ch2 课堂用.ppt

1、Chapter 2: Contract Law,Chapter Outline,Introduction to Contract Law,Role of contract What is contract Consideration Types of contract Elements of a contract,Role of contract,legal form for conducting all sorts of business activities: Sales contract Transportation contract Contract of payment Insura

2、nce contract back,Definitions of Contract,United States: Contract is a promise or set of promises for which the law will provide a remedy in the event of a breach. French Civil Code: Contract is a mutual assent with which one person or more is obligated to give a thing, to do or not to do a thing to

3、 one person or more persons. China: A contract shall be an agreement whereby the parties establish, change or terminate their civil relationship back forward,Consideration,Consideration is the exchange of promises or conduct for a promise that has some value for each party,Is there consideration?,Be

4、tty agreed to pay Ralph 100 if he did not drink beer until he celebrated his 30th birthday. Betty agreed to pay Ralph 100 when he celebrates his 30th birthday tomorrow,Is Consideration required for Contract,Definitions Common law countries Yes Civil law countries No,Is Donation Enforceable?,Is Donat

5、ion Enforceable?,Common Law Countries No Civil Law Countries Yes China (Art. 186) Contract of gift Prior to the transfer of rights to the gift property, the donor may revoke the gift. The previous paragraph does not apply to any gift contract the nature of which serves public interests or fulfills a

6、 moral obligation, such as disaster relief, poverty relief, etc., or any gift contract which has been notarized.,International Definition of Contract,A contract is concluded, modified or terminated by the mere agreement of the parties, without any further requirement. Is consideration required inter

7、nationally? No back,Types of Contract,Express contract an agreement manifested by words Implied contract an agreement manifested by conduct.,Examples for express contract,Insurance contract Formal sales contract Formal transportation contract back,case for implied contractAnna vs. Gertrude,Facts: An

8、na sued the estate of her deceased employer Gertrude. She claimed that she was hired by Gertrude, who was aged and infirm. She was told by Gertrude in the presence of other friends that she need not worry about getting paid, she would be well taken care of in the will. She worked as a companion for

9、11 years without pay, only for board and lodging. The will only provided for $100 to be paid to Anna. She claimed her rightful compensation. Issue: can Anna get the compensation?,Types of Contract (Contd),Contract between two companies Contract to kill somebody Contract made with a minor,Types of Co

10、ntract (Contd),Valid contract enforceable by law remedies for breach Void contract not legally enforceable not binding on either of the parties Voidable contract right to avoid responsibility of performance,back,Elements of a Contract,Formed by offer and acceptance Contractual Capacity Legality of C

11、ontract True Meeting of Minds back,Formation of a Contract,Offer Acceptance,Offer,Definition Parties of an offer Efficacy of an offer Requirements for an offer Termination of an offer,Offer,Definition: offer is a proposal by a person to another indicating an intention to enter into a contract under

12、specific terms Parties of an offer: offeror, offeree Efficacy of an offer: creates the power of acceptance/ power to form a contract by an offeree,back,Requirements for an offer,Intention Definiteness Communication,Intention,The offers words must give the offeree assurance that a binding agreement i

13、s intended. Invitation to treat Quotation, price list, catalogue Case: Gibson v Manchester City Council 1979 Storer v Manchester City Council 1974 serious and objective: Example,Gibson v Manchester City Council 1979,The case concerned Mr Gibson who completed an application form to buy his council ho

14、use from the council. However, when the council changed hands from Conservative to Labour the council said that no more council houses were for sale and that he had not actually entered into a contract to buy his council house. the letter from the council which Mr Gibson contended was the offer for

15、sale. It stated, I refer to your request for details of the cost of buying your council house. The Corporation may be prepared to sell the house to you at a purchase price of 2,725 .etc If you would like to make formal application etc,Storer v Manchester City Council 1974,the council wrote to Mr Sto

16、rer saying, I enclose the agreement for sale. If you will sign the agreement and return it to me, I will send you the agreement signed on behalf of the corporation in exchange. back,Case: serious intention,Facts: Frank became angry because his brand-new 25,000 car broke down on the highway, leaving

