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Comparison between provisions of the CISG regarding late acceptance (Article 21) and the counterpart provisions of the PECL (Art. 2:207)

John Felemegas [*]
July 2004

I.    Introduction
II.   Late acceptance of offer to conclude contract
III.  Notice by offeror giving effect to late acceptance
        (a) CISG Art. 21(1)
        (b) PECL Art. 2:207(1)
IV.  Late arrival of acceptance because of transmission delays
        (a) Cause of delay evident to offeror: duty to inform offeree
(i) CISG Art. 21(2)
(ii) PECL Art. 2:207(2)
        (b) Failure so to inform offeree: acceptance is effective
(i) CISG Art. 21(2)
(ii) PECL Art. 2:207(2)
V.   Conclusion

I. Introduction

In Part II of the Convention, entitled "Formation of the Contract", Article 21 deals with the issue of late acceptance [1] by an offeree, the response to that by the offeror and the effect that a late acceptance has in the context of contract formation.[2]

The Principles of European Contract Law, Chapter 2 "Formation", Section 2 "Offer and Acceptance", Article 2:207 regulates the same issues concerning late acceptance in contract formation.[3]

The Convention provides that a late acceptance can nonetheless be effective, and so do the Principles. Both the Convention and the Principles deal with the issue of late acceptance - whether the offeree accepted the offer late or the acceptance was late because of a delay in transmission -- in almost identical terms.

II. Late acceptance of offer to conclude contract

Art. 21 of the Convention "deals with acceptances that arrive after the expiration of the time for acceptance."[4] In that sense, Art. 21 must be viewed in the context of the basic rule of the Convention that a late acceptance is ineffective.[5]

Honnold states that CISG Art. 21 "like Article 20, extends and elaborates the basic rule" [6] for late acceptances, by providing the answer to some related, important questions which can arise when an acceptance does not reach the offeror within the time he has fixed for acceptance.[7]

CISG Art. 21 makes a distinction in the rules applicable to a late acceptance, depending on whether the acceptance was sent late by the offeree or the lateness of the acceptance was caused by delays in its transmission. The counterpart provision of the PECL, Article 2:207 makes the same distinction.

III. Notice by offeror giving effect to late acceptance

     (a) CISG Art. 21(1)

In the case of a belated dispatch of acceptance by the offeree, a positive subsequent response by the offeror can make the late acceptance nevertheless effective to conclude the contract.[8]

Where the offeree has dispatched belatedly an acceptance -- either after the period for acceptance set by offeror has expired, or before the expiry of the fixed period but using a mode of communication which would not ensure that acceptance reaches the offeror in due time -- it must be presumed that the offeree is aware that his acceptance is (or is going to be) late for the purposes of contract formation. In that case, it is argued that the offeree "knows that his acceptance is actually a counter-offer and needs to be confirmed through an acceptance. Silence by the offeror cannot be inferred by him to be an acceptance (Article 18, paragraph 1)."[9]

From the basic rule of the Convention that an acceptance of an offer becomes effective at the moment it reaches the offeror (pursuant to Art. 18(2)), it follows that the risk of transmission is borne by the offeree.[10] Furthermore, pursuant to Art. 21(1) the offeror has the power to consider a late acceptance as having arrived in due time. If the offeror so elects to be bound by the late acceptance, he must inform without delay the offeree "orally or by dispatch of a notice that he considers the acceptance to be effective".[11] It must be stressed that the subsequent -- and without delay -- response by the offeror to a late acceptance acts only as validation of the contractually binding effect of what was a late acceptance by the offeree and it does not constitute a counter-offer.[12]

It follows that the offeror need not respond to the offeree regarding the late acceptance, in which case no contract is concluded.[13]

If the offeror wishes to assent to the contract he may do so by informing the offeree either orally [14] or by dispatching a notice [15] that the late acceptance is effective. The information can also be given to the offeree in an electronic message.[16]

     (b) PECL Art. 2:207(1)

According to the Principles, a late acceptance is ineffective; i.e., in order for an acceptance to be effective it must reach the offeror within the time fixed for acceptance.[17] That is the same basic rule on late acceptance that is also found in the Convention.

The Principles, like the Convention, make a distinction between an acceptance that was sent late by the offeree [18] and an acceptance that was late because of transmission delays.[19] Like the Convention, the Principles provide a different rule for those two cases.

The wording in Article 2:207(1) is almost completely identical to that used in its counterpart provision of the CISG. In cases of late dispatch of the offeree's acceptance, Article 2:207(1) provides that, notwithstanding the rule in Article 2:206, the offeror may validate the effectiveness of the acceptance by treating it as valid.

