This document discusses contract law and the formation of contracts. It covers topics such as: - Contractual freedom is limited by several areas of law like tenancy, credit, and competition law. - For a contract to be formed, there needs to be an offer and acceptance. The mirror image rule states the acceptance must match the offer. - There are exceptions to the need for formal requirements for contracts. Oral contracts can be valid except in some areas like real estate. - For an offer to be valid and bind the offeror, it must be sufficiently definite and indicate the intention to be bound if accepted. Withdrawal and revocation rules determine when an offer can no longer be accepted

1. Ulla Terese KræmerBUSINESS LAW
 ulkr@easj.dk

2. Markedsføringsøkonomi | Erhvervsret2
Agreements must be kept
--o--
Contractual freedom
except:
 Tenancy law
 Credit sale contracts law
 Insurance contracts law
 Competition law
 Marketing law
 Interest law
FORMATION OF CONTRACT

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 Make your own law
 only valid between the parties
 If we were to make a contract– you and me– what rules should
we make?
 E.g.
 Preparation
 Attendance
 Participation in lessons
 Consequences of non-compliance
WHAT IS A CONTRACT?

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 Binding?
 The burden of proof?
 Deliberation time?
 International dimension?
Oral contracts?
Exceptions:
 Real estate (registration)
 Marriage settlement
 Cheques
 Tenancy law
 Credit sale contracts law
Main rule: No formal requirements
FORM REQUIREMENTS?

5. Offer + acceptance = contract
“Mirror Image Rule”
THE MODEL OF THE CONTRACTS ACT
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From when is offeror
(seller) bound by his
offer?
OFFER
Main rule : When the offer has
come to the buyers notice
Exceptions:
 Invalid agreements
 The right to withdraw (before it
comes to buyers notice)
 Agreement
 Customs

7. Withdraw your offer before the offer comes to the buyer’s
notice
Why at this time?
 The expectations it creates
WHAT IF THE SELLER REGRETS HIS OFFER?
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8. Main rule: Buyer is not required to respond to an offer
Binding effect of passivity?
Exceptions: The seller may reasonably infer that a contract
relationship was sought, e.g. sends an order confirmation
ACCEPTANCE
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Three time factors:
 The time of sending
Deliberation*
 Return
 ”reach the offeror” or ”come to the buyers notice”?
*”Reasonable deliberation time” - Concrete assessment-
Customs – Price sensitivity – B to B
THE PERIOD FOR ACCEPTANCE

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 Main rule: New offer
 Buyer holds a reasonably justified belief that his acceptance
was in fact made on time
 Seller must notify the buyer without undue delay that his
acceptance was delayed – and therefor not binding for the
seller.
The closer to agreement you were - the greater duty to respond
DELAYED ACCEPTANCE

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 Main rule: Deemed a rejection + counter offer
 Exceptions:
 The seller realise, that the buyer believes that it is an absolute
and unqualified acceptance.
 If the seller don’t inform the buyer about the non-conforming acceptance,
then the seller is binded by the ”counter offer”
NON-CONFORMING ACCEPTANCE

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Dispatch Offer Receivial time Awareness
MODEL FOR FORMATION OF CONTRACTS
Reflection time
Dispatch
Receival timeawareness
Acceptance
Seller Buyer

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 Electronic data interchange
 Requires prior agreement
 More detailed rules have been published by ICC (The
International Chamber of Commerce)
EDI

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BREAK

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The contract model: (As in Danish law)
Offer + acceptance = contract
“Mirror Image Rule”
CISG, PART II ART. 14-24

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When is an offer binding? (For the seller)
 When it reaches the buyer
 If it’s accepted
 The acceptance is conforming
 In due time
ART. 14

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1. One or more specific persons
2. Sufficiently definite
3. The intention of the seller
1. what is not covered? unaddressed advertisements
2. Sufficiently definite, if: Expressly or implicity fixes or make provisions for
determining the quality and the price - Indicates
the goods – open price??
3. Remember: – the parties' agreement shall be interpreted in accordance with the
principle of art. 8– What are the party's intentions?
Customs/permanent business partners - how do the parties enter into agreements?
ART. 14 THREE REQUIREMENTS FOR AN ”OFFER”

