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Future of Harmonisation and Unification in Contract Law Regarding "Battle of Forms"

Nguyen Trung Nam [*]

September 2009

INTRODUCTION

Harmonisation, unification,[1] codification and reform in international commercial law [2] have long been the centre of international efforts to facilitate international commercial transactions [3] with lower costs to enterprises and higher legal certainty. Started with the initiatives of the International Institute for Unification of Private Law (Rome Institute or UNIDROIT) in 1930,[4] the international efforts of commercial law harmonisation and unification found their fruits in the two main codes widely recognised and accepted by nations, the United Nation Convention on Contracts for the International Sale of Goods [5] (CISG) and the UNIDROIT Principles of International Commercial Contracts [6] (UNIDROIT Principles). At supra-national level, the European Union has successfully developed a uniform commercial code to be a good reference for its member-States, the Principles of European Contract Law [7] (PECL). At national level, nations have been trying to harmonise their legal system within the jurisdiction,[8] as well as with the international codes. Such developments, however, have been far from a complete uniform commercial law system, or even a harmonised status for the legal regimes. This can be exemplified by international harmonisation process in dealing with the "battle of forms," which is the subject of this dissertation thesis.

The "battle of forms" has been one of the most common seen problems in international transactions nowadays,[9] as well as among the most complicated areas of contract law.[10] It refers to the situation when the merchants exchange letters, emails and (standard) forms that seem to form a contract but in fact they include contradictory or inconsistent standard terms. In most of the cases those conflicts of terms do not lead to litigation as the businessmen with commercial mind-set will prefer to settle those conflicts via give-and-take amicable methods.[11] However if litigation is rendered, it will become very difficult to resolve.

The difficulty in dealing with the issue is that different law systems theoretically and practically solve the battle of form problem in distinct ways. There is a well-recognised need therefore to harmonise and/or unify such different approaches to the battle of forms problem to fill the gap of law in this area. Hitherto, various researches have been made on the comparative laws regulating the battle of forms [12] with different suggested solutions to the problem. But relatively few of them look at the problem from a view of future perspective for the harmonisation of the law regarding the battle of forms both domestically and between the nations.[13]

The purpose of this dissertation thesis is to define the future of harmonisation and unification in contract law regarding the battle of forms by review different approaches of the world's leading legal systems in dealing with the battle of forms, and more importantly, the status and international efforts so far in harmonisation and unification of contract law regarding the battle of forms in the modern trade context. The author hopes that the thesis, offering another concrete view on the issue, will enrich the understanding of the problem and the possibility of international law reform in this area.

The research has two main following objectives:

In order to meet its objective this research renders a primary doctrinal approach, including the analysis of statutes and cases law of several major legal systems (Anglo-American Common Law, France and Germany) and the international codes on contract law (at both regional and international levels) on comparative basis.

The author is fully aware that the doctrinal approach will have certain limitation in a sense that the battle of forms problem is largely associated with the contextual business transactions between merchants,[14] and a pure study at the positive law will easily lead to a narration of the law statements without taking into account the evolution of international commercial activities which has been a main force requesting the harmonisation/unification of the battle of forms treatment and determining the direction of such process. In order to fill this gap and for the purpose of better insight understanding the author will try to provide some contextual and historical background of those positive laws based on previous researches and official materials.

The thesis is structured as follows:[15]

Chapter I: The background of the battle of forms problem will be given. Then different legal approaches in dealing with the problem, including their advantages and disadvantages, will be discussed. This Chapter will also look at the battle of forms problem on international scale and try to determine the rationale for unification and harmonisation of laws regulating this problem.

Chapter II: The development of international initiatives of harmonisation and unification of contract laws related to the battle of forms at international, supra-national and national levels, in which the most important codes will be analysed, including the Vienna Convention 1980 (CISG), the UNIDROIT Principles and PECL. It will also look at how the States have applied or harmonise their national law with of those principles

Chapter III: This Chapter will analyse the challenges as well as promises of the process towards a uniform solution to the battle of forms problem in the context of modern international commercial environment, and some recommendations by the author for the possible direction(s) of this harmonisation.

CHAPTER 1: "BATTLE OF FORMS" PROBLEM AND APPROACHES OF DIFFERENT LEGAL SYSTEMS

I. Background on the "battle of forms"[16] problem

1. Standard forms and their problem

Standard form contracts are those contracts with pre-printed general terms and conditions (GTCs) (also called "boiler-plate").[17] The development of standard form contracts is the inevitable result of the increase in commercial transactions, and a logical development of contracting within large-scale enterprises and complex economies.[18] The standard form contracts serve to decrease time and costs for the merchants in drafting, negotiating, and executing contracts having identical or similar structure of rights and obligations, liability and risk allocation, etc. Especially in mass production and distribution of products, standard form contracts can be seen in almost every area of commercial transactions.[19] For example, in the United States standard form contracts have been in common use since at least the late nineteenth century. Not surprisingly, paper standard forms today are estimated to account for approximately 99% of all contracts made in both consumer and non-consumer transactions.[20] Standard form contracts have become even more popular in e-commerce and internet transactions with the wide acceptance of "clickwrap" and "browsewrap" contracts.[21]

Despite their universal usage, what make standard form contracts well-known for their discomfort is that they may easily create a "battle of forms," a plague among the law courts for centuries.[22] As Andre Corterier rightly commented,[23] the root cause of the battle of forms is a misunderstanding, not between the merchants involved, but between the merchants and their lawyers. On the one hand, merchants come to terms with each other and wish to structure their transactions more efficiently by rendering their lawyers to draft a set of standard terms suitable for them. On the other hand, in order to protect their rights and limit their legal liabilities and risks, lawyers from both sides would try to ensure their own standard terms being applied to the transaction, normally by including "only under the following terms & conditions" [with the general terms & conditions attached] in their communication. In this regard, the standard forms may generally conflict on indemnity & liability, risk of loss, payment term & payment of interest, warranties, remedies, applicable laws and arbitration.[24] While both parties discuss and come into agreement or may even perform the contract as agreed, they may consider only the "dickered" terms [25] but are not aware that their agreement has been based on the conflicting general "legal" terms, and only when legal problem arise,[26] it is the lawyers again, to argue on the face of these standard terms. That is why Professor John Honnold termed this exchange of forms phenomenon une conversation des sourds (i.e. a conversation of the deaf).[27]

2. Questions arising from the "battle of forms" and the opposite assumptions

Continuing with the above story, two questions are immediately popped-up and must be determined by the parties when legal problem arises:

(1) Given the fact that the parties did not actually agree in the complete terms & conditions of their transaction, and given however that they may have actually had "meeting of minds" on their "dickered" terms, has a contract been formed at all between the parties?

(2) If the answer for the above question is yes, e.g. a contract has been formed either initially by law or impliedly by performance of the parties, then on what terms they have agreed with each other? The buyer's standard form, or the seller's standard form, or the hybrid of both, or something else?

Before giving the answer to the above questions, some clarification and assumptions should be discussed. Firstly, one should note that a set of GTCs can be incorporated as part of a contract by the exchange between the parties via offer-acceptance mechanism;[28] by reference to practices or previous negotiations between the parties;[29] or if such standards are widely known and regularly observed by the parties.[30] Once incorporated expressly or impliedly into the contract, the GTCs will become an integral part of it and having the same binding effect as other parts of the contract. Therefore, from a strictly legislative point of view, parties should have agreed on all terms regulating their transaction, including both essential terms and minor issues. From practical point of view, however, there are two opposite assumptions can be drawn.

One assumption is that it is the parties' obligation to carefully read and understand the whole content of each other's forms when they decide to enter into the agreement. This will lead to the approach of applying the offer-and-acceptance rules in the formation of contract [31] to the exchange of letters and forms between the parties. On the contrary, the modern contract law commentators usually assume based on the "battle of forms in action" that businessmen rarely read the boilerplate language on purchase forms, and they normally rely on the existence of a contract despite their clashing forms. This theory may lead to the "performance"[32] or "good faith"[33] approaches which consider that a contract is deemed concluded by the "meeting of minds" between the parties and the terms of such contract should reflect their intention.[34] Keeping these in mind, in the next section we will analyse how the legal systems have traditionally solved the battle of forms problem.

II. Traditional approaches in solving "battle of forms" problem

The best way to understand various scenarios encountered in the battle of form, and the result while applying different solutions offered by legislations, as many scholars do,[35] is to consider several simple examples of commercial transactions using standard forms. This thesis, throughout its following parts, will discuss and analyse two examples laid out below [36] with additional facts or revisions where required to illustrate corresponding points:

Example 1: [37] On June 1, Seller sent Buyer an offer for bulk commodity, including a back-form stating that goods to be packed in "safe bags" and shipment on July 1. On June 5, the Buyer accepted the offer but sent the purchase order (PO) with his own form, which stated that goods to be packed in "new bags". Seller did not object to the PO and expected to ship the goods on July 1. During June the market price of goods felt dramatically, the Buyer consulted with his lawyer if he could invalidate the PO. On June 30 Buyer informed Seller that the PO was cancelled on the ground that Seller had not accepted Buyer's counter-offer on June 5. Example 1A: [38] on June 6 Seller wired Buyer: "Can ship goods in sound, secondhand bags only." On June 7 Buyer replied: "Insist on new bags." On June 8 Seller objected: "Cannot comply with your request." Buyer did not reply and Seller did not ship.

Example 2: [39] Buyer sends Seller a PO for a machine tool with standard form providing a warranty period of twenty-four (24) months, without expressly stating that it will only contract on its own terms. Seller sends a sales acknowledgement with identical terms, except that Seller's warranty clause provide for eighteen (18) months only. Seller then ships the goods and Buyer receives, pays for, and uses them. Twenty months later the tool fails and Buyer needs to determine if the tool is under warranty. Example 2A: same situation except that both parties' forms expressly state that they contract only on their own terms.

1. Anglo-American approach

a) Traditional solution based on offer-and-acceptance rule

The English Common Law has for long established the offer-and-acceptance rule in the formation of contract,[40] under which a contract is only formed if the offeree unreservedly accepts the exact terms proposed by the offeror, or there must be an unqualified expression of assent.[41] This is called "mirror image rule."[42] Any addition or alteration to the offeror's terms will mean rejection of the offer and constitute a counter-offer, not and acceptance.[43] In the United States, the same principle was applied, as provided for in the American Restatement of Contracts.[44]

It is important to note that the counter-offer will have the effect of destroying the original offer, which cannot be accepted subsequently by the offeree. In the leading case of offer-and-acceptance rule, Hyde v. Wrench,[45] the defendant offered to sell his farm for ú1,000. The plaintiff at first made a counter-offer of ú950, but then agreed to pay ú1,000 and tried to accept the original offer. It was held, however, that no contract was formed since by his letter offering ú950, the plaintiff made a counter-offer with the effect of rejecting the original offer, so that the later was not available for him to accept. Similarly, in Jones v. Daniel,[46] where the offeree introduced new terms not referred to in the original offer, it was held that there was no contract between parties.

One problem with the fact of acceptance is when there are exchanges to clarify the terms of the offer and/or to ascertain whether the offeror would consider changing certain aspects of the offer. In the case of Stevenson, Jacques & Co. v. McLean [47] it was held that merely an inquiry to see if one party would be willing to modify his terms would not amount to a counter-offer.

A further problem could be seen with controversy where a person in accepting the offer makes reference to some other term(s).[48] From a strict interpretation of Hyde v. Wrench, it would amount to a counter-offer. However, if this term would be implied into the contract in any event by operation of law, the acceptance will become valid. Similarly, where the acceptance adds new provision "by way of indulgence to the offeror" then such acceptance is still valid.[49] This approach was accepted by Mellish L.J. in Harris' Case,[50] as well as by Lord Denning in Nicolene Ltd. v. Simmonds.[51]

In the scenario of conflict standard forms, the traditional offer-and-acceptance rule, combined with the rule that the contents of a document must be read as a whole (provided only that the party to whom it is addressed has reasonable notice of its contents),[52] will lead to the result that "the counter offer kills the original offer"[53] as seen in Hyde v. Wrench. Therefore, the winner in the battle will be the one who last submits the counter-offer which is accepted by the other party (in so far as a contract has been formed).[54] This is called the "last shot" rule. In B.R.S. v. Arthur V Crutchley Ltd.[55] BRS delivered whisky to AC's warehouse and BRS's driver gave AC a delivery note which contained BRS' conditions (the first shot). AC stamped the note "Received under AC's conditions" (second shot). Then the whisky was stolen and it was held that AC stamping the delivery note was a counter offer which was accepted by BRS handing over the whisky. The contract was made on AC's conditions which is the last shot.

The application of the last shot rule and mirror image rule might be justified by its simplicity, certainty and predictability.[56] The parties will be certain of what lies ahead as it does not bind the offeror to any additional or different terms imposed by the offeree, and vice versa, it does not bind the offeree to the original terms of the offer when the offeree has imposed additional or different terms.[57]

However, the last shot theory has today been abandoned or largely restricted in the Common Law countries [58] due to overwhelming criticism of its "mechanical solution" (which could by chance favour either party or in some cases even neither party) rather than a meeting of the minds between merchants.[59] Modern commentators argued that commercial transactions today are most of the time do not longer accept the assumption of detailed negotiation in mirror image rule.[60] In many cases merchants do not even read each other's forms, or go into detailed negotiation of minor differences between forms. Therefore the application of the last shot rule would obviously sacrifice the equity for efficiency.

At the first sight, one could find prima facie that the rule works in favour of the seller, if the parties keep sending their own forms and the buyer finally accepts the goods.[61] Secondly, the rule encourages the parties to over-flood each other with standard forms and ping-pong [62] their forms in which each party try to ensure their terms prevail.[63] Thirdly, in combination with the mirror image rule, the last shot rule creates a moral hazard for a "wise" party, as long as he hasn't implied acceptance, to "renege" (i.e. opt out of contract) in bad faith when there is an unfavourable change in market condition.[64] The mirror image rule may create "wink of the eye" acceptance or pretended agreements which could be upheld by the courts simply due to failure of one hundred percent consistence of terms.[65] Finally, the rule is said to be of arbitrariness and the all-or-nothing nature.[66] As Professors Baird & Weisberg pointed out, where there was never a bargain-in-fact on the conflicting terms in the first place, it seemed unfair to adopt a winner-take-all approach rather than to require some kind of compromise.[67]

b) Modern trends in English courts view

The problems of traditional offer-and-acceptance approach were discussed in depth in the famous modern case of Butler Machine Tool relating to disputes on a price variation clause,[68] and some alternative solutions were offered by the court. It was held by the Court of Appeal, reversing lower court's decision,[69] that the buyers' order in response to the seller's offer was a counter-offer which was accepted by the sellers' returning the tear-off acknowledgement slip. The contract thus has been formed on the buyers' terms without any price variation clause.[70] The decision was justified by the fact that the sellers' last shot did not prevail because the reference in it to the sellers' original offer was not made with the intention of reiterating the T&Cs contained in the original quotation.[71] Interestingly, the court was divided in reaching the above consensus decision.[72] Lord Denning, while accepted the traditional offer-and-acceptance rule, offered some modern views to the battle of forms:

"No doubt a contract was then concluded. But on what terms?"[73] ... "The better way is to look at all the documents passing between the parties - and glean from them, or from the conduct of the parties, whether they have reached agreement on all material points - even though there may be differences between the forms and conditions printed on the back of them."[74]

Lord Denning further suggested three solutions available to the battle of forms problem, namely: (1) traditional last shot doctrine;[75] (2) the first blow doctrine,[76] which is also applied by some Civil Law regimes;[77] and (3) the hybrid solution of harmonising and reconciling the terms & conditions of both parties where possible, and replacing those irreconcilable differences by a reasonable implication.[78]

These new approaches, of course, receives no less criticisms of being clearly subjective [79], leaving so many agreements in the air,[80] offering "little more than the approach of the majority",[81] and thus was rejected in later cases.[82] The author must insist, however, that Lord Denning's ideas of considering material points agreed through the parties exchange of forms and conducts [83] and the reconciliation of the parties' terms have paved the way to modern approach in many legal regimes, as well as the harmonised approach under the CISG 1980.[84]

Subsequent development in UK case law indicated moderate efforts by the courts to weaken the dominance of the "offer and acceptance."[85] However, the latest cases shows that the High Court still prefer the traditional approach.[86]

c) The United States modern approach under the Uniform Commercial Code [87]

As mentioned elsewhere, a large number of American scholars highly criticised the traditional offer-and-acceptance approach to the battle of form problem [88] and rejected such approach in the light of modern commercial transactions.[89] Therefore, the United States UCC (section 2-207) [90] has modified the Common Law by abolishing the mirror-image rule and applying the so-called "knock-out rule."

Under section 2-207(1), an acknowledgement is treated as an acceptance [91] (unless it is specifically conditions acceptance upon its own terms) even if it is not a mirror image of the original offer.[92] In addition, under section 2-207(3), conduct by the parties will also amount to the formation of contract despite their contrary writings, or even no writings at all. As a result, a contract is more likely to be formed,[93] and neither party can take advantage of the minor discrepancies in the boilerplate forms (having no economic significance) in refusing its performance later on.[94] Ironically, this seems to shift the balance of the battle from the sellers' favour to that of the buyers, whose form will now become the contract terms with supplier's acknowledgement ("first shot" instead of "last shot").[95]

To answer the question "on which terms?" under section 2-207(2) and (3) is much more tortured.[96] The simpler case is when formation is found under s. 2-207(3),[97] then the "knocked-out" rule is rendered, which means the contract will consist of those terms agreed by the parties and everything else will be knocked-out and replaced by the default provisions of the UCC. In case formation is made under s. 2-207(1) [98] then the UCC tends to look into the exchanges between the parties to identify the terms, and the normal rule is that the "different" or "additional" terms [99] will not become part of the contract if the offeree knew that the offeror objected to the discrepancy or if they "materially" alter it.100] However, all these terms are undefined and open to different ways of interpretation. To this extent, almost commentators agree that s. 2-207 made itself a "statutory disaster whose every word invites problems in construction."[101]

The poor drafting quality and confusing wording of s. 2-207 received its backlash in just its first test. Roto-Lith, Ltd. v. F.P. Bartlett & Co.[102] was the very first reported decision under s. 2-207, but also the most frequently criticised one.[103] In this case the buyer ordered a drum of glue from the seller, stating that it needed the glue for "wet pack spinach bags." The seller, however, acknowledged the order with a form that bore the conspicuous legend, "All goods sold without warranties, express or implied". In smaller type, the seller purported to limit its liability to replacement of any glue that proved defective. The glue subsequently failed to adhere, and the buyer sought to impose this loss on the seller. The court held that the acceptance by the seller actually "states a condition materially altering the obligation solely to the disadvantage of the offeror", which fell under the category of "an acceptance expressly made conditional on assent to the additional terms." Therefore, the seller's response was a counter-offer that the buyer accepted when he paid. Surprisingly, the decision seemed to largely neglect s. 2-207(2) and reached the same outcome as if applying the classic mirror image rule! [104]

Subsequent case law in the United States shows a highly divergent interpretation and application of the UCC among different courts and states (e.g. California, Illinois, New York),[105] especially on the distinction of "different" and "additional" terms.[106] Modern views on s. 2-207 [107] have led to several possible solutions in interpreting and applying s. 2-207: (1) Professor Summer's "leading minority" view;[108] (2) Professor White's "knock-out" view;[109] (3) Professor Goldberg's "best shot" view.[110] However, it is well noted that none of these approaches distinguish from others to be a satisfactory solution to the battle of forms.

2. Approaches under Civil Law systems

a) German approach

In a similar way as Common Law, German contract law development also reflects a gradual revolution from the classical offer-and-acceptance analysis to the modern knock-out rule approach in solving the battle of forms.[111] Traditionally, a deviating acceptance does not conclude a contract,[112] but if a contract is formed, then the "last word" prevails.[113] Furthermore, the German Civil Code (§150.2) provides that an acceptance with modifications is a rejection of the offer, combined with a new offer. On the other hand, acceptance by conduct was well-acknowledged and performance was considered as acceptance of the counter-offer including its standard terms.[114] One main difference between the German and Common Law traditional approaches is that in case the parties explicitly and repeatedly insist on their own terms then the Court may still find that a contract has been formed [115] and the terms then would be governed by the default rules of the law.[116] Another notable difference is that silence may count as acceptance under German law.[117]

It's not until the 1970s that the "last word" doctrine found their problems in Germany and the commentators started reform proposals.[118] In 1973, a Bundesgerichtshof decision [119] marked the first step away from the "last word" doctrine toward innovative solutions. In this case the buyer's form stated that any seller's deviation is not valid unless accepted in writing. The seller's confirmation form included the GTCs stating not to be binding and excluded damages for late delivery. The Bundesgemichtshof, while reversing lower courts' decision,[120] held that the seller could not in good faith assume that the buyer silently accepted the terms in the seller's form.[121] The seller also failed to clearly make actual delivery conditional upon the buyer's acceptance of its terms and thus the buyer's receipt of goods did not amount to acceptance of the seller's counter-offer. However, as the parties conducted delivery and acceptance of goods, a contract was formed. Though the decision did not clarify the matter, the court actually "cut the ground from under the classical last-word doctrine."[122]

In another decision in 1980 the Oberlandesgericht Koln court [123] put a new step toward the knock-out approach in holding that accepting a goods without objection manifests not the intention to accept the other party's terms, but that to leave unresolved the divergent points between their forms. If neither party requires further clarification, neither can insist on its own terms. In such case, the contract terms will consist of those terms agreed between the parties [124] and the rest will be filled up by "the provisions of statutory law" ("Gesetzlichen").[125] The approach was later multiplied by German courts [126] and became the dominant approach.

b) French approach

The French contract law system only set out conditions for validity of an agreement, but does not deal specifically with offers and acceptances,[127] and the question of the battle of forms has not typically been considered by courts.[128] Scholarly analyses show that under French law a contract of sale can only be formed if the offer and acceptance coincide completely or with very minor differences.[129] However, when an agreement is reached on essential points and only subsidiary elements are contradicting, the contract is formed unless the parties' intention is to subject their consent to such contradicting elements.[130]

Regarding the question of contract terms, French case law has traditionally been used to the knock-out theory as early as 1912 with some modification by the "loudest shout" theory (i.e. when conflicting standard terms are not strictly contradictory as to their subject-matter and formulation, the provision which was stipulated most explicitly shall prevail).[131] Unlike Germany, the French courts may apply the knock-out rule even when standard terms do not contain an explicit statement that the contract is only subject to the party's own terms, for the courts believe that the use of its standard terms alone already indicates that the party insist on its terms and reject the other party's terms.[132]

Despite the general application of knock-out rule, it is worthy noted that in a few exceptional cases the French courts have accepted the last shot rule approach. In a French Supreme Court case in 1964 it was held that a contract was concluded under the seller's terms on the ground that they are written in bold and striking letters while the buyer's form containing the contradictory terms is only written in fine print on the back of the acceptance.[133] In another case in 1995,[134] the parties' forms contained contradicting term regarding reserving property to the seller, and the buyer explicitly rejected the seller's term. The Court held that the buyer's term prevailed because it was brought to the seller's knowledge.[135]

3. Comparison and evaluation of different approaches exemplified by the hypotheses

From the above analysis, we have found that the Common Law system traditionally solved the battle of forms problem based on the offer-and-acceptance principles, which offer a mechanically arbitrary solution based on mirror image rule [136] and last shot theory.[137]

The "last word" approach of traditional German law and some French Courts decisions show similarity to those of Common Law with minor differences.[138] However the development of modern contract law shows that the knock-out rule (divergent terms to be knocked-out and replaced by statutory law) has gradually become more popular approach under both Common Law and Civil Law systems (with exception of the United Kingdom being heavily based on traditional rules).

The knock-out approach applied by German and French law has several advantages in compared to both the Common Law traditional rules and the UCC. Firstly, in compared to traditional Common Law approach, it offers a more neutral result which overcomes most of problems of traditional last shot and mirror image rules, i.e. overwhelming standard forms;[139] bad faith in opting out of contract; and "all-or-nothing" mechanical result. Secondly, the knock-out rule applied in Civil Law is similar to the "deal-is-on" philosophy of the UCC s. 2-207(1) but the United States' modern approach under UCC is far more complicated, confusing and difficult to apply,[140] in compared to the simple and open-textured knock-out rule under German and French law.[141] Nevertheless, one common flaw of the knock-out approach in both UCC and Civil Law system is that the "neutral result" offered by the "background law" stay out of the parties' control and may not always go in line with the will of both parties.[142] We will see how differently these approaches solve the battle of forms in the hypotheses [143] below:

Example #1: the traditional Common Law approach will lead to conclusion that either party may point out the conflicting terms to resist contract formation. But under the Butler Machine Tools approach a contract may be formed with the divergent terms being reconciled between the parties. Under UCC s. 2-207, the contract is also formed but on Buyer's terms.[144] Under Civil Law the minor difference will not alter the conclusion of the contract and the divergent terms will be filled up by dispositive statutory law.

