What is an Exchange Offer?

According to Article 14 of the "Contract Law of the People's Republic of China", a contract offer is an expression of intent to enter into a contract with another person. The expression of intent should meet the following requirements: (1) the content is specific and clear; The offeror is bound by the meaning expression ^[1] . Among them, if the content of a commercial advertisement meets the provisions of the offer, it is deemed an offer.

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A contract offer is an expression of interest in wishing to enter into a contract with another person. The expression of interest shall meet the following requirements:

(1) The content is specific and clear;

(2) Show that the offeror is bound by the expression of intention after accepting the offeror's commitment.

1. The offer must have the intention to enter into a contract

The intent of entering into a contract is to require that the offer includes hope and has decided to enter into a contract with the other party. However, according to the "Contract Law of the People's Republic of China", the sending of relevant price lists, auction announcements and prospectuses cannot generally be used as offers.

2. The offer must be issued to the offeree with whom the offeror wishes to conclude a contract

It is generally believed that an offer should be made to a specific person, who is the person the offeror wishes to enter into a contract with. The specificity is not limited to one, and may be several, but all must be definite. For example, if a cement plant has 2,000 tons of cement for sale, it will make 500 tons of offers to each of the four construction companies.

An offer should be made to a specific person, but there are exceptions, such as advertising, because it is not issued to a specific person, so it is not an offer, but a contract proposal, also known as an invitation to offer, which is intended to be sent to him after seeing the advertisement. But the bounty ad in the ad is an offer.

3. The content of the offer must be specifically determined

The so-called specific determination means that the offer should contain the main terms of the contract, so that the offeree can decide whether to agree to the contract and make a commitment after reading it.

4. The offer must reach the offeree

The offer only reaches the offeree. The offeree may know the content of the offer and decide whether to promise.

5. The offer should be issued explicitly

1. Effective time of the offer

In the effective time of the offer, China adopts arrivalism, and Article 16 of the Contract Law clearly stipulates that the offer will take effect when it reaches the offeree. ^[1]

1. Withdrawal of the offer

Withdrawal of an offer is made by the offeror in some way to prevent the offer from taking effect after the offeror issues the offer and before it reaches the offeree. Any offer is an offer that can be withdrawn, but in accordance with the "Contract Law of the People's Republic of China", notice of withdrawal of an offer must be effective before the offer or the offeree arrives at the same time.

2. Cancellation of the offer

The revocation of an offer means that the offeror cancels the offer after the offer reaches the offeree and becomes effective, thereby eliminating the fun of the offer. According to the Contract Law of the People's Republic of China, the offer can be revoked in principle, but it cannot be revoked in the following three cases:

1) The offer stipulates a commitment period or otherwise indicates that the offer is irrevocable. For example, if the offeror indicates in the offer that "the company will never cancel".

2) Although there is no stipulated commitment period in the offer, the offeree has reason to believe that the offer is irrevocable and cherished preparations for the transformation. According to the spirit of this regulation, most of the offers in practice are irrevocable offers.

3) The offeror has confirmed the commitment period;

The main difference between withdrawal and withdrawal of an offer is that withdrawal is for an offer that is not in effect, and withdrawal is for an offer that is already in effect.

The lapse of an offer means that the offer has lost its legal binding force. The reasons for the offer lapse are:

(1) The commitment period expires without commitment;

(2) the offer is cancelled by the offeror;

(3) The offer is rejected by the offeree;

(4) The offeree makes a practical change to the content of the offer.

An offer is easy to be confused with an invitation to offer. According to Article 15 of the Contract Law of China, an invitation to offer is also called an invitation to offer. Common offer invitations include sent price lists, auction announcements, tender announcements, prospectuses, commercial advertisements, and so on. However, if the content of a commercial advertisement meets the requirements of the offer, it is deemed to be an offer ^[1] .

The main differences between an invitation to an offer and an offer are:

1. Differentiate according to the wishes of the parties. The offer contains the intention of the parties to be bound by the offer, and the invitation to the offer is merely an expression of the intention that the other party should take the initiative to enter into a contract.

2. Make a distinction in accordance with the law. This refers to whether an act is an offer or an invitation to tender, as clearly stipulated by law.

3. Differentiate according to the contents of the contract proposal. If the contract proposal contains the main terms of the contract, it is an offer, otherwise it is an invitation to tender.

4. Differentiate according to whether the meaning indicates that it is issued for a specific person or an unspecified person. The invitation to offer is, in most cases, addressed to unspecified persons.

5. Differentiate according to the trading habits, that is, the historical trading practices of the parties.