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Reproduced with permission of the author

The Rules on Contract Formation under the
Vienna Convention on Contracts for the International Sale of Goods (1980)

©Zoi Valioti [*]
2003

Introduction
I. Offer (arts. 14-17): Meaning-Effectiveness-Withdrawal-Revocation-Termination
II. Acceptance (arts. 18-22): Meaning-Effectiveness-Acceptance with modifications-"Battle of the Forms"-Time limits for acceptance; Late acceptance-Withdrawal
III.   Time of conclusion of the contract (art. 23)
Conclusion

INTRODUCTION

Much effort has been made over the last years in order to harmonise and unify the law relating to international business transactions. It is the development and evolution of international commerce that calls for the configuration and application of a generally acceptable set of rules governing the international trade. Likewise, variable measures have been adopted to unify the law on international sales. The Vienna Convention on Contracts for the International Sale of Goods can be considered as a respective attempt to that effect.

It should be noted that the Vienna Convention (or else referred to as CISG), adopted at a diplomatic conference on 11 April 1980, has been very successful in its objective, which is to provide a uniform law for international sales, since it has been ratified until now from 60 countries and is applicable in international business transactions in all over the world. It is certain that in the future the CISG will be virtually unanimously accepted.

According to the Convention's provisions and specifically to article 4, among the aspects that the CISG governs is the formation of contract of sale when it comes to international sale of goods.

The Convention provides that the contract of sale is not subject to any special requirements concerning its form; according to article 11 and 13 it can be concluded either in writing (including telegram and telex) or orally ("by words of mouth"). Additionally, according to article 12 and 96, any State whose law requires contracts of sale to be concluded in writing, has the right to make a declaration under art.96 excluding the application of art. 11, where any party have his place of business in that State.

The rules on contract formation are provided in Part II, in the articles 14-24. It should be pointed out that according to art. 92, any Contracting State that does not wish to be bound by Part II (or III) would not be considered a Contracting State in respect of matters governed by that Part. However according to Schlechtriem's opinion "if the forum state applies the CISG as the law of a Contracting State on the basis of art. 1(1)(b) (whether applying its own law or that of a third State) Part II must be applied."[1]

According to arts.14-24, the elements that are necessary for the formation of a contract of sale are the offer and the acceptance to the offer through which an agreement is accomplished. The Convention "adopts the traditional pattern of contract formation (offer-acceptance) and does not refer to current practices in international trade."[2] Such practices could be for example the conclusion of a contract "by agreement reached in point-by-point negotiations, lengthy exchange of correspondence, the dispatch of offers which cross or a failure to object to a commercial letter of confirmation."[3] But does the Convention govern these other forms of reaching agreement? "The majority view is that there is a gap in the Convention which must be filled using the principles of the Convention,"[4] according to art. 7(2), which provides that matters "..which are not expressly settled in [the Convention] are to be settled in conformity with the general principles on which it is based". The Convention also provides in art. 9 that "the parties are bound to any usages or practices that have developed between themselves". Therefore, it should be accepted that the CISG governs any form of concluding a contract, as long as the parties have clearly expressed their intent to be legally bound and the contract contains all the essentialia negotii necessary for the conclusion of a contract under art.14. After all, the Convention itself does not require a contract to be concluded with the stereotype model of offer-acceptance, for example when the contract is concluded (under arts.18(3) and 8(3)) by performing an act.

On the contrary, the CISG does not include any rules about the pre-contractual stage or the negotiations, which may last for even months before a final decision is reached.

Therefore, the rules regarding the offer are provided in articles 14-17 and regarding the acceptance in articles 18-22. Article 23 provides the time when a contract is concluded and article 24 is a subsidiary article.

I. OFFER (ARTS. 14-17): MEANING-EFFECTIVENESS-WITHDRAWAL-REVOCATION-TERMINATION

A. Meaning

According to art.14 of the Convention, the offer is a proposal to conclude a contract and it should be:

  1. definite regarding the goods, their quality and price;
  2. addressed to a specific person or group of persons; and
  3. signifying the offeror's will to be bound by the probable future acceptance.

The description of the goods, their quantity and price are the essentialia negotii of the contract, in other words, the minimum content that should be included in the offer; the goods should be referred to expressly, and the quantity and price either expressly or implicitly. Since these constitute the minimum content of the offer, it is clear that other elements could be included, which are even necessary in certain types of transactions, in order for them to be regarded as sufficiently definite; such elements could be for example the place of delivery or the method of payment.[5]

The goods, their quantity and price could be indicated expressly (for example, 3 tons of green apples for 800 pounds per ton). Nevertheless, the quantity and price could also be indicated implicitly (for example, such and such tons of bricks sufficient to built a three store building). The price could be implicitly stated; for example, "if the offeror uses the seller's catalogue and it is otherwise clear from the offer that he feels himself bound in case of acceptance, it may be inferred that he accepted the price currently charged by the seller." [6]

