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Reproduced with the permission from 27 American Journal of Comparative Law (1979) 311-323

[This is a commentary on provisions on Formation of the contract, contained in the 1978 Draft. Except as indicated by an Editor's note added to this text, there are only minimal differences between the 1978 Draft provisions on Formation of the contract and the provisions on Formation of the contract contained in the CISG.]

Problems of Unifying Law on the Formation of Contracts
for the International Sale of Goods

Gyula Eörsi

THE RELATIONSHIP BETWEEN RULES ON SALES AND ON FORMATION OF CONTRACTS OF SALE

In 1978, in completing the Draft Convention on Contracts for the International Sale of Goods, UNCITRAL provided for the marriage of two sets of rules that had lived separately for over four decades: rules on the formation of contract and rules on the obligations of parties to a contract. This significant step calls for explanation.

Sale and formation of a contract of sale are closely related. In Continental codes the two appear as a unit. The situation is somewhat different in English law: The Sale of Goods Act 1893 [1] includes only a few provisions dealing with the formation of the contract;[2] in most respects formation of the contract has remained under the common law.

However, monographs and textbooks on English sales law deal with the formation of the contract-as well as the rights and duties of the parties.[3] And the Sales Article of the UCC in the United States includes important rules (2-201 to 2-207) on the formation of contracts. Thus one cannot conclude that it is incompatible with the legal systems of the Common law to regulate the formation of contract and other questions of sale in a single instrument.[4] The segregation practiced by the 1964 Hague uniform laws on international sale (ULIS) and on the formation of international contracts of sale (ULF) can be understood only in the light of their history.

From UNIDROIT to UNCITRAL

At an early stage in UNIDROIT work on the law of international contracts of sale, a unified text embraced both the formation of contracts and the other provisions governing sales. However in 1935, immediately before the publication of the first draft, it was decided [page 311] to delete the articles relating to the formation of contracts. Rabel did not agree, and published the provisions that had been deleted from the draft.[5] In 1936 UNIDROIT prepared a draft uniform law on the formation of international contracts by correspondence, and the 1951 diplomatic conference at the Hague concluded that work on the formation of international sales contracts was necessary. The Special Commission on Sales excluded most problems of formation from its current work but took the position that a uniform law on the formation of the contract of sale would be of great importance for the application of the uniform law of sale. Therefore, in 1956 UNIDROIT appointed a new commission to prepare uniform rules on the formation of contracts of sale. This draft was completed by 1958, and served as the basis of the discussions at the 1964 Hague diplomatic conference, which produced a uniform law on formation (ULF) as well on international sales (ULIS).[6]

Initially, UNCITRAL proceeded down the same paths. The Working Group on the International Sale of Goods first prepared a Draft Convention that (like ULIS) omitted rules on formation; in 1977 at Vienna, at UNCITRAL's tenth session, the 1977 Sales Draft was approved.[7] The Working Group then prepared a separate draft on formation. In 1978, at its eleventh session, UNCITRAL decided to integrate the two drafts, and in the course of the session produced the 1978 Draft Convention on Contracts for the International Sale of Goods.

As early as 1935, the reason given for segregating the two issues was to give States the possibility for separate ratification of the convention on the formation of sale and that on the rights and duties of the parties. This same opportunity is given under the 1978 Draft Convention, since the Convention's final clauses will give States the option to ratify Part II on formation without ratifying Part III on the rights and duties of the parties, or vice versa.[8] However, in considering whether this option should be exercised, one should bear in mind the reasons that led UNCITRAL to prepare a single integrated text: At some points the issues are closely intertwined; implementing [page 312] a single convention would be easier than to implement two separate conventions; the rules on formation embody principles that are included in the separate sales draft.[9]

Questions concerning ratification and the action that should be taken at the forthcoming diplomatic conference can be considered more clearly in light of the rules on formation set forth in the 1978 Draft Convention. It will be feasible here to consider only a few selected problems.