Example #2: applying traditional mirror-image and last shot rule will lead to formation of contract by conduct, on the terms of Seller (18 months warranty). Under UCC a contract is also formed by conduct. However, it is unclear what warranty terms will govern as UCC keeps silent on how "different terms" be treated, except for the case of example #2A where the parties expressly limit acceptance to their own terms, then both parties' terms will be "knocked out" and replaced by supplementary terms of UCC on warranty. German law will lead to the application of knock-out rule for both #2 and #2A [145] with warranty term derived from statutory law.[146] Under French law warranty is not essential element and thus the contract has been formed. No distinction will be made between #2 and #2A [147] and the Court will scrutinise the character of the parties to decide either to apply knock-out rule or last shot rule in favour of the Seller.[148]

III. The "battle of forms" problem in international scale - the need for harmonisation and unification

1. International trade and harmonising the "battle of forms" solutions

Harmonisation and unification of the private contract law in general is an inevitable call as a result of international trade development. With the booming development of international trade and investment,[149] international transactions have soon become a large part of the whole economic activities.[150] Accordingly, reducing international transaction costs and other barriers has become a key objective of both governments and private sectors, a means of which is to simplify international sales transactions by removal of legal barriers [151] and increase legal certainty for international transactions.[152] In this regard, creating a uniform private international law will bring about many substantial advantages.[153] Having such a uniform law when transacting business with a foreign business partner, as Hackney concluded:

"...one need not be aware of all the vagaries of the foreign system, but only the one system of law that the whole world transacts business upon. This decreases the legal risk inherent in transacting business on an international scale and consequently creates more profitability in international trade."[154]

Within the Europe, the problem of the variety of legal systems has long been aware by European scholars as "an obvious problem for any contract involving parties from more than one jurisdiction."[155] As Professor David rightly commented, "today the problem is not whether international unification of law will be achieved; it is how it can be achieved."[156]

In respect of the battle of the forms, Hondius and Mahe witnessed that general conditions are often used in international trade, it is appropriate that the solution is sought on an international rather than a national level.[157] Ernst Rabel, the spiritus rector of the project for unifying the law of international sales, contended that the law should provide an "infrastructure" for standard form contracts, and gave a number of reasons why a uniform law would be useful when the parties employ standard form contracts:

"The law would fill in the gaps left by the standard form contracts; it would unify the mandatory law which could not be touched by the standard form contracts; it would suppress differences in the interpretation of standard form contracts due to different mentalities of various national legislators; it would be useful as a basis for the law of standard form contracts; it would influence arbitration; and it would be useful as a general law, as opposed to the diversities of national legislation."[158]

Another empirical evidence of the need for harmonising the battle of forms has been shown by Professor Charles Sukurs in the case of Canada and the US bilateral trade. While arguing that increasing trade between both countries gave rise to private conflicts, especially in the battle of forms problem where each country offers every distinct solution in its legal system,[159] Sukurs suggested that vertical uniformity would eliminate the jurisdictional lines between domestic and international law.[160]

2. Harmonisation, unification or codification of laws?

The terms "unification" and "harmonisation" of law are commonly inter-used by scholars when referring to the process through which the law facilitating international commerce is created and adopted.[161] In fact there is distinction between the two: "harmonisation" is the process through which domestic laws may be modified to enhance predictability in cross-border commercial transactions, while "unification" is the adoption by States of a common legal standard governing particular aspects of international business transactions.[162] For some scholars this distinction is important because they see true international unification as an impossible goal but harmonisation, on the other hand, is a much more reachable one.[163] The author, however, does not suggest such black-and-white significance because in most cases they are "similar in kind and only different in degree and emphasis."[164] The main difference is that harmonisation is conceptually broader, pertaining to the accommodation of differences of legal concepts in different jurisdiction; while unification is a more specific and ambitious way of doing it: to provide a single platform for states to apply in governing international business transactions. Another term associated with unification of laws is "codification", which refers to the official restatement or constitution by the states of existing law practices and doctrines, for the sake of uniform application and ensuring legal certainty. Examples of which are the Napoleonic Codes in France,[165] and the American Restatement of Contracts.

As mentioned elsewhere,[166] there are two common ways of unifying laws: unification of conflict of laws and unification of substantial law. Although the former is desirable, it causes significant problem of "a jump into darkness,"[167] i.e. applying the foreign laws that are unknown or unfamiliar to the courts or businessmen. Discussion on such unification in conflict of laws is beyond this dissertation's scope, which will focus on the later type. From the substantive law unification perspective, there are several methods of unification: (1) classical solution by international conventions or treaties (e.g. the CISG);[168] (2) the model laws (e.g. the US' UCC, UNCITRAL Model Law on International Commercial Arbitration);[169] (3) non-legislative unification of law such as Lex Mercatoria [170] and customary law (e.g. the INCOTERMS); or (4) by mixed forms (e.g. the UNIDROIT Principles or PECL).[171] These methods will be illustrated in the next chapter through the analysis of the harmonisation process of international laws dealing with the battle of forms problem.

CHAPTER 2: THE "BATTLE OF FORMS" - INTERNATIONAL EFFORTS TOWARDS A UNIFORM SOLUTION

I. Historical development of the harmonisation and unification of private contract law regarding the "battle of forms"

The twentieth century trend towards the unification of laws has its origin in the Middle Ages with the development of the Lex Mercatoria.[172] The first idea of reconstructing a new jus commune (Common Law) within Europe was raised in the early twenties by the Italian Professor Vittorio Scialoja in his ambitious project, Projet de code des obligations et des contrats, which was dismissed by the Italian and French Governments.[173] The next initiative was taken under a stronger framework, the UNIDROIT.

Set up in Rome in 1926 as an auxiliary organ of the League of Nations, the International Institute for the Unification of Private Law (UNIDROIT or Rome Institute) started its movement towards a uniform law of international trade in April 1930 with the foundation of a Working Group in charge of drafting a Uniform Law on International Sale (ULIS), including the formation of contracts and other provisions governing international sales. Before the first draft of ULIS was completed in 1936, it had been decided that a separate draft uniform law on the formation of international contracts should be prepared.[174] It took a long time before the drafts of ULIS and the Uniform Law on the Formation of contracts of sales (ULF) were made available for discussion at the 1964 Hague diplomatic conference.[175] At the conference both Conventions ULIS and ULF [176] were introduced and opened for signature on 1 July 1964 and came into force in August 1972.[177] ULF did not solve the battle of forms problem directly, but Article 7 provided some guidelines where the mirror image rule was restated with some tolerances.[178]

Under another framework, the UN General Assembly created the United Nations Commission on International Trade Law (UNCITRAL) in 1966 with the core aim to harmonise and unify international trade law through developing conventions.[179] In its first session in 1968, a question was raised as to the position of States in respect of the Hague Conventions. A questionnaire was sent to member-states of UN and its agencies. Not surprisingly, the analysis of their replies revealed that the existing texts of both ULIS and ULF were unlikely to command a "wider acceptance by countries of different legal, social and economic systems."[180] Thus, the Commission decided to create a working group on drafting a Convention on the International Sale of Goods (CISG). At its tenth session in 1977 and eleventh session in 1978, UNCITRAL respectively adopted the draft CISG and the Rules on the Formation of Contracts for the International Sale of Goods, both of which were later consolidated into a single Convention [181] and were presented for signatures in 1980 and came into force in 1989.[182] Today, CISG has become unquestionably the most important international instrument for the regulation of international commercial transactions.[183]

Battle of forms is one of the most controversial issues during the whole process of drafting the CISG.[184] Its development of the text of Article 19 gave the best example of how divergent the Socialist and Western, the developing and developed worlds, the traditional and modern legal systems could be. Its first draft was put on the Working Group's agenda in 1977,[185] in which the second paragraph was a subject to lots of discussions.[186] A proposal was made (but then rejected) to delete paragraph two to avoid difficulties in interpretation of what is meant by "materially alter the terms of the offer".[187] Further views were made by the socialist countries that if paragraph two was retained, then there should be attempts to define the term "material alteration."[188] Notably, a proposal by Belgian delegation to explicitly regulate the battle of forms cases was also refused in the Vienna Conference due to deep divergence among participants.[189] Final wording of Article 19 was a forced compromise: paragraph two is retained, with additional paragraph three defining "material alteration" on a non-exhaustive basis.[190] The final text of CISG indicated that it did not go much further than the ULF in addressing the problem more directly,[191] which problem has been fixed by the UNIDROIT Principles.[192]

Inspired by the CISG and the idea for a Progressive Codification of International Trade Law,[193] a UNIDROIT steering committee [194] was grouped up in 1974 with another UNIDROIT initiative to develop a code for international commercial contracts.[195] A special Working Group was set up in 1980, which prepared various drafts before the approval of final text in 1994.[196] What makes UNIDROIT Principles distinctive from its "godfather", CISG,[197] and its previous initiatives (Hague Conventions), is that it has a hybrid non-legislative characteristic,[198] and thus, it is freer to provide a detailed level of "extra-law" in supplemental to international regulations on cross-border trade.[199] The combination of articles 2.11, 2.19 and 2.22 of UNIDROIT Principles provide express solution to the battle of forms problem based on the knock-out rule.

At supra-national level, academies in the European Union have been ambitious for "creeping harmonisation" of the European Contract Law [200] through the development of the Principles of European Contract Law (PECL), which were started by a special commission under the chairmanship of Professor Ole Lando since 1982. Part I of PECL was introduced in 1995, revised Part I and Part II was published in 1999 and Part III in 2003.[201] Though the main purpose of PECL is to serve as a first draft of a part of a European Civil Code, they may also be applied as part of the lex mercatoria before such Civil Code can be realised.[202] Similarly to UNIDROIT Principles, PECL designs a specific Article 2.209 to cover the battle of forms cases.

A uniform law must have two main objectives of practical applicability (a text which can be easily applied by parties and enforced by judges with different legal and cultural backgrounds), and legal certainty.[203] We will now turn to the uniform law regarding the battle of forms under CISG, UNIDROIT Principles and PECL to see how these frameworks tried to reach the above objectives and to which extent they have succeeded or failed.

II. "Battle of forms" under the Vienna Convention 1980 (CISG)

1. Interpretation of CISG provisions regulating the "battle of forms"

As mentioned earlier, due to highly divergent positions of its member-countries [204] CISG failed to specifically address the battle of forms [205] but offered instead some general guidance and principles. Regarding standard forms as part of the contract, under CISG there might be three ways where such standard terms can be incorporated into the contract: (1) by exchange of forms between the parties;[206] (2) by practices or previous negotiations between the parties;[207] or (3) by international trade norms or practices.[208] Article 7 of CISG provides the most important principles in interpreting the Convention.[209] Part II of CISG (formation of the contract) regulates the formation of contracts where CISG is applied.

The application of the above provisions to the battle of forms is highly controversial. A large number of commentators argue that Part II of CISG is either insufficient or irrelevant to solve the battle of forms problem and the courts should apply applicable domestic law.[210] Based on the vague provisions of CISG for the contract-by-conduct or acceptance by performance,[211] some scholars [212] also believe that one should fill the gap of CISG by using general principles on which CISG is based (under Article 7) or the 'rules of private international law"[213] when these general principles are absent. This paper suggests that a careful analysis of CISG in the light of its historical context allow us to conclude that the principles set forth in Part II (formation of the contract) of CISG, in particular, Article 14, 18 and 19 (as analysed in the next section), do apply to the battle of forms cases. Therefore, the courts of member-states, in the light of Article 7, should refer to them in dealing with the battle of forms problem prior to reference to any national legislations.[214] The extensive debates of Article 19 of CISG during its drafting phase indicate that the drafters and negotiators of CISG had a clear intention to address the battle of forms problem by this Article.[215] Their disagreement on the specific solutions to the matter [216] does not mean that CISG is not applicable to the battle of forms, and one should not reject Article 19 in part or in whole [217] when dealing with the battle of forms problem and seek solutions either from irrelevant sections of the Convention or by reference to other legislative frameworks. Those who suggest that CISG text does not address the battle of forms problem properly should propose improvement by law reform, instead of distorting the interpretation of current CISG text.

2. Does the contract exist?

Article 19(1) of CISG is a clear restatement of traditional mirror image rule being popular in both Common Law and Civil Law systems, which reads: "A reply to an offer containing additions, limitations or other modifications is a rejection of the offer and shall constitute a counter-offer." The result of this approach is that strictly no contract is formed unless (1) a party expressly and unconditionally accepts the forms sent by the other party; or (2) a party receiving a counter-offer undertakes an act of performance which is an acceptance by conduct.[218] However, the contract-by-conduct under CISG is not certain. Several types of acceptance by conduct might fall outside Article 18(3) of CISG,[219] consequently there are cases where the contract is not deemed formed under CISG but should arguably have been formed under most of national legal systems due to act of performance.

The essential difference of CISG to the traditional approach contains in Article 19(2), which states (emphasis added):

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

This is a clear departure from traditional rules and theoretically will increase the chances of a contract being formed by allowing a reply with additional or different terms that do not "materially alter" the offer, without objection by the offeror,[220] constitute an acceptance. A crucial problem with this provision is the dividing line between material and non-material alteration of the offer. Article 19(3) provides a list of such material terms including those relating, among other things, 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. Virtually and practically, this turns almost anything into material terms. This broad and non-exhaustive list has limited or nullified most of the tolerances allowed in Article 19(2), brought it back almost to the traditional approach, which is under heavy criticisms by those supporting the UCC approach.[221]

Some scholars, such as Corterier,[222] tried to take a "roundabout" of the strict provisions of Article 19(3) by rendering Article 6 of CISG which allows the parties to "derogate from or vary the effects of any of [the Convention's] provisions." In their view, in the light of Article 6,[223] as long as the parties treat divergent terms immaterial, it is enough to form a contract even if such term(s) are considered material under Article 19(3). Such approach, though without a strong ground of reasoning,[224] has been accepted by the German courts in recent cases.[225]

3. What should be the contract terms?

As mentioned above, there are generally two cases by which a contract has been formed under CISG (where the battle of forms exists). In the first case when the parties agree on material terms and only have minor different terms,[226] and no party has performed anything, then the terms of the contract are the terms of the original offer with the modifications contained in the acceptance (Art. 19.2).

In the second case, when the parties have at least partially performed but conflict on material terms, then it is widely contended that the Convention does not address what happens.[227] Literally, Article 19(2) [228] is not applicable in this case. This paper is more agreeable to those scholars [229] who suggest that the conjunction of Article 14,[230] 18, 23 [231] and the classic sense of Article 19 of CISG formulates the last shot rule in determining the contract terms: the counter-offer by the offeree may be accepted by performance of the offeror (Articles 18(1) and 18(3)),[232] the contract is formed under Article 23 and the terms of the contract are those of the counter-offer. This, however, does not deny the fact that when we look into complicated situations of the battle of forms, the principles under CISG are far from clear and invite various ways of interpretation. For example, to answer the question of which terms to be applied when no contract is formed under Article 19(2), according to Professor Honnold, the principles derived from Article 18(1) can lead us to different results: (1) as the seller received no acceptance to his counter-offer, he was deemed to have accepted the original offer by shipping the goods and thus the terms of the offer will apply; (2) the buyer, by receiving the goods, was deemed to have accepted the counter-offer, consequently the terms of the counter-offer will apply.[233] To make things more complicated, if parties perform while continuing to send forms back and forth, it is very difficult to ascertain what constitutes the final, or last, form. The last shot rule under CISG, therefore, may fail to determine the point of time when the acceptance has occurred and which party's form is to prevail as the terms of the contract.[234]

In response to the above problem, Professor Diez-Picazo suggested that Article 19 be partially applied, i.e. only in the cases where there are no acts of performance. If there is performance, the question is not contract formation but the terms of the contract, which should be built on common terms or the dispositive law, general principles of contract interpretation and business usages and good faith.[235] This approach seems to be another artificial interpretation of the Convention, which invites equal justification as well as unreasonableness as any other interpretations.

4. Harmonisation of the "battle of forms" problem under CISG regime

As seen earlier, despite its universal use within international transactions, CISG has faced with serious problem of divergent interpretations. This will inevitably result in inconsistent application by the courts and has in fact ruined the ultimate goal of uniform solution to the battle of forms problem.[236] Being an international governmental treaty, CISG is supreme to State law and by default automatically displace the state law in qualifying international sales contracts that do not specifically exclude CISG.[237] This section will further elaborate how the CISG has been harmonised into domestic law of its member-States, or in other words, how the courts have interpreted and applied the principles of CISG in dealing with the battle of forms cases.

a) The United States [238]

In the US, the UCC is currently used for dealing with the battle of forms problem.[239] Given the United States' prominent position in the world trade, the CISG case law indicates that application of CISG seemed to have been almost neglected in the US until recently.[240] In the very few cases interpreting the Convention reported in the US courts, most are disappointing and heavily criticised of failing to grasp the Convention's spirit of internationalism.[241] Regarding the battle of forms, there are a few US cases which illustrates the divergent interpretation and implementation of CISG at practical level in the US courts.

In Filanto S.p.A. v. Chilewich International Corp.,[242] Chilewich sent a purchase order to an Italian seller, Filanto, for the supply of shoes, which contained a clause which required arbitration in Moscow.[243] Filanto accepted Chilewich's orders by an acknowledgement, but excluded arbitration clause.[244] The parties subsequently negotiated orally over the arbitration clause, while started performance before finalizing their agreement. Chilewich later commenced action claiming breach of contract, seeking a stay of the action and arbitration in Moscow.

Holding that the contract was governed by CISG,[245] the Court then found that Chilewich did not implicitly accept Filanto's counter-offer,[246] but Filanto act of performance [247] indicated its intention to be bound by all clauses of the master agreement (Art. 8(3) CISG). Thus, the agreement was part of Chilewich original offer which Filanto was deemed to have accepted. The Court's conclusion that Chilewich never accepted Filano's counter-offer (though it subsequently partly perform the contract) as well as imposing the duty of Filanto to alert the buyer of its objection shows that it has considered evidence beyond the exchanged writings to interpret CISG flexibly.[248]

On the contrary, a later case, Magellan International Corporation v. Salzgitter Handel GMBH,[249] has shown the harsh result of applying strictly mirror image rule under CISG. Magellan, a United States distributor, entered into negotiations and agreed with a German trader (Salzgitter) on several matters for the purchase of steel bars from a Ukrainian manufacturer.[250] Nevertheless, a dispute arose when Salzgitter, in view of Magellan's refusal to modify the letter of credit issued for payment, threatened not to perform its contractual obligations. Magellan brought an action for anticipatory breach of contract, claiming damages and performance by Salzgitter. The Court held that CISG was the law governing the dispute.[251] In answering whether and when a contract had been concluded, the Court held that, Magellan's order amounted to an offer,[252] whereas Salzgitter's purported acceptance, which laid down some price adjustments, was rather a counter-offer (Art. 19(1) CISG). The Court concluded that the contract had been concluded with the Magellan's acceptance of such counter-offer, which could reasonably be inferred from its issuing of the letter of credit (Art.18(1) CISG) and from the fact that, having claimed specific performance, it confirmed its willingness to pay the price as amended by Salzgitter. This adverse result seems unfair to Magellan who in the first place tried, though unsuccessfully, to "fine-tune" all aspects of the deal before moving forward.[253]

b) German interpretation of CISG

As mentioned in Chapter 1, German contract law solves the battle of forms problem based on the knock-out rule. However, "applying domestic law is not an appropriate solution for controversies that are subject to the CISG."[254] Unlike in the US, the application of CISG is very popular in Germany.[255] But the German Courts have found their own ways in interpreting CISG in a "German" style, which gradually shift the approach to CISG interpretation from the classical sense of last-shot rule [256] to the knock-out rule.

In a case involving a sale of Knitwear by an Italian seller to a German buyer,[257] the parties has concluded a contract on essential terms but each relied on its own standard terms which contained a conflicting choice of law clause. Strictly under Article 19, no contract was formed.[258] The Court however held that a contract was formed, as the parties had started performance, which showed their intention to be bound by it,[259] by the terms already agreed upon as well as by any standard terms which were common in substance, with the exclusion of the conflicting terms such as the choice of law clauses [260] (knock-out rule).

In the recent famous Powder milk case,[261] the German Supreme Court reaffirmed the knock-out rule approach to the cases where there is performance. Notably, the Court did not expressly address the competing theories of last shot doctrine and knock-out rule for determining contract formation,[262] but stated upfront that there was a valid contract due to performance of the parties.[263] Then in determining whether or not T&Cs are in conflict, based on the good faith principle,[264] the Court stated that a party who use a "rejection clause" should be barred from picking only favourable terms of the other party's boilerplate. Consequently a "rejection clause" of the seller will prevail and completely exclude the buyer's terms and the knock-out rule then applied.[265]

Regarding the distinction between material and immaterial terms, a German case [266] held that notice of defects was not considered material term under Article 19(2),[267] which seems to have undermined the Convention's significance in this matter.

c) Other members-States

Not surprisingly, the application of CISG is highly divergent in the courts of other States. The French Cour de Cassation, for example, impliedly prefers applying the knock-out rule for conflicting jurisdiction clauses, which are material terms under Article 19(3). In a 1998 case,[268] it referred to Article 18 and 19 of CISG,[269] but decided to apply traditional conflict of law rules to determine jurisdiction clauses instead of last shot rule.[270] Similarly the Supreme Court of Austria decided to knock-out a contradictory jurisdiction clause to apply Austrian rules on conflict of laws.[271] In another case,[272] however, the Austrian Court of Appeal clearly preferred the last shot doctrine interpretation.[273] In a Dutch case of 1996, the buyer's next-to-last shot was approved as seller's acceptance stated that its standard terms applied only to extent they did not conflict with buyer's standard terms.[274] On the other hand, Argentina courts, in judging forum selection clauses in standard forms, believed that Article 4 of CISG excludes questions of validity, therefore, should only be used for reference.[275]

While the courts interpreted CISG differently, most have generally disregarded the distinction between material and immaterial terms clearly specified in Article 19(2).[276] The Austrian Supreme Court, for example, argued that the list of material terms in Article 19(3) is merely general presumptions that may be rebutted if they are not deemed essential in the very circumstances of the case.[277] In a French case Fauba v. Fujitsu [278] the defendant buyer asserted that the contract had not been formed under Article 19(3) due to the fact that a response had altered price terms in the offer, but both the Court of Appeal and Supreme Court rejected such argument, ironically without making reference to any provision of CISG.

In summary, the rules under CISG have been applied inconsistently by the courts, evident by their divergent positions to the battle of forms problem. The battle of forms in practice tells us that the Convention's goal of a uniform sales law on global scale would definitely be a long way to go.

III. The knock-out rule under unidroit principles 2004 [279]

As mentioned elsewhere, the UNIDROIT Principles regarding contract formation are mainly based on CISG with basically the same structure, except some provisions directly address the standard form contracts and the battle of forms.[280] The drafters were obviously aware of the problem with CISG general rules of contract formation in applying to the battle of forms,[281] thus, designed a specific provision for it in Article 2.1.22:

"Where both parties use standard terms and reach agreement except on those terms, a contract is concluded on the basis of the agreed terms and of any standard terms which are common in substance unless one party clearly indicates in advance, or later and without undue delay informs the other party, that it does not intend to be bound by such a contract."

1. Does the contract exist?

Where both parties use standard terms,[282] the Principles offer a much more relaxing approach than the normal contract formation rules in determining if a contract exists: as long as the parties have agreed on essential terms (front-form), any conflicting terms in the back-form do not prevent a contract being formed, except that one party clearly and immediately indicates its objection to such contract. In fact, UNIDROIT Principles have distinguished the conflicts of front-form and those standard terms in back-form, the later are presumably not often read by merchants, therefore, should not prevent the formation of the contract.

Importantly, UNIDROIT Principles do not allow a party using "defensive clause" in its standard terms as a means to indicate its intention not to be bound by the contract.[283] This will prevent the situation that the parties always put a defense clause within their standard terms to make sure their form will prevail the others'.

2. What should be the contract terms?

Under UNIDROIT Principles, where the battle of forms does not prevent a contract being formed, the terms of such contract will be "the agreed terms and of any standard terms which are common in substance," excluding conflicting terms (the knock-out rule). Though Article 2.1.19 does not answer the question of how to fill the gaps in the contract caused by the "knock-out" of conflicting terms, the general rules in Article 2.11 may apply for those immaterial terms,[284] or the applicable default rules of the governing jurisdiction may fill these gaps.[285] In addition, a novel contribution of UNIDROIT Principles to a fair solution is the avoidance of "surprising terms" which should not be incorporated in the concluded contract.[286]

3. Application of UNIDROIT Principles in international disputes on the "battle of forms"

As stated in its Preamble, a main purpose of the UNIDROIT Principles is "to interpret or supplement international uniform law instruments" and/or domestic law. Being the modern Lex Mercatoria,[287] UNIDROIT Principles are a very comprehensive instrument which has been undoubtedly successful in providing a tool to interpret CISG in many circumstances, as well as effectively filling the gaps where CISG keeps silent.[288]

Regarding the battle of forms problem, however, the application of UNIDROIT Principles to fill the gaps of CISG is highly debatable.[289] In applying the Principles to interpret the general principles of the CISG, Bonell pointed out that: there is a need "to show that the relevant provisions of the UNIDROIT Principles are the expression of a general principle underlying the CISG."[290] This need is not satisfied in the case of the battle of forms problem where the Principles and CISG adopt different solutions. Hitherto, there have been reportedly one single case where the knock-out rule of the UNIDROIT Principles was referred to (but not applied) in a true battle of forms case [291] and very few others related to "one-form" conflicts [292] or standard terms in general.[293] Therefore the significance of the Principles in addressing the battle of forms problem is still in question.

IV. Harmonisation at supra-national level - PECL 1999

An initiative to harmonise contract law, which is similar to UNIDROIT Principles but at supra-national level, was fostered by Professor Ole Lando with the introduction of PECL. In terms of the battle of forms problem, PECL provides quite similar solution based on the knock-out rule.

1. The knock-out rule under PECL

In the same way as Article 2.1.22 of UNIDROIT Principles, Article 2:209 (Conflicting General Conditions) of PECL [294] determines that a contract is formed if the parties have reached agreement except that the offer and acceptance refer to conflicting general conditions of contract, unless a party has indicated in advance explicitly (in front-form), or later on without undue delay, informs his intention not to be bound by such a contract. One notable difference with UNIDROIT Principles is the effect of contract formation when a party declared intention to contract only on its own terms. Under UNIDROIT Principles, this does not threaten the existence of the contract, where PECL will conclude that no contract exists.[295]

Where a contract has been concluded, the general conditions form part of the contract to the extent that they are common in substance. The conflicting general conditions will not become part of the contract.

2. Europeanisation under PECL and its relation with UNIDROIT Principles and CISG

At the outset, in order to understand the possible contribution of PECL in the harmonising the solution to battle of forms problem, one should note that the main purpose of PECL is "to serve as a first draft of a part of a European Civil Code."[296] Therefore, the work on PECL, with the drafters' full awareness of the co-existence of CISG and UNIDROIT Principles, reflects the common will within Europe of a Europeanisation of contract law by way of "from below".[297]

In bench-marking both set of principles, where UNIDROIT Principles are confined to "international" and "commercial" contracts, the European Principles apply to all contracts, including domestic transactions and those between merchants and consumers.[298] As a lex mercatoria, it is submitted that PECL seems to be an unnecessary duplication and may not contribute as much as UNIDROIT Principles and CISG to the battle of forms harmonisation at international scale. However, as a potential infant of a European Civil Code, it will likely contribute much to the vertical uniformity of the solution to the battle of forms within European Union, with the similar binding effect as CISG. [299]

V. Comparision of CISG and the Principles [300] on the "battle of forms" solution using hypotheses

Example #1: the CISG approach will lead to conclusion that the different terms are immaterial and the contract has been formed on the general terms of the Seller plus the requirement of "new bags." But in example #1A, Seller's objection letter on June 8 is a counter-offer and there would be no contract unless either party conduct performance. The approach of Principles will lead to exactly the same result.

