AcceptanceAcceptance

Meaning of acceptance: Meaning of acceptance: Conformity of Conformity of mutual declaration of intentionmutual declaration of intention

Manner of acceptanceManner of acceptance Effectiveness of acceptanceEffectiveness of acceptance Pre-contractual liabilitiesPre-contractual liabilities

Conformity of mutual declaration of intentionConformity of mutual declaration of intention

Contract Formed upon Contract Formed upon Effectiveness of AcceptanceEffectiveness of Acceptance PRC CL Article 13: A contract is PRC CL Article 13: A contract is

concluded by the exchange of an concluded by the exchange of an offer and an acceptance.offer and an acceptance.

PRC CL Article 25:A contract is PRC CL Article 25:A contract is formed once the acceptance formed once the acceptance becomes effective.becomes effective.

Conformity of mutual declaration of intentionConformity of mutual declaration of intention

If the parties agree on all the If the parties agree on all the essential essential elementselements of the contract but have of the contract but have expressed no intent as to the expressed no intent as to the non-essential non-essential elementselements, the contract shall be , the contract shall be presumed to presumed to be constitutedbe constituted.. In the absence of an In the absence of an agreement on the above-mentioned non-agreement on the above-mentioned non-essential elements, the court shall decide essential elements, the court shall decide them according to the nature of the affair.them according to the nature of the affair.(RCC153II)(RCC153II)

Indeterminate Terms;Indeterminate Terms;Supplementary AgreementSupplementary Agreement

PRC CL Article 61PRC CL Article 61 If a term such as quality, price or If a term such as quality, price or

remuneration, or place of performance remuneration, or place of performance etc. was not prescribed or clearly etc. was not prescribed or clearly prescribed, after the contract has taken prescribed, after the contract has taken effect, effect, the parties may supplement it the parties may supplement it through agreementthrough agreement; if the parties fail to ; if the parties fail to reach a supplementary agreement, such reach a supplementary agreement, such term shall be term shall be determined in accordance determined in accordance with the relevant provisions of the with the relevant provisions of the contractcontract or in accordance with the or in accordance with the relevant usage. relevant usage.

Gap FillingGap Filling PRC CL Article 62  PRC CL Article 62 

Where a relevant term of the contract was not clearly Where a relevant term of the contract was not clearly prescribed, and cannot be determined in accordance with prescribed, and cannot be determined in accordance with Article 61 hereof, one of the following provisions applies:Article 61 hereof, one of the following provisions applies:

(i)     If quality requirement was not clearly prescribed, (i)     If quality requirement was not clearly prescribed, performance shall be in accordance with the state standard or performance shall be in accordance with the state standard or industry standard; absent any state or industry standard, industry standard; absent any state or industry standard, performance shall be in accordance with the customary performance shall be in accordance with the customary standard or any particular standard consistent with the standard or any particular standard consistent with the purpose of the contract;purpose of the contract;

(ii)    If price or remuneration was not clearly prescribed, (ii)    If price or remuneration was not clearly prescribed, performance shall be in accordance with the prevailing market performance shall be in accordance with the prevailing market price at the place of performance at the time the contract was price at the place of performance at the time the contract was concluded, and if adoption of a price mandated by the concluded, and if adoption of a price mandated by the government or based on government issued pricing guidelines government or based on government issued pricing guidelines is required by law, such requirement applies;is required by law, such requirement applies;

Gap FillingGap Filling (iii)   Where the place of performance was not clearly (iii)   Where the place of performance was not clearly

prescribed, if the obligation is payment of money, prescribed, if the obligation is payment of money, performance shall be at the place where the payee is performance shall be at the place where the payee is located; if the obligation is delivery of immovable property, located; if the obligation is delivery of immovable property, performance shall be at the place where the immovable performance shall be at the place where the immovable property is located; for any other subject matter, property is located; for any other subject matter, performance shall be at the place where the obligor is performance shall be at the place where the obligor is located;located;

