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Cite as Farnsworth, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 189-194. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.

Article 21

E. Allan Farnsworth

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

ARTICLE 21

(1) A late acceptance is nevertheless effective as an acceptance if without delay the offeror orally so informs the offeree or dispatches a notice to that effect.

(2) If a letter or other writing containing a late acceptance shows that it has been sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time, the late acceptance is effective as an acceptance unless, without delay, the offeror orally informs the offeree that he considers his offer as having lapsed or dispatches a notice to that effect.

1. History of the provision.

     1.1. - Article 21(1) deals generally with the effect of a late acceptance, that is, of an acceptance that is not effective as such because the offer has already lapsed. An acceptance may be late either because it was dispatched too late or because it was delayed in transmission. The Convention distinguishes these two situations and Article 21(2) deals with the special case of an acceptance that appears to be late because of delay in transmission rather than because of late dispatch.

     1.2. - Article 21(1) is based on Article 9(1) of ULFC, which provided:

If the acceptance is late, the offeror may nevertheless consider it to have arrived in due time on condition that he promptly so informs the acceptor orally or by dispatch of a notice.

The Working Group adopted this as the basis for its formulation, noting in doing so that in general it «reflected the traditional rule that a late acceptance constituted a counter-offer» (see Yearbook, VIII (1977), 84). [page 189]

     1.3. - Article 21(2) is based on Article 9(2) of ULFC, which provided:

If however the acceptance is communicated late, it shall be considered to have been communicated in due time, if the letter or document that contains the acceptance shows that it has been sent in such circumstances that if its transmission had been normal it would have been communicated in due time; this provision shall not however apply if the offeror has promptly informed the acceptor orally or by dispatch of a notice that he considers his offer as having lapsed.

The Working Group approved this formula over the repeated objection that it would be difficult for the offeror to determine whether a comniunication would have arrived in due time had there been no delay (Yearbook, VIII (1977), 84; IX (1978), 80). The Working Group thus did not approve a Secretariat proposal that would have adopted the principle of Article 21(2) and applied it to all late acceptances (see Yearbook, VIII (1977), 101-102). Neither this nor the first paragraph proved controversial after it left the Working Group (see Yearbook, IX (1978), 44; Official Records, 1,97).

2. Meaning and purpose of the provision.

     2.1. - Under Article 18(2), an acceptance «is not effective if it does not reach the offeror within the time he has fixed or, if no time is fixed, within a reasonable time». If the acceptance is not in time, the offer lapses, and no contract is concluded by the later acceptance. Under Article 21(1), however, the late acceptance «is nevertheless effective as an acceptance if without delay the offeror orally so informs the offeree or dispatches a notice to that effect».

     2.2. - In many legal systems, a late acceptance operates as a counter-offer (see, e.g., § 70 of the American Restatement (Second) of Contracts; see also KAHN, La Convention de Vienne, 967; NOUSSIAS, Die Zugangsbedürftigkeit, 104-105; SCHMIDT, International Contract Law in the Context of some of its Sources, in American Journal of Comparative Law, 14 (1965), 26-28). Furthermore, it was the Working Group's understanding that a [page 190] late acceptance had this effect under Article 21 (see § 1.2., supra). Under the counter-offer theory, a contract is concluded only if the original offeror notifies the original offeree of his intention to be bound by the late acceptance. This notification by the original offeror operates as an acceptance of a counter-offer by the original offeree, and a contract is concluded at the time that acceptance is effective, which under the Convention would be the time the original offeror's acceptance reaches the original offeree (see Article 18(2)). Under Article 21(1), as under the counter-offer theory, a contract is concluded only if the original offeror notifies the original offeree of his intention to be bound by the late acceptance. But this notification by the original offeror operates, however, not as an acceptance of a counter-offer, but to give effect to the acceptance of the original offeree, and it operates in this way not on its receipt by the original offeree, but on its dispatch by the original offeror. It is not entirely clear whether, the late acceptance is then effective as of the time of dispatch or retroactively as of the time of its arrival (see § 3.3., infra).

Suppose, for example, that an offeror fixes July 30 as the date when his offer lapses, and the offeree does not mail his acceptance until July 30. If the acceptance takes three days to arrive, arriving in normal course on August 3, Article 21(1) gives the offeror a choice. He can decide that he does not want to be bound to a contract, in which case he need do nothing. Or he can decide that he wants to be bound to a contract, in which case he must without delay so inform the offeree or dispatch a notice to that effect.

     2.3. - This solution was thought to be less appropriate if the reason that the acceptance is late is not the offeree's delay but is instead a delay in transmission. At least the solution was thought to be less appropriate if it should be apparent to the offeror that the reason that the acceptance is late is a delay in transmission. In that case, Article 21(2) provides that the late acceptance «is effective as an acceptance unless, without delay, the offeror orally informs the offeree that he considers his offer as having lapsed or dispatches a notice to that effect». It should be noted that even in this exceptional case it is still within the offeror's power to choose whether he will be bound by a contract or not. The only effect of the exception is that in the exceptional situation, he is [page 191] bound if he says nothing. This is a rare instance in which a party's silence results in his being contractually bound.