Example #2: warranty is material terms under CISG, therefore a contract is not formed under Art. 19(2) but may have been formed under Art. 18(3) (contract by conduct). The terms of such contract are not clearly specified in CISG, but different interpretations will lead to either the application of Seller's form (warranty 18 months, applying last shot rule), or the knock-out of warranty term and replacement of CISG relevant provisions on warranty (knock-out rule). Under the Principles, conflict on GTCs, including warranty term, will trigger the battle of forms provision.[301] Therefore, the contract has been formed regardless whether the parties have performed or not. The terms of the contract will be those agreed except the warranty term, which will be knocked-out and replaced by default warranty provision of the governing jurisdiction. Unlike example #1A where the parties can avoid being bound by a contract by clear and explicit objection, in example #2A the "defense clause" incorporated in the parties' standard form will not effect the formation of the contract.

CHAPTER 3: THE "BATTLE OF FORMS" SOLUTION - WHAT LIES AHEAD?

I. Challenges for the "battle of forms" harmonisation

So far, the author has tried to describe the evolution of international law unification and harmonisation regarding the battle of forms problem, mainly through the establishment and practices of CISG and the Principles.[302] With current seventy-four member-States, which number is consistently growing,[303] CISG has clearly succeeded beyond most people's expectation [304] in unifying international sales law by enforcing its substantive regulations in the member-States.[305] In facilitating the implementation of CISG, the Principles have played an important role as a "gap-filling" tool, or Lex Mercatoria. But the courts' application of CISG and UNIDROIT Principles to address the battle of forms problem indicates that the divergent understanding and interpretation of CISG by the courts has largely hindered the most important objective of the Convention: a uniform law application. Unfortunately, despite great efforts of their drafters to offer a clear solution to the battle of forms problem, both UNIDROIT Principles and PECL did not practically help much in this specific issue.[306] In this section we will try to look deeper to the hidden part of this iceberg.

1. Ambiguous text of CISG and the problem of interpretation through the lens of domestic law

Numerous scholars have raised the general problem of ambiguous text of CISG as well as its interpretation trouble,[307] which are inherent in attempts to draft a uniform international law with binding effect. This problem is particularly evident in the case of the battle of forms problem. The severe debates on Article 19 of CISG [308] resulted in a compromised and uncompleted provision [309] that is not nearly as detailed as the UCC or the Principles,[310] silent on many scenarios of the battle of forms,[311] and thus much less than satisfactory. Arguably, in practice any uniform law presumably has to rely on certain imprecision.[312] For it to be more agreeable to various member-states, as well as flexible enough to adapt to new factual and legal developments, CISG is said to have purposefully left incomplete in many respects, to give room for interpretation.[313] Ironically, Article 7,[314] which is considered the heart of CISG in obtaining its uniform interpretation objective,[315] provides somewhat vague principles that themselves may be interpreted differently,[316] especially in terms of the definition of good faith.[317]

The backlash to this pitfall is evident. As we well observe, the scholarly articles elaborated the understanding of CISG rules on the battle of forms in many different ways, and the courts, which hold the power to implement it, even make those differences more severe. Most notably, it is witnessed that the courts, especially those from the Common Law countries,[318] in most of the cases interpret CISG through the lens of their domestic law [319] without consideration of either the "autonomous interpretation" requirement under CISG,[320] or international CISG case law.[321] Consequently these "homesick courts"[322] distorted the CISG rules and principles in a plenty of battle of form cases, ranging from divergent solutions based on multi-interpretation of CISG,[323] to the negligence of parts of CISG,[324] or the reference to CISG as a support only,[325] or even the total disregard of CISG existence.[326]

The "nationalistic interpretation" by the courts is hazardous to the uniform application objective of CISG, due to its encouragement of forum shopping.[327] This also causes another problem which jeopardises the gap-filling mechanism under CISG: the courts are overusing their domestic law and their domestic concepts to "fill the gaps" of CISG even when CISG already offers either specific or general principles to regulate such problems. Beside numerous examples in other areas governed by CISG,[328] one could easily find the battle of forms cases where CISG is gap-filled by domestic law superfluously, or where the terms of CISG are interpreted as if they are analogous to those in domestic law.[329]

2. Opting-out, derogation and objection of CISG

The derogation and opting-out mechanism under CISG have limited its application and influence in international sales in general and the harmonisation of the battle of forms in particular. CISG is built on the notion of freedom of contract, i.e. parties can agree to contract out of CISG and any of its provisions.[330] However, as both John E. Murray and John P. McMahon noted, the US' legal practitioners are suspicious about and even afraid of CISG. American lawyers frequently advise their clients to simply opt-out of CISG, because of what Article 6 of CISG allows.[331] The same trend happens in other parts of the Common Law world.[332] It is notable, however, that if the parties wish to opt-out of CISG they should affirmatively and expressly confirm their intention.[333] Otherwise, the arrangement of the contract that leads to the application of the law of any CISG member-States will automatically trigger the application of CISG.[334] Unfortunately, in the battle of forms context, many courts believed that a choice of law clause in favour of a domestic law would constitute tacit inapplicability of CISG, and therefore imposed national law instead of rendering CISG.[335]

Based on the tolerance given under Articles 92 through 96 of CISG, many countries declared their intention not to be bound by different parts of CISG. Finding Article 16 of CISG so close to the Common Law approach, the Scandinavian States all decided to "opt-out" of the entire Part II CISG, including any provisions on the battle of forms.[336] These states also declared that pursuant to Article 94 the entire Convention would not apply to inter-Scandinavian trade.[337] Pursuant to Article 95, China (PRC), Singapore, St.Vincent & Grenadines, Czechoslovak Socialist Republic and the United States declared their exclusion of Article 1(1)(b) application.[338] These exceptions have created many mini-codes inside CISG and undermined its harmonised objective.[339] Notably, the world's biggest Common Law nation, the United Kingdom, still stand aside CISG.[340]

The root of the above nationalistic interpretation or neglect of CISG and its international case law is arguably attributed to differences between the legislative systems in terms of language,[341] legislative, cultural and educational traditions (e.g. the receipt theory vs. dispatch theory;[342] the good faith principle vs. the use of precedential case law),[343] which prevent a nation from adapting to such a foreign system as CISG.[344] This will continue to be the key obstacle of the international harmonisation in regulating the battle of forms problem.[345]

3. Where CISG becomes out-of-fashion, the Principles fail to advance as a private international law

Given the development of modern sales transaction, featured by the economies of scale, and the rapidly increasing practice of contracting by electronic data interchange (EDI),[346] the relatively strict last shot rule under CISG has been more and more criticised by both scholars and practitioners as an out-of-fashion solution.[347] However, the Convention, being in place for nearly 30 years, neither provide a mechanism for updating its provisions nor international tribunal competent to resolve conflicting interpretations of important provisions.[348] In fact, many courts when dealing with the battle of forms have opted to either drive the interpretation of the Convention away from the last shot rule, or simply neglect it.

The last hope is now given to the UNIDROIT Principles, which are considered one of the "most important and authoritative sources of interpretation in the drafting of new law obligations,"[349] as well as an innovative tool "to better meet the needs of international trade."[350] Regretfully, this function has not work to the extent of the battle of forms problem. The battle of forms problem was discussed extensively during the drafting of the CISG, and it was not considered as necessary to provide a subsection that expressly dealt with this problem.[351] Therefore, there is not a gap in CISG regarding the battle of forms and, where CISG is applicable, the provisions in the Principles cannot offer its own solution which is different from that under CISG.[352] Therefore, the Principles fail to advance its solution to the battle of forms as "private international law" in the light of Article 7. It is also worthy to point out that the Principles themselves contain certain gaps that need to be filled, e.g. the unclear determination of the contract terms in replacement of the conflict terms which are knocked-out.[353]

II. Posibility & directions of a uniform solution for the "battle of forms"

Giesela suggested that most of academics today agree in essence with the courts' argumentation on the prevailing application of the knock-out rule in the battle of forms cases and academic discussion has essentially ceased.[354] This is allegedly not always the case as long as the original text of CISG, being a substantive uniform law for international sales, is still in force, if not further enforced with new member-States, continuingly analysed by scholars and courts, and taught in law schools from all over the world. Even assuming that the debate on the knock-out rule and last shot rule has ceased,[355] one cannot naively think that the courts in member-States will interpret and apply CISG completely or nearly in the same way, while many open questions could be answered differently by different courts.[356]

Several suggestions for the harmonised or uniform solution of the battle of forms have been made by the pro-harmonisation scholars, each having their pros and cons, some are discussed below.

Professor Viscasillas, in seeking for a uniformity interpretation of CISG, suggested that the last shot rule,[357] while far from perfect, would have "more advantages than many detractors of the mirror-image rule and last shot rule acknowledge."[358] She contended that such rule is reinforced by the special configuration of Article 19(1) & (3), which can provide legal certainty and adequate protection for the parties in the majority of cases.[359] Despite the advantages highlighted by Viscasillas, as submitted earlier in this thesis,[360] the justification for the last shot rule has found less support by academics and in courts and certainly will not be the uniform solution for the courts in the future CISG cases.

Another analysis on the battle of forms harmonisation between the US and Canada by Professor Sukurs indicates that one of the most evident challenges in harmonising CISG with domestic law is that each country offers distinct solutions to the battle of forms problem. Therefore he suggests that a "vertical uniformity" among these approaches is necessary.[361] Regarding the interpretation problem, Sukurs submits a mechanism (to which the author highly supports) that, beside the development of international case law, CISG should provide official comments to aid judges in applying CISG with international consistency.[362] Finally, he stressed the need of a more educated bar in countries like the US and Canada, where lawyers and judges are hardly know about CISG.[363] While most of his recommendations are valid, Sukurs does not provide any concrete or specific suggestion on the battle of forms solution.[364] Moreover, as he admits, a vertical uniformity is an ideal option [365] but is hardly a possible mission. For example, the US' Drafting Committee for revision of Section 2 - UCC highly consent that vertical uniformity based upon CISG is inadvisable.[366] Instead, it is proposed to "repeal" current complex s. 2-207 and replace by a simpler and more modern approach, i.e. to apply the knock-out rule for any type of contract formed, and to put "additional" and "different" terms into the same basket.[367]

On the contrary, some authors, such as Christopher Sheaffer and James Bailey, believe that CISG is a convention of failure or an obstacle to the uniform law of international sales.[368] Pointing out various problems associated with CISG interpretation and implementation by courts,[369] these scholars suggest a new Uniform Global Code, which will replace CISG (and hopefully fix its problems) it its entirely.[370] Despite many interesting ideas contained in this proposal,[371] it may be questionable in two aspects: firstly, the replacement of CISG means to jettison all the current structure, process and achievements under CISG, unless the new Code takes its start right from where CISG stands;[372] secondly, it took 50 years to conclude the 101-Article CISG, how long would a comprehensive Global Code [373] be materialised?!

III. Recommendations of the author

It has been proved by this dissertation that the battle of forms solution in international sales law is still far from uniform. It has also been seen that there is no clear-cut suggestion which can quickly ensure a full harmonised or uniform solution to the problem. However, some recommendations below can help pushing up the harmonisation process of international sales law regarding the battle of forms.

1. Facilitating a mechanism for modification/amendment of CISG

One of the main criticisms on CISG is the absence of a mechanism for amendment or modification of its text [374] in order to meet the ever-changing situation of the international sales practices. Given the undeniable achievements of CISG, including its well recognition by many member & non-member States, its comprehensive case law system and other Convention management tools, this thesis does not recommend a "dismantling" of CISG, but rather suggests that UNCITRAL should improve the flexibility of CISG by an initiative to facilitate a mechanism for amendment of CISG, in just the same way as that under the treaties of WTO.[375] Once such mechanism is in place, the Council of CISG should be ready to propose necessary amendments to CISG [376] to reflect the prevailing trend in international sale transactions. In particular, there should be a provision identical to Article 2.1.22 of the UNIDROIT Principles to specifically address the battle of forms problem based on the knock-out rule, which correspond to the aspirations of the modern trade.

Several advantages can be gained by this proposal. Firstly, it would allow the current advanced structure and achievements of CISG to continue to fruit. Secondly, the solution based on the knock-out rule, which has become familiar with most legal systems,[377] would be agreeable and embraced by member-States more easily. The mechanism of amendments e.g. by way of a UNCITRAL Protocol would also take much less time to be materialised. Lastly, this would eliminate the problem of divergent approaches between CISG and the Principles, and will trigger the UNIDROIT Principles' function as a tool of "private international law" to fill the gaps within CISG regarding the battle of forms.

2. Utilisation of CISG Advisory Council, international case law, legislative history and scholarly articles for uniform interpretation of CISG

Commentators have proposed various ideas to improve the recognition of international case law, the Official Commentary, as well as scholarly articles as to reduce divergent interpretation and implementation of CISG.[378] The second recommendation of this thesis focuses in the enhancement of the CISG Advisory Council (CISG-AC),[379] which is a brilliant idea developed by Professor Albert Kritzer in guiding the interpretation of CISG. CISG-AC members include the world's most honoured scholars,[380] many of whom have either participated in the drafting process of CISG and the Principles, as well as contributed an abundant amount of scholarly articles on the practice of these uniform sales law initiatives. Unlike other sources of CISG,[381] CISG-AC may best serve as a centralised single hub for the guidance of general principles in CISG, as well as the most relevant interpretation for each and every provision within it.[382] This guidance arguably presents the mostly accepted views on the issues of CISG and can avoid too many divergent scholarly opinions. In the absence of a single interpretative tribunal, CISG-AC may also be able to issue the Official Comments, in just the same way as the UNIDROIT Principles did,[383] in order to direct the courts' ruling in a uniform manner.

Unfortunately, CISG-AC hitherto has had no Opinion on the battle of forms problem. Even if it would have one, there is still one question as to the function of it as an "authoritative interpretation" tool. Despite the fact that it gathers collective efforts of academies, CISG-AC is currently only a "private initiative" with no more significance than any other available scholarly commentaries. In order to enforce the validity of the Opinions or Official Comments, it is essential that CISG-AC be consolidated with the to-be-borne Council of CISG which has the authoritative power and function of reviewing and proposing amendments/modification of CISG to the contracting States. Then CISG-AC Opinions and Official Comments would be fully recognised by the courts and the rendering of them in reasoning the courts' ruling would be out of question.

Regarding the recognition of international CISG case law by the courts, various scholars have debated on whether the courts should consider them having binding effect, or only a persuasive source of law for supporting the courts' ruling.[384] The author is supportive to suggestion by Franco Ferrari [385] and Sheaffer [386] that international case law should be used as a "highly persuasive authority," rather than binding precedential law. This would arguably be the only feasible and justifiable option, for it well reflects the spirit of Article 7(1) CISG,[387] and can avoid the criticisms that "bad decisions" should not be adopted.[388]

3. Directive education of practitioners in the Common Law States

We have learnt earlier that the Common Law States has faced great problem with unification under the CISG framework, mainly due to the differences between the Civil-Law-oriented philosophy of CISG [389] and the Common Law background of these countries. In the context of CISG now being part of the federal law, the situation that both Sukurs [390] and Ubartaite [391] reported on the awareness of CISG by US' students and practitioners (both judges and attorneys) is really shocking and alarming: in eight or nine cases out of ten the attorney who is asked about CISG responds that he or she did not know what it was, some even explain that this kind of treaty was not necessary in US-related transactions because UCC would always be the governing law! [392] This explains the limited US cases referring to CISG, with merely two cases in the battle of forms area.

Such problem of "better the devil you know than the devil you don't,"[393] which has kept Common Law practitioners away from CISG for decades, could definitely be released by and large with the "international-oriented" education coverage for the future generations of Common Law practitioners. Without doubt, the law schools in these countries will play an important role in rectifying this "broad and serious problem."[394]

CONCLUSION

As Professor Honnold correctly put it, we are so lucky in the battle of forms scenario that litigation has not arisen so often,[395] because "legal science has not yet found a satisfactory way to decide what the parties have "agreed" when they have consummated a transaction on the basis of the routine exchange of inconsistent forms."[396] It has been described by this thesis that different legal systems have traditionally treated the battle of form scenario in various different ways based on two main approaches: the offer-and-acceptance principles (featured by the last shot rule and mirror image rule) and the knock-out rule. While each of these approaches includes both advantages and problems, in the light of modern trade practices with mass production and economies of scale, it is more likely that the knock-out rule offers better neutral and practical solution for the merchants need, and thus, has been more preferred and frequently applied by the courts and practitioners.

The harmonisation of the private contract law regarding the battle of forms can be remarked by the enforcement and implementation of the CISG, and the development of the UNIDROIT Principles and, at supra-national level, the PECL, as Lex Mercatoria. Among these frameworks, CISG has been the most important substantive uniform law for international sales transaction with binding effect on contracting States. In solving the battle of forms problem, the Convention generally adopts the mirror image rule and last shot rule with some attempts to mitigate their harshness by determining immaterial terms to become part of the contract. In contrast, the UNIDROIT Principles and PECL have commonly applied the knock-out rule with different treatment for the disputes in front-form and back-form (standard T&Cs).

Despite the overwhelming number of member-States and the incorporation of CISG into their domestic laws, the harmonisation and unification of the battle of forms treatment under CISG has been largely hindered by the fact that the courts in different States have interpreted the provisions of CISG very divergently, consequently their ruling are severely distinct from case to case. Many courts has misleadingly or deliberately interpreted the Convention through the lens of their domestic law, which lead to the application of either knock-out rule or last shot rule, and in many situation failed to recognise the distinction between material and immaterial terms under Article 19 of CISG. The uniform law objective has also been ruined by the fact that many courts, mostly in the Common Law countries, failed to apply CISG where it should be applied. Practitioners, most of whom are unaware of or unfamiliar to CISG, keep opting out of CISG where possible. Consequently, very few of the battle of forms cases have reportedly rendered CISG in this part of world.

Finally, this thesis has submitted that the objective of uniform sales law under CISG could be facilitated by a mechanism to modify or amend the text of CISG to meet the new challenges of international trade. Regarding the battle of forms problem, CISG should be amended to reflect the knock-out rule, in the same way as provided for under the Principles. Furthermore, in order to enforce the uniform interpretation and application of CISG, the CISG-AC should be enhanced and incorporated into the to-be-borne Council of CISG to become the single hub for advisory opinions or official comments with high recognition by the member-States. Also, the education for law students and practitioners in the Common Law countries should be improved with a more "international-oriented" approach.

In summary, CISG can truly be the vehicle for the harmonisation and unification of international sales law regarding the battle of forms, on the condition that it would reflect the prevailing trend in the modern trade, which provide better arguments for the knock-out doctrine, and that CISG would gain an essential level of the uniformity in interpretation and implementation among the courts within the increasing member-States.


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  47. John E. Murray, 'Section 2-207 of the Uniform Commercial Code: Another Word About Incipient Unconscionability' (1978) 39 U. Pitt. L. Rev. 591.

  48. John E. Murray, 'The Chaos of the "Battle of the Forms": Solutions' (1986) 39 Vand. L. Rev. 1307.

  49. John E. Murray, 'The Definitive "Battle of the Forms": Chaos Revisited' (2000) 20 J.L. & COM. 1.

  50. John E. Murray, 'The Neglect of CISG: A Workable Solution' (1998) 17 J. L. & Comm. 365-379.

  51. John Felemegas, 'The United Nations Convention on Contracts for the International Sale of Goods: Article 7 and Uniform Interpretation' (2000-2001) in Pace Review of the Convention on Contracts for the International Sale of Goods (CISG), Kluwer Law International 115-265, available at <http://www.cisg.law.pace.edu/cisg/biblio/felemegas.html> accessed 10 Aug 2009.

  52. John J.A. Burke, 'Contracts as a Commodity: A Nonfiction Approach' (2000) 24 Seton Hall Legis. J. 285.

  53. John O. Honnold 'Uniform Laws for International Trade: Early "Care and Feeding" for Uniform Growth' (1995) 1 International Trade and Business Law Journal, 1-10.

  54. Joseph Lookofsky and Harry Flechtner, 'Nominating Manfred Forberich: The Worst CISG Decision in 25 Years?' (2005) 9 Vindobona J. of Int'l Comm. Law and Arb. 199-208.

  55. Joseph M. Lookofsky, 'Loose Ends and Contorts in International Sales: Problems in the Harmonization of Private Law Rules' (1991) 39 The American Journal of Comparative Law, 403-416.

  56. Joseph M. Lookofsky, 'The 1980 United Nations Convention on Contracts for the International Sale of Goods - Article 92 Declarations' in J. Herbots editor / R. Blanpain eds., International Encyclopaedia of Laws - Contracts, Suppl. 29 (December 2000) 1-192, available at <http://www.cisg.law.pace.edu/cisg/biblio/loo92.html#28> accessed 10 Aug 2009.

  57. Kaia Wildner, 'Art. 19 CISG: The German Approach to the Battle of the Forms in International Contract Law: The Decision of the Federal Supreme Court of Germany of 9 January 2002' (2008) 20 Pace Int'l Rev. 1-30.

  58. Kevin C. Stemp, 'A Comparative Analysis of the "Battle of the Forms"' (2005-2006) 15 Transnat'L. & Contemp. Probs. 243.

  59. Larry A. DiMatteo et. al., 'The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence' (2004) 34 Northwestern Journal of International Law and Business 299-440.

  60. M. J. Bonell, 'Do We Need a Global Commercial Code?' (2001) 106 Dickinson Law Review 87-100.

  61. M. J. Bonell, 'The Unidroit Initiative for the Progressive Codification of International Trade Law' (1978) 27 The International and Comparative Law Quarterly, 413-441.

  62. M. J. Bonell, 'The UNIDROIT Principles in Practice - The Experience of the First Two Years' (1997) Uniform Law Review 34-45.

  63. M. J. Bonell, 'The UNIDROIT Principles of International Commercial Contracts and CISG -- Alternatives or Complementary Instruments?' (1996) 26 Uniform Law Review 26-39.

  64. M. J. Bonell, 'The UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law: Similar Rules for the Same Purposes?' (1996) 26 Uniform Law Review 229-246.

  65. M. J. Bonell, 'Unification of Law by Non-Legislative Means: The UNIDROIT Draft Principles for International Commercial Contracts' (1992) 40 The American Journal of Comparative Law, 617-633.

  66. Maria del Pilar Perales Viscasillas, 'Battle of the Forms and the Burden of Proof: An Analysis of BGH 9 January 2002' (2002) 6 Vindobona Journal of International Commercial Law and Arbitration, No. 2, 217-228.

  67. Maria del Pilar Perales Viscasillast, '"Battle of the Forms" under the 1980 United Nations Convention on Contracts for the International Sale of Goods: A Comparison with Section 2-207 UCC and the UNIDROIT Principles' (1998) 10 Pace Int'l L. Rev. 97.

  68. Marlyse McQuillen, 'The Development of a Federal CISG Common Law in U.S. Courts: Patterns of Interpretation and Citation' (2007) 61 U. Miami L. Rev. 509-537.

  69. Mathias Reimann, Ann Arbor, Mich, 'The CISG in the United States: Why It Has Been Neglected and Why Europeans Should Care' (2007) 71 Rabels Zeitschrift fr auslndisches und internationales Privatrecht 115-129.

  70. Monica Kilian, 'CISG and the Problem with Common Law Jurisdictions' (2001) 10 J. Transnational Law & Policy 217.

  71. Morris G. Shanker, '"Battle of the Forms": a Comparison and Critique of Canadian, American and Historical Common Law Perspectives' (1979-1980) 4 Can. Bus. L.J. 263.

  72. Muna Ndulo, 'The Vienna Sales Convention 1980 and the Hague Uniform Laws on International Sale of Goods 1964: A Comparative Analysis' (1989) 38 The International and Comparative Law Quarterly, 1-25.

  73. Ole Lando, 'CISG and Its Followers: A Proposal to Adopt Some International Principles of Contract Law' (2005) 53 American Journal of Comparative Law 379-401.

  74. Ole Lando, 'Some Features of the Law of Contract in the Third Millennium' (an inaugural lecture, entitled Common Principles of European Contract Law held on 2 November 1995 at the Erasmus University of Rotterdam) 343-401, available at <http://frontpage.cbs.dk/law/commission_on_european_contract_law/literature/lando1.doc>, accessed on 10 August 2009.

  75. Paul C. Blodgett, 'The U.N. Convention on the Sale of Goods and the "Battle of the Forms"' (1989) 18 Colorado Lawyer 423-430.

  76. Paul Schiff Berman, 'The Globalization of Jurisdiction' (2002) 151 University of Pennsylvania Law Review, 311-545.

  77. Peter Schlechtriem, 'Kollidierende Geschftsbedingungen im internationalen Vertragsrecht' ['Battle of the Forms in International Contract Law'] in: Karl-Heinz Thume ed., Festschrift fr Rolf Herber zum 70. Geburtstag, Newied: Luchterhand (Martin Eimer trans., 1999) 36-49.

  78. Peter Schlechtriem, 'Uniform Sales Law - The Experience with Uniform Sales Laws in the Federal Republic of Germany' (1991/92) Juridisk Tidskrift 1-28.

  79. Philip T. Hackney, 'Is the United Nations Convention on the International Sale of Goods Achieving Uniformity?' (2000-2001) 61 La. L. Rev. 473.

  80. R. David 'The Methods of Unification' (1968) 16 American Journal of Comparative Law 13.

  81. Rajeev Sharma, 'The United Nations Convention on Contracts for the International Sale of Goods: The Canadian Experience' (2005) 36 VUWLR 847-858.

  82. Richard E. Speidel, 'The Revision of UCC Article 2, Sales in Light of the United Nation Convention on Contracts for the International Sale of Goods' (1995-1996) 16 Nw. J. Int'l L. & Bus. 165.

  83. Richard M. Lavers, 'CISG: To use or not to use?' (1992) 4 Int'l Q. 31.

  84. Rick Rawlings, 'The Battle of Forms' (1979) 42 The Modern Law Review, 715-721.

  85. Robert A. Hillman & Jeffrey J. Rachlinski, 'Standard-form Contracting in the Electronic Age' (2002) 77 N.Y.U.L.Rev., 429.

