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other party makes no expression through either language or words but takes certain acts purposing to acknowledge the claim, the implied acceptance could then be ascertained. The silence to which no act is attached, however, may be deemed as implied assent only if provided by laws or agreed upon by the parties.38

During the drafting of the Contract Law, acceptance by silence was expressly excluded from the early drafts. For example, under Article 21 (b) of the Draft Contract Law published in August 1998 for the comments from the general public, acceptance must be made in the express form and silence or non-act shall not constitute an acceptance. This provision was later deleted from the final draft because of the concerns that it might not be practical to eliminate the possibility of silence as an acceptance.39 Therefore, in Article 22 of the Contract Law, it is provided that an acceptance may be made in the form of notice or by way of act. In judicial practice, the people’s courts generally recognize acceptance by silence if it can be proved that the parties have specifically agreed upon or business usages allow.40

2.2. Withdrawal of Acceptance

Keep in mind that in China the “Mail Box” rule does not apply to either offer or acceptance. Thus, since the acceptance may not become effective until it reaches the offeror, it then may be withdrawn before becoming effective. In Article 27 of the Contract Law, the withdrawal of an acceptance is permitted and should be made through the means of notice. However, in order for a withdrawal of acceptance to be valid, Article 27 makes it mandatory that the withdrawal notice reach the offeror before or at the same time when the acceptance notice reaches the offeror.41

In pursuit of Article 27 therefore, the withdrawal of an acceptance may be held valid under two circumstances: (a) the withdrawal notice reaches the offeror before the acceptance arrives, or (b) both the withdrawal notice and the acceptance notice reach the offoror at the same time. In both cases, the time factor is critical, which in fact is a matter of burden of proof. It is particularly true that in the second situation, the party claiming an effective withdrawal

38 See Supreme People’s Court, Opinions (Provisional) on the Questions Concerning Implementation of the General Principles of Civil Law of the People’s Republic of China

(1988).

39There are several situations in which an acceptance might be made by silence: (1) agreed upon by the parties in advance; (2) previous dealings or transaction customs; (3) provided by laws.

40See the Economic Law Chamber of the Supreme People’s Court, the Contract Law Explanation and Application, supra note 22 at pp. 131–135.

41See the Contract Law, art. 27.

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must prove that the withdrawal notice arrives at the offeror at the same time when the acceptance arrives.

2.3. Late Acceptance

As noted, under Article 20 (c) of the Contract Law, an offer may become void if no acceptance is made within the time limit specified in the offer. There are two situations in which no acceptance is made before the time for acceptance expires. One situation is that the offeree does not agree to the terms and conditions in the offer and has no desire to enter into the contract with the offeror. Then there will never be an acceptance. The other situation is that for some reasons the offeree makes no acceptance before the expiration of the acceptance time, but an acceptance is made afterwards. The acceptance that is made after the time for acceptance runs out is termed as “late acceptance”.

It is unarguable that when an acceptance is made late it would then up to the offeror to decide the fate of the acceptance. The offeror may choose to deem it as a valid acceptance or otherwise the late acceptance will be considered as a new offer. The Contract Law also adopts the “up-to-offeror” approach in dealing with the late acceptance, but requires a timely notice to inform the offeree of the offeror’s decision if the offeror wants to take the late acceptance. Under Article 28, if the offeree makes an acceptance beyond the time limit for acceptance, the acceptance shall be a new offer unless the offeror notifies the offeree promptly that the acceptance is effective.42

Thus, the implication of Article 28 is that the late acceptance shall have no effect for the purpose of making the contract unless the offeror accepts the late acceptance and timely informs the offeree of the effectiveness of it. In this respect, the late acceptance on the one hand may still be regarded as acceptance and its effect is subject to the offeror’s cognizance; and on the other hand, the late acceptance may become a new offer and the offeror may decide whether to accept within a reasonable period of time or to reject. In the words of many Chinese scholars, Article 28 of the Contract Law actually grants the offeror an option to deem the late acceptance as if it was made timely or to treat it as a new offer.43

2.4. Late Arrival of Acceptance

As indicated, under the Contract Law an acceptance will not take effect until it arrives at the offeror. The late arrival of acceptance, however, is different

42See the Contract Law, art. 28.

43See the Economic Law Chamber of the Supreme People’s Court, the Contract Law Explanation and Application, supra note 15 at p. 242.

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from late acceptance, and it occurs when the offeree made the acceptance within the time limit for acceptance, but the acceptance reached the offeror after the acceptance deadline. In an attempt to separate this situation from the late acceptance, the Contract Law recognizes the effectiveness of the late arrived acceptance with an exception that the offeror clearly indicates otherwise.