INTERPRETATION, ESPECIALLY "GOOD FAITH"

In preparing the 1978 Draft Convention, UNCITRAL made a significant addition to its earlier general rule on interpretation of the Convention. Art. 6 of the 1978 Draft (with the new language emphasized) reads as follows:

"In the interpretation and application of the provisions of this Convention, regard is to be had to its international character and to the need to promote uniformity and the observance of good faith in international trade."

The first part of the text is derived from provisions in the earlier drafts on the interpretation of the Sales Convention. The "good faith clause" was drawn from art. 5 of the Working Group's 1977 Draft Convention on formation of international sales contracts, which provided:[10]

"In the course of the formation of the contract the parties must observe the principles of fair dealing and act in good faith."

Adding this provision to the Formation Draft was supported on the ground that this would help implement the U.N. resolutions on the New International Economic Order. However, the "good faith" provision could be supported on other grounds. One ground was that "good faith" was required under domestic law, and the same requirement should be extended to international trade. Such an extension by individual countries had been opposed on the ground that this would give aliens greater protection against nationals in domestic courts than such nationals would receive from foreign [page 313] courts.[11] This objection, however, is inapplicable to the inclusion of such rules in an international convention, for the convention's rules would become mutually applicable within the field of operation of the Convention.

Those opposing the insertion of the "good faith" provision argued that such general clauses were vague, and thus could not promote uniformity. Proponents of the "good faith" rule replied that such general clauses were of necessity vague and yet were indispensable in modern law.[l2] Proponents added that, in most cases, one knew what conduct was inconsistent with good faith; in any event, experience with such rules in domestic law showed that even vague provisions were clarified by judicial development, and a similar development could be expected at the international level. In reply, the opposition noted that judicial development, at the international level, by a variety of forums was incomparably more difficult than within the framework of a single national jurisdiction.[l3]

The requirement of good faith by the parties in the formation of the contract was approved by a slight majority of the Working Group, but was rejected (again by a slight majority) by UNCITRAL. In view of these sharply-divided opinions, an uneasy compromise was reached: The general provision on interpretation of the Convention would be expanded to mention not only "the need to promote uniformity" but also "the observance of good faith in international trade." Such is the background of art. 6 of the 1978 Draft Convention, quoted above.

This question arose: What would be the effect of such a rule for interpreting the Convention? According to some delegations: None. Others pointed out that a court or arbitral tribunal might conclude that communications conflicting with the good faith requirement would be ineffective. For example, art. 22 of the 1978 Draft Convention states that any "indication of intention reaches the addressee when it is made orally to him or delivered by any other means to him, his place of business or mailing address. . . ." Suppose that one party knew that the other party and his family would be absent for a long time from his residence and yet sent the declaration there; the court might conclude that such a declaration sent in bad [page 314] faith was not "delivered" to the addressee and therefore ineffective. As a second case, suppose that the addressee had several places of business. The party always had sent his declarations and notices to place "A", but on a single occasion sent his message to place "B" with the intention that it would not reach the addressee in time. Here, the court might interpret the term "place of business" to have been "A" and that therefore the message sent to "B" was ineffective. Or suppose that a party, in the course of contract-making in bad faith, was silent on an essential matter; this might be relevant in interpreting the requirements of art. 33 on conformity of the goods.

COMMON LAW V. CIVIL LAW

In preparing uniform rules for the contract of international sale, the keenest debates were mostly waged over differences in legal technique rather than economic or political issues. As Kahn-Freund has noted: "The ends are determined by society, the means by legal tradition."[l4] Traditions die hard. A number of delegations wanted the unified law to embody as much as possible of their own national legal rules. Such a view may stem from a very natural tendency (not necessarily selfish or nationalistic) to assume that what is familiar is probably better than what is new and strange. But this preference may also reflect a practical consideration: In international trade the law of one's own country gives those familiar with that law substantial "know-how" advantages.

