formation of contract. offer how to make an effective contract? how to make an effective contract?...

Formation of Formation of Contract Contract

OfferOffer

How to make an effective contract?How to make an effective contract? Relation between offer and “declaration of Relation between offer and “declaration of

intention”intention” Distinction between an offer and an “invitation Distinction between an offer and an “invitation

to make an offer”to make an offer” Binding effect of an offerBinding effect of an offer

What is the binding effect of an offer? What is the What is the binding effect of an offer? What is the differences between an binding effect of an offer differences between an binding effect of an offer and the effect of a contract made by this offer? Can and the effect of a contract made by this offer? Can offeror withdraw or revoke an offer made by him? offeror withdraw or revoke an offer made by him?

When does the binding effect start and extinguish?When does the binding effect start and extinguish?

The manner to make a The manner to make a contractcontract

A contract is mutual assent resulting from A contract is mutual assent resulting from an an exchange of reciprocal declarations of exchange of reciprocal declarations of intentionintention by two or more persons for the by two or more persons for the purpose of creating certain legal effects.purpose of creating certain legal effects.

When the parties have When the parties have reciprocally declared treciprocally declared their concordant intentheir concordant intent, either expressly or im, either expressly or impliedly, a contract shall be constituted.(RCC15pliedly, a contract shall be constituted.(RCC153I)3I)

A contract is concluded by the A contract is concluded by the exchange of an exchange of an offer and an acceptanceoffer and an acceptance.(PCL13).(PCL13)

exchange of reciprocal exchange of reciprocal declarations of intentiondeclarations of intention

An offer and an acceptanceAn offer and an acceptance Offer: Offer:

Express or implied Express or implied declarationsdeclarations of intention of intention Real offer: declarations of intention accompanied with a Real offer: declarations of intention accompanied with a

““thingthing”. ”.

Acceptance: Acceptance: Express or implied Express or implied declarationsdeclarations of intention of intention AccomplishmentAccomplishment of intention: of intention: performanceperformance, , acceptance acceptance

of the other party’s tenderof the other party’s tender

Exchange of offersExchange of offers

Invitation to make an Invitation to make an offeroffer

An invitation to offer is a party's manifestation of intention to invite An invitation to offer is a party's manifestation of intention to invite the other party to make an offer thereto. (PCL art.15I)the other party to make an offer thereto. (PCL art.15I) A delivered price list (PCL15I); A delivered price list (PCL15I); the sending of pricelists is not; deemethe sending of pricelists is not; deeme

d to be an offer.(RCC154II)d to be an offer.(RCC154II) Exposing goods for sale with their selling price shall be deemed to be an oExposing goods for sale with their selling price shall be deemed to be an o

ffer. (RCC154II)ffer. (RCC154II) Announcement of auctionAnnouncement of auction Call for tenderCall for tender ProspectusProspectus Commercial advertisementCommercial advertisement

A commercial advertisement is deemed an offer if its contents A commercial advertisement is deemed an offer if its contents meet the meet the requirementsrequirements of an offerof an offer. (PCL art.15II) . (PCL art.15II)

An offer is a party's An offer is a party's manifestation of intentionmanifestation of intention (or declaration of intention) to (or declaration of intention) to enter into a contract with the other party, which shall comply with the following:enter into a contract with the other party, which shall comply with the following:(i) (i) Its terms are specific and definiteIts terms are specific and definite;;(ii) It indicates that upon acceptance by the offeree, (ii) It indicates that upon acceptance by the offeree, the offeror will be boundthe offeror will be bound thereby. (PCL art.14) thereby. (PCL art.14)

Definition of OfferDefinition of Offer

An offer is a party's manifestation of An offer is a party's manifestation of intention to enter into a contract with the intention to enter into a contract with the other party, which shall comply with the other party, which shall comply with the following:following: (i) Its terms are specific and definite;(i) Its terms are specific and definite; (ii) It indicates that upon acceptance by the (ii) It indicates that upon acceptance by the

offeree, offeree, the offeror will be bound therebythe offeror will be bound thereby. . (PCL art14)(PCL art14) Binding effect of contract, not binding effect offer.Binding effect of contract, not binding effect offer.

When offer effect?When offer effect?

