performance etc. was not prescribed or clearly prescribed, after the contract has taken effect, the parties may supplement it through agreement; if the parties fail to reach a supplementary agreement, such term shall be determined in accordance with the relevant provisions of the contract or in accordance with the relevant usage.

Gap Filling

PRC CL Article 62

Where a relevant term of the contract was not clearly prescribed, and cannot be determined in accordance with Article 61 hereof, one of the following provisions applies:

(i) If quality requirement was not clearly prescribed, performance shall be in accordance with the state standard or industry standard; absent any state or industry standard, performance shall be in accordance with the customary standard or any particular standard consistent with the purpose of the contract; (ii) If price or remuneration was not clearly prescribed, performance shall be in accordance with the prevailing market price at the place of performance at the time the contract was concluded, and if adoption of a price mandated by the government or based on government issued pricing guidelines is required by law, such requirement applies;

Gap Filling

(iii) Where the place of performance was not clearly prescribed, if the obligation is payment of money, performance shall be at the place where the payee is located; if the obligation is delivery of immovable property, performance shall be at the place where the immovable property is located; for any other subject matter, performance shall be at the place where the obligor is located; (iv) If the time of performance was not clearly prescribed, the obligor may perform, and the obligee may require performance, at any time, provided that the other party shall be given the time required for preparation; (v) If the method of performance was not clearly prescribed, performance shall be rendered in a manner which is conducive to realizing the purpose of the contract; (vi) If the party responsible for the expenses of performance was not clearly prescribed, the obligor shall bear the expenses.

Effectiveness of Acceptance

Express acceptance

Notice of acceptance
When effect

Oral offer

An acceptance is not effective if the indication of assent does not reach the offeror within the time he has fixed or, if no time is fixed, within a reasonable time, due account being taken of the circumstances of the transaction, including the rapidity of the means of communication employed by the offeror. (CISG art 18 para2) An oral offer must be accepted immediately unless the circumstances indicate otherwise. (CISG art 18 para2)

A notice of acceptance becomes effective once it reaches the offeror. (PRC CL Article 26) An acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror. (CISG art 18 para2)

Effectiveness of Acceptance

Implied acceptance

Performance of an act

Where the acceptance does not require notification, it becomes effective once an act of acceptance is performed in accordance with the relevant usage or as required by the offer. (PRC CL art 26) A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance. Silence or inactivity does not in itself amount to acceptance. (CISG art 18 para1) If, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods or payment of the price, without notice to the offeror, the acceptance is effective at the moment the act is performed, providing that the act is performed within the period of time laid down in the preceding paragraph. (CISG art 18 para3)

Arrival rule

Binding offer Notice of acceptance

Ineffective offer

Arrival rule

Binding offer Notice of acceptance

Contract Formed

Dispatch Binding offer rule

Contract Formed Notice of acceptance

Dispatch Binding offer rule

Contract Formed
Notice of acceptance

Offer arrived

Expired day of Acceptability

UNDROIT Principles

Article 2.1.14 (Contract with terms deliberately left open)

(1) If the parties intend to conclude a contract, the fact that they intentionally leave a term to be agreed upon in further negotiations or to be determined by a third person does not prevent a contract from coming into existence. (2) The existence of the contract is not affected by the fact that subsequently

(a) the parties reach no agreement on the term; or (b) the third person does not determine the term, provided that there is an alternative means of rendering the term definite that is reasonable in the circumstances, having regard to the intention of the parties.to or continue negotiations when intending not to reach an agreement with the other party.

UNDROIT Principles

Article 2.1.13 (Conclusion of contract dependent on agreement on specific matters or in a particular form)

Where in the course of negotiations one of the parties insists that the contract is not concluded until there is agreement on specific matters or in a particular form, no contract is concluded before agreement is reached on those matters or in that form.