It was the contrast between Common law and Civil law that was the focal point of these debates. Before the Second World War the Civil law approach was strongly predominant in the various drafts on international trade law; after the War the tide turned and the Common law approach is gathering momentum.[15]

In conformity with the objectives of the United Nations, the work of UNCITRAL and its constituent bodies has been characterized by the search for compromises. But the attempt to develop a compromise between the two systems has inherent difficulties. As regards legal techniques each of the two systems is coherent in itself but is incongruous with the other. Furthermore the search for a compromise is often complicated by a tacit endeavour to find a "compromise" that favors one's own system. Also much time is lost because of difficulties of communication. A person well versed in one system may find it difficult to grasp the arguments of a representative of the other system. Each will, as a matter of course, [page 315] present his arguments in his own familiar idiom, and often will not be understood by those with different legal background.[16]

The divergences between Common law and Civil law were the principal stumbling-block in preparing uniform rules on the formation of contracts of international sales. The difficulties included the doctrine of consideration, the clash between the dispatch theory and the receipt theory, and the problem of the binding force of the offer.

Doctrine of Consideration

The Draft Convention makes no mention of the doctrine of consideration. It might be argued that problems in this area cannot arise, since "consideration" is supplied by the exchange of promises to deliver and to pay. However, this is not always the case. There may be supplementary covenants where consideration is missing. For example, in the interest of business relations the seller may promise to replace parts and components, when he is not obliged to do so under the contract or by law.

What does the silence of the Draft Convention on the issue of consideration mean? The Draft Convention expressly states (Art. 4) that ["except as otherwise expressly provided"] it "is not concerned with (a) the validity of the contract. . . ."[17] It could be argued that a challenge to enforceability of a promise for lack of consideration is an issue of "validity" and thereby remitted, under conflict rules, to the applicable national law. But it could be argued that recourse to a national law that makes promises unenforceable for lack of consideration would be inconsistent with art. 27 of the Draft Convention which states: "(1) A contract may be modified or abrogated by the mere agreement of the parties." Still, art. 27 can support two conflicting conclusions: (1) Since the article applies only to modification and abrogation, a contrario the doctrine of consideration may be applicable to the formation of the contract. (2) On the contrary, since substantially the same rules are applicable to the formation, abrogation and modification of contracts (in each case an agreement will be required) the exclusion of the requirement of consideration from abrogation and modification also extends by analogy to formation. This conclusion seems to be supported by the fact the question did not even surface, in connection with the 1964 Hague Convention on Formation (ULF).[18] [page 316]

Receipt Theory v. Dispatch Theory

A classic instance of conflict between the Common law and the Civil law is posed by the following case: A posts an offer to B. B immediately posts a letter of acceptance to A, but B's letter is seriously delayed (or lost) in transmission. Are the parties bound by contract?

The classic Common law rule is that in these circumstances a contract was completed when the offeree (B) posted the acceptance; the risk of delay or loss in transmission falls on the offeror (A) when the offeree dispatched an acceptance by a medium expressly or impliedly authorized by the offeror. Most Civil law systems take the opposite view. Closer study reveals variations among the approaches of Common law and Civil law countries; and one also must take into account rules on the revocability of offers which, under both legal systems, minimize the practical consequences of any difference between rules on the moment of acceptance.[l9] Nevertheless, the classic conflict between "receipt" and "dispatch" theory complicated UNCITRAL's work on uniform formation rules.

Behind the debate over the receipt and dispatch theories lurks this situation: For some time one party knows something the other party does not know; during this time both parties are exposed to the risk of an irregularity beyond the control of either party. In the specific setting of contract formation, under the dispatch theory their regularity does not affect the effectiveness of the declaration, while the receipt theory will affect its effectiveness.

Both alternatives have substantially equal justification -- or lack of justification. In fact either of the parties acting in good faith might be at a disadvantage.

For the most part, the Draft Convention, in accordance with Civil law tradition, applies the receipt theory. The offer (art. 13(1)), the withdrawal of an offer (art. 13(2)), the revocation of an offer (art.14(1)), and the acceptance by declaration (art. 16(2)) all become effective only when they reach the other party. Art. 22 makes clear when a declaration must be presumed to have reached the addressee.[20] [page 317]