(iv)    If the time of performance was not clearly prescribed, (iv)    If the time of performance was not clearly prescribed, the obligor may perform, and the obligee may require the obligor may perform, and the obligee may require performance, at any time, provided that the other party performance, at any time, provided that the other party shall be given the time required for preparation;shall be given the time required for preparation;

(v)     If the method of performance was not clearly (v)     If the method of performance was not clearly prescribed, performance shall be rendered in a manner prescribed, performance shall be rendered in a manner which is conducive to realizing the purpose of the contract;which is conducive to realizing the purpose of the contract;

(vi)    If the party responsible for the expenses of (vi)    If the party responsible for the expenses of performance was not clearly prescribed, the obligor shall performance was not clearly prescribed, the obligor shall bear the expenses. bear the expenses.

Effectiveness of AcceptanceEffectiveness of Acceptance Express acceptanceExpress acceptance

Notice of acceptanceNotice of acceptance When effectWhen effect

A notice of acceptance becomes effective once A notice of acceptance becomes effective once it reaches the it reaches the offerorofferor. (PRC CL Article 26)  . (PRC CL Article 26) 

An acceptance of an offer becomes effective at the moment An acceptance of an offer becomes effective at the moment the the indication of assent reaches the offerorindication of assent reaches the offeror. (CISG art 18 para2). (CISG art 18 para2)

An acceptance is not effective if the indication of An acceptance is not effective if the indication of assent does not reach the offeror within the time he assent does not reach the offeror within the time he has fixed or, if no time is fixed, within a reasonable has fixed or, if no time is fixed, within a reasonable time, due account being taken of the circumstances of time, due account being taken of the circumstances of the transaction, including the rapidity of the means of the transaction, including the rapidity of the means of communication employed by the offeror. (CISG art 18 communication employed by the offeror. (CISG art 18 para2)para2)

Oral offerOral offer An oral offer must be accepted immediately unless the An oral offer must be accepted immediately unless the

circumstances indicate otherwise. circumstances indicate otherwise. (CISG art 18 para2)(CISG art 18 para2)

Effectiveness of AcceptanceEffectiveness of Acceptance Implied acceptanceImplied acceptance

Performance of an actPerformance of an act Where the acceptance does not require notification, it becomes Where the acceptance does not require notification, it becomes

effective once effective once an act of acceptance is performedan act of acceptance is performed in accordance in accordance with the relevant usage or as required by the offer. (PRC CL art 26)with the relevant usage or as required by the offer. (PRC CL art 26)

A statement made by or other conduct of the offeree A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance. Silence or indicating assent to an offer is an acceptance. Silence or inactivity does not in itself amount to acceptance. (CISG art inactivity does not in itself amount to acceptance. (CISG art 18 para1)18 para1)

If, by virtue of the offer or as a result of practices which the If, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, parties have established between themselves or of usage, the offeree may the offeree may indicate assent by performing an actindicate assent by performing an act, such , such as one relating to the as one relating to the dispatch of the goods or payment of dispatch of the goods or payment of the pricethe price, without notice to the offeror, the acceptance is , without notice to the offeror, the acceptance is effective at the moment effective at the moment the act is performedthe act is performed, providing , providing that the act is performed within the period of time laid that the act is performed within the period of time laid down in the preceding paragraph.down in the preceding paragraph.(CISG art 18 para3)(CISG art 18 para3)

Notice of acceptance

Binding offer

Offer arrived

Binding offer

Notice of acceptance

Binding offer

Notice of acceptance

Contract Formed

Expired day of Acceptability

Contract Formed

Binding offer

Notice of acceptance

Contract Formed

Ineffective offer

Dispatch rule

Arrival rule

Dispatch rule

Arrival rule

UNDROIT PrinciplesUNDROIT Principles Article 2.1.14 (Contract with terms Article 2.1.14 (Contract with terms

deliberately left open) deliberately left open) (1) If the parties intend to conclude a contract, (1) If the parties intend to conclude a contract,

the fact that they intentionally leave a term to the fact that they intentionally leave a term to be agreed upon in further negotiations or to be be agreed upon in further negotiations or to be determined by a third person does not prevent determined by a third person does not prevent a contract from coming into existence. a contract from coming into existence.

