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(共35张PPT)
CHAPTER 17 NEGOTIATION AND FORMATION OF THE CONTRACT
International Trade Negotiation
Formation of Contract
§1 INTERNATIONAL TRADE NEGOTIATION
?
ENQUIRY
OFFER
COUNTER
OFFER
ACCEPTANCE
Enquiry
Invitation to offer
By the seller or the buyer
Not bind the two parties
Not a necessary step
But usually start of a deal
e.g. “We are interested in your Butterfly Brand sewing machines.
Please make us a quotation at your earliest convenience.”
2. Offer
Proposal
Definite in its terms
Indicates the offeror’s intention to
make a deal
Bind the offeror
Selling offer, buying offer (bid)
Necessary step
“We are making you an offer for 2000
dozen sport shirts as Sample No. 1234
at a unit price of US$90 per dozen CIF
New York. The packing is of export
standard and shipment is to be
effected in May/June 2008. Payment
is to be made by irrevocable sight L/C.
This offer is subject to your reply
reaching here on 20th inst.”
3. Counteroffer
A reply to an offer that makes material
change (s) to the terms of the offer.
A new offer
The original offer becomes null and
void.
legally ineffective
invalid
“Your letter dated Sept. 3rd has been received. We regret that we are unable to accept it as your competitors are quoting for goods of similar quality at a price of US$55. Please reply immediately.”
4. Acceptance
An unconditional assent to an offer or
an assent to an offer with only minor changes
that do not affect any material terms of the
offer.
“We accept your offer of 14th.”
§2 Formation of Contract
OFFER
ACCEPTANCE
FORMATION OF CONTRACT
Offer
Constitution of an offer
Term of validity of an offer
Withdrawal and revocation of an offer
Termination of an offer
(1) Constitution of an offer
To specific person (s)
CISG Article 14(1)
Intention to
be bound if it
is accepted
Sufficiently
definite
① To specific person (s)
The specifications of the addressee will usually
be by name.
Advertisement Catalogue Price list
Generally NOT!
Unless clear, specific and definite
Esp. indicates intention of making a deal
“The price is for your reference.”
“The price is subject to alteration.”
(价格得予变动 )
② Sufficiently definite
(i) Name and quality
(ii) Quantity
(iii) Price
CISG Article 14(2)
Usual practices;
Provisions in part III of CISG.
Other Terms
In practice,
Complete: 6 trade terms & conditions
Clear: Not result in misunderstanding
Without
reservation：Subject to our final confirmation
Quality Quantity, Price, Packing, Shipment, Payment.
③ Indicating the intention of the offeror to be bound in case of acceptance.
To be deemed as an offer, a proposal should also indicate the intention of the offeror to be bound if the addressees accept the proposal.
A buyer was found to have indicated its intention to be bound when it sent the seller “an order” that stated “we ordered” and that called for immediate delivery.
(2) Term of validity of offer
A period within which
the offeree can make an
acceptance, and the offeror
is only bound.
① The latest time
② A period of time
(3) Withdrawal & revocation of offer
① Withdrawal:
An offer becomes effective
when it reaches the offeree.
May be withdrawn if the
withdrawal reaches the
offeree before or at the
same time as the offer.
② Revocation: CISG, Article 16
(i) May be revoked if the revocation
reaches the offeree before he has
dispatched an acceptance.
(ii) However, an offer cannot be
revoked:
(a) indicates irrevocable；
e.g. states a fixed time for acceptance
firm offer
(b) reasonable for the offeree
to rely on the offer being
irrevocable and acted .
Case Study:
Reasonable to rely on the offer
Acted
A
Call for bid
B
Bidder
Buyer of steel
C
Seller of
steel
BID
Enquiry
Offer
(4) Termination of offer
① The term of validity is over；
② The offer is rejected or declined；
③ The offer is legally revoked.
2. Acceptance
(1) Constitution of acceptance;
(2) The moment when an acceptance becomes effective;
(3) Withdrawal of acceptance.
Constitution of acceptance
CISG Article 18(1):
“A statement made by or other conduct ① of the offeree ② indicating assent ③ to an offer is an acceptance. Silence or inactivity does not itself amount to acceptance.”
The acceptance must be made by
the offeree.
It must conform to the offer.
Basically unqualifiedly accept the offer.
(i) A reply to an offer which contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter offer.
(ii) But if the additional or different terms do not materially alter the terms of the offer, then the reply constitutes an acceptance.
The offeror may say NO immediately.
The changes become part of the terms of the contract.
If not
Material alteration
Price
Payment
Quality
Quantity
Place and time of delivery
Extent of one party’s liability to the other
The settlement of disputes
Case Study:
2006/03/01:
A made an offer to B for 1000M/T sugar packed
in sound bags.
2006/03/10:
B accepted A’s offer with an alteration of packing, i.e.
packing in new bags is required.
2006/03/20:
The price of sugar dropped sharply.
B wanted to know if he was legally bound.
Packing
Not material alteration
③ The acceptance must be made within the period of time for acceptance.
A late acceptance is not effective as an acceptance.
Two exceptions:
1. If without delay the offeror informs the offeree that the acceptance is effective.
2. If the acceptance was late because of transmission, still effective unless the offeror informs the offeree that the acceptance is ineffective.
Late Acceptance generally
Late Acceptance (caused by transmission)
Ineffective
Effective
Effective
Ineffective
Offeror informs
④ The acceptance must be indicated
An acceptance must be indicated either by a
statement or by other conduct.
“Silence or inactivity does not itself amount to acceptance.”
(i) Silence or inactivity alone does not constitute an
acceptance;
(ii) Silence or inactivity when coupled with other
behavior may indeed be indicative of an
acceptance.
1. “I know that this is such a good deal that I will assume
that you have accepted unless I hear otherwise.”
The fact that the buyer does not respond will not create a
contract.
(The seller attempted to force acceptance on the buyer.)
2. “Unless you hear otherwise from me within 3 days after I receive your order, I will deliver the widgets (装饰品) you need at $100 each.”
The seller's silence would constitute an acceptance.
(The seller voluntarily assumed the duty to respond. )
(2) The moment when an acceptance becomes effective (Article 18)
① At the moment the acceptance reaches
the offeror.
② An oral offer must be accepted immediately
unless the circumstances indicate otherwise.
(3) Withdrawal of the acceptance
An acceptance may be withdrawn if the withdrawal reaches the offeror before or at the same time as the acceptance would have become effective.
A contract is concluded at the moment when an acceptance of an offer becomes effective.
3. Formation of contract
① Forms of contracts
Sales Contract, Purchase Contract.
Sales Confirmation, Purchase Confirmation.
Sales Agreement, Purchase Agreement.
Sales Memorandum, Purchase Memorandum.
② Content of the contract
Preamble: name and address of the seller and the buyer; the date of contract and purpose of the contract, etc.
Body: clauses regarding name and specifications of commodity, quantity, packing, price; terms of payment, shipment, insurance, general terms and conditions such as claim, arbitration, and force majeure, etc.
(iii) Witness clause: the effectiveness of language and
signature, etc.

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