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 What is the difference between an offer and an invitation to
make offers?
 Is the indication of the price crucial to saying the "offer” is
binding?
No reported decisions
ART. 14.2

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 Art. 15: Withdraw: before the offer take effect (in CISG – recived in DK
– awareness)
 Art. 16: Revoke: after the offer has taken effect - but before
(sent) acceptance
 A compromise between civil law and common law. Why should the seller be
binded when the buyer is not?
DIFFERENCE BETWEEN ”WITHDRAW” AND ”REVOKE”

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 Irrevocable offers can be withdrawn if:
 If the withdrawal reaches the buyer before or at the same time
as the offer
ART. 15.2. SELLERS RIGHT TO WITHDRAW HIS OFFER

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 Art 16.1.: Offers can be revoked – if the revocation reaches the buyer
before he has dispatched an acceptance
Common law consideration - Why should the seller be (more) binded when the buyer is not?
 Except, if:
 Art 16.2. (a): There are stated some kind of fixed time for acceptance
or that it’s irrevocable
 Art 16.2.(b) The buyer has (good) reason to believe, that the offer
was irrevocable and the buyer has acted in reliance on the offer
(customs/previous business)
ART 16. REVOCATION OF AN OFFER

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 When the buyer rejects an offer it lapses – even if it’s an
irrevocable offer
ART. 17 REJECTION OF THE OFFER

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Signature of a contract
 But could also occur by:
 The goods is taken into use
 Opening the package (software)
 An activity
 E.g. park your car in a parking space) – participating – take the bus
etc.
 Not have used your right to withdraw
 But not:
 inactivity – silence (art. 18)
ART. 18-22 ACCEPTANCE

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 1.: There must be some sort of conduct from the buyer.
 Silence or inactivity does not mount itself to acceptance
 – seller cannot circumvent this rule by stating in the offer ”that silence by the buyer will
be taken to indicate the buyers assent”
 2: An acceptance becomes effective when the buyers indications of
assent reaches the seller - in time– see. art. 24.
- If no time is fixed – reasonable time
 3: Within the period of acceptance it can be the practices which the
parties have established/ payment of the price/ usage - there
indicate the assent
ART. 18 ACCEPTANCE

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The acceptance must ”mirror” the offer!
If not= new offer. As in Danish Contrat law § 6
”Battle-of-forms”
”last shot” or ”knock-out”
Art. 19 does not solve the problem
ART. 19 – THE MIRROR IMAGE RULE

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 In the case of minor amendments, the seller is obliged
without undue delay to objects orally to the discrepancy. If
the seller don’t – the terms of the contract are those with
the modifications contained in the acceptance
Material alterations
 Price - payment – quality, quantity of the goods, place and
time of delivery, extent of one party’s liability to the other
or settlement of disputes - Alter the terms of the offer
materially
ART. 19.2. AND 19.3. UNQUALIFIED ACCEPTANCE

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 When does the period begins?
 Date shown on the letter
 Date shown on the envelope
 Instantaneous communication = runs from the moment it reaches the buyer
 Official holidays or non-business days are included in calculating the
periode, however, if a notice of acceptance cannot be delivered because
of a official holidays or non-business day – the period is extended until the
following business day
ART. 20 TIME FOR ACCEPTANCE

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 The offer lapses
 If the seller wants to accept the late acceptance, the seller
must orally inform the buyer immediately
 Is it clear to the seller that the acceptance was sent in a timely
manner, but events the buyer did not have any influence at, has
led to that the acceptance came too late– Seller shall
immediately orally inform the buyer that he will not be binded
by his offer.
 An obligation to act for the seller, if he does not wish to be bound by its offer
ART. 21 LATE ACCEPTANCE

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 Art. 22: Withdrawal must happen before the acceptance
becomes effective
 Withdraw if the withdrawal reaches the seller before or at the
same time as the acceptance would have become effective
 Art. 24 definition of ”reaches”
ART. 22 WITHDRAWAL OF ACCEPTANCE

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A contract is concluded at the moment when an acceptance of
an offer becomes effective in accordance with the provisions of
this convention
Or
A contract is concluded when the acceptance reaches the seller
ART. 23 CONCLUSION OF CONTRACT