The offeror may do so if he informs without delay the offeree to that he assents to the late acceptance. Such response by the offeror has the effect of binding him to the acceptance and concluding the contract, effective from the moment the late acceptance reached him.[20]

The PECL Comment on Article 2:207(1) makes clear that the offeror's notice to the offeree need not be an express statement of acceptance.[21]

Like the Convention, the Principles do not treat the late acceptance as a new offer which the offeror may accept within the time set for acceptance which is often longer than the time provided for in 2:207(1).[22]

IV. Late arrival of acceptance because of transmission delays

     (a) Cause of delay evident to offeror: duty to inform offeree

According to the Convention, if the late arrival of the acceptance was evidently caused by a delay in transmission, the acceptance is effective unless the offeror informs the offeree that the offer has indeed lapsed.[23]

     (i) CISG Art. 21(2)

Art. 21(2) provides that, if "a letter or other writing [24] containing the late acceptance shows that it was sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time" the offeror has an obligation to notify -- either orally or by dispatching [25] a relevant notice -- without delay, the offeree in order to prevent a contract from being concluded.[27]

It is said that the provision in Art. 21(2) mitigates the rigor of the Convention's rule that an acceptance must reach the offeror in order to be effective (Art. 18(2)) and thus it "protects the offeree's reasonable reliance interests where he has no reason to anticipate that his acceptance will not reach the offeror on time."[28]

It must be noted, however, that the offeror is not obliged to be bound by the late acceptance.[29] Furthermore, if it is shown that the relevant communication of acceptance was sent out of time and the offeror does not want to conclude a contract, he should be under no duty to do anything and can simply disregard the late acceptance. Conversely, if the offeror nonetheless wishes to conclude the contract, he must notify, without delay,[30] the offeree that he considers the late acceptance to be effective pursuant to Art. 21(1).[31]

     (ii) PECL Art. 2:207(2)

The wording in Article 2:207(2) is almost completely identical to that used in its counterpart provision of the Convention.

The PECL Comment on Art. 2:207(2) explains that where the offeree sent his acceptance in a timely fashion but a delay in its transmission caused its late arrival at the offeror, the offeror has a duty to notify the offeree if he does not assent to the contract.[32]

     (b) Failure so to inform offeree: acceptance is effective

     (i) CISG Art. 21(2)

It follows from what was said earlier that if the offeror does not inform the offeree -- either orally or by dispatching a relevant notice -- that he considers his offer as having lapsed, the acceptance is effective and concludes the contract pursuant to Art. 21(2).[33] In that case, the late acceptance is considered to have arrived in due time, and the contract is concluded as of the moment the acceptance reaches the offeror.[34]

     (ii) PECL Art. 2:207(2)

It is clear also in the PECL provision that where the offeree sent his acceptance in a timely manner but its arrival was late because of transmission delays, the acceptance should be considered effective unless the offeror without delay informs the offeree that it considers its offer as having lapsed or gives notice to that effect.[35]

V. Conclusion

The wording used in the counterpart provisions of the CISG and the PECL is almost completely identical. Furthermore, based on the striking similarity in policy and structure of the approach adopted in the CISG and the PECL to deal with the issue of late acceptance, it can be concluded that the counterpart provisions are substantively identical.[36]


FOOTNOTES

* Doctorate in Law; Fellow, Pace Law School Institute of International Commercial Law; Lecturer, Faculty of Law, University of Technology, Sydney.

1. I.e., an acceptance that has not reached the offeror in due time, see CISG Art. 18(2).

2. CISG Art. 21is situated among the eleven provisions of the Convention dealing with contract formation; see CISG Part II, Arts. 14-24.

3. PECL Art. 2:207 is situated in the Chapter of the PECL dealing with the rules of contractual formation; see PECL Arts. 2:101-2:107 and 2:201-2:211.

4. See the Text of the Secretariat Commentary on article 19 of the 1978 Draft [draft counterpart of CISG article 21], available online at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-21.html>: "If the acceptance is late, the offer lapses and no contract is concluded by the arrival of the acceptance." Art. 19 of the 1978 Draft and Art. 21 of the CISG are identical, except for some inconsequential re-wording.

5. CISG Art. 18(2).

6. Honnold J.O., Uniform Law for International Sales, Kluwer Law International, 3rd ed. (1999), 195.

7. For a relevant discussion regarding computation of time for acceptance of offer, see Felemegas J., "Comparison between provisions of the CISG (Article 20) and the counterpart provisions of the Principles of European Contract Law", available online, at <http://cisgw3.law.pace.edu/cisg/biblio/felemegas3.html>.

8. CISG Art. 21(1); see also ULF Article 9(1).

9. Enderlein F and Maskow D., International Sales Law, Oceana Publications (1992) 103; also available at <http://cisgw3.law.pace.edu/cisg/biblio/enderlein-art21.html>. The authors also consider the case where the offeror has not fixed a time for acceptance -- the indication of the offeree's assent must reach the offeror within a reasonable time (Art. 18(2)): "In that case, the offeror and the offeree may well consider different periods as being reasonable. Objectively, a reasonable time may have expired already, even though the offeree assumes that the acceptance was made in due time", ibid.