Suppose, for example, that an offeror fixes July 30 as the date when his offer lapses, and the offeree mails his acceptance on July 20, in ample time to arrive before July 30. But because of a delay in the mail, the acceptance, dated and postmarked July 20, does not reach the offeror until August 3. Since the date on the letter and the postmark on the envelope will ordinarily show that the acceptance would have reached the offeror in due time had transmission been normal, the rule of paragraph (2) rather than that of paragraph (1) applies. Under that rule the offeror has a choice. He can decide that he wants to be bound by a contract, in which case he need do nothing. Or he can decide that he does not want to be bound by a contract, in which case he must without delay so inform the offeree or dispatch a notice to that effect. Under paragraph (2) the offeror has the same choice that he did under paragraph (1), but he exercises it in a different way. Under paragraph (2) his silence results in a contract; under paragraph (1) it does not. The reason for the difference is this: if, as under paragraph (1), the offeree himself is the cause of the delay, he is not entitled to assume that there is a contract unless he hears something to that effect from the offeror; but if, as under paragraph (2), the offeree is not the cause of the delay, and is presumably unaware of it, he is entitled to assume that there is a contract unless he hears something to the contrary from the offeree.

3. Problems concerning the provision.

     3.1. - Article 21 is likely to give rise to two problems. The first is that of drawing the line between the general rule of paragraph (1) and the exception in paragraph (2). The second is that of preventing speculation under both paragraphs.

     3.2. - The problem of drawing the line between the general rule of paragraph (1) and the exception in paragraph (2) arise because the exception applies only if the acceptance «shows that it has been sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time». [page 192] Suppose that, in the example given of delay in the mail (see § 2.5., supra), the date on the letter and the postmark on the envelope show that the acceptance was mailed on July 27 rather than on July 30. Now it may not be apparent to the offeror whether or not the acceptance would have reached him in due time had there been no delay in the mails. The offeror's uncertainty may be even greater if he has not fixed a time for acceptance so that an acceptance will be effective if it arises within a «reasonable time» (see Article 18(2)). As was pointed out earlier, this problem was raised in the Working Group (see, § 1.3., supra). It may, however, be less serious in practice than in theory, for if the offeror is unsure of which paragraph applies, he can avoid any uncertainty by notifying the offeree in either case -- whether he chooses to treat the late acceptance as effective or not to so treat it.

     3.3. - The problem of speculation is more substantial. Suppose, in the example given under paragraph (1) (see § 2.2., supra) , that there has been a sharp change in the market between the time that the offeree dispatched his acceptance on July 30 and the time that it reached the offeror on August 3. Since the offeror can choose to have a contract or not, he can make his decision in the light of the change in the market. However, it was the offeror's delay that made him vulnerable to speculation in this way, and the offeree can avoid this risk by sending a withdrawal that overtakes his acceptance at any time before it becomes effective (see Article 22). It is unclear whether this power to withdraw the acceptance survives even after a late acceptance reaches the offeror. The language of Article 21(1) suggests that the offeror's notice may take effect retroactively, giving effect to the acceptance as of the time of its receipt, so that the power of withdrawal would not survive. This interpretation is supported by the fact that the Secretariat's Commentary was changed, in response to the objection from the delegation of one government, to reflect this view (compare Official Records, I, 25 saying that «it is the late acceptance which becomes the effective acceptance as of the moment of its receipt», with the comment on Article 15(3) of the Sales Draft, Yearbook, IX (1978), 119 saying that «it is the late acceptance which becomes the effective acceptance at the moment the original offeror informs the original [page 193] offeree of his intention either orally or by the dispatch of a notice»; see the observations of the delegation from the Netherlands, Yearbook, IX (1978), 137). Nevertheless, such an interpretation seems undesirable, for it tips the balance too much in favour of the offeror and is contrary to the understanding that the Working Group must have had (see § 1.2., supra). At least one commentator shares this conclusion (see HONNOLD, Uniform Law, 200 stating, without discussing the question of retroactivity: «a "late" acceptance ... can be withdrawn until the offeror "dispatches" [Article 21 (1)] his notice that the offer is effective») .

     3.4. - The problem of speculation is more serious under Article 21(2). Suppose that in the example already given, there has been a sharp change in the market during the last week of July. Since the offeror can choose to have a contract or not, he can make his decision in the light of the change in the market. His situation is similar to that under paragraph (1) (see § 3.3., supra), except that now he must take affirmative action if he chooses not to be bound by a contract. However, in contrast to the situation under paragraph (1), it was not the offeree's delay that made him vulnerable to speculation in this way. And furthermore, it is unlikely that the offeree would think to avoid this risk by sending an overtaking withdrawal since, in the facts given, he would suppose, at the time of the change in the market, that his acceptance had already arrived and that it was too late to try to overtake it.

The injustice of allowing the offeror to choose whether he will be bound or not in this situation becomes more apparent as the period of the delay lengthens. Suppose, for example, that the delay is several months. Could the offeror still hold the offeree? It can be argued that after some period of delay the offeror is no longer justified in regarding the delayed communication as «indicating assent to an offer» under Article 18(1) if intervening events had made the contract unfavourable to the offeree. It can also be argued that after some period of delay the offeror would not be acting in good faith if he treated the delayed communication as an acceptance in such circumstances (see Article 7). The possibility of an unjust result could thus be avoided (see HONNOLD, Uniform Law, 201-202). [page 194]


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