(2) The existence of the contract is not affected (2) The existence of the contract is not affected by the fact that subsequently by the fact that subsequently

(a) the parties reach no agreement on the term; (a) the parties reach no agreement on the term; or or

(b) the third person does not determine the (b) the third person does not determine the term, provided that there is an alternative means term, provided that there is an alternative means of rendering the term definite that is reasonable of rendering the term definite that is reasonable in the circumstances, having regard to the in the circumstances, having regard to the intention of the parties.to or continue intention of the parties.to or continue negotiations when intending not to reach an negotiations when intending not to reach an agreement with the other party.agreement with the other party.

UNDROIT PrinciplesUNDROIT Principles

Article 2.1.13 (Conclusion of contract Article 2.1.13 (Conclusion of contract dependent on agreement dependent on agreement on specific matters or in a particular on specific matters or in a particular form) form) Where in the course of negotiations one Where in the course of negotiations one

of the parties insists that the contract is of the parties insists that the contract is not concluded until there is agreement on not concluded until there is agreement on specific matters or in a particular form, specific matters or in a particular form, no contract is concluded before no contract is concluded before agreement is reached on those matters or agreement is reached on those matters or in that form.in that form.

Counter offerCounter offer Late acceptanceLate acceptance

An acceptance which arrives late, except under the An acceptance which arrives late, except under the circumstances in the preceding article, shall be deemed circumstances in the preceding article, shall be deemed to be a new offer. (ROC Civil Code art 160)to be a new offer. (ROC Civil Code art 160)

An acceptance dispatched by the offeree after expiration An acceptance dispatched by the offeree after expiration of the period for acceptance constitutes a new offer, of the period for acceptance constitutes a new offer, unless the offeror timely advises the offeree that the unless the offeror timely advises the offeree that the acceptance is valid. (PRC CL Article 28)   acceptance is valid. (PRC CL Article 28)  

Acceptance with modificationAcceptance with modification An acceptance with amplifications, limitations or other An acceptance with amplifications, limitations or other

alterations shall be deemed to be a refusal of the alterations shall be deemed to be a refusal of the original offer and the making of a new offer. (ROC Civil original offer and the making of a new offer. (ROC Civil Code art 160)Code art 160)

PRC Contract LawPRC Contract Law Article 28      Late AcceptanceArticle 28      Late Acceptance

An acceptance dispatched by the offeree after expiration of the period for An acceptance dispatched by the offeree after expiration of the period for acceptance constitutes a new offer, unless the offeror timely advises the acceptance constitutes a new offer, unless the offeror timely advises the offeree that the acceptance is valid. offeree that the acceptance is valid.

Article 29      Delayed Transmission of AcceptanceArticle 29      Delayed Transmission of AcceptanceIf the offeree dispatched its acceptance within the period for acceptance, If the offeree dispatched its acceptance within the period for acceptance, and the acceptance, which would otherwise have reached the offeror in due and the acceptance, which would otherwise have reached the offeror in due time under normal circumstances, reaches the offeror after expiration of time under normal circumstances, reaches the offeror after expiration of the period for acceptance due to any other reason, the acceptance is valid, the period for acceptance due to any other reason, the acceptance is valid, unless the offeror timely advises the offeree that the acceptance has been unless the offeror timely advises the offeree that the acceptance has been rejected on grounds of the delay. rejected on grounds of the delay.

Article 30      Acceptance Containing Material ChangeArticle 30      Acceptance Containing Material ChangeThe terms of the acceptance shall be identical to those of the offer. A The terms of the acceptance shall be identical to those of the offer. A purported acceptance dispatched by the offeree which materially alters the purported acceptance dispatched by the offeree which materially alters the terms of the offer constitutes a new offer. A change in the subject matter, terms of the offer constitutes a new offer. A change in the subject matter, quantity, quality, price or remuneration, time, place and method of quantity, quality, price or remuneration, time, place and method of performance, liabilities for breach of contract or method of dispute performance, liabilities for breach of contract or method of dispute resolution is a material change to the terms of the offer. resolution is a material change to the terms of the offer.

