BELOW IS A GUIDE ON HOW TO ANSWER THE FOLLOWING QUESTION ON

CONTRACT LAW.
There is no postal rule under the contract law in the Peoples Republic of China.
Refer to Articles 25 and 26 of the Contract Law of the Peoples Republic of China. Do not
confuse the postal rule with Article 24 of the Contract Law of the PRC. Article 24 concerns
the commencement of the time limit to accept an offer. Regarding the time limit to accept an
offer, see Article 23 and Article 24 of the Contract Law of the PRC.
We suggest you to undertake the following process to reach a conclusion.
To do this, you will need to refer to the relevant sections in the Contract Law of the PRC.
It is important that you establish a chronology of dates.
The questions to be addressed are:
1. Who are the parties?
2. What is the issue?
3. What is the Law?
4. Apply the facts to the law
5. Conclusion
1. Who are the parties?
The dispute is between Healthy Fruit Drinks and Excellent Fruit Drink Machines
2. What is the issue?
The issue is whether Healthy Fruit Drinks is liable to Excellent Fruit Drink Machines for the
original order of 3 machines , or the changed order which is 2 machines, or not at all as it
could be argued there was no contract on foot at any time
3. What is the Law?
The law is contained in the Contract Law of the PRC. The law in this question revolves
around whether there has been a valid offer and whether there has been a valid acceptance.
Some of the relevant articles are: 14, 15, 16, 20, 21, 24, 25, 26, 27, 30 and 31.
4. Apply the facts to the law
You must refer to the articles above in order to come to a conclusion as to whether there was
ever a valid contract.
1 August an email is sent by Healthy Fruit Drinks to Excellent Fruit Drink Machines asking
for the prices of machines
This is not an offer it is an invitation for an offer (arts.14 and 15)
10 August - a letter arrives from Excellent Fruit Drink Machines advising Healthy Fruit
Drinks that We can supply machines at a cost AU$550 each. Delivery would be in 3 monthly
shipments commencing on 1 August 2015 to your Chinese Factory
This appears to be an offer (art. 14)
The offer is effective when it reaches the offeree Healthy Fruit Drinks (art.16)
10 August - an email is sent by Healthy Fruit Drinks to Excellent Fruit Drink Machines
stating the offer is accepted but a formal order would follow.

Is this acceptance? Refer to art.21

This will depend on how the court interprets the wordings Formal order follows.
If the court thinks that such email is acceptance, acceptance becomes effective when it
reaches the offeror Excellent Fruit Drink Machines
(art. 26 para 1); for email (electronic data), art.26 para 2 and art.16 para 2: time of arrival of
acceptance - 10August
The contract is formed when acceptance becomes effective (art.25). So, if court thinks this
email is an acceptance, contract was formed on 10 August.
But, it seems that the words Formal order follows could mean no acceptance yet because
there is no assent to the offer (art.21)
The order was posted to Excellent Fruit Drink Machines on 12 August and it did not arrive
until 17 August.
However, on 14 August Healthy Fruit Drinks I sent an email to Excellent Fruit Drink
Machines stating it only wanted 2 machines and not 3. This arrived before the letter and was
a substantial change.
The question arises as to whether this was an acceptance?
Even if the order dated 12 August was an acceptance, it was withdrawn by the email (art. 27)
which arrived before the order (time of arrival for email: art.26 para 2 and art.16 para 2).
The email made a substantial change to the content of the offer (from 3 machines to 2). It is a
new offer (art.30).
On 18Aaugust, Excellent Fruit Drink Machines sent a letter to Healthy Fruit Drinks stating
that it accepted the order. The letter arrived on 22 August .
The issue is whether this was an acceptance (art.21).
It is clear that Excellent Fruit Drink Machines received the email changing the order on 14
August and had received the order dated 12 August (which arrived on 17 August ) when it
sent out its letter dated 18 August
However, this letter from Excellent Fruit Drink Machines did not state whether it was for 2 or
3 machines. Also it stated We note your acceptance of our terms.
Excellent Fruit Drink Machines letter (18 August ) is ambiguous and it is likely the court will
consider that this letter (18 August ) is not an acceptance and there is no contract.