There is ground for objecting to the rule of art. 18(1) that when the offeror by letter fixes a period of time for acceptance, the period begins to run from the date shown on the letter or, if no such date is shown, from the date shown on the envelope. The significant point is that the date on the envelope can be relied on only if there is no date on the letter. When there is a discrepancy of several days between the dates on the letter and the envelope, it is probable that the latter date is authentic. The offeror either antedated his letter or negligently posted it only after the lapse of several days. If recourse is had to this provision, the offeree might find himself at considerable disadvantage. In extreme cases, even the whole period of time for acceptance might expire before the letter reaches the offeree; in any case the time for acceptance will be shortened.[21]

In one important situation the Draft Convention does not follow the receipt theory. Under art. 16(3) "if, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods or payment of the price, without notice to the offeror, the acceptance is effective at the moment the act is performed provided that the act is performed within the period of time laid down in paragraph (2) of this article." Here something like the dispatch theory is followed: the offeree may be protected when he dispatches the goods, although he would not be protected by dispatching a letter of acceptance if the letter is delayed in the mails and reaches the offeror late.

The adoption of the dispatch theory in this case might be justified by the fact that the receipt of the goods as soon as possible would be in the interest of the buyer. In addition, acts related to sending goods or paying the price usually involve a more serious change of position, calling for legal protection, than sending a letter. Moreover, the declaration of acceptance might involve a waste of time, and is not important to the buyer. Finally the special provision for acceptance in art. 16(3) is available only pursuant to the terms of the offer or in accordance with usage or practices established between the parties.

On the other hand, it should be noted that in the world of the Telex the loss of time involved in sending an acceptance is usually negligible. Further, in practice the seller would be expected to notify the buyer that he has sent the goods, especially when the goods will be en route for an extended period of time. Under paragraph (2) a notice that the goods have been sent, or some other "indication" of assent, would qualify as a notice of acceptance. It may, [page 318] therefore, be argued that paragraph (3) is superfluous.[22]

Revocation of Offer or Acceptance

Under the receipt theory, since an offer or acceptance is not effective on dispatch it is still subject to withdrawal. As we shall see, the Draft Convention restricts "revocation" of offers, but these restrictions do not apply to the withdrawal of an offer that is not yet effective; on such withdrawal, the offer is stillborn.[23]

Withdrawal is barred where the dispatch theory is applied; the declaration becomes effective on dispatch. This approach also applies when assent is indicated under art. 16(3) (discussed above) by "performing an act." Here the offer cannot be withdrawn, nor is there need to apply rules restricting revocation: performance of the act is an acceptance of the offer, and a contract has been made.

On the other hand, where the receipt principle is applied, the written offer or its acceptance is not effective unless it reaches the other party. It can therefore be withdrawn before it has reached the other party, and also, for similar reasons, when the offer and its withdrawal or when the acceptance and withdrawal reach the other party at the same time -- e.g., by the same mail (Arts. 13(2), (20)).

If therefore the offer has become effective, the question may be asked whether it may be revoked. This question cannot emerge in connection with the acceptance, for once the acceptance has become effective the contract is in being and a revocation is out of the question.

The General Rule: Revocability

Art. 14 of the Draft Convention opens with the following general rule: "(1) Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance."[24] However, this general rule favoring revocability is subject to two exceptions, one of a Civil law and one of a Common law nature.[25] Unlike the above compromise between the dispatch and [page 319] the receipt theories, this compromise inclines more closely to the Common law.

The cardinal question under the general rule is this: How long will the offer be revocable? The answer appears to be a simple one: The offer is revocable until the contract is made, i.e., until the acceptance is effective. However, in the event of revocation by a letter or telegram, the application of this rule is far from simple. Thus, a revocation may reach the offeree when he has already dispatched the acceptance, but the acceptance has not yet reached the offeror. At this point, art. 14(1) of [the] draft Convention favors the moment of dispatch: "An offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance."[26] Yet, as we have seen, assent may also be indicated by "performing an act"; such an act concludes a contract.

The question arose whether acts like payment of the price may be construed to amount to the "dispatch of acceptance." To meet this problem, art. 14(1) (quoted above) opens with the words, "Until the contract is concluded. . . ." Unfortunately the relationship between the two parts of art. 14(1) is not perfectly clear. It is necessary to recall the basic principle: Until the contract has been made, the offer may be revoked, subject to exceptions set forth in art. 14; one of these exceptions is that the right to revoke terminates when the offeree "has dispatched an acceptance." The puzzle is that, under art. 16(2), the mere dispatch of an acceptance does not conclude a contract but does end the offeror's power to revoke his offer.