Article 31      Acceptance Containing Non-material ChangesArticle 31      Acceptance Containing Non-material ChangesAn acceptance containing nonmaterial changes to the terms of the offer is An acceptance containing nonmaterial changes to the terms of the offer is nevertheless valid and the terms thereof prevail as the terms of the nevertheless valid and the terms thereof prevail as the terms of the contract, unless the offeror timely objects to such changes or the offer contract, unless the offeror timely objects to such changes or the offer indicated that acceptance may not contain any change to the terms thereof.indicated that acceptance may not contain any change to the terms thereof.

A study on formation IssueA study on formation Issue Plaintiff, a company operating international trade business, Plaintiff, a company operating international trade business,

sent a facsimile to defendant inquiring the inventory of No. sent a facsimile to defendant inquiring the inventory of No. 1703 linen and its price list. Defendant replied the 1703 linen and its price list. Defendant replied the inventory of linen is enough for sale and the price is $15 inventory of linen is enough for sale and the price is $15 per meter. Meanwhile 10% down payment should be paid per meter. Meanwhile 10% down payment should be paid at the time sale is concluded. Afterward, plaintiff sent a at the time sale is concluded. Afterward, plaintiff sent a mail expressing his willingness to purchase the linen but mail expressing his willingness to purchase the linen but request the contract of sale should be in writing. A week request the contract of sale should be in writing. A week later, the defendant delivered a written contract drafted by later, the defendant delivered a written contract drafted by him to plaintiff. Soon after plaintiff received the contract, he him to plaintiff. Soon after plaintiff received the contract, he changed the price, set forth in the contract, from $15 per changed the price, set forth in the contract, from $15 per meter down to $14.5 per meter and set out an extra meter down to $14.5 per meter and set out an extra stipulation read as “time for delivery shall be confirmed by stipulation read as “time for delivery shall be confirmed by the purchaser (plaintiff)” right after the last paragraph. the purchaser (plaintiff)” right after the last paragraph. Plaintiff sent the contract with its signature and remitted Plaintiff sent the contract with its signature and remitted $7,250 as down payment to defendant. $7,250 as down payment to defendant.

Defendant prepared the linen for delivery up to Defendant prepared the linen for delivery up to 5000 meters within ten days and requested plaintiff 5000 meters within ten days and requested plaintiff by mail for delivery. Plaintiff refused to confirm the by mail for delivery. Plaintiff refused to confirm the delivery time on the account of its insufficient delivery time on the account of its insufficient storage space for stocking the linen. Defendant storage space for stocking the linen. Defendant requested the delivery again and informed plaintiff requested the delivery again and informed plaintiff that the linen will be sold to the other purchasers if that the linen will be sold to the other purchasers if tender of the linen cannot be accepted. Plaintiff tender of the linen cannot be accepted. Plaintiff expressed his hope to postpone the delivery for a expressed his hope to postpone the delivery for a month. Regardless of plaintiff’s request, defendant month. Regardless of plaintiff’s request, defendant resold the linen to the other person and returned resold the linen to the other person and returned the down payment to plaintiff. Plaintiff initiated an the down payment to plaintiff. Plaintiff initiated an action for damage arising from nonperformance of action for damage arising from nonperformance of the sale of linen. Was the contract formed? the sale of linen. Was the contract formed?

