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conditions provided in the offer. Since Article 20 (a) requires a notice in case of rejection, it is generally believed that the rejection must be make expressly, though some argue that the offeree’s “no-action” to the offer within the time limit for the acceptance may also constitute a rejection. And because under Article 20 (a), a rejection may take effect only after the rejection notice has reached the offeror, it implies that the rejection notice may be withdrawn before or at the same time the offeror receives the rejection notice.

Article 20 (b) essentially refers to the situation where an offer is revoked under Article 18 of the Contract Law. As discussed, Article 18 allows an offer to be revoked if the revocation is made before the acceptance notice is sent. Except for the restrictions stipulated in Article 19, an offer would become null and void when it is effectively revoked. Therefore, an acceptance that is made after the offer is revoked will not be the acceptance but a new offer. And when the “after revocation” acceptance becomes a new offer, the offeree will take the place of the offeror, and conversely the acceptance of the new offer will be up to the decision of the offeror.

In accordance with Article 20 (c), the lapse of time for acceptance may also cause an offer to become null and void, and the offer then is terminated. Article 20 (c) applies where the offer has specified the time limit for acceptance. For purposes of Article 20 (c), the offeree’s failure to accept the offer within the allowed time period will be deemed as a rejection to the offer. Note, however, that since the Contract Law applies “Arrival Rule” to the acceptance, it is essential that the acceptance reach offeror before the expiration day of the offer. The implication of “Arrival Rule” to the acceptance will be further discussed later in this chapter.

The heart of Article 20 (d) is “material alteration”. Under Article 20, an offer will be null and void if the offeree has materially changed the contents of the offer, and the change as such will result in the termination of the offer. The term “material alteration” is defined in Article 30 of the Contract Law as the change in the contract subject matter, quantity, quality, price or remuneration, time or place or method for performance, liability for breach of contract, or dispute settlement, etc. Hence, any change of the above items contained in an offer will make the offer null and void.

2. Acceptance

The concept of acceptance is provided in Article 21 of the Contract Law, which defines acceptance as “a manifestation of the offeree’s assent to an offer”.30 As noted, the Contract Law is the first contract legislation in modern

30 See id., art. 21.

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China that contains the provisions of offer and acceptance though those two terms were actually used in practice for many years before the Contract Law was adopted. Indeed, the concepts of both offer and acceptance are not originated in China, but as provided in the Contract Law, they necessarily reflect some Chinese characteristics. First of all, offer and acceptance are based on the premise that contract is a mutual agreement. Secondly, acceptance, if valid, will result in the conclusion of a contract and no consideration is needed. Thirdly, for certain contracts, their effectiveness would be subject to administrative approval after acceptance.

2.1. Requirements for Acceptance

Yet, pursuant to Article 21, an acceptance is basically to mean that the offeree agrees to the terms and conditions contained in the offer and wants to enter into a contract with the offeror accordingly. Article 25 further provides that a contract is concluded at the time the acceptance takes place.31 Under the Contract Law, however, for an acceptance to be effective, the following three requirements must be met.

The first requirement is “contents consistence” with the offer. As provided in Article 30 of the Contract Law, the consistence rule requires that the contents of the acceptance match the contents of the offer. Thus an alternation to the contents of an offer might affect the effect of the acceptance. However, in application of the consistence rule, the Contract Law divides the alternation into two categories: substantial alteration and non-substantial alteration. According to Article 30, any alteration that involves a change in “the subject matter of the contract, quantity, quality, price or remuneration, time or place or method for performance, liability for breach of contract, or dispute settlement” will be deemed as substantial alteration.32 Otherwise the alteration will be non-substantial.

Under the consistence rule, if the offeree substantially alters the contents of the offer, the acceptance shall constitute a new offer. With regard to the consequences of non-substantial alteration, Article 31 explicitly provides that unless the offeror timely rejects or the offer clearly indicates that the acceptance may not alter the contents of the offer at all, the acceptance shall deemed valid in spite of the alteration, and the contents of the contract shall be those of the acceptance.33 Therefore, unlike substantial alteration, non-substantial alteration to the offer does not necessarily affect the acceptance. To put it differently, what the consistence rule requires is substantial consistence.

31See the Contract Law, art. 25.

32See id., art. 30.

33See id., art. 31.

