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Petar Sarcevic & Paul Volken eds., International Sale of Goods: Dubrovnik Lectures, Oceana (1986) Ch. 4, 111-131. Reproduced with permission of Oceana Publications.

Formation of International Contracts under the Vienna Convention: A Shift above the Comparative Law

Kazuaki Sono
Professor of Law, Hokkaido University

1.  A prelude
2.  Basic approach of the Convention
     (1)  Certain points to be clarified at the outset

(a) Withdrawal of offer or acceptance
(b) Revocability of offer
(c) How long the offer remains valid (period for acceptance of offer
     (2)  Offer (Article 14)
     (3)  Acceptance (Article 18)
     (4)  Assent with additions or modifications (Article 19)
     (5)  Late acceptance (Article 21)
3.  Form of contract (Articles 11, 12, 13 and 96)
4.  Modification or termination of contract (Article 29)

1. A PRELUDE

We have been told that the meeting of minds in the exchange of an offer and its acceptance creates a contract and that the freedom of contract which guarantees the prevalence of the parties' will is the basis of modern society. This historical reasoning seems to have constantly influenced lawyers in dealing with legal rules surrounding the formation and enforceability of contracts. However, let us set aside this historical aspect for the moment and commence our discussion by accepting the reality of life that a contract isa powerful legal device to maintain order in a business relationship through its binding nature upon the parties.

An offer isthen a unilateral authorization to the offeree to create such a powerful device it is a gift of power to the offeree. Such an empowerment is often unsolicited, usually not [page 112] given in exchange for some value from the other party (hence unilateral), and is sometimes given even to a stranger. The rules which regulate certain communication of private messages as an offer and regulate these communications should therefore be carefully tailored so as to take fully into account this unilateral aspect of the empowerment. For example, should the revocation of such an empowerment be permitted before the offeree exercises the power? The answer may be assimilated to the solutions for the revocability of a unilateral authorization to act on behalf of the authorizer or the cancellation of a promise of gift which, particularly when made orally, is treated by most legal systems as revocable until acted or relied upon. Until then, no harm is done to the other party. The other party has not lost anything which he should not have. The revocation will create no confusion in the social order and the status quo may be maintained.

Once an offer has been made, the offeree has the power to create a contract by accepting the offer. Once he exercises this power by so-called acceptance, he becomes bound by the contract to the same extent as the offeror. However, to be sure, the offeree has no obligation to accept the offer. In ordinary situations he even has no duty to respond. Therefore, the rules which regard certain communication of private messages as an acceptance and regulate these communications should also reflect this voluntary and non-obligatory aspect of the acceptance. For example, should the withdrawal of an acceptance be permitted before it reaches the offeror? Perhaps. This is because the offeror will not lose anything which he should not have by permitting such withdrawal. It is possible to test the soundness of most of the rules of the Vienna Sales Convention [page 113] relating to the formation of the contract in the light of the simple perspectives described above.

The law relating to the formation of contracts has long been a popular area for comparative law analyses because of apparent differences in highly particularized technical rules on offer and acceptance existing between the common law and civil law systems. It is not striking, therefore, that most commentators on the Vienna Sales Convention also refer to the differences between the two legal systems and examine Part II of the Convention with critical lawyers' eyes to see which system has prevailed in each of the rules. They conclude that the Vienna Sales Convention has accomplished an equitable and workable compromise between the two legal systems. However, the Vienna Sales Convention is, after all, for the business community and seeks to establish a sound ground upon which international trade can be promoted without undue problems arising from complications due to legal rules which until today have been diverse even among countries belonging to one of the two main systems. Therefore, the soundness of the rules in the Convention should also be examined from this practical aspect to see whether ordinary businessmen who do not have the legal sophistication of lawyers would also feel comfortable. This paper intends to focus on this latter aspect.

Before proceeding further, however, perhaps one "scholarly" comment may be permitted. Despite the often referred to differences between the common law and civil law systems intheir approaches to the formation of contracts, the differences may appear to have become marginal because of many modifications introduced in regard to the basic principles of each system. This may [page 114] be illustrated by taking the popular question of the revocability of an offer as an example.