17、him stranded. Without thinking, Frank said out loudly: “ Id sell this car to the first person who offered me 1.00 for it.” Issue: Is this an offer made by Frank? Can a bystander obtain the car by giving Frank 1.00?,Intention,Offers made in obvious anger, jest, or undue excitement do not meet the ser

18、ious-and-objective-intent test.,Case: Frank offers to sell his television to Peter for 200. It is worth about 250. Peter accepts the offer and tries to pay Frank 200. Frank refuses by saying that he wasnt really serious. Issue: Can Peter obtain the television by giving Frank 200? back,Case: objectiv

19、e intention,Definiteness,Definite terms: (CISG, article 14) indicates or describes the goods or services expressly or implicitly specifies the quantity expressly or implicitly specifies the price for the goods Case: Abramsv.IllinoisCollege ofPodiatricMedicine Bushwall Properties Ltd v Vortex Propert

20、ies Ltd 1976 Sudbrook Trading Estate Ltd v Eggleton 1983,Abramsv.IllinoisCollegeofPodiatricMedicine,原告在1973年成为被告学院的学生。入学后的第一个学期，原告未能通过哲学课的考试，也未能通过补考。在第二个学期原告又有两门课考试不及格。1974年6月14日，学校通知他，由于他的学习成绩太差，他已被学院除名。原告后来对该学院提起这一诉讼，称该学院违反了合同。他要求继续在该学院学习，并由学院在学习上对他提供帮助。原告的理由是：学院曾告诉他，他不用为他的学习成绩担忧，学院将尽一切努力帮助他，包括为他提

21、供一些变通的办法；由于学院作出了这些许诺，他与学院之间发生了有约束力的和有强制执行效力的口头合同关系。 A student told by a school official not to worry about an academic problem cannot rely on those words.,Bushwall Properties Ltd v Vortex Properties Ltd 1976,The agreement provided for the sale of land in three instalments. Following each instalment,

22、 quote, a proportion of the land would be given over to the purchaser. However, there was no mechanism for saying which bit of land would be given over and so the offer was regarded as too vague to be accepted.,Sudbrook Trading Estate Ltd v Eggleton 1983,in order to determine the price of a freehold

23、, the two parties agreed under an option clause: each to appoint a valuer. One of the parties refused to appoint a valuer and so argued the option clause was invalid and not an offer because it was too vague it left something to be decided the option clause was certain enough to be accepted because

24、it merely provided that a reasonable price should be found for the freehold preferably through professional objective valuers back,Communication,Offeror Offeree some way (writing, verbally or implied) An offer becomes effective when it reaches the offeree. Cross-Offer Case: Tinn v Hoffman and Co 187

25、3,Implied Communication,Lucy buys an apple from a sidewalk vendor every morning for a set price, 20 cents. (Since she has bought apples on a regular basis from the same vendor day after day at the same price, the vendor and she may never formally discuss the terms of the contract they make for the s

26、ale of the apple.) Lucy, as she approaches the vendor, gets his attention. Their eyes meet, Lucy smiles and holds up one finger, and the vendor may, in turn, nod at Lucy. Issue: Are those non-verbal expressions by Lucy sufficient to show that Lucy has communicated an offer to the vendor to buy one a

27、pple, even without saying a word? back,Tinn v Hoffman and Co 1873,the two parties by chance wrote to each other at the same time, the one offering to buy 800 tons of iron at 69 shillings per ton and the other offering to sell 800 tons of iron at 69 shillings per ton.,Questions: Are they offers?,“Chi

28、nese Longjing Tea 10 T, CIF Paris 1000 per T, payment by irrevocable L/C, valid for 7 days” “Chinese Longjing Tea 10 T, CIF Paris 1000 per T, payment by irrevocable L/C, valid for 7 days, the price is subject to our final confirmation”,Questions: Are they offers?,Tom told his friend Anna that he was

29、 ready to sell her a second-hand Benz car. Anna accepted but Tom refused because he argued that the price is not specified. Frank, a boss of a flower shop, phoned Lucy (a flower wholesaler who has long business relationship with Frank) to deliver 500 bunches of flowers the next afternoon. However, w

