1. Contract Law

2. 1. Overview
A contract means an agreement on the establishment, alteration or termination of a civil right-obligation relationship between natural persons, legal person or other organization as subjects with equal status.

3. 2. Formation of Contract ------Offer & Acceptance
Definition of an offer
a proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance.
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4. To be an offer, a proposal must :
①Include essential and sufficiently definite terms of a contract;
②Indicate the intention of the offeror to be bound in case of acceptance;
③ Identified offeree
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5. Offer Invitation for Offer

6. An offer becomes effective when it reaches the offeree.
(2) Validity of an offer
An offer becomes effective when it reaches the offeree.
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7. Withdrawn
Revoked

8. However, an offer cannot be revoked in the following conditions:
(a) if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or
(b) if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer.
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9. An offer is terminated when:
①The offeror has revoked it;
② The content of the offer is materially altered by the offeree;
③ A rejection reaches the offeror;
④The time of acceptance has passed.
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10. 2.3 Acceptance (1)Definition of an acceptance
A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance.
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11. (2) Effectiveness of acceptance
Common Law ——mail-box rule
an acceptance is effective when it is posted (placed in a mailbox or in the hands of postman) with the correct address and the proper amount of postage on the envelope.
German Rule ——when the indication of assent reaches the offeror.
（an acceptance may be withdrawn ）
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12. Case 1
Company A sent Company B a letter as an offer to sell 10tons cotton for US ＄20,000 on March 1,2008. The offer reached B on March 2,2008. After received the offer, B dispatched an acceptance on March 5,2008. And the acceptance reached A on March 7,2008. However, on March 4,2008, A sent the revocation to B and it reached B on March 6,2008.
Q: (1)Could A revoke the offer?

13. (2)According to the English law, was the contract concluded?
(3)According to the German rule, was the contract concluded?

14. (3)Modified acceptance
Mirror Image Rule
Materially alter

15. Case 2
S sent an offer to B: “ We’ll sell apples up to 1000 tons at $400 a ton for delivery during January”. B wrote S: “ Would $350 be agreeable on 500 tons?” Two days later B changed his mind and wrote: “ Send 500 tons at your price.” Both messages arrived in regular course of mail. Does B have enforceable rights against S?

16. (4) Time of acceptance
 An offer must be accepted within the time the offeror has fixed or, if no time is fixed, within a reasonable time having regarded to the circumstances, including the rapidity of the means of communication employed by the offeror.
 An oral offer must be accepted immediately unless the circumstances indicate otherwise.

17. A late acceptance is nevertheless effective as an acceptance if without undue delay the offeror so informs the offeree or gives notice to that effect.
 If a communication containing a late acceptance shows that it has been sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time, the late acceptance is effective as an acceptance unless, without undue delay, the offeror informs the offeree that it considers the acceptance as having lapsed.

18. 3. Validity of Contract
A contract is concluded while the acceptance becomes effective. But a contract is not certainly enforceable.

19. 3.1 Elements of a valid contract
(1)The parties must have legal capacity.
(2)It is an agreement between the parties entered into by their mutual assent.
(3)The contract must not be for illegal purposes or to carry on an activity that is illegal or contrary to public policy.
(4)Under the common law, and in French Civil Code, the contract must be supported by legally sufficient consideration.

20. 3.2 Lack of capacity——Uncertain Effectiveness Contract
Full
Limited
Devoid
Civil Capacity

21. 3.3 Lack of genuine assent
——Revocable Contract

22. Material mistakeP118
FraudP123
DuressP121
Gross disparity (Unconscionability)
by taking advantage of the other party's hardship

23. 3.4
illegality ——invalid contract
P124

24. 4. Assignment of Contract
4.1 Assignment of the Rights under the Contract
4.2 Transfer of the Obligations under the Contract
4.3 Concurrent Assignment and Transfer under the Contract

25. 4.1 Assignment of the Rights under the Contract
The obligee may assign its rights under a contract in whole or in part to a third person.
Where the obligee assigns its rights, it shall notify the obligor. Such assignment is not binding upon the obligor if notice was not given.

26. 4.2 Transfer of the Obligations under the Contract
Where the obligor delegates its obligations under a contract in whole or in part to a third person, such delegation is subject to consent by the obligee.

