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Published by Manz, Vienna: 1986. Reproduced with their permission.

excerpt from

Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods

Univ. Prof. Dr. Peter Schlechtriem [*]

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V. Formation of the Contract

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D. Open Questions

1. Battle of the Forms

At the Vienna Conference, Belgium suggested that the issues involved in the battle of the forms also be resolved.[186] Unfortunately, the proposal did not arouse much interest. Even those who recognized the importance of the practical problem believed that the issue was not ripe for resolution, both because UNCITRAL had not discussed the problem and because there was still uncertainty about the proper solution in domestic law.[187] An argument from the German discussions was raised, namely that one could not force the parties to accept the provisions of a law which both had rejected in their standard contract terms. In my opinion, the reluctance is regrettable, and the assertion that the problem could not be resolved because of the uncertainties in domestic law is not convincing. Since the Convention does not address the problem of conflicting standard contract terms, the solution will depend on whether the deviations in the terms are material or immaterial, according to Article 19(2), which corresponds to the proposals submitted in connection with Article 7 of ULF.

The fact that certain provisions are proposed only in standard contract terms or fine print is not enough to characterize them in every case as immaterial. Since standard contract terms normally (also) affect the points mentioned in Article 19(3), where they do, they must be considered material modifications. Most of the time the party who last made reference to his conditions will prevail if the other party indicates assent - or is supposed to - under Article 18(3).[188]

2. Letters of Confirmation

It is not certain, whether and to what extent commercial letters of confirmation will have effect under the Convention. The issue was addressed several times,[189] but unlike the Hague Conference, it was not possible, during the discussions on the recognition of trade usages, to reach an agreement on whether [page 56] the German rules on commercial letters of confirmation were applicable as usages. On the contrary, from the wording of Article 9, it must be assumed that the letter of confirmation will be effective only if the relevant business customs exist between the parties of that particular branch of trade in international transactions. On the other hand, it cannot be assumed [190] that the Uniform Law for International Sales, by limiting the formation of contracts to those created by an offer followed by an acceptance, has left other possibilities, such as the German laws on letters of confirmation, to the discretion of domestic laws applicable by virtue of conflict rules.[191] Otherwise other domestic formation provisions, unrelated to offer and acceptance would also be applicable, and the desired unification and legal certainty would be endangered. In my opinion, Article 7(1) forbids such a "fragmentation" of the law governing the formation of the contract. The entire process of contract formation is governed by CISG.

3. Requirements of Official Permits

A Belgian proposal [192] concerning requirements of official permits did not win the necessary support. As far as governmental or judicial approval is required for the validity of a contract or of particular obligations - e.g., an export license, etc. - it is a question governed by domestic law on the basis of Article 4(a). This also applies to the time the contract takes effect, in the event that the required approval is not retroactive.[193]

4. Culpa in Contrahendo

Finally, the Conference rejected a proposal by the German Democratic Republic which would have introduced a general culpa in contrahendo (= precontractual) liability.[194] The proposal was especially intended to cover those cases in which contract negotiations have already progressed so far that one side, relying on the belief that a contract would materialize, has made considerable expenditures. Because of its general wording, however, the proposed rule could not have been limited to such cases. First, it would have affected a number of problems which arise outside the Uniform Law for International Sales, for example the liability for the invalidity of the contract caused by neglect of form requirements, the liability of an agent without authority and damages in case of avoidance for mistake. For some individual matters governed by the Convention, it would have raised the difficult question of the relation between this liability and the remedies and rules of CISG, e.g., for lack of conformity and for revocation of an offer. Hence, the motion by the German Democratic Republic failed. Damages caused by one party to the other in the course of contract negotiations, therefore, remain subject to regulation by the domestic law applicable according to conflict rules. In this field, domestic laws offer quite different legal bases [194a] for liability.[195] [page 57]

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FOOTNOTES

* The author of this book participated at the Conference as a member of the delegation from the Federal Republic of Germany. The views expressed here are personal to the author and do not necessarily represent the position of the F.R.G. or its delegation.

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186. See A/Conf. 97/C.1/L.87 (= O.R. 96) (motion); A/Conf. 97/C.1/SR.10 at 12 et seq. (= O.R. 219 et seq.) (debate).

187. This was the argument of one of the West German delegates (not the author). See A/Conf. 97/C.1/SR.10 at 12-13 (= O.R. 225).

188. Concerning ULF Article 7, see Schlechtriem, "Die Kollision von Standardbedingungen nach BGB and Einheitlichem Kaufabschlussgesetz," 1974 BB 1310-11.

189. Cf. A/Conf. 97/C.1/SR.5 at 4 18 (= O.R. 256).

190. See supra at IV.C.

191. But see Huber at 449-450.

192. A/Conf. 97/C.1/L.89 (= O.R. 98).

193. The time the contract is formed under Article 23 may therefore differ from the time it takes effect.

194. A/Conf. 97/C.1/L.95 (= O.R. 295).

194a. See also Honnold, Commentary 147.

195. Of course, domestic law is irrelevant as long as the issue is a matter regulated by CISG. For example, a party cannot be liable under domestic law for legitimately revoking an offer under Article 16; otherwise the balance between revocability and contractual commitment could be disturbed by domestic remedies.

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Pace Law School Institute of International Commercial Law - Last updated June 14, 2000
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