Counter offer

Late acceptance

An acceptance which arrives late, except under the circumstances in the preceding article, shall be deemed to be a new offer. (ROC Civil Code art 160) An acceptance dispatched by the offeree after expiration of the period for acceptance constitutes a new offer, unless the offeror timely advises the offeree that the acceptance is valid. (PRC CL Article 28)
An acceptance with amplifications, limitations or other alterations shall be deemed to be a refusal of the original offer and the making of a new offer. (ROC Civil Code art 160)

Acceptance with modification

PRC Contract Law

Article 28 Late Acceptance An acceptance dispatched by the offeree after expiration of the period for acceptance constitutes a new offer, unless the offeror timely advises the offeree that the acceptance is valid. Article 29 Delayed Transmission of Acceptance If the offeree dispatched its acceptance within the period for acceptance, and the acceptance, which would otherwise have reached the offeror in due time under normal circumstances, reaches the offeror after expiration of the period for acceptance due to any other reason, the acceptance is valid, unless the offeror timely advises the offeree that the acceptance has been rejected on grounds of the delay. Article 30 Acceptance Containing Material Change The terms of the acceptance shall be identical to those of the offer. A purported acceptance dispatched by the offeree which materially alters the terms of the offer constitutes a new offer. A change in the subject matter, quantity, quality, price or remuneration, time, place and method of performance, liabilities for breach of contract or method of dispute resolution is a material change to the terms of the offer. Article 31 Acceptance Containing Non-material Changes An acceptance containing nonmaterial changes to the terms of the offer is nevertheless valid and the terms thereof prevail as the terms of the contract, unless the offeror timely objects to such changes or the offer indicated that acceptance may not contain any change to the terms thereof.

A study on formation Issue

Plaintiff, a company operating international trade business, sent a facsimile to defendant inquiring the inventory of No. 1703 linen and its price list. Defendant replied the inventory of linen is enough for sale and the price is $15 per meter. Meanwhile 10% down payment should be paid at the time sale is concluded. Afterward, plaintiff sent a mail expressing his willingness to purchase the linen but request the contract of sale should be in writing. A week later, the defendant delivered a written contract drafted by him to plaintiff. Soon after plaintiff received the contract, he changed the price, set forth in the contract, from $15 per meter down to $14.5 per meter and set out an extra stipulation read as time for delivery shall be confirmed by the purchaser (plaintiff) right after the last paragraph. Plaintiff sent the contract with its signature and remitted $7,250 as down payment to defendant.

Defendant prepared the linen for delivery up to 5000 meters within ten days and requested plaintiff by mail for delivery. Plaintiff refused to confirm the delivery time on the account of its insufficient storage space for stocking the linen. Defendant requested the delivery again and informed plaintiff that the linen will be sold to the other purchasers if tender of the linen cannot be accepted. Plaintiff expressed his hope to postpone the delivery for a month. Regardless of plaintiffs request, defendant resold the linen to the other person and returned the down payment to plaintiff. Plaintiff initiated an action for damage arising from nonperformance of the sale of linen. Was the contract formed?

Culpa in Contrahendo

Duty between contractual party

Pre-contractual duty

Duty

Duty of mutual cooperation, explanation, information, notice, assistance, protection, care, confidentiality, or others. Reliance interest: Interest lost or determent suffered

Liabilities:

Contractual duty

Culpa in Contrahendo

Duty

Liability

Duty of performance arising from contract Expectation interest: Interest lost or determent suffered

Post-contractual duty

Duty

Liability

Duty to maintain the effect of performance, a duty to do or refrain from doing after contractual obligation discharged. Issuing a certificate for employment (Taiwan Basic condition Act for Employment art 19 ); issuing a diagnostic certificate (Taiwan Medical Care Act art. 52); nondisclosure of trade secret. Expectation interest: Interest lost or determent suffered

Culpa in Contrahendo

Rudolf von Jhering

Culpa in contrahendo oder Schadensersatz bei nichtigen oder nicht zur Perfektion gelagten Vertragen, Jherings Jahrbucher fur die Dogmatik des Burgerlichen Rechts (1861)
Duty of Good faith before or upon concluding the contract Damage: Reliance Interest

Reason behind Culpa in Contrahendo

Effect of Culpa in Contrahendo

Pre-contractual Liabilities in ROC Civil Code

Instances incurred pre-contractual liabilities

Revocation of declaration of intention due to mistake Agency without authority Impossibility in the conclusion of contract Fail to inform the other party Negotiation in bad faith Disclosure of secret Fail to protect the other party

Pre-contractual Liabilities arising from mistake in ROC Civil Code

Article88 If the expression was acting under a mistake as to the contents of his expression of intent, or had known the situation of affairs, he would not make the expression; he may revoke the expression; provided that the mistake or the ignorance of the affairs was not due to his own fault. If a mistake in respect to the qualification of the other party or the nature of a thing is regarded as essential in trade, it shall be deemed a mistake as to the contents of the expression of intent. Article89 If an expression of intent has been incorrectly transmitted by the person or institution employed for its transmission, it may be revoked under the same conditions as provided in the preceding article. Article90 The right of revocation provided in the preceding two articles would be extinguished after one year from the date of expression. Article91 If a expression of intent is revoked according to Article 88 or Article 89, the expresser is bound to compensate for any injury which the other party or any third party may have sustained by relying upon the validity of the expression, except the injured party knew, or might know, of the ground on which the expression was revocable.

