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Cite as Eörsi, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 145-149. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.

Article 15

Gyula Eörsi

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

ARTICLE 15

(1) An offer becomes effective when it reaches the offeree.

(2) An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer.

1. History of the provision.

     1.1. - Article 15 deals with an offer in accordance with Article 14, up to the time when it reaches the offeree who has not yet acted upon the offer. It determines when an offer becomes effective (paragraph (1)) and until when may it be withdrawn (paragraph (2)). The antecedents of this article appear in Article 4 of the 1958 Draft and Article 5(1) of ULFC.

     1.2. - Paragraph (1) of the present article provides that an offer becomes effective when it reaches the offeree. Such an explicit statement does not exist in ULFC. Instead, the rule was stated in a negative way:

The offer shall not bind the offeree until it has been communicated to the offeree (Article 5(1)).

There was practically no discussion of this matter in the Committee on Formation at the 1964 Hague Conference. The discussion concentrated on two other issues. One was elicited by Article 3 of the 1958 Draft, which provided a rule in the event of death of the offeree or his incapacity to contract. Yet, after lengthy discussions (see 1964 Hague Conference Records, I, 208-210), the idea of a provision for cases of death and incapacity was abandoned.

The UNCITRAL Working Group at its eighth session made the negative wording of the ULFC positive by substituting «becomes effective» for «shall not bind» (see Yearbook, VIII (1977), [page 145] 79-80). This wording was never contested and later became Article 13(1) of the UNCITRAL Draft Convention and then. Article 15(1) of the Convention.

     1.3. - Paragraph (2) lays down the condition for withdrawal of an offer. At the 1964 Hague Conference and at the UNCITRAL deliberations, nobody challenged the basic rule that an offer may be withdrawn if the withdrawal reaches the offeree either before or at the same time as the offer. However, different wordings were advanced. Article 4(1) of the 1958 Draft provided that an offer is not binding «before it has been communicated to the offeree», and added that the withdrawal shall be communicated to the offeree before the offer or at the same time as the offer». Article 5(1) of ULFC substituted «until» for «before» and «it shall lapse» for «the offer shall be considered as not having been made».

In the text of the Working Group at its eighth session paragraph (1) dealt with withdrawal and paragraphs (2) and (3) respectively with revocability and irrevocability. Thus, the antecedents of Article 15 of the Convention could be found in paragraph (1), drafted at the eighth session as Article 5(1). The first sentence corresponded to Article 15(1) of the Convention, except for the Working Group's use of the word «communicated», instead of «reaches», and that the words «even if it is irrevocable» appeared in brackets. These brackets were deleted by the Working Group at its ninth session. The second sentence was similar to Article 15(2) of the Convention except that here again the word «communicated» was used. When the Working Group at its ninth session considered the then Article 12, it replaced the words «communicated to» by «reaches» (see Yearbook, IX (1978), 74-75; 76; 82).

It should be mentioned at this point that in the Working Group at its ninth session (see Yearbook, IX (1978), 74) and at the Vienna Conference (see Official Records, II, 279-280) some participants found some difficulty in understanding the distinction between withdrawal and revocation, and also in the possibility that an irrevocable offer may be withdrawn (on the latter, see § 2.1.3, infra). Also, the rule for withdrawal was seen as too narrow to be applied to letters or telex communications (see Official Records, I, 75). These observations were not repeated in discussions [page 146] of the First Commitee; in fact, there was no discussion at all on Article 15. At the ninth meeting of the First Committee, it was proposed that the words «even if it is irrevocable», originally placed at the end of the paragraph, be built into the corresponding sentence («An offer, even if it is irrevocable ...»); this was adopted at the thirty-fifth meeting (see Official Records, II, 277, 424).

2. Meaning and purpose of the provision.

     2.1. - «Effectiveness», «withdrawal» and «revocability» (or «irrevocability») are the key technical terms in Article 15.

          2.1.1. - In everyday language «withdrawal» and «revocation» are synonymous. The first is of Anglo-Saxon origin and the second of Latin origin. However in the Convention these expressions have a different meaning. It is therefore essential to make a clear distinction between the two. The key to the distinction lies in the different phases of making a contract. In the first phase an offer is made which becomes effective when it reaches the offeree (Article 15(1)). Until this happens, the word «withdrawal» is used to indicate that the offeree wants to release himself from the offer. The second phase of making a contract comes to an end at acceptance. In this phase the offer is already effective and the word «revocation» is used if the offeror wishes to cancel his offer. Effective offers can, under certain conditions, be «revoked» and offers not yet effective can, under certain conditions, be «withdrawn». At the Working Group, «there was general agreement that 'withdrawal' referred to the period of time before the offer. became effective and that revocation referred to the period of time after the offer became effective» (Yearbook, IX (1978), 747). Therefore, these two expressions must be maintained distinct, since their legal consequences are different. Thus there is no contradiction in a statement that even an irrevocable offer may be withdrawn since «withdrawal» may occur before or at the same time as the offer becomes effective, and «revocation» may happen after the offer becomes effective. The offer may be withdrawn in the first phase of making the contract even if it would be irrevocable in the second phase.

It may be clear from these considerations that reaching effectiveness constitutes the turning-point after which a retreat from [page 147] the offer is no longer termed «withdrawal», but rather «revocation». Thus Article 15(1) is centred around the concept of «becoming effective».

Effectiveness must be distinguished from validity. For instance, conditional sales, are concluded and become valid, absent some reason for invalidity when the contract is made, but they become effective only if and when the condition is fulfilled. Effectiveness means that an offer, an acceptance, a contract or a statute has become effective.

          2.1.2. - Article 15(1) provides that «an offer becomes effective when it reaches the offeree» (for the definition of «reaches» see Article 24). Before the offer becomes effective, the offeree who might have learned that an offer has been made cannot accept this offer. The reason for this is that in the first phase of making the contract the offeree may still withdraw his offer, and an early acceptance would deprive him of the exercise of his right to withdraw under paragraph (1) (see Secretariat's Commentary, Official Records, I, 22). Until the offer «reaches» the offeree, he has no justifiable interest to rely on it. The offeree's legal interests arise when the offer becomes effective. Therefore, the offeror is entitled to withdraw his offer provided that the withdrawal «reaches» the offeree either before or at the same time as the offer. In this case the offer lapses altogether and can never be revived; it can only be repeated. Under such circumstances, it becomes irrelevant whether the offer, if it had not been withdrawn, would have been revocable or irrevocable in the no longer existing second phase of making the contract. If, however, the offer has not yet been withdrawn in time, it becomes effective and can no longer be withdrawn.

          2.1.3. - The words «even if it is irrevocable» were included because if an offer is withdrawn, no offer exists any longer. The question of revocability or irrevocability loses all relevance, since revocability or irrevocability presupposes an offer.

3. Problems concerning the provision.

     3.1. - Article 15 is well balanced. It is necessary to distinguish between withdrawal and revocation as these terms have different [page 148] legal consequences. Yet, not all languages have two distinct terms at their disposal, one for withdrawal and another for revocation. This may create serious difficulties in the application of a uniform law which cannot be properly translated into many languages.

     3.2. - Worthy of note is the discrepancy between Articles 15 and 16. An offer becomes effective when it reaches the offeree, but an offer may be revoked only before the offeree dispatches an acceptance, and not before the acceptance reaches the offeror. This discrepancy is necessary since, if the rules of Article 15(1) were the same as those of Article 16(1) the untenable result would be that the offer becomes effective upon dispatch. [page 149]


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