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d. Withdraw an offer (Art. 17 CL)
The notice of withdrawal shall reach the offeree before or at the same time as the offer. You should take care that the word of “reach”here does not have the same meaning as that for the validity of an offer. “Reach”means reach in fact. It is a higher requirement.
C. Acceptance
a. Definition
An acceptance is the offeree’s expression of his intention to accept an offer.
b. Validity of an acceptance
The acceptance shall be express or implied in fact. Mere silence does not constitute an acceptance. (Art. 22 CL)
The acceptance shall be made within the time limit indicated in the offer (Art. 23 CL)
An acceptance cannot change anything of the offer. (Art. 30 CL) Otherwise; it is not an acceptance, but a counter-offer, or a new offer.
An acceptance becomes valid when it reach the offeror (Art 23 CL)
c. Withdrawal of Acceptance (Art. 27 CL)
An acceptance may be withdrawn. The notice of withdrawal shall reach the offeror before or at the same time as the acceptance.
D. The Formation of Contract
A contract is formed once the acceptance becomes effective (Art. 25 CL)
In case the parties agree or the relevant laws prescribe that entering into of the contract in question shall be in writing or in other forms, the contract is formed when the relevant form is accomplished. (Art. 32, 33, 36 CL)
Case 5
Company A and Company achieves an agreement of sales of wheat from A to B by fax and they agree to conclude the contract by a memorandum. Before concluding the memorandum, A transports its wheat to B and B declines to accept. Which option is right?
A. the agreement is void
B. the agreement is not formed
C. the validity of the agreement is uncertain
D. none
E. Pre-contract Liabilities (Article 42 CL)
Where in the course of concluding a contract, a party engaged in any of the following conducts, thereby causing loss to the other party, he shall be liable for damages.
Negotiating in bad faith under the pretext of concluding a contract;
Intentionally concealing a material fact relating to the conclusion of the contract or supplying false information;
Any other conduct which violates the principle of good faith.
Case 6
On 5 June Company A faxed Company B to buy a machine from B and required ‘reply at once’. On the same day Company B replied that ‘has received your fax’. On 10 June Company A called B if it wants to accept or not. B replied to accept, but ask to conclude a memorandum on 15 June. On 15 June A went to B’s office, nevertheless, B asked for a higher price. A declined B’s offer and B declined to conclude the contract. Which option is right? (selected from Chinese Bar Examination 2005)
A. the sales contract was formed on 5 June
B. the sales contract was formed on 10 June
C. the sales contract was formed on 15 June
D. A is entitled to ask B to bear its Pre-contract liability.
3. Validity of Contract
Although in most cases the validity of a contract mainly depends on the consent of the parties, every jurisdiction does not allow some consent to be legal contracts in consideration of public order. The validity of contract runs as a filter, to filter out illegal consent in order to maintain public order.
A. Contracts the Validity of which is Uncertain 效力待定合同
a. Definition
It refers to a contract that is concluded by a person without sufficient capacity and the validity of the contract concerned need ratification from another person who has sufficient capacity.
b. Two situations
A contract concluded by a person with limited capacity (age: over 10 and less that 18). Its validity depends on the confirmation of his guardian. (Art. 47 CL)
A contract concluded on the principle’s belief by a by a person who lacked agency authority, who acted beyond his agency authority or whose agency authority was extinguished. Its validity depends on the confirmation of his principle. (Art. 48 CL)
A piece of property is sold by a person without property rights over it. its validity depends on the confirmation of the owner. (Art. 51 CL)
Case 7
A Borrowed its computer to B, however, B sold it to C. According to the related provisions of Contract Law, which argument about the validity of the sales contract between B and C is right? (Selected from Chinese Bar Examination 2002)
A. Void
B. Valid
C. Validity is uncertain
D. Can be Amended or Cancelled
Comment on Art. 51 CL: it is one of the most debatable articles in Chinese Contract Law. Within Chinese Civil law system, there exists a differentiation between contract rights and property rights. The two kinds of rights are subject to different rules of law. Putting it clear, a person who does not own Property A can conclude a contract with the other person with the content to sell Property A. Academically speaking; this contract therefore is valid regardless of actual performance. If he cannot deliver Property A to the other person, he just breaches the contract and therefore bears liability related. This contradiction will be changed in the new draft of civil code.
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