Article 29 of the Contract Law specifically deals with the acceptance that arrives late. Under Article 29, if the offeree dispatches the acceptance within the time limit and under normal circumstances the acceptance could reach the offeror, but due to other reasons the acceptance arrives beyond the time limit, the acceptance shall be effective unless the offeror informs the offeree promptly that the acceptance is not acceptable because it exceeds the time allowed.44 Obviously, an acceptance that was timely sent but arrived late will generally be assumed to be effective absent offeror’s rejection.

However, Article 29 offers no definition as to what would be the “normal circumstances” and what would constitute “other reasons” that cause the delay of the arrival of the acceptance. As a practical matter, the general understanding in the people’s courts is that the “normal circumstances” should be those that are commonly acceptable under the customs or usages of the business dealings or particular industry. The determination of the “normal circumstances” will of course largely depend on the evidence provided for that purpose. With regard to “other reasons,” although a case-by-case analysis might also be needed, they should be something that could not be blamed as the offeree’s fault and usually would not happen (e.g. severe weather prevents the post office from delivering the mail timely).45

2.5. Acceptance and Conclusion of Contract

A very common notion under the Contract Law is that the conclusion (meaning formation) of a contract is dependent on the effectiveness of the acceptance. According to Article 25, a contract is concluded when acceptance becomes effective. In light of the Contract Law, the conclusion of contract means that the parties have reached a mutual assent, which demonstrates that the parties have agreed on the terms and conditions of the contract. The conclusion of the contract may also serve as an indicator of the beginning of the contractual rights and obligations between the parties. Basically there are two factors that affect the effectiveness of acceptance. These two factors are the time and place.

In an attempt to clearly address the time of contract, the Contract Law focuses on the way in which a contract is concluded. In addition to Article 26

44See the Contract Law, art. 29.

45See Economic Law Chamber of the Supreme People’s Court, the Contract Law Explanation and Application, supra note 22 at p. 149.

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that provides the “arrival rule” for acceptance to take effect, Article 32 further stipulates that when a contract is made in writing, the contract is concluded at the time both parties sign or affix a seal on it.46 Although Article 32 does not specify which one controls if the signature and seal are made at different times, the general rule is the doctrine of “first in time”. Moreover, under Article 33, if the contract is concluded in the form of a letter or data-telex, etc., a party may request to sign a letter of confirmation.47 Under this circumstance, the contract is concluded when the confirmation letter is signed.

With regard to the place of conclusion of contract, it is provided in a more specific way in the Contract Law because the place of conclusion of contract is regarded as an essential element that would affect the matters of jurisdiction (and choice of law in foreign cases) concerning the contract disputes. First of all, Article 34 adopts a general principle that the place where the acceptance takes effect is the place of conclusion of contract. Secondly, Article 34 contains a special provision stating that when the contract is concluded in the form of data-telex, the main business place of the recipient shall be the place of conclusion of contract, and if there is no main business place the recipient’s habitual residence shall be considered as the place of conclusion of contract. Article 34 also permits the choice made by the parties if the parties have agreed otherwise as to the place of conclusion of contract.48 And thirdly, in accordance with Article 35, if the contract is made in writing, the place where both parties sign or affix a seal shall be the place where the contract is concluded.49

Indeed, Article 34 of the Contract Law provides how the place of conclusion of a contract is to be determined pertaining to the particular way that the contract is concluded. But it should kept in mind that Article 34 provision is

46See the Contract Law, art. 32.

47See id., art. 33.

48See id., art. 34.

49Note that the Contract does not define the terms “Main Business Place” and “Habitual Residence”. In the Civil Code (1986), the term “Domicile” rather than “Main Business Place” is used for business entity. Under Article 39 of the Civil Code, the domicile of a business entity (generally phrased as legal person) is the place where its main administrative office is located. It is then unclear whether the main administrative office could be deemed as the main business place. As far as a citizen (natural person) is concerned, Article 15 of the Civil Code provides that the domicile of a citizen shall be the place where his residence is registered, and if his habitual residence differs from his domicile, his habitual residence shall be regarded as his domicile. According to the Supreme Court’s interpretation, the habitual residence of a citizen is the place where he has lived consecutively for more than one year after being away from his domicile [Article 9 of the Supreme Court’s Opinions (Provisional) on Several Matters concerning Implementation and application of the General Principles of Civil Law of China (1988)].