  86. Rosett, 'The International Sales Convention: A Dissenting View' (1984) 18 INT'L LAW. 445, 446.

  87. Speidel, 'Contract Formation and Modification under Revised Article 2' (1994) 35 William & Mary L Rev 1305.

  88. Stephens, 'On Ending the Battle of the Forms: Problems with Solutions' (1991/92) 80 Ky LJ 815.

  89. Steven Walt, 'Novelty and the Risks of Uniform Sales Law' (1999) 39 Va. J. Int'l Law 671.

  90. Thomas J. McCarthy, 'Ending the "Battle of the Forms": A Symposium on the Revision of Section 2-207 of the Uniform Commercial Code' (1993-1994) 49 Bus. Law. 1019.

  91. Utz, 'More on the Battle of the Forms: The Treatment of 'Different' Terms under the Uniform Commercial Code' (1983) 16 UCC LJ 103.

  92. V. Susanne Cook, 'The Need for Uniform Interpretation of the 1980 United Nations Convention on Contracts for the International Sale of Goods' (1988) 50 University of Pittsburgh Law Review 197-226.

  93. Vgl. tevens Henning Stahl, 'Standard Business Conditions in Germany under the Vienna Convention' (1993) Comp. Y.B. Intl'l Bus. 381.

  94. Victor P. Goldberg, 'The "Battle of the Forms": Fairness, Efficiency, and the Best-Shot Rule' (1997) 76 Or. L. Rev. 155.

  95. Von Mehrens, 'The Battle of Forms: A Comparative View' (1990) 38 Am J Comp Law 265.

  96. White, J.J 'Contracting under Amended 2-207' (2004) 2 Wisconsin Law Rev 723.

  97. William E. Hogan, 'The Highway and Some of the Byways in the Sales and Bulk Sales Articles of the Uniform Commercial Code' (1962) 48 Cornell Law Quarterly 1.

C. Other sources

  1. CISG Advisory Council, available at <http://www.cisgac.com/> accessed 10 Aug. 2009.

  2. CISG Official Records (A/CONF.97/C.1/SR.10, in A/CONF.97/19).

  3. European Union Committee, 'European Contract Law: The Draft Common Frame of Reference' (12th Report of Session 2008-09, 10 June 2009), available at <http://www.publications.parliament.uk/pa/ld200809/ldselect/ldeucom/95/95.pdf> accessed 10 Aug 2009.

  4. PACE University Database, available at <http://www.cisg.law.pace.edu/cisg/> accessed 10 Aug 2009.

  5. UNILEX, 'CISG & UNIDROIT Principles - International Case Law and Bibliography', available at <http://www.unilex.info/> accessed 10 Aug 2009.

  6. World Trade Organisation, 'World Trade Report 2006', available at <http://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report08_e.pdf>, accessed 10 Aug 2009.

  7. World Trade Organisation, 'World Trade Report 2008', available at <http://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report06_e.pdf>, accessed 10 Aug 2009.

D. Sources of law

  1. Convention relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF, 1964).

  2. Convention relating to a Uniform Law on the International Sale of Goods (ULIS, 1964).

  3. German Civil Code § 150.2, § 151.

  4. Italian Codice Civile [Civil Code], Article 1326.

  5. Netherlands Civil Code 1992 Book 6, Article 225(3).

  6. Principles of European Contract Law (1999), available at website <http://frontpage.cbs.dk/law/commission_on_european_contract_law/index.html> accessed 10 Aug. 2009.

  7. Rome Convention on the Law Applicable to Contractual Obligations of 1980 80/ 934/ EEC, se OJEC 9 Oct 1980, No L 266/1 (Rome Convention).

  8. UNIDROIT Principles of International Commercial Contracts (2004), available at <http://www.unidroit.org/english/principles/contracts/main.html> accessed 10 Aug. 2009 (UNIDROIT Principles).

  9. United Nations Convention on Contracts for the International Sale of Goods of 1980, UN Doc. A/CONF. 97/18, Annex I (CISG or Vienna Convention).

  10. US' Uniform Commercial Code (UCC)

E. Cases

1. English cases

2. American cases

3. Canadian case

4. German cases

5. French cases

6. Austrian cases

7. Dutch cases

8. Italian case

9. Spanish cases

10. Argentina cases

11. Chinese case

ABBREVIATIONS


FOOTNOTES

* Thesis, University of the West of England. I would like to express special thanks to my tutor, Ms. Lachmi Singh, for her valuable comments and advice, without which this research would not have been realised. I am also grateful for the helpful comments and encouragement of Ms, Ngo Quynh Anh. All errors, of course, remain my own.

I also owe thanks to my beloved wife, who always keeps encouraging my study, to Professor Evadni Grant, who provided essential guidance as well as various supports to my writings, and my colleagues and friends, who have supported me in many different ways so that I could finish this time-consuming work.

1. Infra ch.1, s. III(2) will discuss in depth the differences and similarities between the terms "harmonisation" and "unification" of laws. In short, these terms are similar in kind and only different in degree and emphasis, as such, they will be used inter-changeable throughout this dissertation.

2. It should be noted that those processes do not necessarily develop in the same direction. On the contrary it is suggested by A. Rosett that unification does not always produce harmonisation, and that codification can be the enemy of reform and substantive improvement in the quality of justice. See A Rosett, "Unification, Harmonization, Restatement, Codification and Reform in International Commercial Law" (1992) 40 Am J of Comparative Law 683.

3. E.g. Bonell witnessed that the idea of developing a uniform commercial code at international level is almost as old as the modern concept of codification of the law itself. See M. J. Bonell, 'The Unidroit Initiative for the Progressive Codification of International Trade Law' (1978) 27 The International and Comparative Law Quarterly, 413.

4. See further details in infra Section II, Ch. 2.

5. Also known as the Vienna Convention of 1980, UN Doc. A/CONF. 97/18, Annex I.

6. International Institute for the Unification of Private Law, 'Principles of International Commercial Contracts' (Rome, 1994), available at <http://www.unidroit.org/english/principles/contracts/main.htm> accessed 10 June 2009.

7. Commission on European Contract Law, The Principles of European Contract Law (1999), available at <http://frontpage.cbs.dk/law/commission_on_european_contract_law/index.html> accessed 10 June 2009.

8. For example the establishment of Uniform Commercial Code (UCC) of the United States was the result of the prolong divergent application of commercial law by different states. It has modified and unified significantly the American case law compiled in the Restatements of the Contracts by the American Law Institute.

9. E.g. John E. Murray described Battle of forms as a chaos that threatens the institution of contract in the US society. See John E. Murray, 'The Chaos of the "Battle of the Forms": Solutions' (1986) 39 Vand. L. Rev. 1307.

10. Kevin C. Stemp, 'A Comparative Analysis of the "Battle of the Forms"' (2005-2006) 15 Transnat'L. & Contemp. Probs. 243, 244.

11. See generally a company lawyer's view on the battle of the form problem in G. Murray, 'A Corporate Counsel's Perspective of the "Battle of the Forms"' (1980) 4 Can. Bus.L.J 290, 290-6.

12. See, for example, Von Mehrens, 'The Battle of Forms: A Comparative View' (1990) 38 Am J Comp Law 265; Kevin C. Stemp (n. 10); Charles Sukurs, 'Harmonizing the Battle of the Forms: A Comparison of the United States, Canada, and the United Nations Convention on Contracts for the International Sale of Goods' (2001) 34 Vand. J. Transnatl. L. 1481; Edward J. Jacobs, 'The Battle of the Forms: Standard Term Contracts in Comparative Perspective' 34 (1985) I.C.L.Q. 297-316; Maria del Pilar Perales Viscasillas, '"Battle of the Forms" under the 1980 United Nations Convention on Contracts for the International Sale of Goods: A Comparison with Section 2-207 UCC and the UNIDROIT Principles' (1998) 10 Pace Int'l L. Rev. 97.

13. An exception in this regard is a Note by Charles Sukurs analyzing the harmonisation of the battle of forms to the CISG by the United States and Canada. See Charles Sukurs (n. 12) 1481.

14. For example, many commentators have criticised the traditional approaches of last-shot and mirror-image (see detailed discussion of these doctrines in infra Ch. 1, sII(2)) towards the battle of form problem in that they solve the problem "mechanically" and failed to reflect the fact that businessmen rarely read the boiler-plate forms, and may unconsciously create conflicts of terms while they have a real intention to perform the contract. See Edward J. Jacobs (n. 12) 306-7.

15. It is noted that, the titles of sections and subsections contained in this dissertation are merely for the purpose of convenience and should not reflect any implication on the exact content under which, or the parallel structuring with any other sections or sub-sections within the dissertation.

16. In this dissertation, the "battle of forms" problem is deemed the problem arising when each of the parties involving a commercial transaction refers to its own GTCs, which are different from the terms in the other party's form (two-form conflict). This dissertation will basically not discuss the conflicts where only one party use standard forms contract, which might be disputed by the other party (one-form conflict). This also means that this dissertation will not cover the conflicts regarding consumer contracts where only the seller provides a standard form contract.

17. Article 2:209(3) PECL provides that: "General conditions of contract are terms which have been formulated in advance for an indefinite number of contracts of a certain nature, and which have not been individually negotiated between the parties."

18. See Corneill A. Stephens, 'Escape from the Battle of the Forms: Keep It Simple, Stupid' (2007) 11 Lewis & Clark L. Rev. 233, 235.

19. The IBM Canada, for example, possesses about 205 standard printed contract forms used in different divisions. See Grant Murray (n. 11) 291.

20. John J.A. Burke, 'Contracts as a Commodity: A Nonfiction Approach' (2000) 24 Seton Hall Legis. J. 285, 290.

21. See explanation and discussion of these e-commerce contracts in Robert A. Hillman & Jeffrey J. Rachlinski, 'Standard-form Contracting in the Electronic Age' (2002) 77 N.Y.U.L.Rev. 429, 431.

22. Morris G. Shanker, '"Battle of the Forms": a Comparison and Critique of Canadian, American and Historical Common Law Perspectives' (1979-1980) 4 Can. Bus. L.J. 263.

23. Andre Corterier, 'A Peace Plan for the Battle of the Forms' (2006) 10 Int'l Trade & Bus. L. Rev. 195.

24. In which buyer's terms favour the buyer and seller's terms favour the seller. See Corneill A. Stephens, 'On Ending the Battle of the Forms: Problems with Solutions' (1991-1992) 80 Ky. L.J. 815, 816.

25. Which are essential terms expressly discussed by the parties such as description of goods/services, prices, quantity, delivery terms, etc.

26. However Viscasillas realised that thousands of transactions proceed satisfactorily despite unresolved conflicts in their terms. Only a dramatically smaller number of them must be resolved under a legal regime. See Viscasillas (n. 12, 99). See also G. Murray (n. 11, at 290-6) who pointed out in his research that the IBM Canada, which possesses about 205 standard printed contract forms, conducts around 60,000 standard form contracts per year, 18,000 of which are subject to possible battle of forms problem. However, since 1963-1980 there was not a single case that standard forms conflicts led to litigation.

27. Larry A. DiMatteo et. al., International Sales Law - A Critical Analysis of CISG Jurisprudence (Cambridge 2005) 66.

28. Article 14.1 and 18.1 of CISG.

29. Article 8.3 and 9.1 of CISG.

30. Article 9.2 of CISG.

31. This is the common law traditional approach with the two accompanying doctrines of mirror image rule and last short rule, which are discussed in details in infra ch. 1, s. II(1).

32. I.e. the formation of a contract can be implied by the parties' performance of the same.

33. The good faith principle is a typical civil law approach, which would result in a neutral solution to the battle of the form. See e.g. German and French approaches to the battle of forms in infra ch. 1, s. II(2).

34. See for example Thomas J. McCarthy, 'Ending the "Battle of the Forms": A Symposium on the Revision of Section 2-207 of the Uniform Commercial Code' (1993-1994) 49 Bus. Law. 1019, 1063.

35. The analysis of simple hypotheses to highlight discrepancies of law is a common method used by scholars in comparative legal study. In the analysis of CISG provisions (including the battle of forms problem), Professor John O. Honnold has introduced very comprehensive examples for deeper understanding of the legal approaches, the same method is followed by Francois Vergne, Kevin C. Stemp, Viscasillas, etc. See generally John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention (3rd edn, 1999) 190-2; Kevin C. Stemp (n. 10) 273-86; Viscasillas (n. 12) 149-55. In their evaluation of the UCC, Professors White & Summers analised 8 basic cases covering various aspects of the problem. See James White & Robert S. Summers, Uniform Commercial Code (4th edn, West Pub. Co., 1995) 42.

36. These examples will borrow some ideas or fact patterns introduced in various analyses mentioned in note 35, with necessary amendments to serve the author's analyzing objective.

37. See Francois Vergne, 'The "Battle of the Forms" Under the 1980 United Nations Convention on Contracts for the International Sale of Goods' (1985) 33 Am. J. Comp. L. 233, 238.

38. John O. Honnold (n. 35) 185.

39. See Kevin C. Stemp (n. 10) 273.

40. For general background of the offer-and-acceptance rule in common law see Paul Richard, Law of Contract (6th edn, Pearson, 2004) 14-49; Furmston, Norisada & Poole, Contract Formation and Letters of Intent (John Wiley & Sons, 1998) 3-67; Fansworth, Contracts (4th edn, ASPEN, New York 2004) 107-217.

41. Definition of acceptance by Treitel. See Paul Richard (n. 40) 24.

42. This term was used by William E. Hogan in his article, 'The Highway and Some of the Byways in the Sales and Bulk Sales Articles of the Uniform Commercial Code' (1962) 48 Cornell Law Quarterly 1, 44.

43. See e.g. Poel v. Brunswick-Balke-Collender Co. of New York, (1915) 216 NY 310, 110 NE 619.

44. American Restatement of Contracts, second edition (§59):

Purported Acceptance which adds qualifications:

A reply to an offer which purports to accept it but is conditional on the offeror's assent to terms additional to or different from those offered is not an acceptance but is a counter-offer.

45. Hyde v. Wrench (1840) 3 Beav 334.

46. Jones v. Daniel (1894) 2 Ch. 332.

47. Stevenson, Jacques & Co. v. McLean (1880) 5 QBD 346. This case involves the offer by defendant to sell iron to the plaintiffs at 40s/ton. The plaintiff sent back a telegram, "Please wire whether you would accept forty for delivery over two months, or if not, the longest limit you could give." Later that day plaintiff sent another telegram accepting the original offer.

48. A variant of this situation is a conditional acceptance, which may be concluded by the courts as effective formation of contract. In Hillas & Co. Ltd. v. Arcos Ltd. (1932) 38 Com Cas 23, Lord Tomlin summed up the common law position on this issue:

"The problem for a court of construction must always be so to balance matters that without the violation of essential principle, the dealings of men may as far as possible be treated as effective, and that the law may not incur the reproach of being the destroyer of bargains."

See also Trollope and Colls Ltds v Atomic Power Constructions Ltd. (1962) 3 All ER 1035; G Percy Trentham Ltd. V. Archital Luxfer (1993) 1 Lloyd's Rep 25.

49. See generally Treitel, The Law of Contract (12th edn, Sweet & Maxwell, London 2007) 18-44.

50. Imperial Land Co. of Marseilles, In re (Harris' Case) (1872) LR 7 Ch. App. 587, 692.In this case the new added terms by the offeree (i.e. extending the time allowed for payment) serve to the exclusive benefit of the offeror, therefore the acceptance was held valid.

51. Nicolene Ltd. v. Simmonds (1953) 1 Q.B. 543 (the offeree's new added term stating that the agreement was under "usual conditions of acceptance" was considered "a meaningless exception").

52. Edward J. Jacobs (n. 12) 299.

53. Megaw J statement in Trollope and Colls Ltd. v. Atomic Power Construction Ltd. (1962) 3 All ER 1035; (1963) 1 WLR 333, 337.

54. The accept by the other party could be express notice or implied by its conduct. In this regard when a contract has been executed the courts are likely to conclude that there was a contract. See Trentham Ltd v Archital Luxfer (1993) 1 Lloyd's Rep 25.

55. British Road Services Ltd. v. Arthur V Crutchley Ltd. (1968) 1 All E.R. 811.

56. Under which the court will easily find the result (of whether or not a contract is formed, and whose terms will apply) in a battle of forms based on the facts of exchanges between the parties.

57. Corneill A. Stephens (n. 24) 818.

58. See Giesela Ruhl, 'The Battle of the Forms: Comparative and Economic Observations' (2003) 24 U. Pa. J. Int'l Econ. L. 189, 191. Some common law countries, such as Canada, apply the same principles of mirror image rule and last shot doctrine, but found ways to mitigate the harshness of those rules, e.g. by allowing contracts-by-conduct approach. See Charles Sukurs (n. 12) 1486 who discussed this approach in the case of Tywood Industries, Ltd. v. St. Anne-Nackavic Pulp & Paper Co., (Ont.H.C. 1979) 100 D.L.R. 3d 374. But see infra ch.1, s. II(1)(b) which suggested that until now UK courts still base heavily on the last shot and mirror image rules.

59. Andre Corterier (n. 23) 198.

60. This modern view with economic aspects and efficiency consideration has been very popular in the United States, represented by Professors John E. Murray, Samuel Williston, Corneill A. Stephens, Daniel Keating, etc. See John E. Murray, 'The Realism of Behaviorism Under the Uniform Commercial Code' (1972) 51 O. R . L. R. EV . 269; Corneill A. Stephens (n. 24) 818; Daniel Keating, 'Exploring the Battle of the Forms in Action' (1999-2000) 98 Mich. L. Rev. 2678, 2684.

61. By accepting the goods the buyer has made an act of performance which makes the contract effective on the seller's form. See more discussion and explanation of this issue in Viscasillas (n. 12) 116; or Shanker (n. 22) 268.

62. Viscasillas (n. 12) 118.

63. See generally Rick Rawlings, 'The Battle of the Forms' (1979) 42 Mod. L. Rev. 715, 717. See also discussion on the typical case of this problem, Butler Machine Tool Co. Ltd. v. Ex-Cell-O Corporation (England) Ltd. (Butler Machine Tool) (1979) 1 All E.R. 237, in infra ch. 1, section II(1)(b).

64. Rick Rawlings (n. 63) 717-8.

65. See Shanker (n. 22) 269-70 who discussed the pretended agreements problem with reference to the Butler Machine Tool case.

66. Douglas G. Baird & Robert Weisberg, 'Rules, Standards, and the Battle of the Forms: A Reassessment of § 2-207' (1982) 68 VA. L. REV. 1217, 1232.

67. See Daniel Keating (n. 60) 2684.

68. Butler Machine Tool (n. 63). In brief, on 23 May 1969 the sellers made a quotation to sell a machine tool to the buyers for ú75,535, delivery lead-time of 10 months. The attached T&Cs contained a price variation clause, and stated to "prevail over any T&Cs in the buyers' order". On 27 May the buyers placed an order for the machine, subject to T&Cs that contained no price variation clause. The order also included a tear-off acknowledgement stating that "We accept your order on the T&Cs stated thereon". On 5 June the sellers signed and returned the acknowledgement, attaching a letter stating that the order was entered into under the terms of their 23 May offer. On delivering the machine the sellers requested price variation of ú2,892 and buyers refused.

69. Previously, the defendant buyers, appealed against the judgment of Thesiger J. on February 12, 1976, in an action started in the Halifax District Registry, ordering that the defendants pay to the plaintiffs ú2,892 damages, ú1,410 interest and costs. The substantial ground of the appeal was that the judge was wrong in law in finding that the conditions of sale in the plaintiff sellers quotation and in particular the price variation clause formed part of the contract between the parties. See Butler Machine Tool (n. 63) 401.

70. Professor Shanker (n. 22, at 271-2) is highly critical of this "nonsense" decision. He submitted that the total agreement between the parties did not exist, because they haven't been actually agreed upon the prices term. Both the lower court and the Court of Appeal tried to believe in the necessity of finding agreement, where in fact, none existed. Professor Atiyah holds a similar view but shows his sympathy that such a non-existence of agreement would be absurd given that the contract is already executed. See P.S. Atiyah, An Introduction to the Law of Contract (5th edn, Claredon Press, London 1995) 70.

71. Scholars, such as Professors Paul Richard (n. 40, at 31) and Edward Jacobs (n. 12, at 301-2), highly consent to this decision. However, they questioned the way the court reached it. Professor Jacobs, for example, argued that the court widened the scope of Hyde v. Wrench from the destruction of a term of an offer to the destruction of a condition imposed upon subsequent negotiations of forms and which would not form part of the contract. He also argued that the court failed to consider the agency aspect, whereby the sellers' clause may act as notice of limitation on its employee's authority to enter into contracts with the buyers under convergent terms to those of the sellers.

72. Except for Lord Denning, other judges in the Court of Appeal, Lawton and Bridge LJJ, chose to analyse the case from the view of classical objective lines. In Von Mehren's words, Lord Denning's proposed approach "was emphatically rejected by the two other judges deciding the case." See Von Mehrens (n. 12) 273.

73. Butler Machine Tool (n. 63) 403.

74. Butler Machine Tool (n. 63) 404 [Emphasis added]. In this regard, Lord Denning's view is quite similar as the United States modern approach under the UCC Art. 2-207, which will be discussed in the next section.

75. He said: "In some cases the battle is won by the man who fires the last shot. He is the man who puts forward the latest terms and conditions: and, if they are not objected to by the other party, he may be taken to have agreed to them." See Butler Machine Tool (n. 63) 404-5.

76. He explained: "In some cases the battle is won by the man who gets the blow in first. If he offers to sell at a named price on the terms and conditions stated on the back: and the buyer orders the goods purporting to accept the offer - on an order form with his own different terms and conditions on the back - then if the difference is so material that it would affect the price, the buyer ought not to be allowed to take advantage of the difference unless he draws it specifically to the attention of the seller." See Butler Machine Tool (n. 63) 405.

77. Some countries, such as Netherlands, also prefer the first blow solution. Netherlands Civil Code 1992 Book 6, Art. 225(3) states that:

"Where offer and acceptance refer to different general conditions, the second reference is without effect, unless it explicitly rejects the applicability of the general conditions as indicated in the first reference."

However, the meaning of "explicitly" is undefined.

78. He said: "There are yet other cases where the battle depends on the shots fired on both sides. There is a concluded contract but the forms vary. The terms and conditions of both parties are to be construed together. If they can be reconciled so as to give a harmonious result, all well and good. If differences are irreconcilable - so that they are mutually contradictory - then the conflicting terms may have to be scrapped and replaced by a reasonable implication." See Butler Machine Tool (n. 63) 405.

79. As Paul Richard commented, when a contract is found to exist, the court would then attempt to impose T&Cs on the parties, which is not an elegant way for the courts to resolve the problem, but to fulfill an exigency. See Paul Richard (n. 40) 32.

80. Furmston, Cheshire, Fifoot & Furmston's Law of Contract (15th edn, Oxford 2006) 211.

81. Furmston (n. 80) 207.

82. See e.g. Johnson Matthey Bankers Ltd. v. State Trading Corporation of India (1984) Lloyd's Rep. 427; Interfoto Picture Library Ltd. v. Stilletto Visual Programmes Ltd. (1988) 1 All ER 348; O.T.M., Ltd. v. Hydranautics (1981) 2 Lloyd's Rep. 211; Zambia Steel & Bldg. Supplies Ltd. v. James Clark & Eaton, Ltd,. (1986) 2 Lloyd's Rep. 225; Muirhead v. Indus. Tank Specialties Ltd., (1986) Q.B. 507, 530 where traditional common law principles are applied. Where there is no contract formed, the party will seek a quantum meruit remedy in restitution, see British Steel Corp v. Cleveland Bridge & Engineering Co., Ltd. (1984) 1 All ER 504, where Goff J held that the seller may be entitled to a restitutionary claim for the reasonable value of the goods (which may not be the same as contract price).

83. Regarding the view on the Butler Machine Tool, Professor P.S. Atiyah has similar view in contending that while the arrangements are executory, it might be sensible to hold that there is no contract; but once a machine is made an delivered, that result would be absurd. However, he did not agree with the Court of Appeal in construing the letter by the sellers being just to identify the subject matter, in his feeling the sellers had intention to reimpose their terms. See P.S. Atiyah (n. 70) 70.

84. See discussion of CISG (infra Ch. 2, section II) in which Art. 19.2 and 19.3 reflected similar view to that of Lord Denning in the Butler Machine Tool.

85. E.g. in Trentham Ltd. v. Archital Luxfer (1993) 1 Lloyd's Rep 25 (where the parties conducted the contract, but there was no matching offer and acceptance), Steyn LJ applied an "objective" approach to the contract formation issue, and accepted that a contract is alleged to have come into existence during and as a result of performance, which even lead to the retrospectiveness of the contract covering pre-contractual performance. Richard Stone commented that this finding by the Court of Appeal is difficult to reconcile, and 14 years since the decision was reached, no other reported case adopted the approach put forward by Steyn LJ. See discussion of the case in Richard Stone, The Modern Law of Contract (7th edn, Routledge-Cavendish, New York 2008) 58-60.

86. See Balmoral Group Ltd v. Borealis (UK) Ltd (2006) 2 CLC 220; Sterling Hydraulics Ltd v. Dichtomatik Ltd (2007) 1 Lloyd's Rep 8.

87. The Uniform Commercial Code (UCC) is a model statute produced under the joint sponsorship of the American Law Institute and the National Conference of Commissioners on Uniform State Laws. Work began on it in the 1940s, and the first edition was approved in 1952. The UCC has been adopted in full by all the US states except Louisiana and District of Columbia. Its stated purpose is "to simplify, clarify and modernise the law governing commercial transactions; to permit the continued expansion of commercial practices through custom, usage and agreement of the parties; to make uniform the law among the various jurisdictions." (s.1-102(2)). Many innovations contained in the code reflect the ideas of its chief architect, prof. Karl Llewellyn. See Hugh Beale, W. Bishop & M. Furmston, Contract Cases & Materials (5th edn, Oxford 2008) 228.

88. See notes 58-67 and accompanying text.

89. Which assumes that businessmen rarely read the boilerplate forms. The economies of scale do not allow them to negotiate through every minor issue of their transactions terms and the buyers and sellers are content to leave their mutual rights uncertain, because greater certainty would have come only with negotiations, the cost of which probably would have exceeded the expected cost of leaving things open to dispute. See general discussion in supra ch. 1, s. I(2). See also Douglas G. Baird & Robert Weisberg (n. 66) 1219; Victor P. Goldberg, 'The "Battle of the Forms": Fairness, Efficiency, and the Best-Shot Rule' (1997) 76 Or. L. Rev. 155, 157.

