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Chapter 10 The Conclusion of Sales Contracts 10.1 The procedure for the conclusion of sales contract Definition of Contract Offer Inquiry Counter Offer Acceptance Definition of Contract A contract is an agreement reached by two or more than two parties concerned， in order to establish， modify or terminate the civil right and obligation of the parties. Offer Definition The necessary conditions for a valid offer in law Validity time of an offer The time for an offer coming into effect The Withdrawal and the Revocation of an offer Invalidation of an Offer Definition An offer is a proposal of terms and conditions presented in a potential contract by one party， called the offeror， to anther party， called the offeree. The necessary conditions for a valid offer in law 1. An offer must be addressed to one or more specific persons. 2. The contents of an offer must be sufficiently definite. 3. With the indication that the offer is binding upon the offeror. 4. An offer comes into effect only when it reaches the offeree. Validity time of an offer 1. In case that the validity time is specified definitely in an offer， the offeree must make an acceptance within the stipulated time limit. The offer is not binding on the offeror when the validity expires. 2. The validity time in an offer not stipulated definitely 3. An oral offer The time for an offer coming into effect The Withdrawal and the Revocation of an offer 1. The withdrawal of an offer 2. The revocation of an offer Invalidation of an Offer 1. The expiry date 2. Rejection 3. Counter-offer 4. Force Majeure 5. In case that the offeror or offeree becomes incapable of legal transaction (such as insanity， death etc.)， the offer is invalid. Inquiry The non-firm offer is legally called as invitation to for offer， referring to with an intention to purchase or sell some certain commodities， one party inquires about the trade terms to the other party， or brings about a proposal for business transaction with some terms. There are some ways to make an invitation to for offer， the inquiry is widely used. It is not with legal force， nor constituting an offer. Counter Offer Counter offer means a reply to the offer made by the offeree， not accepting completely the terms of the offer and with the proposal to modify or change it. Acceptance Implication of an acceptance The key elements constituting an acceptance The period for an acceptance coming into effect Late Acceptance The Withdrawal of An Acceptance The key elements constituting an acceptance 1. An acceptance must be made by the specific offeree. 2. The contents of the acceptance must be in compliance with the offer， that is to say， the modification on the offer is usually regarded as a counter offer as stated above. 3. The acceptance made and delivered to the offeror within the effective period of the offer. 4. The transmission way of the acceptance notice conforming to the requirement of the offer. 5. An acceptance must be indicated. 10.2 Establishment of International Business Contract Establishment of Contract Significance of Signing a Contract Forms of Contract in Written Form Establishment of Contract Time of Establishment of a Contract Key Elements for an Effective Contract 1. The parties concerned must be with the conduct capacity to sign a contract. 2. A contract must be with Consideration or Cause. 3. The objective of a contract must be legal. 4. A contract shall be in compliance with the stipulated form by law. 5. The party concerned of a contract shall be in true willingness. Significance of Signing a Contract 1. The evidence to prove a contract is established. 2. The term with which a contract comes into effect. 3. The basis on which a contract is fulfilled. Forms of Contract in Written Form The form of a contract in written form is not limited. The both parties concerned may adopt anyone of these forms including Contract， Confirmation， Agreement or Memorandum. In addition， there are letter of intent， purchase order， authorization order sheet and the like to be taken as the form of a contract. General Contents of Contract Head General Clauses Ending Case Study Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Case 9 Case 1: Our company imports from abroad a batch of agricultural products and resold them to an American company. Our company makes an offer to the American company. The next day the American company accepts our offer completely. And they request us to offer the certificate of origin. Two weeks later， the American businessman opens an L/C to us. When we are prepared to dispatch the goods， we receive the advice from the Commodity inspection bureau. The certificate of origin should not be issued because the goods are not produced by Chinese company. Then we inform the American businessman to cancel the clause which is required to offer the certificate of origin， is rejected， so controversial. We put forward that we do not agree to provide the certificate of origin， so it is not our duty to offer it. However they believe that it is our duty to offer. Please try to make arbitration on this case according to the CISG. Case 2: As an exporter ， we cable an American businessman to export agricultural products. Beside the necessary items stated in the offer ， the clause Packing in Sound bags is also added in. During the validity of the offer ， the American businessman replies Refer to your telex first accepted Packing in new bags When we receive the above reply ，we are ready for shipment. The international market price for the agricultural products tumbled a few days ago. The American businessman replies that the contract does not established