Culpa in ContrahendoCulpa in Contrahendo

Duty between contractual partyDuty between contractual party Pre-contractual dutyPre-contractual duty

DutyDuty Duty of mutual cooperation, explanation, information, notice, Duty of mutual cooperation, explanation, information, notice,

assistance, protection, care, confidentiality, or others.assistance, protection, care, confidentiality, or others. Liabilities:Liabilities:

Reliance interest: Interest lost or determent sufferedReliance interest: Interest lost or determent suffered Culpa in ContrahendoCulpa in Contrahendo

Contractual dutyContractual duty DutyDuty

Duty of performance arising from contractDuty of performance arising from contract LiabilityLiability

Expectation interest: Interest lost or determent suffered Expectation interest: Interest lost or determent suffered Post-contractual dutyPost-contractual duty

DutyDuty Duty to maintain the effect of performance, a duty to do or refrain Duty to maintain the effect of performance, a duty to do or refrain

from doing after contractual obligation discharged.from doing after contractual obligation discharged. Issuing a certificate for employment (Taiwan Basic condition Act for Issuing a certificate for employment (Taiwan Basic condition Act for

Employment art 19 ); issuing a diagnostic certificate (Taiwan Employment art 19 ); issuing a diagnostic certificate (Taiwan Medical Care Act art. 52); nondisclosure of trade secret.Medical Care Act art. 52); nondisclosure of trade secret.

LiabilityLiability Expectation interest: Interest lost or determent suffered Expectation interest: Interest lost or determent suffered

Culpa in ContrahendoCulpa in Contrahendo

Rudolf von JheringRudolf von Jhering Culpa in contrahendo oder Schadensersatz bei Culpa in contrahendo oder Schadensersatz bei

nichtigen oder nicht zur Perfektion gelagten nichtigen oder nicht zur Perfektion gelagten Vertragen, Jherings Jahrbucher fur die Vertragen, Jherings Jahrbucher fur die Dogmatik des Burgerlichen Rechts (1861)Dogmatik des Burgerlichen Rechts (1861)

Reason behind Reason behind Culpa in ContrahendoCulpa in Contrahendo Duty of Good faith before or upon concluding Duty of Good faith before or upon concluding

the contract the contract Effect of Effect of Culpa in ContrahendoCulpa in Contrahendo

Damage: Reliance InterestDamage: Reliance Interest

Pre-contractual Liabilities in ROC Civil CodePre-contractual Liabilities in ROC Civil Code

Instances incurred pre-contractual Instances incurred pre-contractual liabilitiesliabilities Revocation of declaration of intention due to Revocation of declaration of intention due to

mistakemistake Agency without authorityAgency without authority Impossibility in the conclusion of contract Impossibility in the conclusion of contract Fail to inform the other partyFail to inform the other party Negotiation in bad faith Negotiation in bad faith Disclosure of secretDisclosure of secret Fail to protect the other partyFail to protect the other party

Pre-contractual Liabilities arising from mistake in Pre-contractual Liabilities arising from mistake in ROC Civil CodeROC Civil Code

Article88Article88If the expression was acting under a mistake as to the contents of his expression of If the expression was acting under a mistake as to the contents of his expression of intent, or had known the situation of affairs, he would not make the expression; he intent, or had known the situation of affairs, he would not make the expression; he may revoke the expression; provided that the mistake or the ignorance of the affairs may revoke the expression; provided that the mistake or the ignorance of the affairs was not due to his own fault.was not due to his own fault.If a mistake in respect to the qualification of the other party or the nature of a thing If a mistake in respect to the qualification of the other party or the nature of a thing is regarded as essential in trade, it shall be deemed a mistake as to the contents of is regarded as essential in trade, it shall be deemed a mistake as to the contents of the expression of intent.the expression of intent.

Article89Article89If an expression of intent has been incorrectly transmitted by the person or institution If an expression of intent has been incorrectly transmitted by the person or institution employed for its transmission, it may be revoked under the same conditions as employed for its transmission, it may be revoked under the same conditions as provided in the preceding article.provided in the preceding article.

Article90Article90The right of revocation provided in the preceding two articles would be extinguished The right of revocation provided in the preceding two articles would be extinguished after one year from the date of expression.after one year from the date of expression.

Article91Article91If a expression of intent is revoked according to Article 88 or Article 89, the expresser If a expression of intent is revoked according to Article 88 or Article 89, the expresser is bound to is bound to compensate for any injury which the other party or any third party may compensate for any injury which the other party or any third party may have sustained by relying upon the validity of the expression,have sustained by relying upon the validity of the expression, except the injured except the injured party knew, or might know, of the ground on which the expression was revocable.party knew, or might know, of the ground on which the expression was revocable.

