Introduction to business lawcontracts and sales introduction and formation

Bilateral versus Unilateral Contracts Bilateral contract: is a contract in which both parties promise to perform certain things.. Formation of Contracts There are several elements that m

NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ADVANCED EDUCATION PROGRAMS

-*** -INTRODUCTION TO BUSINESS LAW

Contracts and Sales:

Introduction and Formation

Student : Nguyễn Phương Mai 11213681

(Group 2) Vũ Thị Minh Ngọc 11219366

INSTRUCTO

R

Ha Noi, April 2023

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TABLE OF CONTENTS

PART 1 THEORIES OF CONTRACT 3

I Definition of a Contract 3

II Sources of Contract Law 3

III Types of Contracts 3

IV Formation of Contracts 3

PART 2 CASE STUDY 4

I Facts: 4

II Issues 5

III Rules 5

3.1 Precedent: “CRAFT v ELDER & JOHNSTON CO.Court of Appeals of Ohio, Montgomery County, 1941 38 N.E.2d 416.” 5

3.2 Formation of Contracts 7

IV Judicial decision & analysis 7

V The decision of common pleas court of appeals 8

PART 3 APPLICATION IN VIETNAM 8

PART 4 LESSONS LEANRNED 11

PART 1 THEORIES OF CONTRACT

I. Definition of a Contract

Contract is a promise or set of promises for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty

II. Sources of Contract Law

1 Common Law

Common law today consists of traditional notions of law developed by judical decisions and often codified by states

2 The Uniform Commercial Code (UCC)

UCC is formed by a set of commercial laws that all states would find acceptible

III. Types of Contracts

1 Bilateral versus Unilateral Contracts

Bilateral contract: is a contract in which both parties promise to perform certain things

Unilateral contract: has one party issuing a promise and the other party simply performing

2 Express versus Implied Contracts

Express contract: A contract that is written or orally agreed to

Implied contract: Arises from circumstances and not from the express agreement of the parties In this situation, the parties do not discuss the terms of the contract but nonetheless understand that they have some form of contractual relationship There are several types of contracts that are required to be in writing and cannot be formed by verbal agreement

 Real estate contracts

 Contracts that cannot be performed within one year

 Contracts for the sale of goods over a certain value

 Contracts involving the transfer of property or assets

 Contracts for loans or credit

 Contracts that involve marriage

IV. Formation of Contracts

There are several elements that must be present for a valid contract to be formed, including:

 Offer: One party must make a clear and specific offer to enter into a contract with another party

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 Acceptance: The other party must accept the offer made by the first party, and this acceptance must be communicated in a way that is clear and unambiguous

 Consideration: Both parties must exchange something of value, such as goods, services, or money, as part of the contract

 Intent: Both parties must have a genuine intent to create a legally binding agreement

 Capacity: Both parties must have the legal capacity to enter into a contract, meaning they are not under duress, incapacitated, or otherwise unable to make a binding agreement

PART 2 CASE STUDY

I. Facts:

Name of the case: Alligood v Procter & Gamble Co

Judicial Proceeding: Court of Appeals of Ohio, First District, Hamilton County; Appeal from the Court of Common Pleas, Hamilton County

Decided January 30, 1991

Plaintiff: Ms.Alligood and other purchasers

Defendant: Procter & Gamble Co

Procter & Gamble Co., a producing branded consumer products company, began a Pampers catalog promotional offer in 1981 A statement on each box of Pampers explained that by saving the teddy bear proof-of-purchase symbols (Teddy Bears points) on packages of Pampers diapers, a customer could order various baby items from the Pampers Softouches Baby Catalog at a reduced cost The catalog would be sent free to consumers upon request Included in the catalog were pictures of the items for sale and the designated amount of Teddy Bears points and cash necessary for purchase All sale terms, including the dates during which the offer was in effect, were described in each catalog The only method for ordering merchandise was the use of the specific order form included in each catalog

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About April 1989, P&G sent out its final catalog On the front of the catalog was a statement that it was the final catalog and that the offer would expire on February 28, 1990

Ms Alligood and others had cut out and saved the teddy bear symbols The diaper purchasers claim that each package of Pampers contained an offer to enter into a unilateral contract, which they accepted by purchasing Pampers and saving the teddy bear proof-of-purchase symbols

The precise language of the advertisement printed on packages of Pampers states as follows:

"Save these Teddy Bears points and use them to save money on toys, clothes, furniture, and lots of other baby things when you shop the Pampers Baby Catalog For your free copy of the Catalog, send your name, complete address, and youngest baby's date of birth to:

"Pampers Baby Catalog

"P.O Box 8634,

"Clinton, Iowa 52736."