90. UCC s. 2-207 (1999) stated [emphasis added]:

"1. A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

2. The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:

(a) the offer expressly limits acceptance to the terms of the offer;

(b) they materially alter it; or

(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

3. Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provision of this Act."

91. It is noted that section 2-207 does not only deal with acceptance but also regulates written confirmations, which is not within this dissertation's concern.

92. The philosophy behind this subsection is the "deal-is-on" approach, which rejects mirror image rule and proposes that a deal is on if the parties so understand the situation, even though offer and acceptance do not fully match. See von Mehren (n. 12) 279.

93. Under the UCC, a court has even found a contract after an exchange of documents when the dispute was over a term in one of the forms that would have changed the price by 30%. See Columbia Broadcasting System v. Auburn Plastics, Inc., (1979) 67 A.D.2d 811, 413 N.Y.S.2d 50.

94. See Charles Sukurs (n. 12) 1488.

95. See Caroline N. Brown, 'Restoring Peace in the Battle of the Forms: A Framework for Making Uniform Commercial Code Section 2-207 Work' (1991) 69 N.C. L. Rev. 893, 897; John E. Murray, 'The Definitive "Battle of the Forms": Chaos Revisited' (2000) 20 J.L. & COM. 1, 18-20, 29.

96. See discussion on the "wording" problem of s. 2-207 in notes 99, 101 and accompanying text.

97. I.e. contract is sufficiently formed due to conduct by both parties which recognises the existence of such contract.

98. Which formation is based on exchanged documents between the parties.

99. It should be noted that s. 2-207(2) only mention "additional terms" but not "different terms", which means literally if there are terms which are not "additional" but "different" then they are not subject of s. 2-207(2) and will stay in the air. See more discussion in Kevin Stemp (n. 10) 247.

100. See Francois Vergne (n. 37) 245.

101. Baird & Weisberg (n. 66) 1224. There are too many criticisms and proposals for revision of the drafting and wording related problems of s. 2-207 that this dissertation would not be able to discuss comprehensively. See some examples in Von Mehren (n. 12 at 278) who called s. 2-207 "a large and complex body of decisional law, and an enormous literature"; Caroline Brown (n. 95, at 894) who admitted that "cases and complementary have succeeded in tapping every possibility for confusion inherent in the statutory language or invited by the ambiguities of its practical context"; Kenvin Stemp (n. 10, at 247) mentioned at least four divergent views on interpretations of the "additional" and "different" terms mentioned in s. 2-207; Murray (n. 9 at 1323-24) who discussed various wording issues of s. 2-207; Jacobs (n. 12, at 308) who argued that the way s. 2-207 is worded is less than happy, leaving too many loose ends; Francois Vergne (n. 37, at 245) who gave 5 grounds of criticisms of s. 2-207. However, Von Mehren (n. 12 at 296) suggested simplification of the s. 2-207 wording problem using a contextual approach that where the parties have reached agreement on essential elements of their transaction (price, quantity, duration, etc) then the court needs only to define the area of party disagreement and then draw on "background law". This approach nevertheless invites some other troubles, e.g. it can not solve the disagreement on price terms (for example in Butler Machine Tool case); and that may encourage "sloppiness" by contracting parties relying on the court's resolution. See S. Wheeler & J. Shaw, Contract Law Cases, Materials & Commentary (2nd edn, Oxford 1994) 209-10.

102. Roto-Lith, Ltd. v. F.P. Bartlett & Co., (1st Cir. 1962) 297 F.2d 497.

103. Commentators argued that Roto-Lith provided a poor initial interpretation, followed by mixed subsequent interpretations. See e.g. David Frisch, 'Commercial Common Law, the United Nations Convention on the International Sale of Goods, and the Inertia of Habit' (1999) 74 Tul. L. Rev. 495, 517-29. Though recently embraced by a lower federal court in the First Circuit, Gilbert & Bennett Mfg. Co. v. Westinghouse Elec. Corp., (D. Mass. 1977) 445 F. Supp. 537, 546, it has been rejected in most of the jurisdictions that have considered the issues it raises. See Douglas G. Baird & Robert Weisberg (n. 66) 1221, who witnessed commentators argument (though Baird & Weisberg seemed not to agree with) that "serious drafting errors, compounded by occasional judicial errors, have hampered 2-207's effectiveness and contravened the drafters' purpose". They also noted cases rejecting Roto-Lith's approach: C. Itoh & Co. (America) v. Jordan Int'l Co., 552 F.2d 1228, 1235 n.5 (7th Cir. 1977); Dorton v. Collins & Aikman Corp., 453 F.2d 1161, 1168 & n.5 (6th Cir. 1972); Ebasco Servs., Inc. v. Pennsylvania Power & Light Co., 402 F. Supp. 421, 437-38 (E.D. Pa. 1975); Rite Fabrics, Inc. v. Stafford-Higgins Co., 366 F. Supp. 1, 8-9 (S.D.N.Y. 1973); Steiner v. Mobil Oil Corp., 20 Cal. 3d 90, 107, 569 P.2d 751, 763, 141 Cal. Rptr. 157, 168 (1977); Uniroyal, Inc. v. Chambers Gasket & Mfg. Co., - Ind. App. at -, 380 N.E.2d at 578.

104. Most courts and commentators disagree with this "last shot" view taken in Roto-Lith, some courts even went to the opposite extreme of it by literally interpreting the "expressly conditional on the offerors's assent to those [additional/different] terms" (see e.g. Dorton v. Collins & Aikman Corp. (6th Cir. 1972) 453 F.2d 1161, 1168). In Dale R. Horning Co v. Falconer Glass Industries, Inc., 710 F. Supp. 693 (S.D. Ind. 1989) under similar situation as Roto-Lith, the court held that where the confirmation form materially altered the pre-existing oral contract between the parties, such conditions were not part of the contract (knock-out rule). See also Murray ('Section 2-207 of the Uniform Commercial Code: Another Word About Incipient Unconscionability' (1978) 39 U. Pitt. L. Rev. 591, 637-8) who suggested that the express statement generally reflecting the language of s. 2-207(1) is typically required.

105. See generally Kevin Stemp (n. 10) for a comprehensive comparative study of application of UCC in these states (regarding the battle of the forms), especially on the controversy of distinction between "additional terms" and "different terms".

106. See note 99 and accompanying text. See also Von Mehren (n. 12) 285-7.

107. See some discussion on innovative view of s. 2-207 in Von Mehren (n. 12) 282-6.

108. I.e. to deny the consideration of "different terms" under s. 2-207, which will most likely lead to a "first shot" rule. See Northrop Corp. v. Litronic Indus. (7th Cir. 1994) 29 F.3d 1173; James White & Robert S. Summers, Handbook of the Law under the Uniform Commercial Code (3rd edn, West Pub. Co., 1988) 35.

109. I.e. to remove the different terms and apply the UCC default provisions (same approach as s. 2-207(3)).

110. Which apply the terms of the party that it perceives to be the fairer of the two, the one closest to the "center" - a variation on final-offer arbitration. See Victor P. Goldberg (n. 89) 166.

111. For general discussion on evolvement of German law on the battle of the forms see Giesela Ruhl (n. 58) 201-5; Von Mehren (n. 12) 290-4; Kaia Wildner, 'Art. 19 CISG: The German Approach to the Battle of the Forms in International Contract Law: The Decision of the Federal Supreme Court of Germany of 9 January 2002' (2008) 20 Pace Int'l Rev. 1-30, 10-11; Peter Schlechtriem, 'Kollidierende Geschftsbedingungen im internationalen Vertragsrecht' ['Battle of the Forms in International Contract Law'] in: Karl-Heinz Thume ed., Festschrift fr Rolf Herber zum 70. Geburtstag, Newied: Luchterhand (Martin Eimer trans., 1999) 36-49, 36-7.

112. BGH 29 Sept. 1955, BGHZ 18, 212.

113. This is basically the same approach as the last shot rule, which is called in German law the "theory of the last word" ("Theories des letzten Wortes"). See BGH (Supreme Court), BB 882, No. 1642; BGH, NJW 1248; OLG (Court of Appeal) Koln, WM 846, 847 (1971); BGH, BB 1951, 456; BGH, BB 1952, 238; BGH NJW 1963, 1248; BGH, DB 1971, 2106; BGH, DB 1973, 2136.

114. Section 151 of the German Civil Code provided that an acceptance does not need to be communicated if communication is not expected according to common usage.

115. Normally traditional common law approach will lead this case to no contract. But e.g. in OLG Koblenz WM 1984, 1347 et seq., the court held that:

"Where parties exchange letters and each time refer to their contradicting terms and conditions, none of their standard forms becomes part of the contract. Nevertheless, a contract is validly concluded if it becomes clear that the parties did not want to have the contract jail just because of the lack of consensus on the general terms and conditions."

116. This contract formation is based on the principle of good faith and fair dealing established in § 242 of German Civil Code (where the contract has been partially executed, it is not possible for the parties to allege that no contracts exists), which is not a doctrine in traditional common law. See e.g. GBH, BB 238.

117. Under German law regarding formation of contract, if a party sends the other a letter of confirmation stating the matters agreed between the parties and the other fails to reply, such letter will prevail any prior negotiations - as long as it does not differ significantly. It is important therefore to object very quickly if the recipient does not wish to be bound by the terms. In traditional Anglo-American law a confirmation letter containing divergent terms (even minor ones) would be treated as a counter-offer and silence by recipient does not mean acceptance.

118. As early as 1936 Raiser and Rabel criticised the "last word" doctrine as "thoroughly primitive" and proposed a solution akin to knock-out rule, which states that if a contract is formed, its terms are those on which the parties reached agreement in their negotiations, any gaps are to be filled by the "dispositive statutory law" ("dispositive Gesetzesrecht"). See Peter Schlechtriem (n. 111) 36; Von Mehren (n. 12) 290 where cited Ludwig Raiser, 'Das Recht der allgemeinen Geschaftsbedingungen' ['The Law on General Terms of Business'] (1961) 225 and Rabel,, "Recht des Warenkaufs" ['The Law on Sale of Goods'] (Vol 1, 1936) 101.

119. BGH 26 Sept. 1973, GBHZ 61, 282. After the parties entered into negotiations on specifications, prices and payment terms, the buyer finally placed order which required delivery of April 15, using its standard form which stated that any seller's deviation is not valid unless confirmed in writing by the buyer. The seller returned a confirmation form with its own standard terms and specified delivery of approximately mid-end April, which was stated not to be binding and excluded damages for late delivery. Both parties continued to insist on their own terms. In June the goods was delivered and buyer received and paid partial contract value, withholding the balance to cover damages due to delayed delivery.

120. The lower court held that the confirmation of the seller, under § 150.2 of Civil Code, operated as a rejection and coupled with a new offer, which had been accepted by the buyer's failure to object promptly.

121. BGH 26 Sept. 1973, GBHZ 61, 287. This approach is a restatement of prior BGH ruling in BGH, BB 1136; BGH, WM 451.

122. Von Mehren (n. 12) 292. Similarly, Giesela (n. 58, at 203) commented that "[the courts] clearly departed from the last-shot rule."

123. OLG Koln, BB (1980) 1237, 1240. This case marked the first time that a German court applied the knock-out rule to solve the battle of forms problem.

124. OLG Koln, BB (1980) 1237, 1240 where the court held that "to the extent the parties' terms wer in agreement, they became part of the contract."

125. This is in line with the knock-out doctrine. The approach actually got its root from § 6(2) of the Act on the Regulation of the Law of General Conditions of Contract (Gesetz zur Regelung des Rechts der Allgemeinen Geschafts-bedingungen) which provided that a standard term that does not become part of the contract because it is ineffective under the provisions of the General Conditions of Contract Act is replaced by the default rules of law. See Giesela (n. 58) 203-4; Von Mehren (n. 12) 293.

126. See e.g. Bundesgerichtshof 1985 NJW 1838 where the court further developed the knock-out rule to the "additional terms" when holding that terms are to be drawn from the parties' forms where they are in agreement, but if one party's forms contains additional provisions that have no counterpart in the other partie's terms (except for the case of silent agreement) then such an "offensichtliche Willensubereinstimmung" is lacking and the term in question cannot prevail. See also Von Mehren (n. 12) 293-4.

127. French Civil Code (Art. 1108) provides that:

      "Four conditions are essential for the validity of an agreement:

128. Francois Vergne (n. 37, at 245) witnessed that practically no typical cases of battle of forms had been decided by French courts. Though some scholars, such as Bonassies, gave some examples of the Paris Court of Appeal, but they were not precisely relevant to battle of forms problem. Francois suggested to look at scholarly analyses and treatises of civil law.

129. Francois Vergne (n. 37) 251. This is very similar to the Italian law, which provides in Article 1326 of the Codice Civile [Civil Code] that if the parties do not expressly agree on exactly the same terms, there is no contract.

130. Francois Vergne (n. 37) 251.

131. See E.H. Hondius & Ch. Mah, 'The Battle of Forms: Towards a Uniform Solution' (1998) 12 J.C.L. 268-276, 270 and their discussion on the cases Rea 24 juin 1912, D P I jurisprudence; Req 5 fevrier 1934, G P 1934 (1 er sem) jurisprudence; Civ 16 novembre 1961, D 1962 jurisprudence; Colmar 22 janvier 1932, G P 1932 (2e sem) jurisprudence.

132. See Giesela (n. 58) 205.

133. Giesela (n. 58) 206, citing Cass. com., Oct. 29, 1964, Gaz. Pal. 1965, 45. Though the last-shot rule is applied in this case, the distinction between the "front-form" and "back-form" conflicts has set the background for the knock-out approach under PECL which offers different solutions for these two types of conflicts. See infra ch. 2, s. IV for further discussion.

134. Cass. com., July 11, 1995, Bull Civ. IV., No. 211; JCP 1996 II 22583.

135. In this case, however, a knock-out rule approach could have led to the same result. See Giesela (n. 58) 206.

136. In answering the question "Does a contract exist?" the mirror image rule provides: No, if there is any material or minor conflicting term along the line and parties do not impliedly (e.g. by performance) or expressly accept the other party's offer/counter-offer. Otherwise, yes.

137. With the question "If yes, on which terms?" the last shot rule provides that the terms of the party who sends the last form will be applied.

138. See supra ch. 1, s. II(2)(a) and notes 115- 117 and accompanying text regarding the difference between German last-word doctrine and common law mirror image rule.

139. As under the knock-out rule the party who fires the last shot is not normally the winner there is no incentive for parties to ping-pong their forms, instead they will concentrate on their dickered terms.

140. Some commentators, e.g. Von Mehren, proposed that a legal system must choose only one between the approaches of last shot rule or "deal-is-on" principle in solving the battle of forms problem; no middle way can achieve advantages and avoid disadvantages of these approaches. Thus, the torturous history of s. 2-207 UCC indicated the drafters' failure to choose in clear terms between the two approaches. See Von Mehren (n. 12) 295.

141. The open-textured character of civil law can be seen clearly in the application of good faith and fair dealing by both German and French courts. See examples in notes 119 and 121. Another example is the BGB § 154(2) providing that even an express implementation or defense clause only hinders the conclusion of the contract "if there is doubt", which in cases of long silence or performance can be put aside and in fact, gives more chances of utilising the "deal-is-on" philosophy. See Peter Schlechtriem (n. 111) 45; Von Mehren (n. 12) 295.

142. In this regard, Viscasillas (n. 12, at 119) gave a clear example on notice of non-conformity. The Spanish Commercial Code (Art. 336 regarding apparent defects) provide that the period to give notice for shortage of conformity of the goods is 4 days. Where most of the contracting parties are in agreement of much longer period. If the knock-out rule is rendered where the parties conflict on notice of non-conformity term, then both parties would be forced to accept 4-day notice forming part of their contract.

143. Examples 1A is not discussed here as it is more relevant to illustrate the CISG solution to the battle of forms problem, which will be discussed in chapter 2.

144. As the different terms did not "materially alter the agreement", and the Seller did not object to the Buyer's acceptance with discrepancy. Again, this result shows the hybrid characteristic of UCC between the two extreme approaches toward solving the battle of the forms.

145. Even if both parties insist on their own terms a German court will still find a contract formed. See supra ch. 1, s. II(2)(a) and note 115 and accompanying text.

146. This shows another interesting illustration of the criticisms on the knock-out approach. If for example German statutory law specifies warranty term to be 12 months then in this case applying strict knock-out rule will lead to the result that such 12 month warranty will apply to the contract, which is far away from the will of both parties (which are 18 and 24 months).

147. See explanation in supra ch. 1, s. II.2(b) where French courts believe that the use of its standard terms alone already means that the party insist on its terms and reject the other party's terms.

148. A decision in favour of the Seller may be made on the ground that in the last shot the Seller expressly insisted on his warranty terms which was brought to the Buyer's attention. See Cass. com., July 11, 1995, Bull Civ. IV., No. 211; JCP 1996 II 22583.

149. During 1948-2005 period, the world merchandise exports amazingly increased by 172 times (from US $59 billion to US $10,159 billion). In 2005, the value of world merchandise exports rose by 13 per cent, to US $10.16 trillion (WTO, World Trade Report 2006, at 6) available at <http://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report08_e.pdf> accessed 10 Aug 2009.

150. This is evident by the fact that world export of goods and services have now accounted for 27% of total world GDP (WTO, World Trade Report 2008, at 64) available at <http://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report06_e.pdf> accessed 10 Aug 2009.

151. I.e. in a domestic sale, it is relatively easy for the seller and buyer to seek a common legal forum to regulate their transactions, which is normally the uniform domestic legal system. When the seller and buyer are located in different countries with different cultures and under different legal systems, the situation becomes much more complicated and such divergent legal systems will become a barrier undermining international trade.

152. John Felemegas (ed.), An International Approach to the Interpretation of the United Nations Convention on Contracts for the International Sale of Goods (1980) as Uniform Sales Law (Cambridge 2007) 3.

153. The arguments for harmonisation/unification of international sales law has been overwhelmed by a majority of world's scholars. See generally John Felemegas (n. 152, at 3); G Conetti 'Uniform Substantive and Conflicts Rules on the International Sale of Goods and Their Interaction' in P. Sarcevic & P. Volken (eds), International Sale of Goods (Dubrovnik Lectures Oceana, 1986); V. Susanne Cook, 'The Need for Uniform Interpretation of the 1980 United Nations Convention on Contracts for the International Sale of Goods' (1988) 50 University of Pittsburgh Law Review 197; Gyula Eśrsi, 'Problems of Unifying Law on the Formation of Contracts for the International Sale of Goods' (1979) 27 The American Journal of Comparative Law, 311-323. S. Gopalan in his book, Transnational Commercial Law (WS Hein & Co., New York 2004) 11-86, gave various reasons and empirical evidence for the need of engaging the process of harmonisation of law system in international commercial transactions, among those are: the problem of divergent national substantive laws; inadequate national laws in dealing with international transactions; modernisation and facilitation of international trade.

154. Philip T. Hackney, 'Is the United Nations Convention on the International Sale of Goods Achieving Uniformity?' (2000-2001) 61 La. L. Rev. 473, 474. Similarly John Felemegas (n. 152, at 5) contended that a uniform law would provide parties with greater certainty as to their potential rights and obligations, in compared with the results brought about by the amorphous principles of private international law and the possible application of an unfamiliar system of foreign domestic law. Felemegas fashioned this argument by using Professor Schmitthoff's term "a total conflict avoidance device", which from a trader's point of view, is far better than a "conflict solution devices" offered by the choice of law clauses.

155. Christian Twigg & Flesner, The Europeanisation of Contract Law (Routledge - Cavendish, London 2008) 4, 13-14. In this regard, the authors raised 2 questions: jurisdiction and applicable law in dealing with contract disputes which may arise (conflict of laws). Later in their discussion, they witnessed that some scholars believed what was needed was a uniform private law, rather than a uniform conflict of laws system. The harmonisation of the battle of forms discussed in the context of this dissertation refers mainly to the type of uniform private law, but not uniform conflict of laws system. See also next section 2 on these methods of harmonisation.

156. R. David 'The Methods of Unification' (1968) 16 American Journal of Comparative Law 13, 14.

157. Hondius & Mahe (n. 131) 268.

158. Jan Hellner, 'The Vienna Convention and Standard Form Contracts' in Petar Sarcevic & Paul Volken (eds), International Sale of Goods: Dubrovnik Lectures (Oceana, 1986), Ch. 10, 335, 336-7. Ernst Rabel's arguments are to respond to the early criticism by Professor Edouard Lambert that the text of the uniform law of international sales did not pay sufficient attention to what was called "the living law" (le drolit vif ) found in standard forms.

159. As mentioned earlier, the US approach to the battle of forms problem under the UCC is a sophisticated "knock-out" rule, while Canadian law still apply the traditional mirror image rule and last shot rule with the "contracts-by-conduct" allowance to mitigate the harshness of such rules.

160. Charles Sukurs (n. 12) 1499-1500.

161. UNCITRAL, FAQ - Origin, Mandate and Composition of UNCITRAL, available at <http://www.uncitral.org/uncitral/en/about/origin_faq.html> accessed on 10 Aug, 2009. Another definition by Ziegel of harmonisation could also be relevant to unification: "Harmonisation in this field of law is a word with considerable elasticity. In its most complete sense it means absolute uniformity of legislation among the adopting jurisdictions." Leebron put it in a less exhaustive way: "Harmonisation can be loosely defined as making the regulatory requirements or government policies of different jurisdictions identical or at least more similar." See Gopalan (n. 153) 7-8.

162. UNCITRAL (n. 161). Zamora provided another clue of the distinction between harmonisation and unification in defining broadly that "Harmonisation does not entail the adoption of a single, model set of rules, but instead implies a wide range of ways in which differences in legal concepts in different jurisdictions are accommodated. This accommodation can take place in many ways: by a process of law reform in one or more countries, reflecting influences beyond the jurisdiction's borders; by the mediation of private law concepts adopted by parties caught between two legal systems; or by a myriad of other contact points between legal regimes..." where in his opinion, unification is merely the "imposition of one legal model on all jurisdictions." See Gopalan (n. 153) 8.

163. Henry Deeb Gabriel, 'The Advantages of Soft Law in International Commercial Law: The Role of Unidroit, Uncitral, and the Hague Conference' (2009) 34 Brook. J. Int'l L. 655, 655-6; A. Rosett (n. 2) 684.

164. M Bridge, quoted in Tran Quoc Thang, 'Passing of Property Under Contracts for the International Sale of Goods: Should the CISG Regulate the Transfer of Property?' (PACE 2004) available at <http://www.cisg.law.pace.edu/cisg/biblio/thang.html> accessed 10 August 2009.

165. The Codes consolidated legislation operating beore the French revolution and codified existing business practice in a systematic manner. This is among various European national codifications of civil codes during 19th and 20th centuries. See Gopalan (n. 153) 10.

166. See notes 154, 155 and accompanying text.

167. The term used by the German writer Ernst Raape, quoted in Ole Lando, 'Some Features of the Law of Contract in the Third Millennium' (an inaugural lecture, entitled Common Principles of European Contract Law held on 2 November 1995 at the Erasmus University of Rotterdam) 343-401, 347, available at <http://frontpage.cbs.dk/law/commission_on_european_contract_law/literature/lando1.doc>, accessed on 10 August 2009. In his paper Ole Lando also discussed extensively the problems and difficulties associated with the choice-of-law rule in the context of the Rome Convention on the Law Applicable to Contractual Obligations of 19 June 1980 80/ 934/ EEC, se OJEC 9 Oct 1980, No L 266/1 (hereinafter called Rome Convention). Then he concluded that "the choice-of-law rule is a poor tool of legal integration."

168. The advantage of this method are: supranational rules in different equally authentic languages; treaties only allow for minor modifications so that identical rules exist in all contracting states, and because of the preparation of the rules as supranational compromises by international working groups, the final convention can easily, dogmatically and politically be accepted by the contracting states. However, there are also disadvantages, namely: huge timing and costs to draft an internationally acceptable convention and requires diplomatic conferences with all the contracting states participating to introduce necessary changes because of its status as a treaty; the necessity of compromises between different legal regimes does not necessarily favour the most suitable legal rules but rather those that are politically acceptable among the contracting states. See F Diedrich 'A Law of the Internet? Attempts to Regulate Electronic Commerce' (2000) 3 The Journal of Information, Law and Technology, para. 3.1, available at <http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/2000_3/diedrich>, accessed 10 August 2009.

169. Advantages of a model law on a global level are mainly its speed and its flexibility in the drafting process. The greatest disadvantage of model laws is that they do not put aside superfluous conflict of laws rules. In the case of UCC, one has always to use conflict of laws rules to find out the correct national or state version of the model law. See Diedrich (n. 168) para. 3.2.

170. Berthold Goldman defined Lex Mercatoria as "a set of general principles and customary rules spontaneously referred to or elaborated in the framework of international trade, without reference to a particular national system of law." The main characteristics of Lex Mercatoria are the "legal-extra" (not real law but supplemental to substantive law) and "transnational" (developed and accepted by international commercial community) nature. A detailed discussion of Lex Mercatoria can be found in Monica Kilian, 'CISG and the Problem with Common Law Jurisdictions' (2001) 10 J. Transnational Law & Policy 217, 219-26. See also F. Ferrari, 'Uniform Interpretation of The 1980 Uniform Sales Law' (1994-95) 24 Georgia Journal of International and Comparative Law 183-228.

171. "Mixed forms" in the context of unification and development of laws means that the codes are developed by both the international commercial community (Lex Mercatoria) and the legal scholars (who normally draft and propose substantive law), as seen in the case of UNIDROIT Principles. See further discussion of non-legislative means of unification of law in M.J. Bonell, 'Unification of Law by Non-Legislative Means: The UNIDROIT Draft Principles for International Commercial Contracts' (1992) 40 The American Journal of Comparative Law, 617-633, 617-8.

172. Ferrari, (n. 170) 184. On Lex Mercatoria see note 170 and accompanying text.

173. M. J. Bonell (n. 3) 413.

174. See Gyula Eśrsi (n. 153) 311-2. According to Gyula Eśrsi, the reason for segregating the two issues of general rights and duties of parties, and the formation of contract is to give States the possibility for separate ratification of the conventions. The problem with this approach is that at some points these issues are closely intertwined and separating them may not be a wise idea. By this reason the CISG drafters decided to put a single text for the formation of contract and the obligations and rights of parties.

