Introduction to

Contract Law
DR. JASMIN KOLLMANN

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Content
• What is a contract?
• Basic features of contracts
• Common law particularities
• Chinese contract law

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Contracts - Basics

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What is a contract?
• Contract
◦ an agreement, a set of promises, that two parties make to each other
◦ and that the law recognizes and enforces
• Contract law
◦ law of exchange
◦ legal rules that enforce agreements

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Did you just form a contract?
You go out to dinner with a friend and say: „Wouldn‘t it be awesome
if we could do business together? I really need to buy a thousand
widgets.“
Your friend says: „We sell widgets. I could sell you a thousand
widgets for $10 a widget.“
You say: „That‘s awesome!“

• CONTRACT???

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Contracts are everywhere, e.g.

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Basic elements:
• Agreement
◦ Complete
◦ Deliberate
◦ Voluntary
• Two or more competent persons
• Mutual consideration
• Form
• Legality

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Example: Sales Contract
• Benjamin offers to sell his bike to Lily for $100.
◦ Offer
◦ Benjamin is the offeror.
• Lily agrees and gives Benjamin $100.
◦ Acceptance
◦ Lily is the offeree.

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Example: Contract Negotiation
• 2nd hand clothes:
• Susie: I‘ll give you $ 100 for that bag.
• Emily: But I‘d like to get $150 for it.
• Susie: Hm, then I will go look somewhere else.
• Emily: Wait, I‘ll take the $100.
• Susie: [pays $100]

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Invitation to Treat
• „50% off on i-Phones, Saturday only!“
• Jenny goes to the store on Saturday afternoon
• „i-Phones are sold out.“

• Contract?

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Implied Contract
• You enter a little shop, grab a can of coke, put it on the cashier‘s
desk, and show your WeChat code to pay.
• Contract?
• Implied Contract
◦ Formed by conduct or conduct + words
• Express Contract
◦ Formed by written or oral words

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Agree to a deal
• Meeting of minds
• Secretly thinking – „I don‘t want this contract“
◦ Contract is a voluntary obligation
◦ Intention corresponding to reasonable meaning of words
• Mutual assent
• Threshold when you agree and can be held liable

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Common Law
Particularities vs.
Chinese Contract Law

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Threshold for contractual liability
• Action in contract only if parties consented
• Time consuming and expensive negotiation - stopped
◦ Contractual damages?
◦ possible in some civil law countries
◦ Article 500 PRC Civil Code

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Promises subject to contract law
• Are all voluntary assumed obligations enforceable?
• Statute of frauds requires written document
◦ E.g. transfer of land
◦ „Healing“ possible?
◦ Art 490 (2) PRC Civil Code
• Social promises
◦ Generally not enforceable

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Promises subject to contract law
• Doctrine of consideration
◦ Giving a gift
◦ Arts 657ff PRC Civil Code
• Example:
◦ Bonus for work upon retirement – notarized
◦ Common law: not enforceable
◦ Civil law: enforceable
◦ Art 658 (2) PRC Civil Code

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Liability for Breach of Contract
• George: Hand with scar
• Doctor promised surgery for perfect hand
◦ Surgery failed
• Damages – amount?
◦ Restitution: achieve situation as if the contract was performed correctly
◦ Common law: monetary damages
◦ Civil law: „restitution in kind“
◦ Arts 577ff PCR Civil Code

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Contract Law of the
People‘s Republic of
China
CIVIL CODE ADOPTED ON 28 MAY 2020
ENTERED INTO EFFECT ON 1 JANUARY 2021

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Book Three - Contracts
Article 464
A contract is an agreement on the establishment, modification, or
termination of a civil juristic relationship between persons of the civil
law.
An agreement on establishing a marriage, adoption, guardianship, or
the like personal relationships shall be governed by the provisions of
laws providing for such personal relationships; in the absence of such
provisions, the provisions of this Book may be applied mutatis
mutandis according to the nature of such agreements.

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Protection of Parties
Article 465
A contract formed in accordance with law is protected by law.
A contract formed in accordance with law is legally binding only on
the parties thereto, unless otherwise provided by law.

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Form of contracts
Article 469
The parties may conclude a contract in writing, orally, or in other forms.
A writing refers to any form that renders the content contained therein
capable of being represented in a tangible form, such as a written
agreement, letter, telegram, telex, or facsimile.
A data message in any form, such as electronic data interchange and e-
mails, that renders the content contained therein capable of being
represented in a tangible form and accessible for reference and use at any
time shall be deemed as a writing.

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Offer - Acceptance
Article 471
The parties may conclude a contract by making an offer and
acceptance or other means.

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Definition of Offer
Article 472
An offer is an expression of intent to conclude a contract with
another person, and the expression of intent shall conform to the
following conditions:
(1) the content shall be specific and definite; and
(2) it is indicated therein that the offeror is to be bound by his
expression of intent upon acceptance thereof by an offeree.

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Invitation to offer
Article 473
An invitation to offer is a manifestation that a person expects
another person to make an offer to him. Auction announcements,
bidding announcements, stock prospectuses, bond prospectuses,
fund prospectuses, commercial advertisements and promotions, and
mailed price catalogs, and the like, are invitations to offer.
A commercial advertisement and promotion shall constitute an offer
if its content conforms to the conditions for an offer.

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Definition of Acceptance
Article 479
An acceptance is an expression of intent of the offeree to accept an
offer.

Article 480
An acceptance shall be made by means of notice, except that an
acceptance may be made by performing an act according to the
parties’ course of dealing or as indicated in the offer.

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Formation of Contract
Article 483
A contract is formed at the time when an acceptance becomes
effective, unless otherwise provided by law or agreed by the parties.

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Article 509
The parties shall fully perform their respective obligations as contracted.
The parties shall comply with the principle of good faith, and perform
such obligations as sending notices, rendering assistances, and keeping
confidentiality in accordance with the nature and purpose of the contract
and the course of dealing.
The parties shall avoid wasting the resources, polluting the environment,
or damaging the ecology in the course of performance of the contract.

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Terms of contract
Article 470
The content of a contract shall be agreed by the parties and generally includes the
following clauses:
(1) name or designation and domicile of each party;
(2) objects;
(3) quantity;
(4) quality;
(5) price or remuneration;
(6) time period, place, and manner of performance;
(7) default liability; and
(8) dispute resolution.
The parties may conclude a contract with reference to the various types of model
contracts

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Vocabulary
• Contract • Doctrine of Consideration
• Enforceable • Express Contract
• Offeror – Offeree • Implied Contract
• Offer – Acceptance • Statute of Frauds
• Meeting of the minds • Restitution in kind
• Counteroffer • Legally binding
• Invitation to treat • Terms of Contract

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