The uncertain position of the offeror under this rule can lead to problems. The offeror cannot know when his revocation reached the offeree, and even less when the offeree "indicated" his assent by "performing an act." Therefore, it might be useful to state in the Convention that the offeree is bound to give notice if the revocation has reached him late. The requirement (rejected by UNCITRAL) that the parties act in good faith would be helpful in dealing with such problems; it is doubtful whether the good faith clause hidden in art. 6 among the rules on the interpretation and application of the Convention could be fully effective. Perhaps the most helpful avenue would be to draw an analogy from art. 19(2), which requires the offeror to notify the offeree when, owing to abnormalities in transmission, an acceptance posted in due time arrives late and the offeror considers that his offer has lapsed. [page 320]

Exceptions

The draft on formation prepared by the Working Group set forth three exceptions from the general rule of revocability. The first two were: "(a) if the offer indicates that it is firm or irrevocable; or (b) if the offer states a fixed period of time for acceptance."

These exceptions, particularly the second, provoked extended discussions at the 1978 session of UNCITRAL. One delegation strongly urged that when the offer states a fixed period for acceptance, the businessmen of Common law countries would interpret this to mean not only that the offer would terminate at the end of this period, but also that during this period the offer was revocable at any time.[27] When it was suggested that such a reading of the offer would be inconsistent with the statutory rule, the delegation replied that in the relations between the businessmen of two Common law states, the meaning they give to their own contract must be respected.

Following this discussion, UNCITRAL contracted points (a)-(b)(quoted above) of the Working Group draft into a single provision in art. 14(2) (a): An offer cannot be revoked, "if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable."

To some, this wording will seem similar to point (a) in the Working Group Draft (the so-called Civil law position). Nevertheless, the delegation in question concluded that, under the compromise version, when the sellers and buyers of Common law countries state a fixed time for acceptance, this in itself would not necessarily indicate that the offer was irrevocable. It might however be asked whether such a position would be consistent with the requirement of art. 6 that "in the interpretation and application of the provisions of this Convention regard is to be had to . . . the need to promote uniformity. . . ."

The Draft Convention sets forth a second exception from the general rule of revocability -- an exception "of Common law character" based on reliance. Under art. 14(2)(b) an offer cannot be revoked "if it was reasonable for the offeree to rely upon the offer as being irrevocable and the offeree has acted in reliance on the offer." The main significance of this rule is the protection it gives an offeree "who had to carry out investigations or make inquiries before deciding whether to accept an offer.[28] The Civil law affords such protection, in a manner characteristic of the Civil law (as does the ULF (art. 5(2)), by prohibiting revocation in bad faith. However some delegations from Civil law countries opposed the above-quoted [page 321] reliance rule of art. 14(2)(b); its wording seemed unusual to Civil law jurists. It is true though that similar protection could be derived from the provision in art. 16(2) which makes the period of time within which the acceptance can effectively reach the offeror dependent (inter alia) on the "circumstances of the transaction." In view of the compromise character of the article, the opponents acquiesced and agreed to art. 14 of the Draft Convention.[29]

"Acceptances" that Deviate

We now turn to the effect of a mismatch between the terms of offer and acceptance -- a problem that sometimes emerges from the so-called Battle of the Forms.

Art. 17(1) of the Draft Convention opens with the classic general rule that an "acceptance" containing "additions, limitations or other additions" is a rejection. But para. (2) (closely following art. 7(2) of ULF) lays down this important exception:

"(2) However, a reply to an offer which purports to be an acceptance but which contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance unless the offeror objects to the discrepancy without undue delay. If he does not so object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance."