30、hen the flowers are delivered, Frank refused to accept by saying he didnt make an offer because the price is not specified.,Advertisement?,Commercial advertisement No. invitations for offer Where the contents of a commercial advertisement meet the requirements for an offer, it shall be regarded as a

31、n offer Case: Lefkowitz v. Great Minneapolis Surplus Store Reward post case,General Commercial Advertisement,Case: Craft v. Elder 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,Example: irrevocable offer,Frank

32、offers to pay Lucy 100 if she hops on one foot all the way from the classroom to her dormitory exactly one mile apart. Lucy hops on one foot all the way, but just before she reaches dormitory, less than 100 meters away, Frank says to Lucy: “I revoke my offer!” back,Revocation of an offer,China Contr

33、act Law Article 18: An offer may be revoked. The revocation notice shall reach the offeree before it has dispatched a notice of acceptance. Article 19 An offer may not be revoked, if the offeror indicates a fixed time for acceptance or otherwise explicitly states that the offer is irrevocable; or th

34、e offeree has reasons to rely on the offer as being irrevocable and has made preparation for performing the contact. back,Rejection of an offer,An offer shall lose efficacy when the notice of rejection reaches the offeror by express language (“I dont need what youre selling.” or “I reject that”) by

35、implied conduct (shaking the head) Silence Inactivity Counteroffer back,Lapse of time,End of the time period prescribed in the offer. example: “the offer will expire at 5:00 p.m. on Thursday, April 9th.” If no time period stated, the end of a “reasonable time period” (CISG, Art. 18), which may be de

36、termined by the subject matter of the contract. back,Acceptance,Definition Efficacy Requirements for Acceptance Timing of acceptance Withdrawn and revocation of acceptance,Acceptance,An acceptance is the expression of an intention by the offeree to assent to the offer. Efficacy of acceptance: conclu

37、de a contract back,Requirements for acceptance,Must be made by the offeree (not by a third person) example Must be made within the time limit Where no time limit is prescribed in the offer if the offer is made in dialogues, immediately; If the offer is made in forms other than a dialogue, within a r

38、easonable period of time Must be unequivocal (without adding or changing any terms) back,Example,Mary to Tom: please ask your brother will he sell this horse to me for ￥15,000? Tom to Mary after two days: my brother said hed like to do so. back,Timing of acceptance,Mail-box-rule: Common law countrie

39、s Pass the risk of loss or delay in transmission of an acceptance to the offeror once the offeree has dispatched the acceptance The mailbox rule applies only to acceptance received the letter of acceptance: Civil law countries An acceptance is not effective until it reaches the offeror Risk of loss

40、or delay in transmission is on the offeree,Timing of acceptance,CISG Article 18(2): An acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror. China Article 26 An acceptance becomes effective when its notice reaches the offeror. back,Withdrawal and revoca

41、tionof acceptance,Withdrawal: before it becomes effective Common law countries Civil law countries CISG: an acceptance may be withdrawn if the withdrawal reaches the offeror before or at the same time as the acceptance China: An acceptance may be withdrawn, but a notice of withdrawal shall reach the

42、 offeror before or at the same time when the notice of acceptance reaches the offeror. Revocation,Questions and thinking: Are these acceptance valid?,Silence? Frank speaks to Tom: Do you want to buy my car for 500? Tom answers: Yes, I take it. Frank speaks to Tom: Do you want to buy my car for 500?

43、Tom answers: I must go back home to ask my wife. (after 10 minutes), Yes, I take it.,Questions and thinking: Are these acceptance valid?,Frank speaks to Tom: Do you want to buy my car for 500? Tom: says nothing Frank speaks to Lucy: Do you want to buy my car for 500? Tom says: Yes, I take it. Frank

44、speaks to Tom: Do you want to buy my car for 500? Tom answers: No, but I give 400 (then says after a few minutes) yes, I take it for 500,Questions and thinking: Are these acceptance valid?,An oral offer must be accepted immediately,Questions and thinking: Are these acceptance valid?,A makes an offer