On May 1, 1989, two groups of plaintiffs filed separate complaints against defendant-appellee, the Procter & Gamble Company (“P&G”), alleging breach

of contract arising from a catalog of Pampers diapers The plaintiffs-appellants sought class-action certification and representation, which was granted on Jun

7, 1989 On June 16 and June 29, 1989, P&G filed motions to dismiss,

requesting that they be treated as motions for summary judgment Following oral argument, the Court of common pleas granted summary judgment to P&G

on October 30, 1989

Ms.Alligood and other purchasers of disposable diapers (plaintiff) brought a breach of contract action against manufacturer based on failure to redeem proof

of purchase symbols for merchandise The Court of Common Pleas, Hamilton County, entered judgment in favor of manufacturer, and purchasers appealed

II Issues

Whether an enforceable contract existed between the plaintiffs and P&G based on the language on the Pampers packages?

III Rules

3.1 Precedent:“CRAFT v ELDER & JOHNSTON CO.Court of Appeals of Ohio, Montgomery County, 1941 38 N.E.2d 416.”

- Plaintiff: Craft

- Defendant: Elder & Johnston Co

On or about January 31, 1940, the defendant, the Elder & Johnston Company, carried an advertisement in the Dayton Shopping News, an offer for sale of a certain all electric sewing machine for the sum of $26 as a “Thursday Only Special”

Plaintiff in her petition, after certain formal allegations, sets out the substance of the above advertisement carried by defendant in the Dayton Shopping News She further alleges that the above publication is an advertising paper distributed in Montgomery County and throughout the city of Dayton; that on Thursday, February 1, 1940, she tendered to the defendant company $26 in payment for one

of the machines offered in the advertisement, but that defendant refused to fulfill the offer and has continued to so refuse The petition further alleges that the value

of the machine offered was $175 and she asks damages in the sum of $149 plus interest from February 1, 1940

The trial court dismissed plaintiff’s petition as evidenced: “Upon consideration the court finds that said advertisement was not an offer which could be accepted by plaintiff to form a contract, and this case is therefore dismissed with prejudice to a new action, at costs of plaintiff.” Within statutory time plaintiff filed notice of appeal on questions of law

According to the determination of Court of Appeals of Ohio, the court also affirmed and concluded that they constrained to the view that the trial court committed no prejudicial error in dismissing plaintiff’s petition The judgment of the trial court will be affirmed and costs adjudged against the plaintiff-appellant In the decision making process, the rule was well established “It is clear that in the absence of special circumstances an ordinary newspaper advertisement is not an offer, but is an offer to negotiate, an offer to receive offers or, as it is sometimes called, an offer to chaffer.” Restatement of the Law of Contracts, Par 25, Page 31.“Thus, if goods are advertised for sale at a certain price, it is not an offer and no contract is formed by the statement of an intending purchaser that he will take a specified quantity of the goods at that price The construction is rather favored that such an advertisement is a mere invitation to enter into a bargain rather than an offer So a published price list is not an offer to sell the goods listed at the 7

published price.” Williston on Contracts, Revised Edition, Vol 1, Par 27, Page 54.

“The commonest example of offers meant to open negotiations and to call forth offers in the technical sense are advertisements, circulars and trade letters sent out

by business houses While it is possible that the offers made by such means may be

in such form as to become contracts, they are often merely expressions of a willingness to negotiate.” Page on the Law of Contracts, 2d Ed., Vol 1, Page 112, Par 84 “Business advertisements published in newspapers and circulars sent out

by mail or distributed by hand stating that the advertiser has a certain quantity or quality of goods which he wants to dispose of at certain prices, are not offers which become contracts as soon as any person to whose notice they may come signifies his acceptance by notifying the other that he will take a certain quantity of them They are merely invitations to all persons who may read them that the advertiser is ready to receive offers for the goods at the price stated.” Corpus Juris 289, Par 97