In UNCITRAL, opinions diverged widely over this provision. Some believed that the provision was required by contemporary trade practices. Others thought that an acceptance must be in complete agreement with the offer and, that, in any event, the words "materially alter" were too vague. A third group of delegations tried to minimize the vagueness by a modification of the wording.[30]

The result was a compromise. Paragraph (2) was retained, but a new para. (3) was added:

"(3) Additional or different terms relating, inter alia, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially, unless the offeree by virtue of the offer or the particular circumstances of the case has reason to believe that they are acceptable to the offeror."

As may be seen, the new para. (3) reduces the vagueness, and also the sphere of application of the preceding rule, while the exception [page 322] at the end of the paragraph preserves the possibility of continued life for the attempt to give effect to transactions in spite of a mismatch between offer and acceptance.

[Editor's note: The exception at the end of the paragraph ("unless the offeree by virtue of the offer or the particular circumstances of the case has reason to believe that they are acceptable to the offeror") does not appear in the CISG; it was deleted at the 1980 Vienna Diplomatic Conference.]

ON COMPROMISES

There is no fair unification law without compromises. Here area few comments on how the process of compromise has worked in UNCITRAL.

(a) One of the traditions that has developed in UNCITRAL is a readiness for compromise; in most cases the overall solution has been fairly well balanced.

(b) Within each issue, the compromises have produced provisions of much greater complexity than would have resulted from formulations free of compromise. But this is part of the price for a unification that is fair.

(c) Some compromises are clear-cut and provide a correct orientation to the parties. Others are rendered somewhat ambiguous because the concessions given to some are partly withdrawn by concessions accorded to others. (One example, discussed above, is the new para. (3), added to art. 17, on additional terms in an "acceptance.") Or sometimes, the failure to reach a real compromise is veiled by a vague "compromise" provision. (An example is the "good faith" clause in art. 6, limited to a rule of interpretation of the Convention.) Occasionally even this device is indispensable, and may be included as part of the price for unification.

(d) The principal method for drafting a compromise is to use the solution of the one legal system as the principal rule, and then to dovetail solutions of the other legal system into the text as exceptions. This may well be the most appropriate procedure. What must be avoided is to commingle the solutions of different legal systems within the same element of a rule. Each element is a unit; inserting an alien ingredient into the unit might raise the level of complexity of the draft beyond bearable limits. [page 323]


FOOTNOTES

1. 56 & 57 Vict. c. 71.

2. E.g., s. 3 (formal requirements), s. 8 (determination of the price), s. 58(3), (sale by auction).

3. E.g., Anson’s Law of Contract (24th ed., Guest, 1975).

4. See also the Indian Codes and related statutes such as the Pakistani Sale of Goods Act, III of 1930, (ch. II regulates the formation of contracts).

5. See von Caemmerer, "Die Haager Konferenz über die internationale Vereinheitlichung des Kaufrechts vom 2. bis 25. April 1964," 29 RabelsZ 101-104 (1965); "UNIDROIT Draft Uniform Law on the Formation of Contracts for the International Sale of Goods (corporeal movables) and Report" (1963) reprinted in Diplomatic Conference on the Unification of Law Governing the International Sale of Goods, The Hague, 2-25 April 1964, Vol. II, 421 et seq. The background of ULF is summarized in "Report of the Secretary-General: Formation and Validity of Contracts for the International Sale of Goods," A/CN.9/128, Annex II, VIII Yearbook 90-92.

6. See General Introduction, supra at I-A.

7. Id.

8. Part I defines the scope of the Convention and contains further general provisions applicable to the whole Convention; Part IV will contain the final clauses to be formulated in the diplomatic conference.

9. See A/CN.9/SR.197, paras. 2-17. In preparing the draft, the Working Group considered both ULF and the UNIDROIT draft on the validity of contracts of international sale. With respect to the latter, only the provisions on interpretation were used in drafting; the provisions on validity were not employed. See Enderlein, "Zur Ausarbeitung einer Konvention über den Abschluss Internationaler Kaufverträge durch die UNCITRAL," Recht im Aussenhandel, Annex 32, zu Aussenwirtschaft 52 (1977).