Pre-contractual liability arising from agency Pre-contractual liability arising from agency without authority in ROC Civil Codewithout authority in ROC Civil Code

Article 110Article 110If one who has no delegated power to If one who has no delegated power to make a juridical act as an agent of make a juridical act as an agent of another person, another person, he is liable for the he is liable for the injury to the bona fide other party.injury to the bona fide other party.

Pre-contractual liabilities arising from impossibility in the Pre-contractual liabilities arising from impossibility in the conclusion of contract in ROC Civil Codeconclusion of contract in ROC Civil Code

If the prestation of a contract is impossible, it is If the prestation of a contract is impossible, it is void.void. However, if the impossibility can be However, if the impossibility can be removed and if the parties, at the time when removed and if the parties, at the time when the contract was constituted, intended to have the contract was constituted, intended to have it performed after the removal of the it performed after the removal of the impossibility, the contract is still valid. (Article impossibility, the contract is still valid. (Article 246 para 1)246 para 1)

If the contract is subject to a suspenseful If the contract is subject to a suspenseful condition or to a time of commencement, and if condition or to a time of commencement, and if the impossibility has been removed prior to the the impossibility has been removed prior to the fulfillment of the condition or the arrival of the fulfillment of the condition or the arrival of the time, the contract is valid. (Article 246 para 2)time, the contract is valid. (Article 246 para 2)

Pre-contractual liabilities arising from impossibility in the Pre-contractual liabilities arising from impossibility in the conclusion of contract in ROC Civil Codeconclusion of contract in ROC Civil Code

When a contract is void on account of the impossibility of When a contract is void on account of the impossibility of the performance, the party who at the time of constituting the performance, the party who at the time of constituting the contract knew or might know the impossibility is the contract knew or might know the impossibility is responsible for the injury caused to the other party who, responsible for the injury caused to the other party who, without his own negligence, believed in the validity of the without his own negligence, believed in the validity of the contract.contract. (Article 247 para 1)(Article 247 para 1)

The provision of the preceding paragraph shall be mutatis The provision of the preceding paragraph shall be mutatis mutandis applied if the prestation is partially impossible mutandis applied if the prestation is partially impossible and the contract is valid in respect to the possible part, or if and the contract is valid in respect to the possible part, or if one of the several prestations subject to a choice is one of the several prestations subject to a choice is impossible.impossible. (Article 247 para 2) (Article 247 para 2)

The claims for the injury in the preceding two paragraphs The claims for the injury in the preceding two paragraphs shall be extinguished by prescription if not exercised within shall be extinguished by prescription if not exercised within two years. (Article 247 para 3)two years. (Article 247 para 3)

Other Pre-contractual Liabilities in ROC Civil CodeOther Pre-contractual Liabilities in ROC Civil Code

Even though the contract is not constituted, one of Even though the contract is not constituted, one of the parties is responsible for the damage caused to the parties is responsible for the damage caused to the other party who without his own negligence the other party who without his own negligence believed in the constitution of the contract when he, believed in the constitution of the contract when he, in order to prepare or negotiate for the contract, has in order to prepare or negotiate for the contract, has done either of the following:done either of the following: (1) Hidden in bad faith or dishonestly explained the gravely (1) Hidden in bad faith or dishonestly explained the gravely

relevant matter of the contract when the other party relevant matter of the contract when the other party inquired.inquired.

(2) Intentionally or gross negligently disclose the other (2) Intentionally or gross negligently disclose the other party’s secret known or held by himself which the other party’s secret known or held by himself which the other party has explicitly expressed to be kept in secret.party has explicitly expressed to be kept in secret.