The basic principle under the common law is that an offer is revocable until accepted even if it states that it is irrevocable. However, if the offer is supported by consideration coming from the offeree, the offeror cannot revoke the offer without the offeree's consent. In essence, in this case the power to create a contract (i.e., option) has already been purchased by the offeree in exchange for some value and the offeror is therefore bound by his authorization. The basic principle that an offer is revocable has also been modified to a great extent whenever adherence to the principle would have produced unfair results. For example, the inducement created by an offer upon the offeree to act on reasonable reliance thereon has often been regarded sufficient to constitute "consideration," thus making the offer no longer revocable (see also Uniform Commercial Code 2-205 of the United States). The general approach of the civil law, on the other hand, is that, unless an offer is stated revocable, the offer is irrevocable during the period of time fixed in the offer or, if no such period is stated, for the duration of a reasonable period. It can, however, be easily anticipated that this principle would not be adhered to by courts in situations such as follows: X, a manufacturer of powerful engines, is aware of Y's interest in his engines. X writes to Y offering to sell a certain quantity of the engines for a stated value and gives Y 45 days to consider. The next day X changes his mind and writes to Y instructing him to ignore the offer. Y receives the first letter but does not yet do anything about the offer, including serious thinking. Because of the second letter, Y ignores the first [page 115] letter. However, 20 days later Y learns from a third source that the first letter indeed contained a very attractive offer. Thereafter, upon examination of the offer for the first time, he also finds it so and therefore accepts.

2. BASIC APPROACH OF THE CONVENTION

(1) Certain points to be clarified at the outset

(a) Withdrawal of offer or acceptance

The withdrawal of an offer should be clearly distinguished from the revocation of an offer which might take place after the offer has become effective. An offer, which is the authorization to the offeree to create a contract by acceptance, becomes effective when it reaches the offeree (Articles 15(1) and 24). The offer may therefore be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer. This is the same regardless whether or not an offer is stated to be irrevocable (Article 15(2)). Such a withdrawal will not inconvenience the offeree in any manner.

The same principle applies to the withdrawal of an acceptance. An acceptance may be withdrawn provided that the withdrawal reaches the offeror before or at the same time the acceptance reaches the offeror (Article 22).

(b) Revocability of offer

After an offer reaches the offeree, he might not act upon it immediately. During this period, the offeror may change his mind and might wish to cancel the offer he has made. This constitutes the revocation of an offer. Unless the offeror himself indicated that the offer shall remain irrevocable or the offeree has already acted in reliance on [page 116] the offer, the offeror, who unilaterally gave the power to create a contract to the offeree, should be able to revoke the offer provided that the revocation reaches the offeree at least before he dispatches acceptance (Article 16). Although the contract has not yet been created, i.e., not until the acceptance reaches the offeror (Article 18(2), but cf. Article 18(3)), once the acceptance has been dispatched, it is reasonable that the offeree be protected for his expectation of the contract and that revocation should no longer be permitted.

By nature, there is no room to conceive of revocating an acceptance because an acceptance becomes effective when it reaches the offeror and thereby a contract will be created. Therefore, with regard to acceptance, only its withdrawal is conceivable (see (a) above). As has already been stated, an offer may not be revoked if it indicates that it is irrevocable. In this regard, Article 16(2)(a) states that an offer cannot be revoked "if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable." However, it should be noted that the crucial test of the irrevocability of an offer is whether it "indicates" expressly or by implication that it is irrevocable under the circumstances. The indication of "the fixed time for acceptance" in an offer would in itself not necessarily always make the offer irrevocable. This point may be clarified by the following example. An offer dated 1 September states, "If I do not receive your reply of acceptance by 15 September, this offer expires." It is clear from this statement that the period for acceptance of the offer lapses on 16 September, but it is unascertainable from this statement alone whether the offeror meant the [page 117] offer is irrevocable during this period. Civil law lawyers may consider this statement to indicate that the offer is irrevocable until 15 September and lapses thereafter. However, common law lawyers may maintain that the offer lapses after 15 September but that the offer does not indicate that it is irrevocable. Therefore, whether the offeror intended the offer to be irrevocable would still have to be assessed in the light of all the circumstances of the offer being made, including the trade usages and the practices which the parties have established between themselves (Articles 8 and 9).