3.2 Formation of Contracts

3.2.1 Offer

To be valid, an offer must contain certain and definite language and cover all necessary terms, which include the following:

➢ Parties

➢ Subject matter of the contract

➢ Price

➢ Payment terms

➢ Delivery terms

➢ Performance times

3.2.2 Consideration

Consideration is what distinguishes gifts from contracts and is what each party give up under the contract It is sometimes called Bargained-for-exchange As consideration is one of the three main requirements of forming a contract, in order

to create a legally valid contract, the parties will need to exchange something of value

IV. Judicial decision & analysis

Our main case Alligood v Procter & Gamble Co would be analyzed based on the general rule of contract formation and being supported by the rule which was established from the precedent

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Firstly, a valid offer must have key phrases including the identity of the parties to

be bound, the contract's subject matter, price term, due time, conditions of payment and delivery Clearly, the phrase displayed on Pampers boxes, which Ms Alligood and others claim constitutes the whole unilateral contract with P&G, falls well short of all the elements for a legitimate contract It states: "Save these Teddy Bears points and use them to save money on toys, clothes, furniture, and lots of other baby things when you shop the Pampers Baby Catalog” We can see that only one of the parties, P&G, can be identifiable The commercial itself made no mention of the steps a potential offeree would be required to take to accept the discounts on other products The supposed contract's subject matter, as well as the offeree's necessary consideration, are both unclear enough to be noticed No pricing or delivery terms are stated in the advertisement

Consideration is also too vague to be discernible Essentially, if there is a

consideration between the two parties, the supplier offers an incentive such as discount points in exchange for increased sales, while the offeree must make a purchase in order to receive the discount However, how those points are redeemed for discounts is not stated clearly Hence, the advertisement and catalog as a whole would not represent a single contract

Secondly, according to the rule which was established from the precedent, ads are simply invitations for offers Even if advertisements offering to redeem proof of purchase symbols with merchandise from catalogue were taken in conjunction with the catalog, and even if the catalog's expiry date had not passed, there would not have been an offer to enter into a contract Advertisement and catalogue would create only an offer to receive offer, and an invitation to order from the catalog As .

a result, there are no legal commitments for which P&G can be held liable

V The decision of common pleas court of appeals

The judgement was affirmed P&G is not at fault for refusing to redeem the Teddy Bears points and that the purchasers lack contractual rights to compel P&G to deliver the catalog products

PART 3 APPLICATION IN VIETNAM

Due to the absence of similar case law in Vietnam, we request permission to use Vietnamese laws to support the practical application in Vietnam

According to Article 14 of the CISG, "A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance

A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price." Article 14 of the CISG provides a definition of an offer to contract, forming an offer when it is sent to one or more identified persons, expressing the offeror's intention to be bound upon acceptance, and providing criteria for determining the essential content of an offer to contract Therefore, Procter & Gamble's reward program, as advertised, clearly demonstrates the intention to enter into a contract Therefore, P&G unilaterally made an offer According to Section 1, Artical 390 of the 2005 Civil Code, "An offer to contract is the expression of the offeror's intention to conclude a contract and the offeror's commitment to this offer towards the specific offeree." Compared to this provision, Section 1, Artical 386 of the

2015 Civil Code has removed the phrase "specific": "An offer to contract is the expression of the offeror's intention to conclude a contract and the offeror's commitment to this offer towards the offeree or the public." The 2015 Civil Code recognizes the clear expression of intention to contract and the binding nature of this offer on the offeror towards the "public," making the offer to contract closer to

a notification, an advertisement sent to an unspecified target, whether an individual

or a specific organization

Regarding the service contract, the acceptance of the offer to contract can be demonstrated through conduct, such as when the promisee is rewarded for performing actions requested by the promisor, without the need to provide a verbal acceptance Alligood accepted the offer to contract from the moment the request to receive the catalog was sent

Furthermore, Vietnamese law does not regulate consideration in contract

formation Therefore, the contract has been formed According to Article 386 of the

2015 Civil Code, two types of entities are proposed: specifically identified entities

or the public This serves as a basis for determining the offer to contract by individuals or businesses through flyers, mass media, mobile phones, or email addresses if the advertising content contains indications of an offer to contract, the organization or individual making the offer must be responsible for the committed content

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