45、 to B on January 1; A then decides to revoke the offer on January 2 and puts a letter in the mail to B revoking the offer; However, B puts a letter accepting the offer in the mail on January 3, and does not receive As revocation letter until January 4.,Questions and thinking: Are these acceptance va

46、lid?,A makes an offer to B on January 1, and initially B intends to reject the offer on January 2 by putting a letter in the mail to A rejecting the offer. However, the next day B changes his mind and sends a fax to A accepting the offer.,Questions and thinking: Are these acceptance valid?,On Januar

47、y 1, A makes an offer to sell a parcel of land to B. B mails her acceptance on January 2. On January 3, however, before A receives Bs acceptance, B telephones A and states she wishes to reject the offer. When Bs original letter of acceptance arrives on January 4, A records the contract as a sale. ba

48、ck,Contractual Capacity,Definition: the legal ability to enter into a contract. The persons who have not sufficient capacity Minors Mentally incompetent persons Intoxicated persons (drunkenness),Minors,Minor: a young person who has not reached the age of majority (adult) Age: Common law countries: w

49、as 21, decrease to 18 France: 18 Germany: 18 18 7-18, limited capacity Under 7: no capacity,Minors,China: Adult (full capacity) 18 16-18, and whose main source of income is his own labor shall be regarded as a person with full capacity for civil conduct. Limited capacity Minor aged 10 or over No cap

50、acity Under 10,Validity of minors,General rule: Voidable at the option of minor Only minors may disaffirm contract Adult is bound before disaffirmance German rule Contract becomes effective after being ratified A bona fide counterpart has the right to withdraw it before the contract is ratified Chin

51、a rule,Example: contract with a minor,Facts: Ralph, an adult, enters into a contract with Betty, who is a minor, to sell Betty his television for 150, and Betty pays Ralph 150 and watches the television for one year. At the end of that year, Betty, still a minor decides to disaffirm the contract by

52、returning Ralph television and getting back 150.,Example: contract with a minor,Facts: Betty (a minor) enters into a contract with Ralph (an adult) to sell him her television for 150. After one year, Betty, still a minor decides to disaffirm the contract, and asks Ralph to return her television. How

53、ever, because the 150 has been spent out, she cant return Ralph money.,Consequences of disaffirmance,French Civil Code 1312: if the received interest still exists, the minor should return to the adult party; if the received interest doesnt exist, the adult party has no right to demand return from th

54、e minor. back,Mentally incompetent persons Intoxicated persons,Cognitive standard If the person was sufficiently incompetent that he cant understand the legal consequences of his action: voidable If he understands: valid back,Legality of contract,Contract is illegal or against public policy and publ

55、ic morals Void Examples: Gambling contract Trading on a Sunday Usurious contract License: case (Cope v. Rowlands) Commercial bribery: case (Sirkin v. Fourteenth St. Store),Usurious in China,Fact: Wang li borrowed ￥15,000 from Zhang mei, and agreed in writing to repay it in 1 year with the monthly in

56、terest rate as 4%. After one year, Wang li refused to repay the principal sum and the interest. Zhang mei sued to the court for his principal and interest. Issue: is Wang li forced to repay ￥15,000? Interest?,Usurious in China,General Principles of the Civil Law of the Peoples Republic of China, Art

57、90: Legitimate loan relationships shall be protected by law. The interest rate can be higher than legal rate, no higher than 4 times of legal rate. back,Cope v. Rowlands,Facts: 1836, the plaintiff is a broker in London who is not licensed as a broker to purchase and sell stocks. The defendant enjoye

58、d the service by the plaintiff, but refused to pay. The plaintiff brought action to the court. back,Sirkin v. Fourteenth St. Store,Facts: P brought this action to recover $1,555 for goods sold and delivered. D claimed P offered Ds purchasing agent bribe of 5% of the purchase price of all orders plac

59、ed with p and has already paid $75 to the purchasing agent for the goods in question. A state statute made it a misdemeanor to offer a bribe to an agent authorized to procure supplies, etc. D appeals, and wins. Rule/Issue: D is relieved from paying cause P bribed Ds agent, even though D has retained the benefits o