27. 5. Performance of Contract
5.1 Breach of Contract
(1)English Law
①Breach of condition
②Breach of warranty
(2)USA
① Material breach
② Minor breach

28. (3)CISG ① Fundamental breach of contract
② Non- Fundamental breach of contract

29. 5.2 Remedies for Breach of Contract
(1)Specific performance
① Monetary Specific Performance If a party fails to pay the price or remuneration, the other party may require payment thereof.

30. ② Non-monetary Specific Performance; Where a party fails to perform, or rendered non-conforming performance of, a non-monetary obligation, the other party may require performance, except where:P131 (i) performance is impossible in law or in fact; (ii) the subject matter of the obligation does not lend itself to enforcement by specific performance or the cost of performance is excessive; (iii) the obligee does not require performance within a reasonable time.

31. (2)Damages Calculation of Damages
Where a party failed to perform or rendered non-conforming performance, thereby causing loss to the other party, the amount of damages payable shall be equivalent to the other party's loss resulting from the breach, including any benefit that may be accrued from performance of the contract, provided that the amount shall not exceed the likely loss resulting from the breach which was foreseen or should have been foreseen by the breaching party at the time of conclusion of the contract.

32. (3)Liquidated damages
The parties may prescribe that if one party breaches the contract, it will pay a certain sum of liquidated damages to the other party in light of the degree of breach, or prescribe a method for calculation of damages for the loss resulting from a party's breach.

33. Where the amount of liquidated damages prescribed is below the loss resulting from the breach, a party may petition the People's Court or an arbitration institution to increase the amount; where the amount of liquidated damages prescribed exceeds the loss resulting from the breach, a party may petition the People's Court or an arbitration institution to decrease the amount as appropriate.

34. Where the parties prescribed liquidated damages for delayed performance, the breaching party shall, in addition to payment of the liquidated damages, render performance.

35. (4) Deposit
The parties may prescribe that a party will give a deposit to the other party as assurance for the obligee's right to performance in accordance with the Security Law of the People's Republic of China. Upon performance by the obligor, the deposit shall be set off against the price or refunded to the obligor. If the party giving the deposit failed to perform its obligations under the contract, it is not entitled to claim refund of the deposit; where the party receiving the deposit failed to perform its obligations , under the contract, it shall return to the other party twice the amount of the deposit.

36. Is Tom’s requirement in conformity with the relevant law?
Case: There is a contract between Mike and Tom. According to their contract, Mike gave a deposit of ＄ to Tom. And a liquidated damages clause that the breaching party should pay ＄ to the other party was also included in the contract.
Afterward, Mike breached the contract and that caused loss of ＄ to Tom. Now Tom requires Mike to pay the liquidated damages of ＄ and the loss of ＄ resulting from the breach. In addition, according to Tom’s opinion, the deposit he got will not be returned.
Is Tom’s requirement in conformity with the relevant law?

37. Election Between Deposit or Liquidated Damages Clauses
If the parties prescribed payment of both liquidated damages and a deposit, in case of breach by a party, the other party may elect in alternative to apply the liquidated damages clause or the deposit clause.

38. (5)RescissionP132

39. (6)Injunction

40. 5.3 Excused non-performance
Withholding performance
Where the parties are to perform simultaneously, either party may withholding performance until the other party tender its performance.
 Where the parties are to perform consecutively, the party that is to perform later may withhold its performance until the first party has performed.
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41. (2)Force majeure
 Force majeure means impediments beyond one’s control, which it could not reasonably be expected to have taken into account at the time of the conclusion of the contract or to avoid or overcome.
 Non-performance by a party is excused if that party proves that Non-performance was due to force majeure.
 When the impediment is only temporary, the excuse shall have effect for such period as is reasonable having regard to the effect of the impediment on the performance of the contract.
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42. Where an event of force majeure occurred after the party’s delay in performance, it is not exempted from liability.
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43. The court may ignore exemption clauses which are grossly unfair.
Exemption clauses are those terms which directly limit or excluded the non-performing party’s liability in the event of non-performance or which permit one party to render performance substantially different from what the other party reasonably expected.
The court may ignore exemption clauses which are grossly unfair.
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44. 6. Discharge of Contract
The rights and obligations under a contract are discharged in any of the following circumstances: (i) The obligations were performed in accordance with the contract; (ii) The contract was terminated; (iii) The obligations were set off against each other; (iv) The obligor placed the subject matter in escrow in accordance with the law; (v) The obligee released the obligor from performance;
(vi) Both the obligee's rights and obligor's obligations were assumed by one party; (vii) Any other discharging circumstance provided by law or prescribed by the parties occurred.