Nonetheless, in some cases the indication of the price presents certain difficulties; that is, in cases of "open price" contracts, where the price is not fixed either expressly or implicitly. In such cases, the question that arises is whether a contract is concluded or not. Having only art. 14 in mind the answer would be "no". Nevertheless, further examination would be necessary, considering the provision of art. 55,[7] according to which a contract can be validly concluded without making any reference to the price whatsoever. It seems that there is a contradiction between these two articles. But is there or could they be read together instead? Some commentators argue, "that a CISG contract which does not fix or provide for the price is not sufficiently definite and thus not binding upon the parties thereto... Other commentators point out that article 55 provides a gap-filling reference to the price. Since Article 55 provides a method of dealing with price gaps in CISG contracts, this provision can be read as negating any inference that a price gap is fatal under Article14"[8]. Therefore, there are two opposing views: according to the first, article 14 should be read alone, coming to the conclusion that if the parties did not make any arrangement for the price, there is no valid contract. According to the second, articles 14 and 55 should be read in conjunction, since the latter is able to fill in the gap of the missing price and, reach to the conclusion that a valid contract is concluded .[9]

The offer should be addressed to a specific person or group of persons, in order to be definite. In an opposite case, the offer will be considered as an invitation for proposal. Therefore, offers to the public should not be considered as offers, but as invitations to treat. "Price lists, circulars, newspaper advertisements, radio and television spots (even where the price and details of the goods are set out precisely in accordance with art. 14(1) second sentence), brochures, offers to an indefinite group of persons via Internet, teletext or minitel and also invitations to tender, or shop windows displays"[10] constitute invitations for proposal and do not imply the offeror's will to be legally bound. However, sometimes the above are considered as offers when that is clearly indicated by the offeror. Such an indication usually lies in the expressions and the language used.

Nevertheless the most important element of an offer is certainly the offeror's intention to be bound by the acceptance. The offeror should be completely aware that his statement constitutes an offer and be ready to fulfil his obligations in case of an acceptance. The "requirement of intention to be bound is of a subjective nature... and at any rate...can best be ascertained on the basis of the conduct of the parties( art.8). Furthermore, the perspective parties commonly entered into preliminary negotiations. Such negotiations may also indicate the seriousness of the offer or the lack thereof."[11]

B. Effectiveness

The effectiveness of the offer is dealt with in art.15(1) of the Convention, where it is stated that the offer becomes effective when it "reaches" the offeree.

But what does "reaches" mean? Since it is encountered in several provisions of the second part of the Convention, it would be wise to explain its meaning now. Its meaning is provided in art. 24, which is a subsidiary and explanatory article. Therefore, the offer, acceptance or other statement "reaches" the addressee when it:

  1. is made orally to him;
  2. is delivered personally to him;
  3. is delivered to his place of business or mailing address; or
  4. is delivered to his residence (if he has not a place of business or a mailing address).

It is clear that under the CISG, a declaration reaches the addressee when it is delivered to his address and not when it comes to his attention. "In other words when it has come within the recipients own sphere."[12]

That means that all the legal consequences of the offer begin from the time that the offeree learns personally about it or from the time it is delivered to his address.

C. Withdrawal

The rule for the withdrawal of the offer is that an offer can be withdrawn only if 'the withdrawal reaches the offeree before or at the same time as the offer' (art.15 (2)).

In art.15(2), a distinction is made between the withdrawal and the revocation of the offer. It should be noted that these two terms generally have the same meaning and only under the Vienna Convention a distinction is made between them. A withdrawal takes place when the offeror takes back his offer before it has been effectively communicated to the offeree. On the contrary, the offeror can revoke his offer after it has been effectively communicated (but before the offeree had dispatched his acceptance). This difference should be stressed, since withdrawal and revocation have different legal consequences. After the withdrawal "the offer lapses and cannot be revived; it can only be repeated."[13]

D. Revocation

The Convention provides the rules for the revocation of the offer in article 16; according to the general rule, the revocation is possible only before the offeree has dispatched an acceptance [16(1)]. The exemption follows on art.16(2)(a)(b): an offer is irrevocable if it so indicates (by fixing a time for acceptance or otherwise) or if the offeree reasonably considered it as irrevocable.

There are different conceptions concerning revocation between the common and civil law systems.[14] The CISG accepts that an offer is revocable, following the common law view, but does make an offer irrevocable in certain cases. It can be seen that the Convention in this point, makes a compromise between the civil and the common law traditions concerning the revocation of the offer.

The Convention uses the "dispatch rule" to determine when the offeror has lost his right to revoke his offer; he has the right to revoke it until the offeree has dispatched his acceptance and not till the time the acceptance reaches him.[15] "This may be a trap for the offeror, because he does not know if or when the offeree has dispatched an acceptance and may later find out that his revocation is no longer effective."[16] That means that the dispatch of an acceptance ends the period that the offeror can revoke his offer even before the moment of the conclusion of the contract.

Article 16(2) constitutes the exception to the rule of revocability of the offer. According to art.16(2)(a), the offeror cannot revoke his offer if it indicates that is irrevocable.