10. The full text of the 1978 Draft Convention on Contracts for the International Sale of Goods appears infra at II-H. The Draft Convention on the Formation of Contracts for the International Sale of Goods, prepared by the UNCITRAL Working Group (the "1977 Formation Draft"), appears in U.N. Doc. A/CN.9/142/Add 1.

11. See Eörsi, "Contracts of Adhesion and the Protection of the Weaker Party in International Trade Relations" in: I UNIDROIT (ed.), New Directions in International Trade Law 155-175 (1977).

12. The "good faith clause" turns up not only in the Civil law codes but as a general clause also in UCC 1-203 and at other sections in connection with the particular rules. See Honnold, Law of Sales and Sales Financing 25-26 (4th ed. 1976).

13. At one point the ULF requires the observance of good faith: under art. 5(2) an offer "can be revoked unless the revocation is not made in good faith or in conformity with fair dealing." Good faith in the setting of revocation will be discussed infra. On the debate in the Working Group see Enderlein, supra n. 9, s. 3.3.

14. Kahn-Freund, "Comparative Law as an Academic Subject," 82 Law Q. Rev. 40-45 (1966).

15. This process appears clearly in the development of UNIDROIT’s drafts relating to commercial representation, commission agency or agency, and unification of international sales contracts.

16. On the question of the compromises see the noteworthy statements of Enderlein, supra n. 9 at 7.

17. It is difficult to distinguish between (1) avoidable and (2) unenforceable contracts. The first, with the aid of the substantive law, leads to the same conclusion as the second, with the aid of procedural law.

18. It is true that art. 1(9) ULF, unlike the Draft Convention, wholly excludes conflicts law; yet this exclusion is expressly limited "for the purpose of the application of the present law. . . ." Since ULF is not applicable to validity, the ULF provision excluding conflicts rules would likewise not be applicable to validity questions.

19. See Schlesinger, Formation of Contracts -- A Study of the Common Core of Legal Systems, Vol. I: 158-163, Vol. II: 1437-1441 (English), 1446-1463 (French), 1464-1473 (Austrian, German, Swiss). See also UCC 2-206(1)(a).

20. Art. 22 of the 1978 Draft Convention provides: "For the purposes of Part II of this Convention an offer, declaration of acceptance or any other indication of intention ‘reaches’ the addressee when it is made orally to him or delivered by any other means to him, his place of business or mailing address, or, if he does not have a place of business or mailing address, to his habitual residence." This provision is by far more explicit than the comparable provision of ULF art. 12(1): "For the purposes of the present law, the expression ‘to be communicated’ means to be delivered at the address of the person to whom the communication is directed."

21. ULF art. 8(2) provides that attention should be given only to the "day the letter was dated," i.e., the time here criticized.

22. It is clear from the text that the "performance of an act" must be such as to indicted assent. See v. Caemmerer, supra n. 5 at 124, and ULF Art. 6(2).

23. ULF (art. 5(1), (2)) uses the terms "withdrawal" and "revocation" in connection with the offer in the same way as the Draft Convention. In connection with acceptance it speaks, however, of "revocation" in situations comparable to those for which it refers to "withdrawal" of an offer.

24. ULF art. 5(2), (cf. the Rome draft) also opens with a general rule that an offer "can be revoked." See v. Caemmerer, supra n. 5 at 199, who remarks that the hardest nut to crack for ULF was the question of the binding force of the offer. The same may be said of UNCITRAL’s draft. Also see Herber in Dölle (ed.), Kommentar zum Einheitlichen Kaufrecht, art. 5, I.1 (1976).

25. In art. 5(2) ULF there is only a "Civil law" exception; as we shall see, both ULF and the Draft Convention on this point speak "the language of the Common law."

26. See also art. 4(4) of the Rome draft, art. 5(4) ULF.

27. A/CN.9/XI. CRP.18, add. 9. para. 5.

28. Id., para. 9.

29. A proposal that the reliance rule of art. 14(2)(b) would be applicable only "if the offeror knew that the offeree had relied on the offer or if this reliance derived from an act of the offeror" did not receive the required support. Id. para. 10.

30. A/CN.9/SR.199, paras. 21-34.


Pace Law School Institute of International Commercial Law - Last updated October 9, 2008
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