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The second requirement concerns “Arrival Rule”. In accordance with Article 26, an acceptance becomes effective when the acceptance notice reaches the offeree. Once again, the Contract Law mandates that the acceptance arrive at the offeror in order for the acceptance to take effect. Under Article 22, the acceptance could be made either by notice or by act. In general the acceptance should be made through the means of notice, and the acceptance will take effect when the acceptance notice reaches the offeror. However, as provided in Article 26, if the transaction practice permits or the offer allows the acceptance to be made through an act, the performance of the act, e.g. to deliver the goods, will then constitute the acceptance. Article 26 further provides that if a contract is concluded in the form of data-telex, the arrival time for the acceptance will be the time when the data-telex enters the system.34

A timely arrival of acceptance notice is another important factor in the application of the “Arrival Rule”. Article 23 of the Contract Law makes it prerequisite for an acceptance to take effect that an acceptance shall reaches the offeror within the time limit specified in the offer. Furthermore, in accordance with Article 23, if no time limit specified in the offer for acceptance, the arrival of the acceptance shall be determined in the following ways:

(a)If the offer is made orally, the acceptance shall be made promptly unless otherwise agreed upon by the parties; or

(b)If the offer is made in any other forms, the acceptance shall arrive within a reasonable period of time.35

Often, the reasonable period of time as provided in Article 23 (b) is to be determined according to industrial usages or transaction customs, previous dealings, or nature of the business. In addition, the method to communicate between the parties will also be considered. Thus, the channel that the parties have used to deliver the acceptance may become a relevant determinant as to what time period might be reasonable. Further it has been suggested that to determine a reasonable time period, the courts shall take into consideration the time length that the offeree would normally need to make a sound decision.36

Equally important is the time for an acceptance starts to run. Article 24 of the Contract Law provides three ways under which the time period for acceptance should be calculated. First of all, if the offer is made in the form of a letter or telegram, the time limit for acceptance commences from the date shown on the letter or from the date the telegram is handed in for dispatch. The “date

34See id., art. 26.

35See id., art. 23.

36See Wang Liming, Study on the Contract Law (Vol. I), supra note 3, at p. 233; See also Jing Ping, Detailed Explanation to Contract Law of China, supra note 9 at p. 20.

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shown on the letter” refers to the time the letter of the offer is dated, and the “date for dispatch” means the time when the telegram is given to post office or other office engaged in telegram business for sending the telegram out, which is normally indicated in the official receipt of such office. Secondly, if the letter is not dated, the beginning time will be from the date as shown on the envelope that contains the offer. And thirdly, if the offer is made by means of instantaneous communications such as telephone or facsimile, the time limit for acceptance starts at the moment the offer reaches the offeree, meaning the moment at which the offeree answers the phone or receives the fax.

The third requirement for acceptance is that the acceptance must be made by the offeree to the offeror. This requirement is derived from the definition of the acceptance contained in Article 21 of the Contract Law. Since the acceptance is the manifestation of the offeree’s assent to the offer, it must be made by the offeree. Of course, the acceptance may not have to be made by the offeree personally. It may be made by the authorized agent of the offeree. On the other hand, the acceptance may not necessarily be made by just one offeree. An acceptance could be made by several offerees if the offer is made to more than one specified persons. If, however, the acceptance is made by a third party – a non-intended offeree, it will be regarded as an offer.

Some contract scholars in China also suggest that the acceptance should comply with the format required by the offer. They argue that although under Article 22 of the Contract Law, an acceptance should in general take the form of notice unless otherwise allowed by business usages or indicated in the offer to be made by act, the way the notice is sent to offeror is subject to the requirement of the offer. For example, if the offer states that the acceptance shall be made through telegram, a mailed acceptance may then not be deemed acceptable. Therefore, a failure to follow the format specified in the offer for acceptance may render the acceptance void.37

From a reading of the Contract Law, it is questionable whether an acceptance could be implied. The Contract Law, while defining the acceptance as “a manifestation of offeree’s assent to the offer”, is unclear as to whether the manifestation could be inferred from the conduct – active or passive act of the offeree. More precisely, there is no readily answer to the question whether the offeree’s acceptance to an offer could be manifested by silence. Interestingly, in its “Opinions (Provisional) on the Questions Concerning Implementation of the General Principles of Civil Law of People’s Republic of China,” the Supreme People’s Court divided silence in the context of civil conducts into act-attached silence and non-act silence. According Article 66 of the Opinions, when one party makes to the other party certain claims of civil rights, and the

37 See Wang Liming, Study on the Contract Law (Vol. I), supra note 3 at pp. 236–238.