At most, Article 16(2)(a) might be read as a presumption that an offer with a fixed time for acceptance is also intended to be irrevocable, but this presumption is rebuttable. The difficulty associated with the determination of irrevocability of an offer is, however, only conceptual under the Convention. This is because the Convention in any event affords the necessary protection to the offeree by providing in Article 16(2)(b) that an offer cannot be revoked "if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer." The difference between the civil law and common law approaches to this point has been submerged beautifully.

(c) How long the offer remains valid (period for acceptance of offer)

As indicated above, an offer becomes effective when it reaches the offeree. An offer usually remains effective thereafter for a certain period of time unless terminated earlier by a rejection of the offer by the offeree (Article 17) or validly revoked. After the lapse of this period, the empowerment to the offeree to create a contract by its acceptance [page 118] ceases to exist. The offer must therefore be accepted during this period also Article 20).

An acceptance will not be effective if the indication of assent does not reach the offeror within the time he has fixed or, if no time is fixed, within a reasonable time, due account being taken of the circumstances of the transaction, including the rapidity of the means of communication employed by the offeror. An oral offer must be accepted immediately unless the circumstances indicate otherwise (Article 18(2)).

(2) Offer (Article 14)

An offer is an empowerment to the offeree to create a contract in accordance with the terms of the offer by accepting it. Being such a serious authorization, it must be sufficiently definite it and must indicate the intention of the offeror to be bound in case of acceptance.

Since there are no particular words which must be used to indicate such an intention, sometimes a careful examination of the "offer" may be required in order to determine whether such an intention existed. This is particularly true if one party claims that a contract was concluded during negotiations which were carried out over an extended period of time, and no single communication was labelled by the parties as an "offer" or an "acceptance." In determining the existence of the requisite intention to be bound in case of acceptance, due consideration must be given to all relevant circumstances of the case, including any practices which the parties have established between themselves, trade usages and any subsequent conduct of the parties (Article 8(3)). [page 119]

It is not ordinarily conceivable that such an authorization would be made other than to one or more specific persons. Therefore, a proposal other than one addressed to one or more specific persons will be considered merely as an invitation to make offers, unless the contrary is clearly indicated by the person making the proposal. For example, widespread distribution of a catalogue of merchandise will usually be regarded as a solicitation for the "recipients to place an order irrespective whether or not it states that the contents are subject to change without notice. However, a catalogue sent to specific dealers on a restricted mailing list may sometimes be construed as an offer to each dealer.

If the contents of a proposal for concluding a contract are not sufficiently definite, this fact alone may manifest that the person making the proposal is still engaged in negotiations and has not yet seriously indicated his intention to be bound by acceptance. In this connection, Article 14(1) of the Convention provides in part that 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. This provision is helpful in ordinary situations by establishing the presumption that a proposal which lacks one of these elements-would not be regarded as sufficiently definite. However, it should be noted at the same time that, even if these elements are present in a proposal, the decisive test to make the proposal as an offer is whether the intention to be bound by acceptance can be found in the proposal under the circumstances. For example, where a seller offered to sell a million dollars worth of equipment to be manufactured with the only specifications being the type and quantity of the goods, [page 120] it would normally be the case that a seller would not contract for such a large sale without specifications such as delivery dates and quality standards. Therefore, the lack of any indication in respect of these matters would suggest that there has not yet been an intention to be bound by acceptance.

However, once the offeror's intention to be bound in case of acceptance can be found, the missing terms of the contract will be supplied by trade usages or by the provisions of the Convention (e.g., Article 31 concerning how and where the goods are to be delivered; Article 33 concerning the time of delivery; Article 57 concerning place of payment; Article 58 concerning time of payment; and Article 65 concerning detailed specifications of the goods).

With regard to the price, it is not necessary that the price be calculable at the time of the contract. For example, the offer and the resulting contract might call for the price to be that prevailing in a given market on the date of delivery, which might be months or even years in the future. In such a case, the offer expressly makes provision for determining the price. Where the buyer sends an order for goods listed in the seller's catalogue or where he orders spare parts, he may have decided to make no specification of price at the time of placing the order. This may occur because he does not have the seller's price list or he may not know whether the price list he has is current. Nevertheless, it may be implicit in his action of sending the order that he is offering to pay the price currently being charged by the seller for such goods. If such is the case, the buyer has implicitly made provision for the determination of the price. [page 121]

It should further be noted that many national sales laws provide a mechanism for fixing the price for cases where a validly concluded contract does not include any provision therefore either expressly or implicitly. The Vienna Sales Convention itself also provides such a mechanism (Article 55). The time may eventually come, after wide popular adherence to the Convention, that the awareness of its contents would make it difficult to assert that the price had not been indicated even implicitly as long as the offeror's intent to be bound by acceptance could otherwise, be proved.