175. The whole project ceased in 1939 due to the Second World War and restarted in 1951 with a diplomatic conference organised by the Netherlands on the UNIDROIT drafting work. A special committee was appointed to continue the work and the revised draft was introduced in 1956. In 1963 the modified draft was completed based on comments/feedback of the interested governments. In addition, a new commission was appointed to prepare uniform rules on the formation of contracts of sales (ULF), which completed its draft in 1958 as the basis for discussion at the 1964 Hague diplomatic conference.

176. In full, the Convention relating to a Uniform Law on the International Sale of Goods (ULIS, 1964) and The Convention relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF, 1964).

177. Currently only 13 countries have signed the Conventions (Belgium, France, Gambia, Germany, Greece, Holy See, Hungary, Israel, Italy, Luxembourg, Netherlands, San Marino, United Kingdom), in which France, Greece, Holy See, Hungary, Israel have not ratified. See UNIDROIT, Status of UNIDROIT Conventions, available at <http://www.unidroit.org/english/implement/i-64ulis.pdf> and <http://www.unidroit.org/english/implement/i-64ulf.pdf> accessed on 10 August 2009. However, the significance of ULF and ULIS has been very limited, as CISG has successfully superseded these texts. Article 99(3) CISG provided that a state which ratifies, accepts, approves, or accedes to the CISG and is party to either or both the Hague Conventions shall at the same time denounce either or both of them.

178. Article 7 of ULF reads as follows:

"1. An acceptance containing additions, limitations or other modifications shall be a rejection of the offer and shall constitute a counter-offer.

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 shall constitute an acceptance unless the offeror promptly objects to the discrepancy; if he does not so object, the terms of the contract shall be the terms of the offer with the modifications contained in the acceptance."

Para. 1 of this article was a basic statement of traditional offer-and-acceptance rule, where para. 2 was clearly inspired by a provision in Scandinavian legislation in an attempt to release the harshness of such rule. These provisions were incorporated into CISG by its drafters with minor amendments and addition of new elements, which will be discussed in depth in the next section.

179. As per G.A. Res., the Commission's main duty is to "further the progressive harmonisation and unification of the international trade law by preparing or promoting the adoption of new international conventions, model laws and uniform laws and promoting the codification and wider acceptance of international trade terms, provisions, customs and practices." See Muna Ndulo, 'The Vienna Sales Convention 1980 and the Hague Uniform Laws on International Sale of Goods 1964: A Comparative Analysis' (1989) 38 The International and Comparative Law Quarterly, 1-25, 3.

180. There are four main reasons in objection of existing texts of ULIS and ULF and proposal for development and adoption of a completely new text: (1) The Hague Conference was only attended by 28 states with very few socialist and developing representatives, as a result, it was believed that it favoured the sellers who are from industrialised nations; (2) ULIS used abstract and complex concepts which could easily result in ambiguity and error; (3) ULIS pointed more to external trade between common boundary nations, rather than international trade involving overseas shipments; and (4) the scope of application was too broad, as it was to apply regardless of conflict rules. See Muna Ndulo (n. 179) 3-4.

181. See for reference note 174 and accompanying text.

182. At present CISG has 74 Contracting States, including Argentina, Armenia, Australia, Austria, Belarus, Belgium, Bosnia & Herzegovina, Bulgaria, Burundi, Canada, Chile, China, Colombia, Croatia, Cuba, Cyprus, Czech Republic, Denmark, Ecuador, Egypt, El Salvador, Estonia, Finland, France, Gabon, Georgia, Germany, Ghana, Greece, Guinea, Honduras, Hungary, Iceland, Iraq, Israel, Italy, Japan, Kyrgyzstan, Latvia, Lebanon, Lesotho Liberia Lithuania Luxembourg Macedonia Mauritania Mexico Moldova Mongolia Montenegro, Netherlands, New Zealand, Norway, Paraguay, Peru, Poland, Republic of Korea, Romania, Russian Federation, Saint Vincent and the Grenadines, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Syrian Arab Republic, Uganda, Ukraine, Uruguay, USA, Uzbekistan, Venezuela, Zambia. See CISG contracting states, available at <http://www.unilex.info/dynasite.cfm?dssid=2376&dsmid=13351>, accessed 10 Aug., 2009.

183. As Viscasillas (n. 12, at 97-8) commented, the wide acceptance of CISG by nations with vastly social, legal and economic systems demonstrated the considerable success obtained by it. A quick research by Schwenzer & Hachem ('The CISG-Successes and Pitfalls' (2009) 57 Am. J. Comp. L. 457-478, 458) indicated that approximately 2,500 published court decisions and arbitral awards, an abundant number of scholarly writings and numerous conferences show the prominent role of CISG in practice, legal academia, and legal education. In addition, 9 out of 10 world leading trade nations are member-States of CISG (except UK).

184. See generally Farnsworth, in Bianca & Bonell, Commentary on the International Sales Law (Giuffr, Milan 1987) 175-184, in which he commented that the article became a tug-of-war between traditionalists, who preferred simply to state the rule of offer-and-acceptance in para. 1; and the reformers, who sought to depart from that harsh rule.

185. Article 13's draft wording (corresponding to Article 19 CISG) was based on Art. 7 of ULF (see note 178 for full text of Art. 7 ULF) (emphasis of differences added):

"1. A reply to an offer containing additions, limitations or other modifications is a rejection of the offer and shall constitute a counter-offer.

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 promptly objects to the discrepancy without 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."

The inclusion of "reply to an offer" in para. 1 by the drafters is "to ensure that a reply which merely made inquiries or suggested the possibility of additional or different terms did not constitute a counter-offer." The final text of Art. 19 added "which purports to be and acceptance" after "a reply to an offer" for further clarity. See UNCITRAL Yearbook, IX (1978), 42, quoted in Farnsworth (n. 184) 175).

186. In summary, the traditionalists wished that para. 2 is only limited to "mere differences in wording, grammatical changes, typographical errors or insignificant matters, such as the specifications of details which are implicit in the offer. On the contrary, the reformers believed that such para. should have a broader scope of application than to mere matters of wording and alike (similar to the approach under the US' UCC). Another dispute was a proposal of the Secretariat during the eighth session to include a para. similar to that of para. 2, i.e. after the conclusion of a contract of sale, if one party sent a confirmation modifying the terms of the contract, any such terms that did not materially alter the contract would automatically become part of the contract unless objected to by the recipient of the confirmation. This proposal was opposed by the traditionalists and removed from agenda at its ninth session. See UNCITRAL Yearbook, IX (1978) 43, quoted in Farnsworth (n. 184) 175.

187. François Vergne (n. 37) 235.

188. In fact, most socialist countries, including Czechoslovakia, Yugoslavia and German Democratic Republic, concerned that a reply with additional or different terms should never be considered an acceptance, the terms "materially alter" were too vague, and the draft did not solve the battle of the forms. The United States, on the contrary, stressed the importance to agree that commercial transactions should go ahead without a formal conclusion of a contract by offer and acceptance. See Francois Vergne (n. 37) 236-7. See also PACE, 'Legislative history of CISG article 19: Match-up with 1978 Draft to assess relevance of Secretariat Comentary', available at <http://www.cisg.law.pace.edu/cisg/text/matchup/matchup-d-19.html> accessed 10 Aug. 2009.

189. The Belgian delegation proposed during the Vienna Convention a text directly address the battle of forms problem, which read: "When the offeror and the offeree have expressly (or implicitly) referred in the course of negotiations to general conditions the terms of which are mutually exclusive the conflict clauses should be considered not to form an integral part of the contract." (Official Records (A/CONF.97/C.1/SR.10, in A/CONF.97/19 at 288-9). The proposal, which is based on the knocked-out rule, was rejected on the same basis as the UCC approach proposal.

190. In the ninth session, the Commission approved the addition of para. 3 (Art. 17, later became Art. 19) as follows (emphasis 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 they are acceptable to the offeror." (Yearbook, IX (1978) 43).

The inclusion of the last part in para. 3 (from 'unless...') was proposed by the French delegation, in an attempt to weaken the mirror image rule by limiting the terms deemed material under para. 3. In the Vienna Conference, both para. 2 and 3 were debated extensively. Though they failed to delete para. 2, the traditionalists finally succeeded in deleting the last part of para. 3 from 'unless ...' This reflected the proposition of Mr. Stalev (Bulgaria's reperesentative), who explained that "[para. 1 of the Article] established a fundamental rule and a rational principle. However, that fundamental rule was almost nullified by the exceptions given in para. 2 and 3... That solution sacrificed the fundamental considerations of international trade relations - certainty and security - to less important considerations, such as the flexibility of rules and equity in individual cases. It also jeopardised the interests of less experienced enterprises, which might not refuse an offer in good time. His delegation therefore proposed that para. 2 and 3 should be deleted and, if that proposal were not accepted, recommend that at least part of para. 3 from'unless...' should be deleted." (Official Records, p. 284). According to Francois Vergne (n. 37, at 237), the rationale of the socialist drafters for security of contractual transactions was the Council for Mutual Economic Assistance (CMEA) of which they are member-countries. Under CMEA the General Conditions for the Delivery of Goods provided that acceptance of an offer must be unconditional. Thus the socialist representatives tried their best to drive the CISG as close to their own set of rules as possible.

191. See discussion of Article 19 - CISG in the next section, where it shows that CISG did not answer all the questions in different scenarios of the battle of form problems.

192. Unlike ULF and CISG, the UNIDROIT Principles provide a specific provision to regulate the battle of forms problem. See below para.

193. The original project name in French version was "essai d'unification portant sur la partie generale des contrats (en vue d'une Codification progressive du droit des obligations 'ex contractu')," which was taken into the Work Program of UNIDROIT in 1971. The title of "Progressive Codification of International Trade Law was later renamed "Preparation of Principles for International Contracts." See M.J. Bonell (n. 171) 618.

194. This steering committee consists of Professors David, Schmitthoff, and Popescu, who represent respectively the civil law systems, common law systems and the law systems of the socialist countries.

195. The committee set out the general subjects of the future code: (a) formation of contracts; (b) interpretation of contracts; (c) conditions of validity; (d) performance of contracts; (e) non-performance of contracts; (f) damages; (g) unjust enrichment and restitution; and (h) proof. See M. J. Bonell (n. 3) 415.

196. In 2004 the Governing Council of UNIDROIT adopted the new edition of the UNIDROIT Principles. As compared to the 1994 edition, the second edition contains 5 additional chapters as well as an expanded Preamble and new provisions on Inconsistent Behaviour and on Release by Agreement, and some revisions to meet the needs of electronic contracting. A significant recognition of the important role the UNIDROIT Principles play in international contract and arbitration practice may be seen in the fact that UNCITRAL at its fortieth session (2007) formally endorsed the 2004 UNIDROIT Principles of International Commercial Contracts and commended their use for their intended purposes. See UNIDROIT Principles of International Commercial Contracts (2004), available at <http://www.unidroit.org/english/principles/contracts/main.htm>, accessed 10 August 2009.

197. The term used by Ulrich Magnus, who suggested that the agreement between CISG and UNIDROIT Principles is not a surprise. See Viscasillas (n. 12) 103.

198. See for reference note 171 and accompanying text. In fact, the Working Group drafting the Principles consists of leading experts in the field of comparative law and international trade law, most of them are academic, some are judges or civil servants, but neither of them expresses the views of their governments. As an eminent Swiss arbitrator correctly put it, "[t]he UNIDROIT Principles, are likely to find a quite universal acceptance, since they have been worked out [...] with the contribution of over seventy well known specialists from all major areas and legal systems of the world, including formerly socialist countries, Latin America countries and countries of the Far East." See M. J. Bonell, 'The UNIDROIT Principles in Practice - The Experience of the First Two Years' (1997) Uniform Law Review 34-45, 43.

199. The non-legislative character of UNIDROIT Principles makes it much easier than a convention (such as CISG) to be finalised and ready for application. Only in the first 2 years after UNIDROIT Principles were published, their success in practice had already gone beyond all expectations. Though there had been three cases reportedly decided solely by reference to the UNIDROIT Principles, the Principles were being referred to in a growing number of cases in judicial proceeding, interpreting domestic law and international uniform law, as well as a guide in contract negotiation or even chosen by the parties as the law governing their contracts. The Principles were also served as an important source for codifications of national and international legislation and were the subject of lectures and study by a large number of universities and law schools in the world. See generally M. J. Bonell (n. 198). As the most updated Unilex statistics by 2008, UNIDROIT Principles has been referred to in at least 213 cases. The actual number (including those unreported) might be considerably more. See Unilex collection <http://www.unilex.info/dynasite.cfm?dssid=2377&dsmid=14311> accessed 10 August 2009.

200. The question as to should the Europeanisation be done "from above" (so that the European Parliament or the State Legislatures enact a Civil Code); or should it develop "from below" (the spirit of the people and the endeavours of the doctors being the engines that propels it) has been discussed by commentators represented by Professors Thibaut and Savigny in Germany since the early nineteenth century. According to those supporting Savigny's idea, "a European Contract Law should grow organically and slowly in the people, led by the academics and supplemented by the business community when it feels the need. In their international organisations the business people should establish common customs and practices. This new European law should be taught to the students who, when they become judges, will apply it in their decisions." They wish the new European law to "creep" onto the minds of the Europeans, which idea is akin to lex mercatoria philosophy under the PECL. See O. Lando (n. 167) 360-1.

201. The Commission on European Contract Law (Lando Commission) is a self-appointed commission, supported by the Legal Services of the European Commission from its establishment until 1994. It started to work out the PECL in 1980. In 1995 Part 1 of the Principles dealing with performance, non-performance and remedies was published. A new edition of the Principles, which includes a revised version of Part 1 treats in addition the formation, validity, interpretation and contents of contracts and the authority of an agent to bind his principal, was published in 1999. In 2003 the Commission published Part III of PECL regarding Plurality of parties, Assignment of Claims, Substitution of New Debtor: Transfer of Contract, Set-Off, Prescription, Illegality, Conditions, and Capitalisation of Interest. See generally Principles of European Contract Law website <http://frontpage.cbs.dk/law/commission_on_european_contract_law/index.html> accessed 10 Aug. 2009.

202. Lando (n. 167) 363.

203. François Vergne (n. 37) 253.

204. See supra ch. 2, s. I regarding the drafting process of CISG on the battle of forms.

205. See explanation infra where it is submitted that the Convention did not provide any specific provisions in dealing with the standard forms and disputes on them. The solution by CISG can only be implied through the principles provided in Article 19, whose relevance of application to the battle of forms is itself debatable.

206. Art. 14(1) CISG provided that: "A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price." Then Art. 18(1) provided that: "A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance. Silence or inactivity does not in itself amount to acceptance." This implies that the standard forms when attached to an offer or acceptance will serve as definite part of such declaration.

207. Art. 8(3) CISG provided that: "In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties." Then Art. 9(1) elaborates that "The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves." So previous negotiations and practices by parties may be deemed part of their agreed contract.

208. This is provided in Article 9.2 CISG: "The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned."

209. Article 7 of CISG governs the ways in which courts must interpret the CISG's provisions. It emphasises the international character of the CISG and relegates domestic law to merely gap-filling function (emphasis added):

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

(2) Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law."

Four general principles of interpretation can be derived from this Article: (1) Consideration of its international character; (2) Consideration of the need for application uniformity; (3) observation of good faith; and (4) the use of CISG's implicit general principles to settle questions not explicitly covered under the Convention.

210. Von Huber (cited in Viscasillas (n. 12, at 138)) suggested that Art. 17 in CISG draft (then became Art. 19) should not be applied, as the question of validity of contract should be decided by applicable domestic law as provided by Art. 4 of CISG. Similarly Joseph M. Lookofsky ('Loose Ends and Contorts in International Sales: Problems in the Harmonization of Private Law Rules' (1991) 39 The American Journal of Comparative Law, 403-416, 410) when discussing a battle of forms case (The North Sea Cranes) suggested that CISG is not applicable as it is not concerned with validity. Francois Vergne (n. 37, at 257) suggested that the insufficiency of CISG has led the courts to the only alternative, which is to refer to a domestic solution. On the other hand, Jan Hellner (n. 158, at 360) submitted that the offer-and-acceptance rules under CISG "are not well suited to standard form contracts, of which there are many different kinds." "The Convention lacks rules for the introduction of standard terms into contracts, and it does not solve the problem of the "battle of forms." Therefore Hellner suggested that Article 19 is only applicable for cases in which the disagreement between the parties becomes apparent before performance has begun; but not for the battle of forms. Peter Schlechtriem ('Uniform Sales Law - The Experience with Uniform Sales Laws in the Federal Republic of Germany' (1991/92) Juridisk Tidskrift 1-28, 19) suggested that Art. 19 is "a provision ill-suited for the battle of forms problem."

211. Article 18 CISG regulates acceptance of offer by conduct mainly similar to the common law traditional last shot rule. However it is far from clear on what terms the contract has been formed. The provision also seems to conflict with Article 8(2) which provided that ambiguities between forms in the face of performance "are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances." See infra s. 3 regarding terms of contract formulated under CISG.

212. These include Van Der Velden, Moccia, Mario Frigo, etc. See Viscasillas (n. 12) 141.

213. Some US courts referred to this term in using the UCC to interpret CISG, which is not relevant in the author's opinion. See Calzaturificio Claudia s.n.c. v. Olivieri Footwear, Ltd., 96 Civ. 8052, 13-15 (HB)(THK) (S.D.N.Y. 1998); Delchi Carrier S.p.A. v. Rotorex Corp., 71 F.3d 1024, 1027-28 (2d Cir. 1995).

214. In this regard, the author highly agrees with Franco Ferrari (n. 170, at 199-201) who correctly pointed out:

"To have regard for the Convention's international character means that the interpreter should not apply domestic law to solve interpretive problems, i.e., he should not read the Convention through the lenses of domestic law, but should project the interpretive problems against an international background... [I]t is irrelevant whether the terms or concepts employed in the Convention correspond to terms which within a domestic legal system have a determined meaning, since the expressions employed in the Convention were intended to be neutral. Furthermore, one must not forget that the choice of one term rather than another is the result of a compromise and does not necessarily correspond to the reception of a concept peculiar to specific domestic law: the interpreter has to be aware of so-called faux-amis."

215. See various suggestions and proposals of the delegations attending the drafting sessions of CISG and the Vienna Diplomatic Conference 1980 in supra ch. 2 s. I, notes 184-190 and accompanying text. From a commentary by Gyula Eśrsi (n. 153, 322-3) on the compromises among the member-states during the negotiation period of CISG we also see the clear intention of the negotiators to apply Art. 19 for the battle of forms cases.

216. See e.g. argument of Viscasillas (n. 12, at 140) that "[the proposal of the Belgium delegation for addressing the battle of forms during the drafting of CISG] does not mean, as some scholars state, that the battle-of-the-forms is a gap in CISG. On the contrary, it shows that a different solution to the one in CISG art. 19 was proposed, without success." This argument, to the author, is quite logical and convincing.

217. See note 212 and accompanying text for comments preferring the exclusion of Article 19 in solving the battle of forms.

218. Under Article 18(3), 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, and the acceptance is effective at the moment the act is performed, provided that the act is performed within the period of time that the offeror has fixed for the validity of his offer (or a reasonable time if it is not fixed).

219. E.g. under s. 2-207(3) of UCC provided that "Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract." This definition is in fact much wider than the contract-by-conduct under Art. 18(3) of CISG which generally refers to dispatch of goods or payment of the price only.

220. This may be said as another flaw of CISG in the same way as the traditional mirror image rule. As the offeror (normally the seller) reserves the right to object minor different terms subsequent to sending the offer, he could take advantage over the offeree by choosing to continue or avoid the contract in a fluctuating market (as long as there has been no performance). The requirement of objection "without undue delay" may limit this unfairness to a certain extent, subject to further determination of the term "undue delay".

221. See e.g. Giesela Ruhl (n. 58) 196-7; Kevin Stemp (n. 10) 261; Christine Moccia, Note, 'The United Nations Convention on Contracts for the International Sale of Goods and the "Battle of the Forms"' (1989/1990) 13 Fordham Int'l L.J. 649, 659. Farnsworth (n. 184, at 179, 181-3) correctly pointed out the exception of para. 2 will rarely be applicable because of para. 3, which makes Article 19 adhere so closely to the traditional rule and gives the offeror power to speculate on a fluctuating market.

222. Andre Corterier (n. 23) 211. Having similar idea, Professor Henning Stahl ('Standard Business Conditions in Germany under the Vienna Convention' (1993) Comp. Y.B. Intl'l Bus., 381) suggested that a "tacit derogation" of Art. 19 CISG might be derived from Art. 9 which provided that "the parties are considered... to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned."

223. It is notable that the interpretation of Article 6 itself is highly controversial, as to the question that such derogation must be expressed (as submitted by Professor Isaak Dore and Herbert M. Sampson III) or can be implied (as proposed by Professor Bradley J. Richards and James E. DeFranco). See e.g. Heidi Stanton, 'How to Be or Not to Be: The United Nations Convention on Contracts for the International Sale of Goods, Article 6' (1996) 4 Cardozo Journal of International & Comparative Law 423-449, available at <http://www.cisg.law.pace.edu/cisg/biblio/stanton.html#iii> accessed 10 Aug 2009.

224. For example, if we assume that Article 6 is to be interpreted that derogation of any part of CISG must be expressed, Corterier's interpretation of Article 19(3) is clearly groundless.

225. See AG Kehl, 3 C 925/93, 6 Oct. 1995 (Knitware case) (F.R.G.); BGH 9 Jan. 2002 (Powdered milk case) available at PACE. See discussion of these cases in infra ch. 2, s. II(4).

226. If the divergent terms are considered material under CISG, or if a party keeps objecting the other party's form (orally or in written) even on minor terms then there is no contract between the parties (Art. 19).

227. See e.g. Paul C. Blodgett, 'The U.N. Convention on the Sale of Goods and the "Battle of the Forms"' (1989) 18 Colorado Lawyer 423-430, 425; Vergne (n. 37) 256; Charles Sukurs (n. 12) 1495-6; Joseph Lookofsky, 'The 1980 United Nations Convention on Contracts for the International Sale of Goods' in J. Herbots & R. Blanpain eds, International Encyclopaedia of Laws - Contracts, Suppl. 29 (Kluwer Law International, The Hague 2000) 1-192, 73; Honnold (n. 35) 187-91.

228. Article 19 is limited only to the issues of contract formation and not to modifications of existing contracts. Therefore the accepted view is that where a contract has been validly concluded based on the parties performance, one party should not change a material term in the contract without acceptance by the other party (Art. 29(1)).

229. See Viscasillas (n. 12) 145-6; Christine Moccia (n. 221) 659; Farnsworth (n. 184) 178-81.

230. Article 14(1) provided that: "A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price."

231. This Article provided that a contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of CISG.

232. Regarding the time of acceptance by performance, Article 18(3) provided that (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 subsection (2). This may lead to some unjust outcome: the offeree triggers the contract formation by acting a conduct of performance at the offeror's surprise. Professor Honnold (n. 35, at 186-88) tried to overcome this injustice by interpreting that Art. 18(3) must be read in conjunction with the more general provision in subsection (2) that the indication of assent reach the offeror within a reasonable time under the circumstances of the transaction. Thus, he suggested that performance of an act should not create a contract under Art. 18(3) unless the offeror receives notice within a reasonable time that the act has been performed. This approach is not justifiable, given the clear and straight forward terms "without notice to the offeror."

233. Honnold (n. 35) 195.

234. Christine Moccia (n. 221) 662.

235. This is actually another version of the knock-out rule. See Viscasillas (n. 12) 143.

236. It should be reminded here that CISG is primarily designed to offer a substantive uniform law, rather than a harmonised solution by way of choice of laws. See discussion on these two types of law uniform in supra ch. 1, s. III(2).

237. Art. 1 of CISG provided that it applies to contracts of sale of goods between parties whose places of business are in different States: (a) when the States are Contracting States; or (b) when the rules of private international law lead to the application of the law of a Contracting State. Furthermore, neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this Convention.

238. Having the largest common law system UK is not yet a member of CISG. Other common law countries, such as Canada or Australia, have extremely few CISG cases related to battle of forms problem. Therefore this dissertation will only discuss the application of CISG in the US, which is the biggest common law member of the CISG.

239. See supra ch. 1, s.II.1(c) for reference. Within the US the application of UCC by different states is far from "uniform." See Kevin Stemp (n. 10) 244.

240. 13 years after CISG came into force until 2001, there were only 21 US courts cases applying CISG, which were reported in UNILEX. Since 2002, the number of cases increased quickly. During 2002-2009 there have been 43 additional cases which reportedly applied CISG by the courts. There might be more cases unreported to UNILEX, but this paper will base on UNILEX which is currently the most comprehensive database of CISG cases.

241. John Felemegas, 'The United Nations Convention on Contracts for the International Sale of Goods: Article 7 and Uniform Interpretation' (2000-2001) in Pace Review of the Convention on Contracts for the International Sale of Goods (CISG), Kluwer Law International 115-265, available at <http://www.cisg.law.pace.edu/cisg/biblio/felemegas.html> accessed 10 Aug 2009, ch.2, s.2, where Felemegas cited and analysed various cases in the US courts (Beijing Metals & Minerals Import/Export Corp. v. American Business Center. Inc., 993 F.2d 1178 (5th Cir. 1993), (CLOUT no. 24); Delchi Carrier, SpA v. Rotorex Corp., No 88-CV-1078, 1994 WL 495787 (N.D.N.Y. Sept. 9, 1994); affirm'd. in part by 71 F.3d 1024 (2d Cir. 1995); MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova D'Agostino S.p.A., 144 F.3d 1384 (11th Cir. 1998)) where the interpretation of the CISG in light of its true "international character and the need to promote uniformity" was not recognised and appreciated by the US courts.

242. Filanto S.p.A. v. Chilewich International Corp. (1992) 91 Civ. 3253 (CLB) U.S. District Court, S.D., New York.

243. The purchase order, in fact, incorporated the terms of a master agreement between Chilewich and a Russian buyer, which agreement requires arbitration in Moscow. See n. 242.

244. Chilewich, for its part, claims never to have received this acknowledgement by Filanto.

245. The court justified that at the time of the conclusion of the contract the parties had their places of business in contracting States (USA and Italy), therefore, Art. 1(1)(a) CISG will apply.

246. The court took into account the previous practices of the parties (Art. 8(3) CISG) and held that due to the extensive course of prior dealing the seller was under a duty to alert the buyer in a timely fashion of its objection to incorporating the arbitration clause. This all the more so since the seller knew that the buyer had already commenced performance by opening the letter of credit in its favor. The Court disregarded the seller's argument that in its reply to the buyer's original offer five months later it expressly objected to the incorporation of the arbitration agreement (which was not considered timely), thereby rendering its acceptance a counter-offer (Art. 19(3) CISG).