An offer An offer inter presentsinter presents A declaration of intentionA declaration of intention inter presentsinter presents becomes effective at the moment when the per becomes effective at the moment when the per

son to whom it is made son to whom it is made understandsunderstands it well. (RCC art 94) it well. (RCC art 94) An offer to enter into a contract, made during conversation, shall lapse if not immediately An offer to enter into a contract, made during conversation, shall lapse if not immediately

accepted by the offeree. (Japan commercial Code 507)accepted by the offeree. (Japan commercial Code 507) An offer An offer inter absentsinter absents

A declaration of intentionA declaration of intention inter absentsinter absents becomes effective at the moment when the becomes effective at the moment when the notinotification of the expression reaches such other partyfication of the expression reaches such other party, except when the withdrawal of th, except when the withdrawal of the notification previously or simultaneously reaches such other party. (RCC art 95I)e notification previously or simultaneously reaches such other party. (RCC art 95I)

An offerAn offer becomes effective becomes effective when it reaches the offereewhen it reaches the offeree. (PCL art.16I). (PCL art.16I) When a contract is concluded by the exchange of electronic messages, if the recipient of an When a contract is concluded by the exchange of electronic messages, if the recipient of an

electronic message has designated a specific system to receive it, the time when the electronic electronic message has designated a specific system to receive it, the time when the electronic message enters into such specific system is deemed its time of arrival; (PCL art.16II) message enters into such specific system is deemed its time of arrival; (PCL art.16II)

if no specific system has been designated, the time when the electronic message first enters into if no specific system has been designated, the time when the electronic message first enters into any of the recipient's systems is deemed its time of arrival. (PCL art.16II)any of the recipient's systems is deemed its time of arrival. (PCL art.16II)

A declaration of intentionA declaration of intention made to a person at a distance shall be effective from the made to a person at a distance shall be effective from the time time notice of it has reachednotice of it has reached the other party.(PCC97I) the other party.(PCC97I)

Can an offer be withdrawn?Can an offer be withdrawn?

An offer may be withdrawn. An offer may be withdrawn. (PCL17)(PCL17) The notice of withdrawal The notice of withdrawal shall reach the offeree before or at shall reach the offeree before or at

the same time as the offerthe same time as the offer. . (PCL17)(PCL17) If a notice of withdrawing an offer arrives after the arrival of the If a notice of withdrawing an offer arrives after the arrival of the

offer itself, though it should usually arrive before or offer itself, though it should usually arrive before or simultaneously with the arrival of the offer within a reasonable simultaneously with the arrival of the offer within a reasonable time by its transmitting manner, and this might be known to the time by its transmitting manner, and this might be known to the other party, other party, the other party so notified should the other party so notified should notify the offeror immediately of notify the offeror immediately of

such delaysuch delay. (RCC162I). (RCC162I) If such other party delays the notice specified in the preceding If such other party delays the notice specified in the preceding

paragraph, paragraph, the notice of withdrawing the offer shall be the notice of withdrawing the offer shall be deemed to have arrived without delay.deemed to have arrived without delay.(RCC162II)(RCC162II)

withdrawal

Notice of Delay

Ineffective offer

Effective offerOffer on the way to the offeree

Offer on the way to the offeree


withdrawal

Ineffective offer

withdrawal

Effective offer

Offer dispatched Offer arrived

Withdrawal arrived after offer effected

Delayed withdrawal arrived after itshould have arrived

Withdrawal arrived before offer effected

Binding effect of an offer Binding effect of an offer in RCCin RCC

IrrevocabilityIrrevocability (substantive binding power) (substantive binding power) A person who offers to make a contract shall be bound by his A person who offers to make a contract shall be bound by his

offer. (RCC art 154) (German Civil Code 145 and Swiss Civil offer. (RCC art 154) (German Civil Code 145 and Swiss Civil Code)Code)

ExceptionException At the time of offer, the offeror has expressed he will not be bound At the time of offer, the offeror has expressed he will not be bound

by the offer; or by the offer; or it may be presumed from it may be presumed from the circumstancesthe circumstances or or the nature of the nature of

affairsaffairs that he do not intend to be bound by the offer. that he do not intend to be bound by the offer.

AcceptabilityAcceptability Substantive binding power.Substantive binding power. An offer is acceptable if its acceptance by an offeree is An offer is acceptable if its acceptance by an offeree is

suficent to establish a contract.suficent to establish a contract.

Notice of acceptance

Binding offerOffer on the way to the offeree


revocation

Offer dispatched

Offer arrived

Binding offer

revocation


Contract Formed

Expired day of Acceptability

Contract Formed

Irrevocability of an offer in ROC Civil Code

Binding effect of an offer Binding effect of an offer in PCLin PCL

Revocable in principleRevocable in principle An offer may be revoked. An offer may be revoked. The The notice of revocationnotice of revocation shall reach the offeree shall reach the offeree

before it has dispatched a notice of acceptance. before it has dispatched a notice of acceptance. (art. 18) (art. 18)

Exception of revocabilityException of revocability

An offer may not be revoked:An offer may not be revoked: if it if it expressly indicatesexpressly indicates, whether by stating a fixed , whether by stating a fixed

time for acceptance or otherwise, that it is time for acceptance or otherwise, that it is irrevocable;irrevocable;

if if the offeree has reason to regard the offer as the offeree has reason to regard the offer as irrevocableirrevocable, and , and has undertaken preparation for has undertaken preparation for performanceperformance. (art. 19). (art. 19)

CISG art.16CISG art.16

(1) Until a contract is concluded (1) Until a contract is concluded an offer may be an offer may be revokedrevoked if the revocation reaches the offeree before he if the revocation reaches the offeree before he has dispatched an acceptance. has dispatched an acceptance.