That an offer becomes effective when it reaches the offeree has already been discussed (see (l)(a) above).

(3) Acceptance (Article 18)

A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance. The acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror (Articles 18(1) and 24). Therefore, if the offeree receives no response to his acceptance from the offeror, it may be prudent to enquire whether the offeror in fact received the communication. However, where so permitted by virtue of the offer or as a result of practices which the parties have established between themselves or of trade usages, 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. In such cases, the acceptance becomes effective at the moment the act is performed, provided that the act is performed within the period for acceptance of the offer. [page 122]

Acceptance by means of "an assent by performing an act" described above calls for some analysis. The Convention refers by way of illustration to such acts as one relating to the dispatch of the goods or payment of the price. Dispatch and payment are clear examples of decisive steps taken by the offeree to enter into the invited contractual relationship with the offeror. However, the Convention refers to an act such as "one relating to the dispatch." Thus the question arises whether commencement of the preparation to perform, e.g., by assembling parts for equipment ordered without notice to the offeror would be sufficient? Should room for speculation be permitted to the offeree? In this connection, it may be noted that "an assent by performing an act" without notice to the offeror, if it can be regarded as an acceptance, will become effective at the moment the act is performed, and no more room for withdrawal of the acceptance which is otherwise ordinarily possible is anticipated (see (2)(a) above). It may also be noted that, since assent by an act requires no notice to the offeror, the only means for the offeror to become aware of the acceptance is through the act of the offeree. These factors seem to dictate that, in order for an act to sufficiently constitute "an assent by performing an act," the act must be such a decisive step that little room will be left for its retraction due to the very nature of the act. This also seems to suggest that, unless an offer uses such a phrase as "Ship immediately," it would be prudent for the offeree to give notice of assent to the offeror in any event (see also Article 16(2)(b)).

Silence or inactivity with respect to an offer will not in itself amount to either acceptance or rejection. The Convention is neutral on this [page 123] point. However, if the silence is coupled with other factors which under the circumstances give sufficient assurance that the silence of the offeree is an indication of assent, the silence can constitute acceptance. In particular, silence can constitute an acceptance if the parties have previously so agreed. Such an agreement may be explicit or it may be established by an interpretation of the intent of the parties as a result of the negotiations, any practices which the parties have established between themselves, trade usages and any subsequent conduct of the parties (Articles 8(3) and 9).

In this connection, it may also be worth noting that the assimilation of the offeree's silence to an acceptance may be associated with the underlying consideration of the need to protect the offeror against being misled by the offeree's silence. In such cases, this assimilation may be invoked only in favour of the offeror and not the offeree. This may be illustrated by the following example. In accordance with a basic agreement between the parties relating to a long-term supply of merchandise, the seller is required to respond to any orders placed by the buyer within two weeks of receipt. Each of several orders received subsequently for the first six months were acknowledged by the seller within two weeks and complied with promptly. Orders placed during the following three months were not acknowledged, but the buyer received the merchandise shortly after two weeks of each order. However, for a similar order placed during the tenth month, no response came and no merchandise was received. Since the buyer had not received any negative communication from the seller within two weeks of the order, the buyer had thought that, as before, he would obtain the merchandise as ordered and [page 124] made arrangements accordingly. The seller admits that he received the order, but asserts that he did not accept the order. In this example, the buyer would probably prevail. On the other hand, if, in the above example, the buyer had purchased the merchandise from a third person or acted otherwise in disregard of the order because the merchandise had not been received for a substantial period of time after the order, the seller would not be able to assert acceptance based on his own silence.

The above observation may suggest that the ultimate issue in regard to silence may often be the question of the observance of good faith under particular business circumstances, the breach of which will be sanctioned by assimilating the silence to acceptance or rejection (see Article 7(1)).

