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Cite as Date-Bah, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 240-244. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.

Article 29

Samuel K. Date-Bah

1. History of the provision
2. Meaning and purpose of the provision
3. Problems concerning the provision

ARTICLE 29

(1) A contract may be modified or terminated by the mere agreement of the parties.

(2) A contract in writing which contains a provision requiring any modification or termination by agreement to be in writing may not be otherwise modified or terminated by agreement. However, a party may be precluded by his conduct from asserting such a provision to the extent that the other party has relied on that conduct.

1. History of the provision

     1.1. - Article 29 derives from Article 18 of the Formation Draft prepared by the UNCITRAL Working Group. The original text was as follows:

(1) The contract may be modified or rescinded by the mere agreement of the parties.
(2) A written contract which contains a provision requiring any modification or rescission to be in writing may not be otherwise modified or rescinded. However, a party may be precluded by his conduct from asserting such a provision to the extent that the other party has relied on that conduct.

The original Article 18 contained another paragraph which is now subsumed in Article 12 of the Convention.

     1.2. - As a result of the decision of the Commission at its eleventh session to integrate the Formation Draft with the Sales Draft, Article 18 of the Formation Draft became Article 27 of the integrated UNCITRAL Draft Convention presented to the Vienna Conference in 1980. The Commission moved Article 27 from the rules on formation and placed it in Part III of the Sales Draft. One delegation's attempt to move the article back to Part [page 240] II of the Convention was defeated at the Vienna Conference. The discussion at the Vienna Conference of the proposal to move the article back to Part II of the Convention provides an insight into why the majority of delegations preferred to have this provision in the Sales Part of the Convention.

     1.3. - The minority delegation's argument was that the article dealt with the modification of contracts or their termination by mutual agreement and that since such modified contracts were in a sense new contracts, it would be more appropriate for the article to be placed in the Part dealing with formation of contracts. However, several delegations pointed out that modifying a pre-existing contract is different from entering into a new contract. For example, as one delegation pointed out, such modification agreements raised problems relating to the doctrine of consideration for common law countries.

In fact, the very language of the article, in stating that a contract could be modified or terminated by the «mere agreement» of the parties was intended to make it clear, for the benefit of common law countries, that no consideration would be required to make binding such modification agreements.

     1.4. - The text of the article as adopted by the Commission and subsequently presented to the Vienna Conference was as follows:

(1) A contract may be modified or abrogated by the mere agreement of the parties.
(2) A written contract which contains a provision requiring any modification or abrogation to be in writing may not be otherwise modified or abrogated. However, a party may be precluded by his conduct from asserting such a provision to the extent that the other party has relied on that conduct.

2. Meaning and purpose of the provision

     2.1. - Paragraph (1) is intented to override the rule applied in many common law jurisdictions, that a modification agreement is not binding as a contract unless the promise for whose benefit the agreement is made furnishes new consideration. Traditionally, [page 241] the common law doctrine of consideration has been held to apply not only when contracts are originally formed, but also when preexisting contracts are modified. The harshness and inconvenience of this common law approach has been mitigated somewhat in many jurisdictions by the development of doctrines of waiver and promissory estoppel and even by statutory intervention. The role of the doctrine of consideration in the area of modification of pre-existing contracts has been widely criticized as putting impediments in the way of businessmen seeking, in the words of Karl Llewellyn, a «re-adjustment of a going business deal». This difficulty does not arise under the civil law. By overriding the common law rule, paragraph (1) harmonizes the common law and civil law systems on this matter.

     2.2. - Paragraph (2) contains the convention's solution to the problem of what is to be the legal effect of clauses in international sale of goods contracts that require that the modification or termination of the contracts concerned be in writing. National legal systems have varying solutions to this problem. Some legal systems allow oral modifications or termination, in spite of such clauses. Paragraph (2) is intended to furnish a uniform solution to this problem.

     2.3. - The rule contained in paragraph (2) is that if a written contract provides that it may be modified or terminated only in writing, then the parties' declared intention should prevail and an oral modification or agreement to terminate will be ineffective. Thus the parties' declared intention overrides the provision in Article 11 that the contract of sale need not be concluded in or evidenced by writing. and is not subject to any other requirement as to form. If the parties agree that modifications of the pre-existing contract or an agreement to terminate it must be in writing, then this requirement as to form has to be complied with.

     2.4. - This general rule contained in Article 29(2) is however subject to an exception. The conduct of a party to the contract may preclude him from asserting his full rights under a clause requiring modification or termination to be in writing, if the other party has relied on such conduct. The kind of conduct that will lead to such preclusion is not specified. The verbal formula [page 242] used in the paragraph would thus seem to provide judges and arbitrators a flexible framework within which to reach fair results when one party's behaviour is such that it would be unfair to allow him to insist on the requirement of writing.

     2.5. - What kinds of conduct can lead to such a preclusion? Let us take an example. A seller sells goods to a buyer under a written international contract which contains a clause providing that it may not be modified except in writing. Nevertheless, the seller orally varies the agreement, telling the buyer that he can pay the contract price over twelve months, instead of the three months prescribed in the contract. If after one month the seller decides to ignore the modification and revert to the written contract, would he be entitled to do so? Under Article 29(2) he may not be entitled to, if the buyer has meanwhile acted in reliance on his extension of the payment period, by, for instance, committing funds to other purposes, which would not have been so committed, if the original arrangement to pay within three months had not been changed.

     2.6. - Action of the other party in reliance on the modification or termination is an important condition to the preclusion of a party from relying on his original rights under the contract. Moreover, the language of Article 29(2) provides for such preclusion only «to the extent that the other party has relied on that contract». Accordingly, the Commentary prepared by the UNCITRAL Secretariat on the provision suggests (see Official Records, I, 28) that where a sales contract is partly performed and partly executory, a party who has agreed to an oral modification may reinstate his original rights by notice. If he gives the other party notice that he intends to resume his original rights, then there is no longer the requisite conduct on which the other party can rely. This would appear to be a persuasive view.

3. Problems concerning the provision

     3.1. - The chief problem likely to arise from the application of Article 29 is in the mapping out of the interrelationship between the main rule and the proviso of Article 29(2). What is [page 243] the kind of conduct which, if relied on by the other party, will preclude a party from asserting a provision requiring that a modification or termination of the contract be in writing? There is a built-in flexibility (or is it vagueness?) which produces a degree of uncertainty in the application of the provision. [page 244]


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