247. Filanto started performance by shipping part of the goods ordered constituted an indication of its intention to accept Chilewich's original offer (Art. 18(1) CISG). Equally, Filanto's subsequent reliance on the master agreement which it had previously excluded, is yet another.

248. Notably, the court in this case noted that there was "little to no US case law on the CISG," which has been cited countless times in other US later cases as an excuse for the application of UCC and US case law, rather than CISG international case law.

249. Magellan International Corporation v. Salzgitter Handel GMBH (1999) 99 C 5153 U.S. District Court of Illinois.

250. Those include seller acting as middle-man between the U.S. buyer and the Ukrainian manufacturer, quantity of the goods, amount and method of payment, instructions for manufacturing.

251. According to the facts alleged by Plaintiff, the parties had agreed that either the Illinois version of the UCC or CISG would apply. The Court further considered the fact that both parties had their places of business in Contracting States and did not expressly opt out of CISG, therefore, Art. 1(1)(a) CISG will trigger the application of CISG.

252. This order constitutes of a determined quantity of steel, with indication of price, which based on Art. 14(1) and Art. 8(2) CISG would amount to an offer.

253. See Charles Sukurs (n. 12, at 1498) who commented that "If the CISG made any attempt to mitigate the harshness of the last shot doctrine in contracts-by-conduct, that buried attempt was lost on the court in Magellan."

254. Huber, cited by Kaia Wildner (n. 111) 12.

255. Germany has so far contributed 200 cases out of 730 total cases which referred to CISG (UNILEX).

256. In an early case in 1993 (Oberlandesgericht [OLG] Saarbrucken [Provincial Court of Appeal] Jan. 13, 1993, 1 U 69/92 (F.R.G.) (available at PACE) the German court applied strictly CISG last shot rule with the reasoning that "When forms are used, the rules of the Convention also apply; consequently, any variation of those forms would be a counter-offer. Such a counter-offer would most certainly be accepted through some type of act of performance." See J. M. Klotz, P. J. Mazzacano & A. I. Pribetic, 'All Quiet on the CISG Front: Guiliani v. Invar Manufacturing, the Battle of the Forms, and the Elusive Concept of Terminus Fixus' (2008) 46 C.B.L.J. 430, available at <http://ssrn.com/abstract=1127850>, accessed 10 Aug 2009. The general last shot rule under Art. 18 and 19 of CISG was also applied in another case in 1998 (Oberlandesgericht [OLG] Mnchen Mar. 11, 1998, 7 U 4427/97 (F.R.G.) (available at PACE) where it was held that by performing buyer accepted standard terms that differed from its offer.

257. AG Kehl, 3 C 925/93, 6 Oct. 1995 (Knitware case) (F.R.G.)

258. Under Article 19 CISG the forum selection clause is a material term and the acceptance containing such difference will make it a counter-offer.

259. The court elaborated that the intention of the parties to be bound by the contract between them meant that the parties had impliedly derogated from Art. 19(1) CISG

260. This would be determined in compliance with German private international law rules which referred to Italian law.

261. BGH 9 Jan. 2002 (Powdered milk case). For a detailed analysis of this case see generally Kaia Wildner (n. 111); Edoardo Ferrante, '"Battle of Forms" and the 1980 United Nations Convention on Contracts for the International Sale of Goods (CISG) - A note on the BGH (German Supreme Court) decision of 9 January 2002' (2003) 8 Unif. L. Rev. N.S. 976; Maria del Pilar Perales Viscasillas, 'Battle of the Forms and the Burden of Proof: An Analysis of BGH 9 January 2002' (2002) 6 Vindobona Journal of International Commercial Law and Arbitration, No. 2, 217-228.

262. In this regard applying both theories of knock-out rule or last-shot rule will lead to the same result. Commentators have different ideas on this Court decision. Some suggested its practical effect was the first shot rule (Viscasillas, n. 261, at 217-28); some believed the decision was neutral to both knock-out and last shot rule (Edoardo Ferrante, n. 261, at 979); and others thought it might be a ground breaking decision for the knock-out rule as prevailing theory (Kaia Wildner, n. 111, at 27).

263. According to the Court, by their performance, it is assumed that they considered the lack of agreement on all the terms not essential and an agreement was formed upon the dickered terms.

264. In basing its judgment on good faith principle, the Court referred to the principle of good faith in Art. 7(1) of CISG, though CISG does not give any definition of "good faith."

265. The Court also analysed the last shot doctrine and concluded that even if the last shot doctrine is applied in the case at hand, the result would be exactly the same.

266. Landgericht Baden-Baden 4 O 113/90, 14 Aug. 1991 (F.R.G.) available at UNILEX.

267. According to commentators this provision should clearly mean a material term under literal wording of the Convention. See Larry A. DiMatteo et. al., 'The Interpretive Turn in International Sales Law: An Analysis of Fifteen Years of CISG Jurisprudence' (2004) 34 Northwestern Journal of International Law and Business 299-440, 355.

268. CASS, Cour de Cassation, J 96-11.984, 16 Jul. 1998 (Fr.), available at PACE.

269. The Court stated that a reply to an offer which purported to be an acceptance but which contained different terms that materially altered the terms of the offer, such as a different stipulation regarding the settlement of disputes, as provided for in article 19(3), did not amount to acceptance. The jurisdiction clause invoked by the buyer was therefore inapplicable.

270. See also Appellate Court (Court of Appeal) Paris, 95-018179, 13 Dec. 1995 (ISEA Industrie v. Lu) where the disputed forum clauses were held inapplicable and were knocked-out.

271. Oberster Gerichtshof, 7 Ob 590/90, 7 June 1990, available at PACE. This case involves the parties using their own standard terms, which contained conflicting jurisdiction clauses. The Court of Appeal held that neither set of standard terms had become part of the contract because no party had sufficiently demonstrated that it was only willing to conclude a contract on the basis of its standard terms. The use of contrary standard terms, which had not been contested by either party at the time the contract was concluded, would thus lead to the assumption that the parties intended to conclude the contract, irrespective of the inclusion of any standard terms. According to § 36 IPRG [Austrian Conflict of Laws], German law was hence to be applied.

272. Oberlandesgericht [Appellate Court] Linz 23 Mar. 2005 (Conveyor band case), available at PACE.

273. The court held that a seller's order confirmation, which forms the last declaration in terms of Art. 19(1) CISG, qualifies as a counter-offer. The fact that the buyer has impliedly accepted this offer by performance would cause the incorporation of the seller's standard terms.

274. Gerechtshof's Hertogenbosch, ICT GmbH v. Princen Automatisiering Oss BV, 770/95/HE 19 Nov. 1996. The case involved a Dutch seller and a German buyer having an oral agreement for the sale of computer software. The buyer later confirmed the content of the agreement by written; containing a forum selection clause in favor of a German Court. The seller confirmed the buyer's written order and declared that its own standard terms were applicable to the contract for all contractual terms not addressed to in the buyer's confirmation. A copy of the standard terms was then sent to the buyer, which received it without objection. After delivery the seller commenced an action to obtain payment in Dutch Court on the basis of a forum selection clause contained in the seller's standard terms. The buyer claimed that its own forum selection clause was applicable. The Court denied its jurisdiction to hear the case since it held that according to the CISG provisions on acceptance (Art. 18 CISG et seq.), the buyer's forum selection clause was applicable. In the Court's opinion by replying to the buyer's written confirmation of the agreement, the seller had expressly excluded the applicability of its own standard terms with regard to "all terms" conflicting with the ones stated in the buyer's confirmation. The result was that the seller had accepted the buyer's confirmation in its entirety, including the printed forum selection clause in favor of a German Court.

275. See Camara Nacional de Apelaciones en lo Comercial, Division C, 44.786, 15 Mar. 1991, available at PACE; Camara Nacional de Apelaciones en lo Comercial, Division E, 45.626, 14 Oct. 1993.

276. See Larry DiMatteo (n. 267) 354.

277. In Oberster Gerichtshof [Supreme Court], 2 Ob 58/97, 20 Mar. 1997 (available at PACE), The Supreme Court held that the alterations listed in article 19(3) CISG are not to be considered as altering the terms of the offer "materially" in the sense of article 19(2) CISG if, in the light of usages, the negotiations and the very circumstances of the case, they are not deemed essential. In particular, it was held that alterations merely in favour of the other party do not require an express acceptance.

278. Cour de Cassation [Supreme Court], 92-16.993, 4 January 1995 (Fauba France FDIS GC Electronique v. Fujitsu Mikroelectronik GmbH)

279. UNIDROIT Principles were firstly published in 1994. In 2004 a later version was published, where the numbering was revised to reflect the revisions and additions of new content. For avoidance of ambiguity this paper will only use the numbering of UNIDROIT Principles version 2004.

280. Article 2.1.19(a) provided the rules to apply UNIDROIT Principles in dealing with standard form contracts: "the general rules on formation apply, subject to Articles 2.1.20 - 2.1.22 [regarding standard terms and the battle of forms]." Article 2.1.19(b) gave definition of standard terms, which are "provisions which are prepared in advance for general and repeated use by one party and which are actually used without negotiation with the other party." These standard terms will be interpreted, considering their special nature and purpose, in accordance with the "reasonable expectations of the average users" of standard T&Cs (UNIDROIT Principles Art. 4.1 (Intention of the parties) cmt. 4, available at UNILEX).

281. Article 2.1.11 of UNIDROIT Principles (Modified Acceptance) corresponds almost perfectly to Article 19(1) and 19(2) of CISG. But this Article does not intentionally apply to the battle of forms problem, which is rather addressed by Article 2.1.22. In this regard, the drafters of UNIDROIT Principles had great efforts in utilizing the "gap-filling" function of the Principles as a source of "extra-law."

282. It is notable that if only one party uses standard terms then Art. 2.1.22 is not activated. The parties must instead look at general contract formation rules under Art. 2.1.11.

283. UNIDROIT Principles Art. 2.22, cmt. 3 illus. 2,3 (1994) (corresponding to Art. 2.1.22 UNIDROIT Principles 2004 ver.) explained that "What will in practice amount to such a "clear" indication cannot be stated in absolute terms but the inclusion of a clause of this kind in the standard terms themselves will not normally be sufficient since what is necessary is a specific declaration by the party concerned in its offer or acceptance." In compared to the knock-out rule under German and French laws, UNIDROIT Principles approach is much more innovative: under German law objection to the terms of the other party can be incorporated in the back-form terms; under French law the objection can even be implied from the introduction of (conflicting) standard terms themselves. It is submitted that these approaches are unfair, given the assumption that the parties are not much aware of the back form differences.

284. I.e. the terms of the contract are the terms of the offer with the modifications contained in the acceptance.

285. See Kevin Stemp (n. 10) 266; Viscasillas (n. 12) 134-5.

286. Art. 2.1.20 provided that: "No term contained in standard terms which is of such a character that the other party could not reasonably have expected it, is effective unless it has been expressly accepted by that party." However, the question as to whether before or at time of conclusion of contract buyer must be given opportunity to know content of seller's standard terms not expressly regulated in CISG is left open in UNIDROIT Principles.

287. UNIDROIT Principles Preamble 3rd sentence. On UNIDROIT Principles as Lex Mercatoria see Gesa Baron, Bonn/Edinburgh, 'Do the UNIDROIT Principles of International Commercial Contracts form a new lex mercatoria?' (PACE essay submission, June 1998), available at <http://www.cisg.law.pace.edu/cisg/biblio/baron.html> accessed 10 Aug 2009.

288. There are countless examples where UNIDROIT Principles are referred by courts and arbitral tribunals in filling the gaps of CISG and domestic laws. For more details of cases and commentaries regarding this, see PACE, 'General observations on use of the UNIDROIT Principles to help interpret the CISG' (PACE, Last updated June 30, 2009) available at <http://www.cisg.law.pace.edu/cisg/text/matchup/general-observations.html> access 10 Aug 2009. Hitherto there have been 213 cases reported in UNILEX which referred to UNIDROIT Principles as a source of the court/tribunal judgment, in which 65 cases are held by courts and 148 others are under arbitral tribunals.

289. See e.g. Kaia Wildner (n. 111, 13) who argued that it cannot be assumed that there is a gap in the CISG with regard to the battle of forms. Therefore the provisions in the UNIDROIT Principles cannot be used as a tool to find an appropriate solution for the battle of forms in international sales contract.

290. M. J. Bonell, 'The UNIDROIT Principles of International Commercial Contracts and CISG - Alternatives or Complementary Instruments?' (1996) 26 Uniform Law Review 26-39, 35.

291. Supreme Court of the Netherlands, C99/315HR, 13 July 2001 (Hardstaal Holding B.V. v. N.N.), available at UNILEX. This is a typical battle of forms case where both parties refer to its own standard terms. A dispute arose as to whether a valid contract has been concluded and if so which party's tandard terms, if any, should apply. In his judgment the Advocate General mentioned the "last shot" doctrine and the "knock out" doctrine and pointed out that the latter has been adopted by Article 2.1.22 of the UNIDROIT Principles. However, the Court finally adopted the first shot doctrine in accordance with Article 6:225 lid 3 BW (Dutch Civil Code) to conclude that the offeror's terms prevail.

292. See Cour d'appel de Grenoble 24 Jan. 1996 (Fr.) (Socit Harper Robinson v. Socit internationale de maintenance et de ralisations industrielles) This case involves the conflict between a carrier's standard term and a term in the parties' contract (front-form), available at UNILEX. With reference to Article 2.1.21 of UNIDROIT Principles, the Court decided that the reference made in the contract to the carrier's standard terms was invalid.

293. See e.g. Qu Lianji v. Guangzhou Baiyun Tianxiange Restaurant (2001) yunfaminchuzi 1430 (Guangzhou Baiyun District People's Court); Hof 'S-Hertogenbosch 16 Oct. 2002 (Netherlands), available at UNILEX. These cases referred to Article 2.1.20 of UNIDROIT Principles.

294. PECL Article 2:209: Conflicting General Conditions

(1) If the parties have reached agreement except that the offer and acceptance refer to conflicting general conditions of contract, a contract is nonetheless formed. The general conditions form part of the contract to the extent that they are common in substance.

(2) However, no contract is formed if one party:

(a) has indicated in advance, explicitly, and not by way of general conditions, that it does not intend to be bound by a contract on the basis of paragraph (1); or

(b) without delay, informs the other party that it does not intend to be bound by such contract.

(3) General conditions of contract are terms which have been formulated in advance for an indefinite number of contracts of a certain nature, and which have not been individually negotiated between the parties.

295. The following case could illustrate this difference:

"R orders from B specific equipment. Therefore he uses an order form. This form states among other non-standard provisions that he intends to contract on the sole basis of his 'standard terms for purchase' printed on the reverse side of the order form. B accepts this proposal by returning an acknowledgement of order to which his own standard terms are attached. Where the UNIDROIT Principles apply, R's non-standard provision would be understood as a rejection of the knock-out rule set out in the first part of Art. 2.1.22. A contract would be concluded and only R's general conditions would apply to it - to the extent that B, in his turn, would not react without undue delay. PECL lead one to suppose that R's statement results in the non-existence of the contract." (Art. 2:209 al 2, cited in Hondius & Mahe (n. 131) 273).

296. Ole Lando (n. 167) 363.

297. In 2001 The Commission on European Contract Law held a Communication to identify various options for public consideration, from (I) no action, (II) promoting the development of common contract law principles leading to greater convergence of national laws, (III) improving the quality of existing Community legislation (the acquis) to (IV) adopting new comprehensive legislation at Community level (e.g. in the form of an optional instrument). The outcome suggested that that there was no consensus about, and that it was difficult to assess, the magnitude of any problems caused by differences in national laws, as distinct from other aspects of cross-border transactions (such as language and/or cultural differences). Finally the Commission concluded that the way forward should be encompassed by options II and III ("from below" option). See generally European Union Committee, 'European Contract Law: The Draft Common Frame of Reference' (12th Report of Session 2008-09, 10 June 2009), available at <http://www.publications.parliament.uk/pa/ld200809/ldselect/ldeucom/95/95.pdf> accessed 10 Aug 2009, at 9-10.

298. PECL Article 1.101(1) provides that "These Principles are intended to be applied as general rules of contract law in the European Union."

299. In this regard, M. J. Bonell ('The UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law: Similar Rules for the Same Purposes?' (1996) 26 Uniform Law Review 229-246, 140-5) submitted that the duplication between these two sets of Principles is not the case. In fact UNIDROIT Principles and PECL are established on different purposes which do not compete with each other.

300. As PECL and UNIDROIT Principles offers quite similar solutions to the battle of forms problem, in this part the Principles shall mean either PECL or UNIDROIT Principles unless specifically mention each set of Principles.

301. Art. 2.1.22 of UNIDROIT Principles or Art. 2:209 of PECL.

302. As mentioned above (n. 300), the "Principles" mentioned singularly in this dissertation shall represent both UNIDROIT Principles and PECL.

303. For the overwhelming influence of CISG in international sales law see notes 182, 183 and accompanying text.

304. See Schwenzer & Hachem (n. 183, at 457) who commented that CISG is "the story of a worldwide success that everyone had hoped for but most probably did not expect."

305. In the context of the solution to the battle of forms problem, this unification means all the member-States shall apply a single solution offered under CISG as mandatory law (replacing applicable domestic law) when the specific requirements to apply the Convention is met.

306. See Ch. 2, section III where it is submitted that UNIDROIT Principles could not fill the gap of CISG in the battle of forms problem. In fact, though many courts prefer applying the knock-out rules, only in one case the court referred to UNIDROIT Principles when dealing with the battle of forms problem.

307. See e.g. Schwenzer & Hachem (n. 183, at 467) who admitted that the main criticism on CISG was its imprecision and vague terms, which is especially problematic to the common law countries; Rosett, 'The International Sales Convention: A Dissenting View' (1984) 18 INT'L LAW. 445, 446, who argued that principles of Article 7 regarding interpretation of CISG are too nebulous and undefined to provide any guidance; Steven Walt, 'Novelty and the Risks of Uniform Sales Law' (1999) 39 Va. J. Int'l Law 671, 676-83, who highlighted various interpretation problems in CISG; Franco Ferrari (n. 170, at 196-7) who highlighted the interpretation problem accentuated in CISG that "[e]very convention which does not constitute an exhaustive source of its subject, but regulates only certain issues of it excluding others, and which does not want to identify itself with any legal system, because it wants to conjugate with all, can easily give rise to problems concerning the precise meaning of its provisions and to problems concerning the necessity of filling the gaps in which an incomplete discipline will inevitably result."

308. See various debates on Article 19 in ch. 2, s. I.

309. See different propositions on the interpretation of the battle of form solution offerred by CISG in ch. 2, s.II(1). All these propositions of interpretation become possible due to the absence of clear and detailed provisions for the specific battle of forms problem as seen in the Principles, which wording is impossible to be reached under CISG. Moreover, the

310. Burt A. Leete, 'Contract Formation under the United Nations Convention on Contracts for the International Sale of Goods and the Uniform Commercial Code: Pitfalls for the Unwary' (1992) 6 Temple International and Comparative Law Journal 193-215. He explained that "an approach similar to the UCC, which plugs standard terms into a contract that has been reached through performance, with each party having submitted forms with differing terms, might be too difficult to obtain. It would require the CISG to contain many more terms, which would be difficult to agree upon because of the widely varying legal backgrounds of the participants."

311. A particular example which received an abundant number of scholarly criticisms is the silence of CISG on the terms of contract where the parties have perform a part of contract. See supra ch. 2, s. II(3).

312. Schwenzer & Hachem (n. 183) 469. In making such an assumption, it is however submitted that the uniform interpretation of the Convention would be the key factor determining its success or failure.

313. Christopher Sheaffer, 'The Failure of the United Nations Convention on Contracts for the International Sale of Goods and a Proposal for a New Uniform Global Code in International Sales Law' (2007) 15 Cardozo J. Int'l & Comp. L. 461, 462.

314. See content and principles provided by Article 7 - CISG in note 209 and accompanying text.

315. Kilian (n. 170) 226. See also Franco Ferrari (n. 170, 199) who connoted that Art. 7(1) CISG does not identify a method, but rather the goals of the Convention.

316 E.g. Christopher Sheaffer (n. 313, at 472) argued that even plain language of Article 7(1) invites multiple interpretation: it can be read as "regard is to be had to... the observance of good faith in international trade" (a standard of good faith is imposed directly on the parties); or "regard is to be had... to the need to promote... the observance of good faith in international trade" (i.e. to consider it as a general requirement to promote good faith in international trade, not only in an individual case).

317 See Felemegas (n. 241, ch. 2, s. 4, 5) for a very comprehensive discussion of this definition under English-common law and civil law regimes, as well as controversial qualitative definition of good faith under CISG.

318 As most commentators emphasised, the "domestic" problem is more serious with the common law member-States such as the US, Canada, Singapore, Australia and New Zealand. See generally Marlyse McQuillen, 'The Development of a Federal CISG Common Law in U.S. Courts: Patterns of Interpretation and Citation' (2007) 61 U. Miami L. Rev. 509-537, 510; Kilian (n. 170) 226; Joseph Lookofsky and Harry Flechtner, 'Nominating Manfred Forberich: The Worst CISG Decision in 25 Years?' (2005) 9 Vindobona J. of Int'l Comm. Law and Arb. 199-208; Rajeev Sharma, 'The United Nations Convention on Contracts for the International Sale of Goods: The Canadian Experience' (2005) 36 VUWLR 847-858; Mathias Reimann, "The CISG in the United States: Why It Has Been Neglected and Why Europeans Should Care" (2007) 71 Rabels Zeitschrift fr auslndisches und internationales Privatrecht 115-129; Genevive Saumier, 'International Sale Of Goods Law In Canada: Are We Missing The Boat?' (2007) 7 Can. Int'l Lawyer 1-8; Antonin I. Pribetic, 'An 'Unconventional Truth': Conflict of Laws Issues Arising Under the CISG' (2009) 1 Nordic Journal of Commercial Law 1-48, 8, available at <http://ssrn.com/abstract=1302962> accessed 10 Aug 2009; Edita Ubartaite, 'Application of the CISG in the United States' (2005) 7 Eur. J.L. Reform 277-302.

319. See Sukurs (n. 12) 1505. See also John E. Murray, 'The Neglect of CISG: A Workable Solution' (1998) 17 J. L. & Comm. 365-379.

320. Historically, for a long time, there has been dispute on the interpretation of the international conventions between the supporters of the "nationalistic thesis" (according to which "in virtue of national proceedings, the conventions transform themselves into domestic law and therefore their interpretation and integration must take place according to the interpretive techniques ... of the domestic system in which they are transplanted and will be applied,") and the supporters of the "autonomous thesis" (international conventions must be interpreted in an autonomous manner, without making reference to the meaning one generally attributes to certain expressions within the ambit of a determined system, because otherwise the result would not only be a lack of uniformity, but also the promotion of forum shopping.) In CISG, Article 7(1) specifically requires that the courts comply with an "autonomous interpretation." See Franco Ferrari (n. 170, 198-9).

321. As we have seen in Filanto and Magellan cases, the US courts never made reference to decisions of international courts, but instead stated that there was little or no case law in the US regarding CISG application. In this regard, Kilian (n. 170, at 233) commented that "the unwillingness of common law judges to apply CISG is due to the lack of precedence among common law jurisdictions applying CISG, simply because common law judges want to get their precedents in first."

322. The parodic term is used by Henning Lutz, 'The CISG and Common Law Courts: Is There Really a Problem?' (2004) 35 VUWLRev 28, 711, s.III(B)(1), available at <http://www.austlii.edu.au/nz/journals/VUWLRev/2004/28.html> accessed 10 Aug 2009.

323. See supra ch. 2, s. II(4)(b) discussing German-style interpretation of CISG (based on good faith principle) in Knitwear case and Powder milk case; supra ch. 2, s. II(4)(c) discussing CASS, Cour de Cassation, J 96-11.984, 16 Jul. 1998 (Fr.) and Oberster Gerichtshof, 7 Ob 590/90, 7 June 1990 where French and Austrian Supreme Court applied knock-out rule for CISG cases; but see Conveyor band case where Austrian Court of Appeal decided to apply last shot rule.

324. E.g. many courts disregarded the distinction between material and immaterial terms clearly specified in Article 19(2). See Fauba v. Fujitsu, Oberster Gerichtshof [Supreme Court], 2 Ob 58/97, 20 Mar. 1997, discussed supra ch. 2, s. II(4)(c).

325. See Camara Nacional de Apelaciones en lo Comercial, Division C, 44.786, 15 Mar. 1991; Camara Nacional de Apelaciones en lo Comercial, Division E, 45.626, 14 Oct. 1993 where Argentina courts believed that Article 4 of CISG excludes questions of validity, therefore, CISG should only be used for reference in a the battle of forms case.

326. There are many general cases that the courts in the common law member-States failed to refer to CISG in cases where it should be applied (see note 318). For the battle of forms problem, one important case recorded is Guiliani v. Invar Manufacturing 2007 WL 2758802, 2007 CarswellOnt 5922 (Ont. Sup. Ct. J.) [Guiliani], where the court failed to recognise the application of CISG in a battle of forms dispute.

327. Professor Honnold commented on this phenomenon that: "[t]he settlement of disputes would be complicated and litigants would be encouraged to engage in forum shopping if the courts of different countries persist in divergent interpretations of the [CISG] Convention." See Honnold (n. 35) 94.

328. E.g. Appellate Court Milan 20 March 1998 (Italdecor v. Yiu's Industries) (Italy) where the Milan Court of Appeal examined only domestic law; Delchi Carrier SPA v Rotorex Corp., 71 F.3d 1024 (2d Cir. 1995) where the US court rejected the application of international case law and instead used UCC for interpretation; Raw Materials Inc. v. Manfred Forberich GmbH (which is named by Lookofsky and Flechtner (n. 318) as the "Worst CISG Decision in 25 Years") where the the court approach treats the exemption provision of Art. 79 CISG as if it were indistinguishable from U.S. domestic law. Though CISG was held applicable, the court in fact treated the CISG as irrelevant and superseded by U.S. domestic law (which was extremely misleading); Bejing Metals & Minerals Export/Import Corp. v. American Business Center, Inc., 993 F.ed 1178, 1183 n.9 (5th Cir. 1993) where the court decided to apply UCC case law merely because there was "virtually no US case law" on CISG.

