The article addresses when an offer to enter into a contract becomes effective. It will also clarify whether the offer can be modified, withdrawn, or canceled. This information is provided for reference purposes.
1. When does an offer to enter into a contract become effective?
According to Article 388 of the 2015 Civil Code, the effective time of an offer to enter into a contract is determined as follows:
Set by the offeror: If the offeror specifies a response period, the acceptance is only effective if made within that period; if the offeror receives a response after the specified period, that response is considered a new offer from the late respondent.
No specified period: If the offeror does not specify a response period, the acceptance is only effective if made within a reasonable time.
No time specified by the offeror: In cases where the offeror does not stipulate a response time, the offer becomes effective when the offeree receives the offer, unless otherwise provided by relevant laws.
When the parties communicate directly, including by phone or other means, the offeree must immediately respond with acceptance or rejection, unless the parties have agreed on a response period.
The following cases are considered as the offeree having received the offer to enter into a contract:
The offer is delivered to the residence if the offeree is an individual, or to the head office if the offeree is a legal entity;
The offer is entered into the offeree’s official information system;
The offeree learns of the offer to contract by other means.
2. Is it allowed to modify or withdraw an offer to enter into a contract?
According to Article 389 of the 2015 Civil Code, the offeror has the right to modify or withdraw an offer to enter into a contract in the following cases:
The offeree receives notice of the modification or withdrawal before or at the same time as they receive the offer.
The offeror has clearly stipulated conditions under which the modification or withdrawal of the offer may occur if those conditions arise.
Before modifying or withdrawing an offer, the offeror must notify the offeree, and this notification must reach the offeree before or at the same time as the offer. This ensures that if the offeree receives notice of the modification or withdrawal before receiving the offer, the offer has not yet taken effect, thereby protecting the rights of all involved parties. In cases where the offeree receives notice of the modification or withdrawal at the same time as the offer, they have not yet invested significant time or effort in considering it, thus allowing the offeror the right to change or withdraw it.
The law allows for modification or withdrawal at these two times to safeguard the rights and balance the interests of both parties.
In addition to notification, the modification or withdrawal of an offer may depend on conditions specified by the offeror within the offer itself. Since the offer reflects the unilateral intent of the offeror, they have the right to include conditions as long as they comply with legal requirements. When the offeror specifies conditions for modifying or withdrawing the offer, the offeree can consider these conditions before deciding to accept.
Withdrawing an offer does not make it effective, so the parties are not bound by any obligations associated with it.
If the offeror changes the terms of the offer, this will be considered a new offer. Modifying the offer’s content essentially replaces the previous offer with a new one, thereby nullifying the original offer. If the offeree accepts, they are accepting the new offer.
3. Cancellation of an offer to enter into a contract?
According to Article 390 of the 2015 Civil Code, “The offeror has the right to cancel an offer if this right is clearly specified in the offer and if the offeree receives the cancellation notice before they send an acceptance notice.”
The validity of an offer to contract is based on the parties’ intent and can also be terminated by the intent of either party. To protect the interests of both parties, the cancellation of an offer must meet certain conditions to prevent undue impact.
The right to cancel must be clearly stated in the offer. Including the right to cancel in the offer helps the offeror avoid legal disputes or compensation obligations if they wish to cancel.
The offeror must notify the offeree. Upon receiving an offer, the offeree will review it before deciding whether to accept. Therefore, notification is necessary to protect the offeree’s interests.
The notice must be sent before the offeree accepts the offer. Once the offeree has accepted, the contract formation process begins, and the offer cannot be canceled if it has already taken effect.
Subject to Cancel the Offer: Cancellation is a unilateral decision by the offeror to release themselves from the commitment they initiated. When the initial purpose no longer exists or due to other reasons, the offeror may cancel the offer. In a contract formation relationship, the offeror is the sole initiating party, while the offeree may be multiple parties at the same time. Both parties must fully meet the requirements as subjects in a civil relationship.
Form of Offer Cancellation: The 2015 Civil Code does not specify a particular form for cancellation, so it can be done orally, in writing, or by a specific action. The cancellation notice may be given directly or indirectly, depending on the method chosen by the offeror.
Effectiveness of Offer Cancellation: Cancellation becomes effective when the offeree receives the cancellation notice, provided that the notice is sent before the acceptance of the offer.
Significance of Offer Cancellation: The purpose of an offer to contract is to facilitate cooperation between two parties and progress toward signing a contract. However, when potential risks associated with the offer are identified, the offeror may proactively cancel the offer to protect their interests and avoid potential losses.
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