10. See Enderlein and Maskow, op. cit., 104.

11. Text of the Secretariat Commentary on article 19 of the 1978 Draft, op. cit.

Cf. Enderlein and Maskow, op. cit., 104-105, where the authors (a) describe the wording 'without delay' as being "not quite comprehensible", because the offeror probably needs time to reflect on whether to accept the late acceptance, and (b) state that this rule is "questionable, in particular when the acceptance is declared very late and the circumstances as a whole have changed in the meantime" (further references provided therein are omitted).

12. Text of the Secretariat Commentary on article 19 of the 1978 Draft, op. cit.: "[U]nder this paragraph [CISG 21(1)] it is the late acceptance which becomes the effective acceptance as of the moment of its receipt, even though it requires a subsequent notice to validate it." See also Schlechtriem P., Uniform Sales Law -- The UN-Convention on Contracts for the International Sale of Goods, Manz, Vienna (1986) 55: "This notice [by offeror], however, does not constitute the acceptance of a counter-offer; the date of the contract depends on when the acceptance was received, even though it was received late", also available online at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem-21.html See also Ziegel J., Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods, (1981), available at <http://cisgw3.law.pace.edu/cisg/text/ziegel21.html>, who states: "the late acceptance takes effect from the date of its receipt and not from the time when the offeror communicates with the offeree." Cf. Enderlein and Maskow, op. cit., 105, where the authors state: "It is not clear whether the late acceptance becomes effective at the moment when the offeror informs the offeree or dispatches the relevant communication or whether it becomes effective retroactively from the moment it is received. (Since the offeror needs to inform the offeree without delay, there will only be a slight difference in time [...]). (further references provided therein are omitted).

For the Convention's rules regarding counter-offers, see CISG Art. 19.

13. See Enderlein and Maskow, op. cit., 104: "[I]t is up to the offeror whether or not he considers the acceptance to be valid. If he wants a contract [...] he must inform the offeree accordingly [...]. Should the offeror keep silent [...] there will be no contract. "

The same policy is adopted in PECL Art. 2:206(1). See also Lando O. and Beale H. (eds.), Principles of European Contract Law: Parts I and II, Kluwer Law International (2000) 176-177, Comment A; also available at <http://cisgw3.law.pace.edu/cisg/text/peclcomp21.html#cnpc>: "Any acceptance which reaches the offeror after that time may be disregarded by the offeror. Normally it does not even have to reject the acceptance."

14. CISG-AC Opinion no 1, Electronic Communications under CISG, 15 August 2003. Rapporteur: Professor Christina Ramberg, Gothenburg, Sweden. The opinion is available online at <http://cisgw3.law.pace.edu/cisg/CISG-AC-op1.html>. Regarding Electronic Communications in the context of Art. 21(1), the Opinion states: "The term 'oral' includes electronically transmitted sound provided that the offeree expressly or impliedly has consented to receiving electronic communication of that type, in that format, and to that address."

15. CISG-AC Opinion no 1, op. cit. The Opinion states: "The term 'notice' includes electronic communications provided that the offeree expressly or impliedly has consented to receiving electronic messages of that type, in that format, and to that address."

16. CISG-AC Opinion no 1, op. cit. Comment 21.1: "The important factor is that the information be conveyed to the offeree, not in what form it was conveyed."

17. PECL Art. 2:206(1) and (2). See also Lando O. and Beale H. (eds.), Principles of European Contract Law: Parts I and II, Kluwer Law International (2000) 176-177, Comment A; also available at <http://cisgw3.law.pace.edu/cisg/text/peclcomp21.html#cnpc>.

1. PECL Art. 2:207(1).

1. PECL Art. 2:207(2).

20. Lando and Beale, op. cit., Comment B.

21. Ibid.

22. Lando and Beale, op. cit., Comment D.

23. CISG Art. 21(2); see also ULF Art. 9(2). See also the Text of the Secretariat Commentary on article 19 of the 1978 Draft [draft counterpart of CISG article 21], available online at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-21.html>: "[I]f the letter or document which contains the late acceptance shows that it was sent in such circumstances that if its transmission had been normal, it would have been communicated in due time [...] the late acceptance is considered to have arrived in due time, and the contract is concluded as of the moment the acceptance reaches the offeror, unless the offeror without delay notifies the offeree that he considers the offer as having lapsed."

