Acceptance

1
Acceptance
2

• Meaning of acceptance Conformity of mutual
  declaration of intention
• Manner of acceptance
• Effectiveness of acceptance
• Pre-contractual liabilities

3
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 25A contract is formed once the
  acceptance becomes effective.

4
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 non-essential elements, the court
  shall decide them according to the nature of the
  affair.(RCC153II)

5
Indeterminate TermsSupplementary 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.

6
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

7
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.

8
Effectiveness of Acceptance

• Express acceptance
• Notice of acceptance
• When effect
• 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)
• 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)
• Oral offer
• An oral offer must be accepted immediately unless
  the circumstances indicate otherwise. (CISG art
  18 para2)

9
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)

10
Binding offer
Ineffective offer
Arrival rule
Notice of acceptance
Binding offer
Contract Formed
Arrival rule
Notice of acceptance
Binding offer
Contract Formed
Dispatch rule
Notice of acceptance
Dispatch rule
Binding offer
Contract Formed
Notice of acceptance
Offer arrived
Expired day of Acceptability
11
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.

12
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.

13
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)  
• Acceptance with modification
• 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)

14
PRC Contract Law

• Article 28      Late AcceptanceAn 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
  AcceptanceIf 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
  ChangeThe 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 ChangesAn 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.

15
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.

16

• 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?

17
Culpa in Contrahendo
18
Duty between contractual party

• Pre-contractual duty
• Duty
• Duty of mutual cooperation, explanation,
  information, notice, assistance, protection,
  care, confidentiality, or others.
• Liabilities
• Reliance interest Interest lost or determent
  suffered
• Culpa in Contrahendo
• Contractual duty
• Duty
• Duty of performance arising from contract
• Liability
• Expectation interest Interest lost or determent
  suffered
• Post-contractual duty
• Duty
• 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.
• Liability
• Expectation interest Interest lost or determent
  suffered

19
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)
• Reason behind Culpa in Contrahendo
• Duty of Good faith before or upon concluding the
  contract
• Effect of Culpa in Contrahendo
• Damage Reliance Interest

20
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

21
Pre-contractual Liabilities arising from mistake
in ROC Civil Code

• Article88If 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.Article89If 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.Article90The right of revocation
  provided in the preceding two articles would be
  extinguished after one year from the date of
  expression.Article91If 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.

22
Pre-contractual liability arising from agency
without authority in ROC Civil Code

• Article 110If 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.

23
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)

24
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)

25
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)

26
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
• (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.
• Article 43
• 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.     

27
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)

28
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)

29
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?