Contract and Contract making
What is a contract?
A contract is a legally binding agreement between two or more parties
What form does it take
Writing
Oral
Partly oral and partly written
Conduct
Content : total terms and conditions/ clauses/ provisions regulating parties’ rights
and obligations
What is a contract?
A contract is a legally binding agreement between two or more parties
What form does it take
Writing
Oral
Partly oral and partly written
Conduct
Content : total terms and conditions/ clauses/ provisions regulating parties’ rights
and obligations
Source of Law
Local Law
International Law
1980 United Nations Convention on Contracts
international Sale of Goods – CISG
UNIDROIT Principles of International Commercial
Contracts 2004 – PICC
(UNIDROIT : International Institute for Unification of Private Law)
For the
Vienna Convention 1980
Came into force in 1988
Is the work of more than 62 states and 8 international organizations
Incorporates rules from all the major legal systems
Include 4 parts
General provisions
Formation of contracts
Rights and obligations of buyers and sellers
Ratification and the entry into force
Essential Elements Of A Valid Contract
Agreement
Capacity
Legality
Consent
Making Contract
Offerer -----------------------------Offeree
Makes offer to
--------------------------
Accepts
Agreement
Offer
An offer is a legally binding promise made by one party to another party.
Hint: the offer was clear, definite, explicit and left nothing open to negotiation.
Offer occurs when if reaches the offeree
See case Lefkowitz v Great Minneapolis Surplus Store, 251 Minn 188 86 N.W .2d
689 (1957)
Great Minneapolis Surplus Store (D) published advertisements in a newspaper
for a sale on fur coats, mink scarves, and lapin stole. Each of the advertisements
indicated that the sale items would be sold on a first come first served basis,
stated the quantities of each item available, and stated that they would be sold
for one dollar each. Lefkowitz(P) was the first customer to present himself and
offer the one dollar price per the terms of the advertisement. The defendant
refused to sell the sale items to Lefkowitz
Offer ≠ Invitation To Treat
Displaying goods for sale with the price attached
Advertising good for sale through catalogue/media
Tenders/auctions
Preliminary enquiries
Invitation to treat
Offer or not?? See more in ACT 14.1 CISG
The Fate of the Offer
Offeror may withdraw the offer
Offeror may revoke the offer
OFFER
Offeree may reject the offer
Offeree may accept the offer
Offer may lapse due
to passing of time
contract
Withdraw / Revoke the Offer
Offer can be withdrawn prior to their reaching the offeree
Offer can be revoked anytime before acceptance
Withdrawal and revocation must be communicated to the offeree in some
reasonably reliable manner
Rejecting an Offer
Offer can be rejected expressly or by implication
How can be understood “implication”
Offeree’s conduct
Clarification of the terms
Offeree’s counter offer
Reply with any changes
Acceptance of the Offer
Only the offeree may accept the offer
Acceptance must be final and unconditional
Acceptance must be communicated to the offeror
Silence does not amount to acceptance
Offeror cannot force acceptance upon the offeree
When is the contract made?
Stated on the intention of the parties
If not, when communication is opened in the ordinary course of business
Over the internet, when it enters an information system
Postal Rule
Acceptance occurs when the letter is posted
Same to public telegraph and publc telex
Not apply to instantaneous mode of communtication
Evidence for the postal rule-is in need