24. CISG-AC Opinion no 1, Electronic Communications under CISG, 15 August 2003. Rapporteur: Professor Christina Ramberg, Gothenburg, Sweden. The opinion is available online at <http://cisgw3.law.pace.edu/cisg/CISG-AC-op1.html>. Regarding Electronic Communications in the context of Art. 21(2), the Opinion states: "The term 'writing' covers any type of electronic communication that is retrievable in perceivable form. A late acceptance in electronic form may thus be effective according to this article."

25. CISG-AC Opinion no 1, op. cit. The Opinion states: "The term 'dispatch' corresponds to the point in time when the notice has left the offeree's server. A prerequisite is that the offeree has consented expressly or impliedly to receiving electronic messages of that type, in that format, and to that address." Comment 21.5, ibid.: "It is enough that the notice has been dispatched; it does not have to reach the addressee. However, it must have been dispatched correctly. This means that the address must be correctly stated and that the sender uses a computer program that the addressee has indicated he is willing to accept."

26. CISG-AC Opinion no 1, op. cit. Comment 21.6: "The offeror should inform the offeree about a late acceptance by dispatching a notice. Dispatch occurs when the notice leaves the offeror's server. If, however, the offeree does not use the kind of electronic communication that the notice is sent in, the offeror is not considered to have dispatched the notice. The offeree must have indicated that he is willing to receive electronic acceptances of the type and format used by the offeror. CISG Arts. 8 and 9 may be of assistance in determining whether the offeree has impliedly indicated his willingness to receive such messages."

27. CISG-AC Opinion no 1, op. cit. Comment 21.4: "When the offeror provides a quick notice that that the acceptance has arrived too late, the acceptance is not effective. Information to the offeree about the late acceptance can be given in an electronic message. The important factor is that the information be conveyed to the offeree, not in what form it is conveyed. According to this Article such notice shall be communicated orally or by a [written] notice. The offeror may provide the information by electronically conveyed sound or by an electronic message under the precondition that the sender of the late acceptance has indicated that he is willing to receive such electronic messages."

28. Ziegel J., Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods, (1981), available at <http://cisgw3.law.pace.edu/cisg/text/ziegel21.html>.

29. Enderlein and Maskow, op. cit. 105, where the authors point out that "[t]he offeror could not foresee that an acceptance would arrive even after the period for acceptance had expired" and he "may have made other arrangements or have lost his interest in the transaction." For a similar approach in the PECL, see Lando and Beale, note 32, infra.

30. Kritzer A.H., Guide to Practical Applications of the United Nations Convention on Contracts for the International Sale of Goods, Kluwer, (1988) 190, stresses that "if the offeror wants to treat such an acceptance as invalid, he may if he proceeds without delay. A concern is that where an acceptance is late under these circumstances, Article 21 may give the offeror an opportunity to speculate and decide whether to honor the late acceptance on the basis of a rise or fall of prices in the interim period." Regarding the potential for opportunistic speculation by offeror at the expense of the offeree, in the application of Art. 21, Honnold, op. cit., at 197, opines that "[t]his opportunity will be avoided [...] by construing Article 21(1) in relation to the basic rule in Article 18(1) that a statement is an acceptance only if it indicates 'assent' to the offer in the light of the objective facts available to both parties when (Art. 18(2)) the reply 'reaches the offeror'. This result would also respond to the rule of Article 7(1) that 'in the interpretation of this Convention, regard is to be had ... to the need to promote... the observance of good faith in international trade'."

31. See the Text of the Secretariat Commentary on article 19 of the 1978 Draft [draft counterpart of CISG article 21], available online at <http://cisgw3.law.pace.edu/cisg/text/secomm/secomm-21.html>.

32. Lando and Beale, op. cit., Comment C. "The offeror, however, only has this duty if the acceptance shows that it was sent in time and that it arrived late due to an unexpected delay in transmission." Ibid.

33. CISG-AC Opinion no 1, op. cit. 21.3: "The purpose of this Article is to make a delayed acceptance effective when the offeror does not inform the other party that the acceptance has been delayed and the acceptance has reached the offeror too late. A typical situation is when an electronic acceptance is delayed and does not reach the offeror within the normal time-span. The article is only applicable if the acceptance is sent in a letter or other writing. The article applies also when the acceptance is sent by an electronic message as long as this electronic message fulfils the two functions of writing, i.e. that it can be understood and saved."

34. Schlechtriem, op. cit., states "the acceptance becomes effective on arrival and thus concludes the contract, unless the offeror protests orally or in writing". See also note 14, supra.

35. Lando and Beale, op. cit., Comment C.

36. See also Lando and Beale, op. cit., Note 1: "Article 2:207(1) is in accordance with CISG, art. 21(1)"; Note 2: "Article 2:207(2) is identical to CISG art. 21(2)."


Pace Law School Institute of International Commercial Law -- Last updated July 30, 2004
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