329. E.g. CASS, Cour de Cassation, J 96-11.984, 16 Jul. 1998 (Fr.) (conflict terms are knocked-out and traditional choice of law was applied); Prime Wood, Inc. v. Roxan GmbH & Co. Veredelungen, No. A3-97-28, 1998 US Dist. WL 1777501, at (D.N.D. Feb. 19, 1998) (the US District Court referred to UCC 2-207 for judgment instead of CISG relevant provisions and stated that "there would be the same result if the CISG governed" without explanation.); In Powder milk case, the German court were clearly influenced by the "good faith" principle and the knock-out doctrine under German law in its decision. Though the court expressly referred to the "good faith" principle under Art. 7(1) CISG, its decision is not sufficiently justified as the term under CISG would not necessarily have same meaning as the "good faith" principle under German law.

330. Article 6 CISG.

331. Kilian (n. 170) 227. See also James P. Quinn, 'The Interpretation and Application of the United Nations Convention on Contracts for the International Sale of Goods' (2005) 9 Int'l Trade & Bus. L. Rev. 221, 224.

332. See note 318 and accompanying text.

333. Se remarks of Heidi Stanton (n. 223, 447-8) who insisted that "[t]he Convention applies automatically to all sales contracts between parties of different states. Therefore, if a party desires to exclude the Convention, they will have to do so correctly in order to avoid its application. Thus, in light of scholarly analysis, Senate hearings, court decisions, and the legislative history of the Draft Convention, the proper method of exclusion can be accomplished by one of two methods: (1) explicitly exclude the Convention and specify a choice-of-law clause to govern in the Convention's absence or (2) manifestly imply, through the nature of the contract or the intentions of the parties, that the Convention is to be excluded from application."

334. Some commentators, e.g. Jacob Ziegel ('The Future of the International Sales Convention from a Common Law Perspective: (2000) 6 New Zealand Bus. L.Q. 336, 345-6), while analysing CISG case law argued that the drafters of CISG may have erred in making the Convention the default rule instead of limiting its applicability to cases where the parties had consciously chosen CISG as their governing law. It is submitted that this argument is groundless. One should look at the legislative history of Articles 1 and 6 of CISG to find that there was a large debate on the retention or deletion of subparagraph (1)(b) of Article 1 (requiring the application of CISG when the rules of private international law lead to the application of the law of a Contracting State), and the result was a compromise: subparagraph (1)(b) of Article 1 was retained, but the Convention's Final Provisions (Part IV) included Article 95 where a member-State can declare its exclusion of subparagraph (1)(b). Surprisingly, this requirement has been well-aware and accepted in the US federal case law applying CISG. See e.g. St. Paul Guardian Insurance Co. v. Neuromed Medical Systems & Support GmbH, No. 00 CIV. 9344(SHS), 2002 WL 465312 (S.D.N.Y. Mr. 26, 2002); Ajax Tool Works, Inc. v. Can-Eng Mfg. Ltd., No. 01 C 5938, 2003 WL 223187 (N.D.Ill. Jan 30, 2003); BP Oil International, Ltd. v. Empresa Estatal Petroleos de Ecuador 332 F.3d 333 (5th Cir. 2003); American Mint L.L.C. v. GOSoftware, Inc., No. Civ. A. 1:05-CV-650, 2005 WL 2021248 (M.D.Pa Aug 16, 2005). See discussion of these cases in Marlyse McQuillen (n. 318) 518-9.

335. E.g. in Audiencia Provincial de Alicante 16 Nov. 2000, BSC Footwear Supplies v. Brumby St. (Shoes case) where the parties disputed over the applicable law, the Spanish court applied Spanish domestic sales law and found in favour of the Spanish seller. The buyer appealed, asserting that the Court should have applied the CISG, since the matter related to an international sale of goods. The Court of Appeals affirmed the decision, concluding that the parties had tacitly excluded the application of CISG under article 6 when the buyer's form stated that "The contract will be interpreted by the laws of England." Similarly, in Audiencia Provincial de Girona 06 Nov. 2006 442/2006 (Spain), Quarella S.p.A. v. Marbres i Granets De la Selva S.L. where the form prepared by the purchaser stated that 'the agreement shall be interpreted under English law,' the court, after affirming that 'the parties did not wish to submit their discrepancies to international law,' concluded that Spanish law is the legislation to be applied, when in fact in the case of an international sale it would be the CISG and not Spanish law.

336. See further in Lookofsky, 'The 1980 United Nations Convention on Contracts

for the International Sale of Goods - Article 92 Declarations' in J. Herbots editor / R. Blanpain eds., International Encyclopaedia of Laws - Contracts, Suppl. 29 (December 2000) 1-192, available at <http://www.cisg.law.pace.edu/cisg/biblio/loo92.html#28> accessed 10 Aug 2009.

337. The Scandinavian countries have developed their own uniform Sale of Goods Acts applied to inter-Scandinavian trade. See CISG Table of Contracting States, available at <http://www.cisg.law.pace.edu/cisg/countries/cntries.html> accessed 10 Aug. 2009..

338. The list of countries making declarations under Articles 92-96 is not exhaustive. Estonia, Finland also made declarations under Art. 92; Australia, Canada & Denmark (Art. 93); Argentina, Belarus, Chile, China, Hungary, Latvia, Lithuania, Paraguay, Russia, Ukraine (Art. 96), etc. See CISG Table of Contracting States (n. 337).

339. See Sheaffer (n. 313) 476-7.

340. The UK, which has a much-admired legal system which gave birth to the common law, is also one of the founding members of UNCITRAL and its representatives played an active role in the drafting of CISG. It has never officially explained the reasons for its reluctance to join CISG. Alison Williams ('Forecasting the Potential Impact of the Vienna Sales Convention on International Sales Law in the United Kingdom' in PACE Review of the Convention on Contracts for the International Sale of Goods (CISG), (Kluwer Law International 2000-2001) 9-57) identified some concerns of UK in participating the Convention: (1) One fundamental criticism leveled against the CISG is that it does not match up to English standards of precision and drafting, which favours concrete legal solutions to specific problems; (2) Art. 9 of CISG regarding "contract usages which [parties] knew or should have known of -- as long as the usage is one which is widely known and regularly observed in international trade" is deemed "ill-designed for documentary sales and standard form contracts; (3) the introduction of good faith in CISG which may "produce a climate more receptive to notions of good faith and fair dealing in England." These concerns are also valid in most other common law countries. Some other big countries which have not been part of CISG include India and Brazil.

341. For example, Franco Ferrari ('CISG Case Law: A New Challenge for Interpreters?' (1999) 17 Journal of Law and Commerce 245-261, at 253) commented that requiring interpreters to consider foreign decisions creates practical difficulties, including that foreign case law is usually not readily available, and it is often written in a language unknown to the interpreter.

342. A classic instance of conflict between the common law and the civil law is the Receipt theory v. Dispatch theory, which can be illustrated by the following case: A posts an offer to B. B immediately posts a letter of acceptance to A, but B's letter is seri- ously 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 authorised by the offeror. Most Civil law systems take the opposite view. See Gyula Eśrsi (n. 153) 317.

343. The "good faith" principle play an important role under civil law systems such as Germany, France, but it is not a doctrine under common law systems. Applying this principle in handling the battle of forms cases has led the courts in continental Europe to the formation of contract and application of the knock-out rule in most of the cases, while in English courts, for example, the last shot rule is still the dominant approach based on the well-established offer-and-acceptance doctrines in case law. See supra ch.1 s. II(3) regarding good faith; note 340 and accompanying text regarding English concerns of the good faith and fair dealing principles.

344. The US' adoption of CISG is a good example of how educational background impact CISG application. Kilian (n. 170, at 228) summarised scholars' critics on the low rate of the application of CISG by the US' courts: "The problem here is that judges tend to interpret the [CISG] Convention with reference to their domestic laws, "If a judge in Hungary, the United States or any other contracting state is to see the Convention through an international lens instead of a lifetime domestic lens, we now know that the typical judge may require assistance from an international legal ophthalmologist." [Murray] This is not meant to denigrate the ability of judges - merely to point out that a significant paradigm shift is required for which judges may see no pressing need. In this context, David Frisch remarks that a judge's "inertia of habit" - formed by his legal education and experience - leads to "intellectual stubbornness" that makes it difficult to accept a new kind of legal thinking." Similarly, Sheaffer (n. 313, at 463) argued that many countries rule solely on the basis of their domestic legal traditions. These jurisdictions, rarely called upon to adjudicate international commercial disputes, will continue to misinterpret international commercial law regardless of any reformation.

345. This is the reason why many commentators believe that to achieve a "utopian notion of a singular law" is very difficult, or even impossible. Some others, such as Bailey, even think CISG is a failure, which "is actually an obstacle to uniformity in the law of international sales." See Philip T. Hackney (n. 154) 474-5; James E. Bailey, 'Facing the Truth: Seeing the Convention on Contracts for the International Sale of Goods as an Obstacle to a Uniform Law of International Sales' (1999) 32 Cornell Int'l L.J. 273, 276.

346. An example of EDI is illustrated by Thomas J. McCarthy as follows: "a company needs additional feedstocks for its manufacturing processes. Instead of sending its supplier a purchase order by mail, the company employs the faster expedient of transmitting electronically a purchase order transaction set. The transaction set includes a series of elements of information identical to the data typed on its paper cousin: product, quantity, price, freight, taxes, etc. The supplier responds immediately with a functional acknowledgment, which does not accept the order, but confirms that the order arrived with complete data in the correct format. Later, after review of the purchase order data and its ability to comply, the supplier electronically accepts by transmitting an electronic purchase order acknowledgment or shipping notice, receipt of which is confirmed by the customer issuing a functional acknowledgment... each party receives the data needed and is able to complete the transaction without delay; each party also knows immediately whether the other is on board or not via the acknowledgments. The process is faster, more efficient, and more economical than exchanging paper forms and is being adopted throughout the United States and abroad." Regarding the battle of forms, Thomas realised that businessmen normally refuse the inclusion of legal boilerplates in the free text of their transaction sets because they "do not consider the boilerplate printed on the reverse side of their forms to be part of the deal unless it coincidentally reflects some aspect of custom, usage, course of dealing, or practice that they understand as implicit in the resulting transactional relationship." See Thomas J. McCarthy (n. 34) 1024-6.

347. The majority of these criticisms are made by the American writers (see note 224 and accompanying text). But they are also supported by scholars from the civil law systems as well. See e.g. Peter Schlechtriem(n. 111) 36-49, who rejected the last shot rule and submitted that "even cases of clearly diverging clauses can be solved easily in most circumstances: they fall out and are replaced by commercial practice formed between the parties ("knock-out" rule)."

348. See Jacob Ziegel (n. 334) 345.

349. Christopher Sheaffer (n. 313) 485.

350. M. J. Bonell (n. 171) 617-633.

351. See more details to support this argument in supra ch.2, s. III(3) and note 289.

352. See Wildner (n. 111) 13; Viscasillas (n. 12) 138-40.

353. See supra ch. 2, s. III(2).

354. This commentator gave evidence that most recent law review articles dealing with the problem of the battle of forms date back to the late 1980s. She, however, admitted that the overwhelming acceptance of the knock-out rule does not mean that the last-shot rule no longer finds application. See Giesela (n. 58) 204.

355. This dissertation submits that it is not really the case, if we look at the number of commentaries, including both positive and negative, on the Powder milk case where the German court confirmed the knock-out rule application under CISG. See supra ch. 2, s. III(3)(b) and note 262 and accompanying text.

356. In a recent research on CISG implementation by courts, DiMatteo et. al. (n. 267, at 356) found in their review of CISG jurisprudence involving the battle of forms scenario that: "courts [are] struggling to devise a unified framework for applying CISG rules. Most troubling is that courts seldom use cases from other Contracting States. Because these battles are so prevalent in international transactions and Article 19 offers the flexibility for courts to adopt several approaches, Article 19 is one of the areas where the CISG could most benefit from the adoption of official comments, examples, and guidance that some commentators have suggested." This indicates that Article 19 would obviously continue to be a controversial provision at both theoretical and practical levels.

357. Viscasillas refers to the last shot rule applied in acceptance-by-performance scenario where the contents of the contract are the the terms of one party in conjunction with acceptance by performance. See Viscasillas (n. 12) 148.

358. Viscasillas (n. 12) 148.

359. Viscasillas (n. 12) 148.

360. See supra ch. 3, s. I(3).

361. I.e. to amend domestic laws in accordance with CISG so that they will provide identical solution to the battle of forms problem. It is notable that Sukurs' suggestion of vertical uniformity only limit itself between nations that share high volumes of transactions (such as the US and Canada). See Charles Sukurs (n. 12) 1499. Sukurs' suggestion finds supports from several scholars, such as Richard E. Speidel ( 'The Revision of UCC Article 2, Sales in Light of the United Nation Convention on Contracts for the International Sale of Goods' (1995-1996) 16 Nw. J. Int'l L. & Bus. 165, 170) who said: "there are... special needs for vertical uniformity between international and domestic sales law... uniformity would eliminate uncertainty and surprise over the scope of state (UCC) and federal (CISG) sales law and avoid disruptions in transactions in transactions that originate as domestic sales and conclude... as international sales."

362. Sukurs suggests such official comments offering interpretive guidance as well as illustration for each article of the CISG, in the same way as the US experience with UCC comments. These comments, in Sukurs words, could provide international canons of statutory interpretation that would cut through the multitude of differing domestic standards, and help the judges to look beyond their own borders. See Sukurs (n. 12) 1509.

363. Sukurs argues that the limited CISG case law in the US suggests that lawyers and judges in the US do not know about CISG. In a survey of the Florida Bar in 1998, it was found that CISG was not taught in contracts or sales courses, and surprisingly only 30% of the members of Florida Bar Section on International Law had reasonable knowledge of CISG, and it is reported that there was no case in Florida involving CISG. See Sukurs (n. 12) 1510-1.

364. Sukurs (n. 12, at 1513) recognises that in the battle of forms scenario the US relies predominantly on the UCC approach, Canadian domestic law is based largely on the common law mirror-image rule, and CISG adopts an approach to the battle of forms that embraces the mirror image rule, but attempts to soften it through an allowance for non-material terms. He also analysed and critically evaluated Professor Hillman's position on the uniform interpretation of CISG (which basically encourages the attention to general principles contained in CISG to interpret Art. 19 and related provisions). However, he only states that "the differences in approach to the battle of forms must be reconciled to facilitate harmonisation of commercial law" by the vehicle of CISG, but stays unclear about his position of how the solution to the battle of forms under CISG should be understood and applied in the US and Canada, e.g. where in other countries such as Germany or France, the knock-out rule is being more frequently applied based on the modern interpretation of CISG's tacit derogation (Art. 6) and good faith principle (Art. 7).

365. The controversy over the possibility of unification "from the above" (vertical harmonisation) or "from below" (horizontal harmonisation) is not only within the America region. In the Europe, the future law of contract is highly debatable. One suggestion is a continuation of the fragmented Union legislation and continued debates between members of a growing European academia on the principles of contract law, supported by the international arbitral tribunals' application of the lex mercatoria and by the efforts of the business world to provide uniform customs, standard form contracts and contract terms. In this way an unwritten European jus commune may emerge (the Savignys trend). Another option is a European Civil Code covering the law of contracts (the Thibauts trend). People supporting this option believe a Code will provide the greater amount of legal certainty. They suggest that "[i]n the countries of the European Union where since the Common Market was established in 1958 the inter-union trade has increased still more than world trade, unification of the law of contract will become the more urgent the more the trade and communication grow." See O. Lando (n. 167) 366.

366. The Drafting Committee stated a bunch of factors supporting its position as follows:

(1) The absence of compatible background law;

(2) Art. 2 - UCC is part of an integrated commercial code;

(3) Nature of CISG resembling a code in the civil law tradition;

(4) Limitations if scope of CISG: e.g. excluding validity of contracts, or sale of goods bought for personal, family or household use, or liability of the seller for death or personal injury caused by the goods to any person, etc) (Art. 2-4);

(5) Differences in drafting process: CISG process involved the compromises between representatives from different legal traditions and different economic regions;

(6) Differences in substances: e.g. in terms of the battle of forms, it is said that the contract formation articles are highly formalistic and fail to respond to the use and abuse of standard forms in the formation process;

(7) Technological and transactional obsolescence: e.g. the increasing development of EDI.

See Speidel (n. 361) 171. The 6th factor seems to be most relevant to the battle of form issue, where it has been stressed by Franco Ferrari that "it is... impermissible and dangerous to assert that the concepts of the CISG and the UCC are analogous." E.g. "good faith [and trade usage] under the CISG cannot correspond to the UCC definition." See F. Ferrari, 'The Relationship Between The UCC and The CISG and The Construction of Uniform Law' (1995-1996) 29 Loy. L. A. L. Rev. 1021-1033, 1023, 1031.

367. The revised text of s. 2-207 UCC is proposed as follows:

§ 2-207. Terms of Contract; Effect of Confirmation.

Subject to Section 2-202, if (i) conduct by both parties recognizes the existence of a contract although their records do not otherwise establish a contract, (ii) a contract is formed by an offer and acceptance, or (iii) a contract formed in any manner is confirmed by a record that contains terms additional to or different from those in the contract being confirmed, the terms of the contract are:

(a) terms that appear in the records of both parties;

(b) terms, whether in a record or not, to which both parties agree; and

(c) terms supplied or incorporated under any provision of this Act.

However, the resulting amendment is still subject to a series of different proposals, and is said to "generate another twenty years of debates." See White, J.J 'Contracting under Amended 2-207' (2004) 2 Wisconsin Law Rev 723; Holly K. Towle, UCC Article 2 Amendments: A Defective Product and a Flawed Process" (2005) 20(6) Washington Legal Foundation 1-4, available at <http://www.nam.org/~/media/Files/s_nam/docs/233200/233190.pdf.ashx> accessed 10 Aug 2009.

368. See generally Sheaffer (n. 313); Bailey (n. 345).

369. Most of these criticisms have been discussed or referred to in supra ch. 3, s. I.

370. Sheaffer (n. 313) 479. A similar idea was raised by Professor M.J. Bonell (see 'Do We Need a Global Commercial Code?' (2001) 106 Dickinson Law Review 87-100). Without excluding the significance of CISG, he suggests the development of a Global Commercial Code with the same approach as the UCC but with a much broader scope of territorial application. This Code should not be a comprehensive code of general principles and rules capable of providing an answer to all legal controversies that might arise in practice, but rather a compilation of special rules relating to the most important kinds of commercial transactions. The remaining details would be filled by more flexible instruments such as the UNIDROIT Principles. Another version of this proposal is a "World Code of International Commercial Contracts" suggested by Professor Ole Lando, with the basic idea to promote the UNIDROIT Principles from their present status as soft law to rules of law. See Ole Lando, 'CISG and Its Followers: A Proposal to Adopt Some International Principles of Contract Law' (2005) 53 American Journal of Comparative Law 379-401, 383.

371. The suggestion by Sheaffer (n. 313, at 479-93) of a Global Code contains many interesting and useful ideas in avoiding the problems faced by CISG, namely: (1) the use of official, systematic commentary to aid in its interpretation; (2) the creation of an International Advisory Coucil working as a "Permanent Editorial Board," akin to that established under the UCC; (3) the establishment of an International Court similar to ECJ or ICJ; (4) the use of English as the only version to interpret any ambiguity; (5) the rendering of UNIDROIT Principles as guidance in drafting and interpreting the Code; and (6) the use of international case law, supplemental commentary and scholarly articles to aid the Code's interpretation and implementation.

372. Under UNCITRAL, many initiatives have been made to develop an uniform interpretation and application of CISG, including (1) translation of CISG in six official languages, (2) establishment of an enormous amount of CISG information, including CISG text, legislative history to the detailed level of each Article, CISG international case law, scholarly articles and commentaries, all available over the internet (most notably PACE and UNILEX) with easy access (3) development of a full set of CISG cases digest, incorporating relevant international CISG cases with explanation; (4) organisation of annual moot court competition held in Vienna where students debate a fictitious dispute based on the provisions of the CISG to help improve understanding of the CISG amongst future practitioners. In addition to this, many countries have developed their own CISG database (e.g. Japan CISG database available at <http://www.juris.hokudai.ac.jp/~sono/cisg/eng_index.html> accessed 10 Aug 2009) for domestic implementation reference.

373. Let's take the case if UNIDROIT Principles is to be basis for development of a new Code. Such text currently consists of 184 Articles, any input of further details will increase considerably more Articles.

374. See e.g. Jacob Ziegel (n. 334) 345.

375. Due to limitation of this dissertation scope, it is impossible to suggest a detailed plan for such establishment of amendment mechanism within CISG. But reference can be made to the WTO agreements such as TRIPs or TRIMs. E.g. the text of TRIPs includes a provision (Article 71) which allow the Council for TRIPS to review the implementation of TRIPs after a certain period and continue its reviews on bi-yearly basis, in the light of any relevant new developments which might warrant modification or amendment of the Agreement. TRIMs contains a similar provision in Article 9. In order to make this happen, firstly UNCITRAL should appoint a Council of CISG (as UNCITRAL has been taking care of many other conventions, treaties and work programs beside the management of CISG) akin to the Council of TRIPs or TRIMs to review and propose relevant amendments.

376. This should be stressed here that CISG should be amended, rather than extended to a more detailed level, because such details would put about 75 or more delegates into endless negotiation. Rather, CISG may render UNIDROIT Principles and Official Commentary to fill the gaps. See infra recommendation #2.

377. As we thoroughly discussed along this thesis, many Civil Law countries such as Germany, France, Austria have more and more preferred the knock-out rule approach. The US' proposed revision of s. 2-207 UCC also clearly rejected current approach under CISG and would definitely follow the knock-out approach with less complication than current version. See notes 366-7 and accompanying text.

378. See e.g. Susanne Cook (n. 153, at 217-9) who suggested a test in examining foreign courts' decision which sufficiently restrains the discretion of lower courts to prevent undue bias, and at the same time, does not tie United States courts to an untenable foreign decision; John Felemegas (n. 241, at 135) who suggested the interpretation based on the plain text of CISG, its full context and legislative history, and insisted that "[t]ribunals around the world dealing with CISG related issues should be faithful to the true character of the Convention, by adopting a similar interpretative approach and by considering relevant foreign jurisprudence"; John E. Murray (n. 319, at 365-79) who recommended the development of "CISG Official Comments" akin to the UCC Official Comments, which can help "eliminate manufactured difficulties and become a major force in promoting familiarity and use of the Convention through a reasoned analysis of the purpose of each Article, in pursuit of the general purposes and policies of the entire Convention."

379. The CISG-AC was established in 2001 as a private initiative to respond to the emerging need to address some controversial, unresolved issues relating to the CISG which would merit interpretative guidance. CISG-AC contributes to the interpretative guidance through the continuing issuance of its opinions. So far nine (09) opinions have been published. See general information of CISGAC in <http://www.cisgac.com/> accessed 10 Aug. 2009.

380. Most notable members of the CISG-AC are Professor Dr. Eric E. Bergsten, Emeritus of Pace University, formerly Secretary General of UNCITRAL, Professor Dr. Michael Joachim Bonell, University of Rome La Sapienza, formerly Secretary General of UNIDROIT, Professor E. Allan Farnsworth, Columbia University, New York, Professor Dr. Dr. h.c. Peter Schlechtriem, Emeritus, University of Freiburg, Professor Albert Kritzer, Executive Secretary of the Institute of International Commercial Law, Pace University School of Law, Professor Clive M. Schmitthoff, Senior Lecturer in International Commercial Law, Centre for Commercial Law Studies, Professor Dr. MŹ del Pilar Perales Viscasillas, Universidad Carlos III, Madrid, etc.

381. On the sources of CISG information see note 372. This thesis argues that current sources of CISG information are relatively defragmented, especially in terms of commentaries for the understanding and interpretation of CISG and its cases law. E.g. there are many commentaries noted by academies with different positions, but there is no official commentary to the text of the CISG which provide a single guidance to it. Regarding the UNCITRAL case digest (Art. 19, section related to the battle of forms problem, available at <http://daccessdds.un.org/doc/UNDOC/GEN/V04/549/48/PDF/V0454948.pdf?OpenElement> accessed 10 Aug 2009) it is noted, without comment, that several decisions took the last shot rule, where several others took the knock-out rule. This would not encourage a uniform implementation of CISG.

382. Each Opinion of CISG-AC includes several significant parts: (1) the provisions of CISG relevant to the problem specified by the opinion; (2) legislative history of the articles (if required); (3) statement of opinion; (4) Comments/justification for that statement.

383. See UNILEX Database, where each provision of the UNIDROIT Principles is attached with an Official Comment by the Working Group, with clarification of the text wording and illustration by examples.

384. See e.g. Hackney (n. 154) 479.

385. See Franco Ferrari (n. 341) 259-60.

386. Sheaffer (n. 313) 488.

387. Which Art. only requires that [emphasis added] "regard is to be had . . . to the need to promote uniformity in its application."

388. Kilian (n. 170) 238-40 who argued that "[e]stablishing an authoritative precedence that may well fly in the face of some domestic law... needs to be done with sufficient analysis to establish authority," and many bad decisions with poor reasoning should not be followed.

389. Though this is not one hundred percent true, because the main objective of CISG is to find the golden mean between the principles and interests of the two systems, one may argue that CISG to some extent has incorporated Civil Law concepts into its interpretation rules under Art. 7 (good faith). See Ubartaite (n. 318) 289.

390. See note 363 and accompanying text.

391. See Ubartaite (n. 318) 297.

392. In addition to this, in a small survey in the US' well-known Jessup International Moot Court Competition, Ubartaite (n. 318, at 298) realised that there was a clear distinction between the level of knowledge of the students about CISG, where most of students from Germany, Spain, Italy, South America, UK are familiar with CISG and many had covered CISG at their law school. In contrast US students and practitioners are hardly aware of CISG existence, about which they can only learn from voluntary activities but not through law school. He also notes that only less than 20% of US law gradutes ever take a course on international law.

393. Richard M. Lavers, 'CISG: To use or not to use?' (1992) 4 Int'l Q. 31, 31.

394. Ubartaite (n. 318) 299.

395. See note 26 and accompanying text which prove that in a huge amount of standard terms exchanged on daily basis, many of them having divergent content, but most still work well except very rare cases where conflicts amount to litigation.

396. John Honnold (n. 35) 182.


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