(4) Assent with additions or modifications (Article 19)

Since an offer is an authorization to the offeree to create a contract in accordance with the terms contained in the offer by accepting it if he so wishes, the acceptance must conform to the offer. Otherwise, a contract cannot be created. A reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer. Before accepting or rejecting an offer, the offeree may request clarification of the offer or enquire about the possibility of the offeror modifying the terms of the offer. This is, of course, distinct from acceptance or rejection.

However, in assenting to the offer, the offeree may often add new terms. If the additions [page 125] or modifications materially alter the original terms of the offer, it is a rejection of the offer and constitutes a counter-offer. However, additions or modifications may occasionally be of such a nature that they do not materially alter the terms of the offer, and it may be reasonable for the offeree to think that those additions or modifications have been accepted by the offeror unless the offeror objects to such modifications without delay. Therefore, in such a case, the offeree should give notice if he does not agree even with minor modifications, and only when he objects orally to the descrepancy or dispatches a notice to that effect without undue delay, the offeree's purported acceptance can be treated as a rejection of the original offer (cf. article 18(1) concerning silence). If he does not so object, the assent by the offeree with immaterial modifications will be treated as an acceptance, and the terms of the offer with the modifications contained in the acceptance become the terms of the contract.

In assessing whether a modification of the terms of an offer is material or not, it should be noted that under Article 19(3) additional or different terms relating, among other things, to the price, payment, quality of the goods, place and time of delivery, the extent of one party's liability to the other or the settlement of disputes will be considered to alter the terms of the offer materially. Besides these examples, there are certainly many more instances where modifications will be regarded as material, and instances of modifications which will not be regarded as immaterial would, in fact, be rare. It has been suggested that the following situations may fall under this rare category: variation by the seller of the vessel designated for [page 126] shipment under a CIF contract and slight variation in the packaging of the goods. However, even in such cases, it would depend upon the circumstances of the transaction in question. Modifications considered to be unimportant to the offeree may be important to the offeror, and vice-versa. Therefore, as further illustrated below, prudence seems to call for a notice or enquiry in case of any doubt in order to prevent serious disputes which might otherwise arise later.

However, it is often the case that parties do not pay attention to fine print appearing on the contract forms. In this context, it is of particular importance that Article 19(3) regards modifications of the terms of the offer relating to the settlement of disputes as material. This is because the dispute settlement mechanism could vitally affect the substantive interests of the parties. Disputes often arose in the past where a party insisted on arbitration in accordance with an arbitration clause which he added while the other party declined, and the cases were divided as to whether the arbitration should take place. Under the Convention the addition of an arbitration clause to the terms of the offer is a material alteration of the terms of the offer. This point, however, is subject to an important clarification. The Convention provides that 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 (Article 9(2)). Where, therefore, according to the usages or practices relevant to a particular transaction resort is to be had to arbitration in [page 127] cases of disputes, a lack of reference in the contract to arbitration would not alter the situation unless the offeror specifically excluded arbitration in the offer. Thus, in such a case, even if the offeree, in accordance with usages or practices, has added an arbitration clause to the terms of an offer, to which the offeror was silent in regard to arbitration, that addition would not have to be considered a material alteration of the terms of the offer.

To highlight some of the possible problems relating to the so-called "battle of forms" which might arise regardless of the applicable law, the following example may be given. The offeror (X) sends a purchase order to the offeree (Y) for certain items listed in Y's special discount-sale catalogue. The purchase order indicates that the goods would be purchased only if a warranty be given for the goods and if delivered within two weeks. It further states that the order is strictly under the terms stated thereunder and that no addition to or modifications of the terms will be permitted without written approval of the purchaser. Y acknowledges the receipt of the order, indicates his pleasure to comply with the order, and sends his acknowledgement form duly filled out and signed. The form, however, states that only those terms stated thereunder become the terms of the contract unless objected to immediately, and it contains a clause in bold print disclaiming warranty. Since a material alteration has been made by Y to the terms of X's purchase order, this is a rejection of the original offer and constitutes only a counter-offer. A week later, however, X receives the goods from y and he utilizes them. X could have duly rejected the delivery, but he did not. He thought that the goods were with warranty. In the example [page 128] given above, Y's terms would prevail. Disputes often arise after a party has acted on a capricious belief that there is a contract according to his own terms.

