Law of Obligations Part 3. Formation of Contract. Now, when a contract is concluded, when agreement is reached, we said this. But when an agreement is reached, when an offer is accepted. Moment of conclusion of contracts is the moment of acceptance. Offer is provided, acceptance is given, and the moment of acceptance is the moment of conclusion of the contract. What is offer? So we try to remember when an offer is made, but quite often during negotiations offer is made. In absolutely any contract, we do have offer and acceptance. One party gives an offer, another accepts. It can be almost simultaneous. It can be within one day, one week, one year, but first, offer then acceptance. What are the characteristics of an offer? It shall be precise and unambiguous. So you should definitely understand what is offered. It shall be addressed to one or more certain persons. It shall contain essential conditions of agreement. It shall contain subject matter of agreement. It shall express intention to conclude a contract with party to whom offer is made. For example, if I tell you I will sell this stick to anyone who applies to me. Is it an offer? The answer is no. Why? It is precise we do have a stick, it contains essential conditions of agreement. So we have sale and purchase. It's not necessary to put the price in the main body of the agreement, it can be somewhere extra. It expresses intention, I will, but it is not addressed to one or more certain persons. It is addressed to everybody, that means to nobody. Why? It is not an offer. As we said, offer is something which is capable of acceptance. So moment of acceptance is moment of contract. So if it was an offer, first person applies, we have a contract. Then second person applies, and I have only one stick. So not possible, we do not have offer, exclusions late. I will give you an example of an offer. I will sell my Audi to Elena Issaeva for 0.5 million Rubles. Is it precise? Yes, if I have only one Audi, it is precise. Next, address to a particular person, Elena Issaeva, we do have, so one, two. Contains essential conditions of contract, sell. So sale and purchase contract. "Will", it is intention to sell. For example, if I tell somebody my Audi costs 0.5 million Rubles. What it means it means it is just a fact, I'm not going to sell Audi, it is not an offer. The same, Audi for sale. What is Audi for sale? Audi for sale is invitation to treat. So I give you Audi for sale, you tell me, I will buy your Audi for two million Rubles. Now, you made an offer and this offer is capable of acceptance from my part. Also, invitation to treat advertisements in the newspaper for example. Quite often, you see in advertisement that it is not considered to be a public offer. Why? Because if it is a public offer, it is also capable of acceptance and it is a must for you. You are obliged to execute the contract because the moment of acceptance is the moment of conclusion of contract. What are the differences between public offer and offer? Lets come back here. Characteristics of an offer: precise and unambiguous, addressed to one or more certain persons, contain essential conditions of agreement, express intention to conclude a contract with a party to whom offer is made. Let's forget this. Selling of air tickets, selling of cars, and it is public offer, but it is a public offer when it is initiated by commercial legal entity. Commercial legal entity may be obliged to conclude a contract if acceptance is given, not in each [inaudible]. Examples of offer, items on display in shop windows. Here we have differences with UK law where it is not capable of acceptance. Rewards. So reward like this, lost dog, I will pay a reward of 2,000 Rubles to the person who returns the dog safely. So I did not name a person, so it is not an offer, but it is a public offer, and it is an exception and it is capable of acceptance, that is why. Auction. The winner at the auction, a person who gives the highest price. The winner at tender, a person who gives best conditions. Gaming and betting, again, another example of public offer. Next, termination of offer. What are cases of termination of offer? Offer can be rejected. So when the contract is concluded, we said it is offer which is accepted and it is accepted unconditionally. If there are certain conditions, that means rejection of an offer. The following examples, Maria offered Elena a farm for one million Rubles. Elena said, ''Yes, but for 950,000 Rubles.'' What happened here, Maria made an offer, Elena did not accept. Elena made counter offer. So now, offer comes from part of Elena and it is up to Maria to accept or not. So acceptance will be from part of Maria. Counter offer means original is rejected and offer number 1 is this particular offer which Elena makes. Next situation, lapse of time. So open a catalog, it gives prices and says price is valid until 1st of December. So what it means, it means that from 1st of December price is not valid anymore. So because of time, offer has terminated. Of course, you can resolve all the problems if you die. No other problems you will have because you have died. The same happens with legal entity, liquidation of legal entity terminates, an offer terminates all the problems. Revocation. Revocation means you evoke an offer. So you made an offer and you revoke it. The general rule under Russian law is that you cannot revoke an offer. But as we said before to any rule, there are exceptions. You can't revoke an offer before acceptance. So if you revoke it before exceptions, no offer takes place here. Acceptance, unconditional, and our general rule that silence is not acceptance. But performance constitutes acceptance. So silence is not acceptable, what it means? So I say, if I do not hear anything from Maria within five days, I suppose that she buys my pen for 5,000 Rubles. Does not work, it is not acceptance. Performance constitutes acceptance. What it means, it means I offered a company to sell me certain types of goods and the company delivers these goods to me. We do not have any written contract, we must have because we are two legal entities, so the contract must have written form. But performance constituted acceptance and sends all terms of contract. In the Russian Federation quite a brief list of essential terms is present. Subject matter of contract. What is subject matter of sale and purchase, let's say of this pen? Of course, it is not this pen. It is sale and purchase. With Saudi law of obligation, it is obligation. So it is my obligation to give you this pen and your obligation to take this pen and to pay price to me. Next, certain terms I given directly for certain types of contracts by law. So for example, in case of delivery, contract term of delivery is essential condition. All terms on which purchase can reach agreement. So let's start with the following cases. For example, we have a contract that you build a house for me. You build a house, you suppose that this is a house but you did not put a roof on it. So is it breach of essential or non-essential condition? I would say essential because even children when they draw a house, they draw a house with a roof. So breach of essential condition means that contract may be terminated by one of the parties. There may be breach of inessential condition. So we have agreed that you build a house with a blue walls but you've painted them green. You are in breach, but we speak about minor condition not essential condition, so that means you cannot claim termination of contract. But if we like we can make these terms essential. So if we put in our contract that essential terms, blue walls in case of breach of this essential term, I will have a right to terminate the contract. Very important situation when we speak about validity of contract. So answer a question if a contract of 12-year-old is valid. You will say no, but it is not correct answer, so at 12-year-old person, can buy a liter of milk. So when we speak about validity of contract, we need capacity of parties. Of course, majority of contracts will be concluded from 18 years of age. But certainly contracts require certain other ages. Subject matter of contract must be legal. If I agreed with you to sell your weapons and I did not deliver weapons to you, you cannot enforce it. Specific form we said, materiel form or simple written form or state registration form if it is required. Contract must have an element of a bargain that means offer and acceptance. So for example, you concluded a contract and send it to another party and another party signed the contract and put certain list of exceptions to this contract and sent you back and you forgot about this. What is the status of the contract? The status of the contract is the contract is not concluded, because we did not reach an agreement. As we said, offer must contain an ambiguous terms and conditions. So these are essential features of contract that make a valid conclusion of contract.