(3) Any other matter obviously against good faith.(3) Any other matter obviously against good faith. The claim for the injury in the preceding paragraph The claim for the injury in the preceding paragraph

shall be extinguished if it is not exercised within two shall be extinguished if it is not exercised within two years (Article 245-1)years (Article 245-1)

Pre-contractual Liabilities in PRC Contract LawPre-contractual Liabilities in PRC Contract Law

Article 42 Article 42  Where in the course of concluding a contract, a party Where in the course of concluding a contract, a party

engaged in any of the following conducts, thereby causing engaged in any of the following conducts, thereby causing loss to the other party, it shall be liable for damages:loss to the other party, it shall be liable for damages:

(i)  (i)  negotiating in bad faithnegotiating in bad faith under the pretext of concluding a under the pretext of concluding a contract;contract;

(ii) (ii) intentionally concealingintentionally concealing a material facta material fact relating to the relating to the conclusion of the contract or conclusion of the contract or supplying false informationsupplying false information;;

(iii) any other conduct which (iii) any other conduct which violates the principle of good violates the principle of good faithfaith. .

Article 43Article 43 A party may not disclose or improperly use any trade A party may not disclose or improperly use any trade

secret which it became aware of in the course of secret which it became aware of in the course of negotiating a contract, regardless of whether a contract is negotiating a contract, regardless of whether a contract is formed. If the party formed. If the party disclosed or improperly used such disclosed or improperly used such trade secrettrade secret, thereby causing loss to the other party, it , thereby causing loss to the other party, it shall be liable for damages.  shall be liable for damages.        

UNDROIT Principles of UNDROIT Principles of International Commercial ContractsInternational Commercial Contracts Negotiations in bad faithNegotiations in bad faith

(1) A party is free to negotiate and is not (1) A party is free to negotiate and is not liable for failure to reach an agreement. liable for failure to reach an agreement.

(2) However, a party who negotiates or (2) However, a party who negotiates or breaks off negotiations in bad faith is breaks off negotiations in bad faith is liable for the losses caused to the other liable for the losses caused to the other party. party.

(3) It is bad faith, in particular, for a party (3) It is bad faith, in particular, for a party to enter into enter into or continue negotiations to or continue negotiations when intending not reach an agreement when intending not reach an agreement with the other party. (with the other party. (Article 2.1.15Article 2.1.15))

UNDROIT Principles of UNDROIT Principles of International Commercial ContractsInternational Commercial Contracts Duty of confidentialityDuty of confidentiality

Where information is given as Where information is given as confidential by one party in the course of confidential by one party in the course of negotiations, the other party is under a negotiations, the other party is under a duty not to disclose that information or to duty not to disclose that information or to use it improperly for its own purposes, use it improperly for its own purposes, whether or not a contract is subsequently whether or not a contract is subsequently concluded. Where appropriate, the concluded. Where appropriate, the remedy for breach of that duty may remedy for breach of that duty may include compensation based on the include compensation based on the benefit received by the other party. benefit received by the other party. ((Article 2.1.16Article 2.1.16))

Case for Pre-contractual DutyCase for Pre-contractual Duty X failed to check his house’s condition that was X failed to check his house’s condition that was

burned out one month ago and sold it to Y. In order to burned out one month ago and sold it to Y. In order to buy the house, Y spent money on broker remuneration buy the house, Y spent money on broker remuneration and transportation cost. Meanwhile, expecting moving and transportation cost. Meanwhile, expecting moving into new house, Y sold his old house in comparative into new house, Y sold his old house in comparative low price. What duty did X breach? What right can Y low price. What duty did X breach? What right can Y claim? claim?

X was working for Y Co. as a computer engineer. X was working for Y Co. as a computer engineer. Because of a unresolved dispute between them on a Because of a unresolved dispute between them on a raise in salary, Y dismissed the employment with X raise in salary, Y dismissed the employment with X and refused to issue a certificate for employment. X and refused to issue a certificate for employment. X disclosed Y’s trade secret on ongoing invention of a disclosed Y’s trade secret on ongoing invention of a new machine to the public to express his anger at Y. new machine to the public to express his anger at Y. What duty did X and Y breach? What right can Y and X What duty did X and Y breach? What right can Y and X claim? claim?