because we did not confirm when they changed the packing condition. We insists that the contract has been established. So the parties occur this argument . How to handle this case? Case 3: A Chinese International engineering contracting company asks an Italian supplier to make an offer for us to sell a batch of steel on May 3 by telex . In our telex statement: We require that this offer is to calculate the specialist of a building and determine whether or not to participate in bidding; We must tender the tenderer on May 15 and the bid opening date is on May 31. The Italian supplier cables us the offer on May 5 for the above mentioned steel. We calculate the price on his offer and submit the tender to the tenderer on May 15. The Italian supplier sends a telex to revoke his May 5 offer On May 20， Because of the rising price of the steel market. We immediately reply them that we don't agree to revoke the offer. So， both sides make a dispute on the revocation of the offer. Then on May 31， we bid successfully. We immediately telex the Italian supplier to accept the May 5 offer. But the Italian supplier insists that they have cancelled the offer on May 20.The contract is not established. However we believe that the contract is established. Both sides argue. Hence both sides agree to submit it to arbitration. Question: if you are an arbitrator ，how to make an arbitration? Explain the reasons? Case 4: A Britain businessman (businessman A) makes an offer to a federal Germany businessman (businessman B) on May 3 to sell a certain of goods. Businessman B is in the receipt of this offer the next day (May 6，) Businessman B makes a complete answer to accept the offer on the morning of May 6 . After businessman A sends the offer ， he finds the commodity prices upward， hence he cabled businessman B to withdraw the offer in the afternoon of May 7.It is in the morning of May 8 that Businessman A receives the acceptance from businessman B .Question: (1) According to the Britain law， is it legal for businessman A to withdraw the offer? (2) If the case is applied to the CISG ， whether both sides exist contract relationship? Case 5: One day morning A French businessman pays a visit to one of our exporters to purchase a certain of goods. We make an oral offer， they do not answer. He visited again that day afternoon and accepted the mornings offer unconditionally. At that time we have also learned that there is an upward tendency in the international market. So how to handle this situation ， why? Case 6: One of our exporters makes an offer to an Italian businessman， the offer is subject to the reply reach here on 10th of this month. Then the Italian businessman cables to inform us of accepting this offer on 9th.Because of the delay of the Telegraph Office， We receive his acceptance notice in the morning of the 11st of this month. However we get the message that the market price is upward. So what shall we do ? Case 7: One of our foreign trade company received an offer from the D company which is in Paris， France on July 16 ， 2009.500 MERTICTON TINPLATE USDOLLARS540 CFRCHINA PORT AUGUST SHIPMENT SIGHT L/C SUBJECT TO YOUR REPLY REACHING US BY JULY 20 We replied on July 17 stating that we can accept the offer if the unit price is USD 500.00 CFR CHINA PORT. If there are some disputes， arbitration in China. he D company replied by cable that the market is firm ，the price can not be reduced， the arbitration can be accepted， lease reply as soon as possible. There is an upward tendency in the tinplates price at the same time. So we replied by cable that we accept your firm of 16th.The L/C has been established through the Bank of China， please confirm. However the French businessman did not confirm and returned the L/C .Question: Whether the contract is establish? Does we make any mistakes? Explain the reasons. Case 8: According to a French businessmen inquiry ，one of our exporter makes an offer to sell a kind of goods， subject to your reply reaching us by 5th of this month. The French businessman cables to accept the offer on 4th of this month. Because of the delay of the Telegraph Office， We receive his cable in the morning of the 6th of this month. At the same time we cable to refuse the offer since the marker price increases. However the French businessman believes that it is not his duty to make the delay of the acceptance notice and insists that the contract has been established. We don’t agree on it .Therefore we prosecute to the court. How should you think the judges judgment? If we don’t refuse upon we receive the offer， How to make a judgment? Explain the reasons? Case 9: A Beijing company made an offer to a Paris company ， stating that the offer is firm until March 10.This offer was sent by EMS on March 1.Then the Beijing company found there was something wrong on the offer and decided to inform the Paris company to withdraw this offer by cable. Whether this offer can be withdrawn? What are the reasons? Reflection questions: What are the steps in negotiation? Why the offer and acceptance are the necessary steps? What is offer? What are the necessary conditions for a valid offer? What are the different provisions in the offer coming into effect? What is the meaning for the time for the offer coming into effect? Whether the offer can be withdrew or revoked? What are the provisions for the offers withdrawal and revocation? What is the acceptance? What are the conditions for a valid acceptance? What is the late acceptance? What is the consequence for a late acceptance in law? Whether the acceptance can be withdrew? Which are the conditions for a legally binding contract?
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