(5) Late acceptance (Article 21)

In principle, the assent to an offer which reaches the offeror after the expiration of the period during which the offer remains open will not create a contract because the authorization to the offeree to create a contract has already expired.

However, even if the assent reaches the offeror after the expiry of the period for acceptance of the offer, the offeror may nevertheless be willing to treat it as an acceptance and there is no reason to preclude this. Therefore, the offeror, if he so wishes, may treat a late acceptance as effective by, without delay, informing the offeree orally or dispatching a notice to that effect. If he does not choose to do so, there will, of course, be no contract.

Occasionally, there may also be situations where a letter or other writing containing a late acceptance shows that it has been sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time. Even in such cases, the fact remains that the assent did not arrive in time during the effective period of the offer. Accordingly, the offeror need not in principle be bound by the late acceptance. However, if the offeror keeps silent after the receipt of the late acceptance, the offeree will often be misled into believing that the acceptance reached the offeror in time and there is a contract. Therefore, in such a case, the offeror should give notice to the [page 129] offeree if he no longer wishes to enter into a contract, and unless, without delay, the offeror orally informs the offeree that he considers his offer as having lapsed or dispatches a notice to that effect, the late acceptance will be treated effective as an acceptance (cf. Article 18(1) concerning silence).

The above observation would suggest that it would always be advisable for the offeror to notify the offeree of his intention without delay whenever he receives a late acceptance. This point is important particularly because it may often be difficult to determine whether or not an assent has been sent in such circumstances that it would have reached the offeror in due time if the transmission had been normal.

3. FORM OF CONTRACT (ARTICLES 11, 12, 13 AND 96)

A contract need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including by witnesses (Article 11). Many contracts for the international sale of goods are concluded by modern means of communication which do not always involve a written form of contract. Where States require that such contracts be in writing for purposes of administrative control, such as foreign exchange or import and export regulations, a writing might nevertheless be required. Even in such cases, however, the contract itself would be enforceable between the parties without such formalities. On the other hand, some States consider the requirement that contracts for the international sale of goods be in writing to be a matter of important public policy even in the context of the relation between the parties. Therefore, Articles 12 and 96 [page 130] provide a certain mechanism for a State to make reservation in this regard when it ratifies or accedes to the Convention. However, since Article 13 provides that "writing" includes telegram and telex, the possibility of such reservation would in most cases not result in much practical difference.

4. MODIFICATION OR TERMINATION OF CONTRACT (ARTICLE 29)

A contract may be modified or terminated by the mere agreement of the parties. After a contract has been concluded, the need may arise in the course of its performance with regard to technical modifications of certain provisions, such as those concerning specifications or delivery dates. Even if such modifications of the contract may increase the costs of one party or decrease the value of the contract to the other, the parties may agree that there will be no change in the price. Such agreements are effective.

A contract in writing which contains a provision requiring any modification or termination by agreement to be in writing may not be modified or terminated by any means other than in writing. However, in some cases a party might act in such a way that it would not be appropriate to allow him to later invoke such a provision against the other party. Therefore, to the extent the other party has relied on such conduct, the first party cannot invoke the provision. This may be illustrated by the following example: A written contract for the sale of goods to Y to be manufactured by X over a two-year period of time provided that all modifications or termination of the contract had to be in writing. Soon after X [page 131] delivers the first shipment of goods to Y, Y's contracting officer tells X to make a modification in the design of the goods for the subsequent shipments. Even though X does not receive written confirmation of the request, he modifies the design as requested and the next five monthly deliveries are accepted without objection by Y. However, the sixth delivery is rejected as not conforming to the contract. In this example, Y cannot reject the sixth delivery. It was certainly not a prudent act for X not to have requested a written confirmation of the modification requested at the time of the first delivery. However, each time the buyer receives the goods in the modified design without objection, the more the buyer loses his justification to object to the change in design without a written confirmation. In the above example, whether X must reinstate the original design for the future deliveries under the remainder of the contract would depend upon the extent of the modification of the design which has already been made and the expenses and inconveniences which the seller would bear if the original design were to be restored. It is clear that this is a matter which should be discussed by the parties in advance of the seventh delivery.


Pace Law School Institute of International Commercial Law - Last updated September 10, 2002
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