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CONTENTS

Introduction

CHAPTER 1CONTRACT LAW1


1
ANGLO-AMERICAN CONTRACT LAW1
1
TAIWAN CONTRACT LAW24
25
EXERCISES32
32
ANSWERS40
40

CHAPTER 2TORT LAW49


49
ANGLO-AMERICAN TORT LAW49
49
TAIWAN TORT LAW70
71
EXERCISES78
78
ANSWERS85
85

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Chapter 1

CONTRACT LAW

ANGLO-AMERICAN CONTRACT LAW


Definition
A contract is an agreement that is enforceable by court.
contract

agreement

enforceable
court

What is a contract?
Contract = agreement + enforceable by court
Contract = promise(s) + remedy
promise
remedy

AGREEMENT

ENFORCEABLE
BY COURT

CONTRACT

PROMISE(S)

REMEDY

CONTRACT

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Governing law
Anglo-American contracts are governed by Article 2 UCC (sale of
goods), the Restatement (Second) of Contracts and common law.
Uniform
sale

Commercial Code (UCC)

of goods

Restatement

(Second) of Contracts

common

law

Types of contracts

Types of contracts

express (words) ()
implied (conduct) ()
quasi-contract

unilateral (promise + performance)


(+)
bilateral (promise + promise)
(+)

An express contract is formed by words. An implied contract is


formed by conduct. A quasi-contract is not a contract in a legal sense.
It applies equitable principles to prevent unjust enrichment.
express

contract

implied

contract

quasi-contract
equitable
unjust

principles

enrichment

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A unilateral contract is a promise in exchange for a performance (e.g.


Anton offers to pay $1000 to the person who brings back his lost dog;
Anton does not want a promise, Anton wants action/performance).
A bilateral contract is a promise in exchange for a promise (e.g. Anton offers to pay Berta $1000 if Berta promises to bring back his lost
dog; Anton is satisfied with a promise).
unilateral

contract

bilateral

contract

promise

performance

Contract formation
The essential elements of a contract are offer, acceptance and consideration.
offer

acceptance

consideration

How is a contract formed?


Contract = offer + acceptance + consideration
MUTUAL ASSENT

OFFER

ACCEPTANCE

MUTUAL CONSIDERATION
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Offer
An offer is a manifestation of willingness to enter into a contract,
which creates a power of acceptance. The person who makes an offer
is called the offeror. The person to whom the offer is made is called
the offeree.
manifestation
willingness
power

of acceptance

offeror

offeree

A valid offer exists if:


1. The offeror makes a promise or commitment. Note that mere advertisements or preliminary negotiations are not offers.
promise

or commitment

advertisement
preliminary

negotiations

2. The offer must contain the essential terms, e.g. subject matter, offeree, time. But missing terms can be substituted by reasonable
terms or subsequent performance.
essential

terms

reasonable

terms

3. The offer must be communicated to the offeree, so that the offeree


has knowledge of the offer.
communication

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4. The offer is not revoked. As a general rule, an offer can be revoked


any time before acceptance, unless there is (i) an option (ii) a firm
offer (= signed writing by a merchant to keep his offer valid for a
maximum period of three months, see Article 2-205 UCC) or (iii)
part performance / detrimental reliance.
revoke

option

firm

offer

part

performance

detrimental

reliance

What is a valid offer?


Offer = promise + essential terms + communication
promise
essential

terms

communication

Acceptance
Acceptance is the offerees manifestation of assent to the terms of the
offer. The power of acceptance is terminated once the offeree rejects
the offer or makes a counter-offer, the offer is revoked or time has
lapsed.
assent
reject

counter-offer
revoke
lapse

of time

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The requirements for valid acceptance are:


1. Unequivocal assent by offeree: The offeree must have knowledge
of the offer and accept as specified in the offer (e.g. by registered
mail); if the offer does not specify the method of acceptance, the
offeree may use any reasonable method.
unequivocal
reasonable

assent

method

2. Under common law, the terms of the acceptance must be the same
as those of the offer ( mirror image rule ). In contrast, the UCC
(see Article 2-207 UCC) provides a more flexible rule: If the acceptance includes additional terms and one of the parties is not a
merchant, they become part of the contract if the offeror explicitly
assents. If both parties are merchants, the additional terms automatically become part of the contract, unless they materially alter
the original offer or the offeror objects. If the acceptance includes
conflicting terms, they do not become part of the contract (knock
out rule), instead UCC gap fillers or common law applies.
mirror

image rule

additional

terms

merchant

explicitly

assent

materially
to

alter

object, objection

conflicting

terms

3. Communication of the acceptance: According to the mailbox


rule , the acceptance is effective upon dispatch, if not otherwise
provided in the offer.

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communication
mailbox

rule

Examples:
Offeror sends offer > offer is valid when received by offeree.
Offeree sends acceptance. Contract is formed when offeree sends acceptance (mailbox rule).
EE sends acceptance
CONTRACT IS FORMED

OR sends
offer

EE receives
offer

OR receives
acceptance

Offeror revokes offer.


Offeree sends acceptance before receiving revocation.
Contract is formed when offeree sends acceptance (mailbox rule).
EE
receives
revocation

OR sends
revocation

OR sends
offer
EE receives
offer

EE sends
acceptance
CONTRACT
IS FORMED

OR receives
acceptance

Offeree first sends acceptance, then rejection.


Contract is formed when offeree sends acceptance (mailbox rule).
EE sends acceptance
CONTRACT IS FORMED

OR sends offer
EE receives offer

EE sends
rejection

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Offeree first sends rejection, then acceptance (mailbox rule does not
apply). Contract is formed or not, depending on what offeror receives
first.
OR receives
rejection/acceptance
CONTRACT IS FORMED
OR NOT DEPENDING ON
WHAT ARRIVES FIRST

EE sends
rejection

OR sends
offer

EE sends
acceptance

EE receives
offer

4. The power of acceptance terminates due to offerees rejection,


counter-offer (= rejection + new offer), or lapse of time (stated /
reasonable time).
power

of acceptance

terminate
rejection

counter-offer
lapse

of time

What is a valid acceptance?


Acceptance = assent + terms of offer + communication
assent
terms

of offer

communication

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MUTUAL ASSENT
REJECTION / COUNTEROFFER /
LAPSE OF TIME

REVOCATION
3. COMMUNICATION
Knowledge

2. ESSENTIAL TERMS
Subject matter
1. PROMISE
Not invitation
for offer, preliminary negotiation

3. COMMUNICATION
Mailbox rule

2. MIRROR IMAGE RULE


vs. UCC RULE

1. ASSENT
by offeree

OFFER

Manifestation of willingness
to enter into a contract
creates a power of acceptance

ACCEPTANCE

Manifestation of assent
to the terms of the offer

Consideration
In addition to mutual assent, Anglo-American law requires that a
contract must be supported by mutual consideration in order to be
enforceable. Consideration is the price or bargained-for value for the
mutual exchange between the parties. The bargain element is given
where there is a price for the exchange, a motive to induce; economic
benefit is not required. The value element is given where there is a
legal detriment or change of legal position (do/refrain).
mutual
bargain

assent

price

value

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mutual

exchange

motive

induce

economic

benefit

legal

detriment

legal

position

refrain

What is valid consideration?


Consideration = bargain + value
MUTUAL ASSENT

MUTUAL CONSIDERATION = BARGAIN + VALUE


Exceptions: Certain promises are binding without consideration. In


particular, consideration can be substituted by (1) detrimental reliance (promissory estoppel), where actual reliance is reasonably
foreseeable; (2) contracts for the sale of goods can be modified in
good faith (Article 2-209 UCC).
substitute

detrimental

reliance

promissory

estoppel

actual

reliance

reasonably
sale

foreseeable

of goods

modify in good faith


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. .
, 2015.09

ISBN 978-957-11-8338-1 ()
1.2.
805.18

104018660

1QJ5

(150.7)






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