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b. non-important items:
Lack of the following items, a contract may be validly concluded but need further specification.
iv. Quality;
v. Price;
vi. The place of performance;
vii. The time of performance;
viii. The method of performance;
ix. Allocation of the expense of performance;
x. Liability of breach of a contract;
xi. Method of dispute resolution.
Therefore, when reviewing a draft of contract, the breakthrough for a lawyer is to look at the 11 points to examine in general if there are already the related terms and if these terms are sufficient specific and certain according to actual intention of contract parties. If unfortunately an incomplete contract has been concluded and valid, the next step is to ask for a supplement agreement with the other parties. If it does not work, then try to specify the uncertain terms according to the relevant provisions of contract interpretation in contract law or common usage. (Art. 62 CL)
(Art. 62 CL)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:
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;
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 wasconcluded, and if adoption of a price mandated by the government or based on government issued pricing guidelines is required by law, such requirement applies;
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;
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;
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;
If the party responsible for the expenses of performance was not clearly prescribed, the obligor shall bear the expenses.
B. Offer
Like all other legal systems Chinese Contract Law requires an offer and an acceptance for a contract validly to be concluded.
a. Definition
An offer is a party’s expression of his intention to enter into a contract with the other party. (Art. 14 Contract Law) An offer shall include all the elements of a valid contract except for the acceptance of the other party, i.e., if the other party want to conclude the contract, what he does is to declare acceptance after receiving the offer.
Therefore, another concept, invitation to offer (Art. 15 Contract Law), shall differentiate from offer. An invitation to offer is an intention to invite the other party to make an offer.
b. Legal Conditions (Art. 14 Contract Law)
Its terms are specific and definite.
It means an offer shall include fundamental elements of a contract. There is no common recognition about prerequisite items of a contract in general. According to Chapter Nine: Sales Contracts within Contract Law, a sales offer shall contain subject matter, quantity.
Case 2
Company A sends an offer to Company B that I need steel of Type X, and if you have reserves, please reply ASAP and I will buy. IS IT AN OFFER? Answer: no, because no terms about quantity.
It indicates that upon acceptance by the offeree, the offeror will be bound thereby.
Case 3
Company A sent Company B a fax with the content that I have 100 ton steel of Type 100, the price of which is 100,000 RMB. If you want to buy, just reply. In this case, it is not an offer but an invitation to offer because Company A does not mention he will be bounded by the fax, i.e., when B accepts, he will definitely sell his product to B.
Other specific types of invitation to offer include catalogues (price list), announcement of auction, call for tender and commercial advertisement. (Art. 15 CL)
c. Validity of an offer (Art. 16 CL)
An offer becomes effective when it reaches the offeree. Note shall be taken of ‘reach’. In case of mail, an offer is effective at the time you send the mail, not when the offeree receives the mail. (Art. 24 CL) It is very important to decide whether the offeree make a valid acceptance within time limit.
Case 4
A sends B an offer by mail on 1 May, 2006 that … please reply within 10 days. B receives this offer on 8 May, 2006. (1) When the offer becomes effective? Answer is 1 May, 2006. (2)What is the final date for B to make an acceptance? Answer is 11 May, 2006.
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