(2) However, an offer cannot be revoked: (2) However, an offer cannot be revoked:

(a) if it indicates, whether by stating a fixed time for (a) if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or acceptance or otherwise, that it is irrevocable; or

(b) if it was reasonable for the offeree to rely on the (b) if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in offer as being irrevocable and the offeree has acted in reliance on the offer.reliance on the offer.


Revocable offerOffer on the way to the offeree



revocation

Ineffective offer

Offer dispatched Offer

arrived

Binding offer (irrevocable)



revocation


Contract Formed

Expired day of Acceptability

revocation

Contract Formed

Revocation of an offer in PRC Contract Law

Binding effect of an offer Binding effect of an offer in JCCin JCC

IrrevocabilityIrrevocability An offer specifying a period of acceptanceAn offer specifying a period of acceptance

An offer specifying a period of time for acceptance An offer specifying a period of time for acceptance may not may not be revokedbe revoked. .(JCC521I). .(JCC521I)

If the offeror does not receive notice of acceptance within If the offeror does not receive notice of acceptance within the period specified, the offer shall lapse.(JCC521II)the period specified, the offer shall lapse.(JCC521II)

An offer without specifying a period of acceptance An offer without specifying a period of acceptance An offer which has been made to a person at a distance An offer which has been made to a person at a distance

without a time limit for acceptance without a time limit for acceptance may not be revokedmay not be revoked before the expiration of such time as is reasonably before the expiration of such time as is reasonably necessary for the offeror to receive notice of acceptance.necessary for the offeror to receive notice of acceptance.((JCC524)JCC524)

AcceptabilityAcceptability


Binding offer(irrevocable)



Offer dispatched

Offer arrived



revocation

Expiration of a specific period for acceptance

Contract Formed

Revocation of an offer in Japan Civil Code

Expired day for reasonably receiving notice of acceptance

Extinction of an offer (Extinction of an offer (An offer is An offer is extinguished in any of the following extinguished in any of the following circumstances)circumstances)

TerminationTermination by offereeby offeree

The notice of The notice of rejectionrejection reachesreaches the offeror (PCL art 20); the offeror (PCL art 20); An offer ceases to be bindinAn offer ceases to be binding if it is g if it is refusedrefused.(RCC art.155).(RCC art.155)

The offeree The offeree makes a material changemakes a material change to the terms of the offer. (PCL art 20) to the terms of the offer. (PCL art 20) Counter offerCounter offer

by offerorby offeror The offeror lawfully The offeror lawfully revokes the offer revokes the offer (PCL art 20)(PCL art 20)

lalapse of timepse of time The offeree The offeree fails to dispatch its acceptancefails to dispatch its acceptance at the end of the period for at the end of the period for

acceptance (PCL art 20) acceptance (PCL art 20) An offer made inter presentes ceases to be binding if it is not accepted at once.An offer made inter presentes ceases to be binding if it is not accepted at once.

(RCC art.156)(RCC art.156) An offer made inter absentes ceases to be binding if it is not accepted by the oAn offer made inter absentes ceases to be binding if it is not accepted by the o

ther party within the time during which notice of acceptance may be expected tther party within the time during which notice of acceptance may be expected to arrive under ordinary circumstances. (RCC art.157)o arrive under ordinary circumstances. (RCC art.157)

If a period of time for the acceptance of the offer has been fixed, the offer ceasIf a period of time for the acceptance of the offer has been fixed, the offer ceases to be binding if it is not accepted within such period. (RCC art.158)es to be binding if it is not accepted within such period. (RCC art.158)

If Offeror DiesIf Offeror Dies

The fact that after the notification of the expresThe fact that after the notification of the expression the expresser dies, or becomes no capacitsion the expresser dies, or becomes no capacity to make juridical acts, or is limited in capacity y to make juridical acts, or is limited in capacity to make juridical acts, shall not null the expressto make juridical acts, shall not null the expression of intent. (RCC art 95)ion of intent. (RCC art 95)

If an expression of intent is made to a person wIf an expression of intent is made to a person with no capacity or limited in capacity to make jurith no capacity or limited in capacity to make juridical acts, it becomes effective when the notifiidical acts, it becomes effective when the notification of the expression reaches the guardian cation of the expression reaches the guardian of the person.(RCC art 96)of the person.(RCC art 96)

formation of contract. offer how to make an effective contract? how to make an effective contract?...

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