Pre-contractual liability arising from agency without authority in ROC Civil Code

Article 110 If one who has no delegated power to make a juridical act as an agent of another person, he is liable for the injury to the bona fide other party.

Pre-contractual liabilities arising from impossibility in the conclusion of contract in ROC Civil Code

If the prestation of a contract is impossible, it is void. However, if the impossibility can be removed and if the parties, at the time when the contract was constituted, intended to have it performed after the removal of the impossibility, the contract is still valid. (Article 246 para 1) If the contract is subject to a suspenseful condition or to a time of commencement, and if the impossibility has been removed prior to the fulfillment of the condition or the arrival of the time, the contract is valid. (Article 246 para 2)

Pre-contractual liabilities arising from impossibility in the conclusion of contract in ROC Civil Code

When a contract is void on account of the impossibility of the performance, the party who at the time of constituting the contract knew or might know the impossibility is responsible for the injury caused to the other party who, without his own negligence, believed in the validity of the contract. (Article 247 para 1) The provision of the preceding paragraph shall be mutatis mutandis applied if the prestation is partially impossible and the contract is valid in respect to the possible part, or if one of the several prestations subject to a choice is impossible. (Article 247 para 2) The claims for the injury in the preceding two paragraphs shall be extinguished by prescription if not exercised within two years. (Article 247 para 3)

Other Pre-contractual Liabilities in ROC Civil Code

Even though the contract is not constituted, one of the parties is responsible for the damage caused to the other party who without his own negligence believed in the constitution of the contract when he, in order to prepare or negotiate for the contract, has done either of the following:

(1) Hidden in bad faith or dishonestly explained the gravely relevant matter of the contract when the other party inquired. (2) Intentionally or gross negligently disclose the other partys secret known or held by himself which the other party has explicitly expressed to be kept in secret. (3) Any other matter obviously against good faith.

The claim for the injury in the preceding paragraph shall be extinguished if it is not exercised within two years (Article 245-1)

Pre-contractual Liabilities in PRC Contract Law

Article 42

Where in the course of concluding a contract, a party engaged in any of the following conducts, thereby causing loss to the other party, it shall be liable for damages:

Article 43

(i) negotiating in bad faith under the pretext of concluding a contract; (ii) intentionally concealing a material fact relating to the conclusion of the contract or supplying false information; (iii) any other conduct which violates the principle of good faith.

A party may not disclose or improperly use any trade secret which it became aware of in the course of negotiating a contract, regardless of whether a contract is formed. If the party disclosed or improperly used such trade secret, thereby causing loss to the other party, it shall be liable for damages.

UNDROIT Principles of International Commercial Contracts

Negotiations in bad faith

(1) A party is free to negotiate and is not liable for failure to reach an agreement. (2) However, a party who negotiates or breaks off negotiations in bad faith is liable for the losses caused to the other party. (3) It is bad faith, in particular, for a party to enter into or continue negotiations when intending not reach an agreement with the other party. (Article 2.1.15)

UNDROIT Principles of International Commercial Contracts

Duty of confidentiality

Where information is given as confidential by one party in the course of negotiations, the other party is under a duty not to disclose that information or to use it improperly for its own purposes, whether or not a contract is subsequently concluded. Where appropriate, the remedy for breach of that duty may include compensation based on the benefit received by the other party. (Article 2.1.16)

Case for Pre-contractual Duty

X failed to check his houses condition that was burned out one month ago and sold it to Y. In order to buy the house, Y spent money on broker remuneration and transportation cost. Meanwhile, expecting moving into new house, Y sold his old house in comparative low price. What duty did X breach? What right can Y claim? X was working for Y Co. as a computer engineer. Because of a unresolved dispute between them on a raise in salary, Y dismissed the employment with X and refused to issue a certificate for employment. X disclosed Ys trade secret on ongoing invention of a new machine to the public to express his anger at Y. What duty did X and Y breach? What right can Y and X claim?