The offeror's intention for his offer to be irrevocable is deduced by the language and expressions used, for example: firm offer, will be held open, open offer, option, guarantee. Article 8 (interpretation of statements or other conduct of the parties) will be once more a useful tool for the interpretation of the offeror's intent.[17]

An issue that came up and caused a much misunderstandings and controversy among at Vienna Diplomatic Conference on the CISG is whether an offer which contains a "fixed time" for acceptance is thought to be irrevocable or not. And it is true that "...the language adopted in the CISG is described as a compromise solution."[18] The problem came up because the meaning of the "fixed time" is understood differently in the civil and common law systems. In civil law when the offeror sets a fixed time for acceptance, it means that it is irrevocable till that time and then it lapses. On the contrary, in common law it means that it is revocable, unless other indications point to the contrary, and it lapses after that time. The existing ambiguity can be resolved by applying art. 8: a thorough examination of the parties' intention should be made, in order to define their understanding of the offer being revocable or irrevocable. That means "the fixed time for acceptance...in an offer, would in itself, not necessarily always make the offer irrevocable."[19]

According to art.16(2)(b), in order for an offer to be irrevocable two elements are necessary: 1) the offeree's reliance that it is irrevocable and 2) an act made by the offeree showing that he relied on the offer. " Such an act or conduct may consist of preparation for production, buying or hiring materials or equipment, incurring expenses where that act or conduct was regarded as normal in the trade concerned, or was supported by preliminary negotiations, or should otherwise have been foreseen or known to the offeror."[20]

The rationale of art.16 is to protect the offeree's legitimate expectation that the contract is concluded and thus, it is no longer possible for the offeror to revoke his offer.[21] Article 16 tries to reconcile two different views; one adopted by the civil law and one by the common law, in order to create a uniform rule acceptable by both legal systems.

E. Termination

The rule on termination of the offer under the CISG is that the offer comes to an end in any case when the rejection reaches the offeror (art.17).

The Vienna Convention does not contain any rules about the status of the offer in cases like death, insolvency or loss of legal capacity. In situations like these, it should be accepted that rules of domestic law apply (art.7(2)).[22]

II. ACCEPTANCE (ARTS. 18-22): MEANING-EFFECTIVENESS-ACCEPTANCE WITH MODIFICATIONS-"BATTLE OF THE FORMS"-TIME LIMITS FOR ACCEPTANCE-LATE ACCEPTANCE-WITHDRAWAL

A. Meaning

The CISG defines an acceptance as any statement or conduct that indicates assent to an offer (art.18(1)).

The wording of the offer is irrelevant; the only condition for a valid acceptance is to signify the offeree's intent to be bound by the terms fixed in the offer. If the acceptance includes variations it should be treated under the scope of art.19. "Mere confirmation of receipt, an expression of thanks or an indication of interest does not express an intention to accept it"[23] and should not be treated as an acceptance.

The means used is also irrelevant. The offeree can accept the offer by using any means of communication, unless the offeror had specifically indicated one (for example by telephone). If the offeree replies using different means of communication his reply should be appraised under art. 19. In any case, any reply should be appraised under arts. 8(3) and 9(1)(2), according to the usages and practices the parties had established between them.[24]

The offeree can indicate his assent not only by a statement, but also by "any other conduct." Examples of such conduct are the packaging of goods for dispatch, the dispatch of the goods, payment or opening a letter of credit for the purchase price.[25]

To the question whether silence constitute an acceptance or not, art. 18(1) gives a clear answer; "silence or inactivity does not in itself amount to acceptance". That means that the offeror cannot assume from the offeree's wish not to reply that he had accepted his offer, since one party's silence cannot indicate assent to an offer.[26]

Nevertheless, the article's wording ("by itself") suggests that silence may constitute an acceptance in some cases, and when certain conditions are met; such conditions are the previous agreement between the parties, their conduct, or the usages and practice established in international trade in these types of transactions, according to art. 8 (3), 9 (1)(2). In any case, the offeree's intention to be bound should be sufficiently clear.

B. Effectiveness

Art. 18(2) provides that the acceptance becomes effective when it reaches the offeror. The time of the acceptance's effectiveness is important considering the fact that this is the time when the contract is concluded.

It is obvious that the CISG adopts the civil law rule of "receipt", in order for the acceptance to be effectively communicated. The CISG does not follow the "mailbox rule" of the common law systems, according to which an acceptance becomes effective once it has been dispatched. The acceptance should reach the offeror on time. If the offeror had fixed a time for acceptance, then the acceptance should reach him within that time or else it will not be effective and the offer will lapse. [27] If there is no time fixed, then the acceptance should reach the offeror within "reasonable time". The question that arises in situations like these is how should the "reasonable time" be defined. The answer is given by the wording of article 18(2); the "reasonable time" is defined by the special circumstances under which the transaction was made or even by the nature of the means used by the offeror.[28]

An oral offer should be accepted immediately because it does not "survive after the conversation has ended,"[29] unless there are special circumstances (for example the offeror's assent to extend the period for acceptance).

An exception to the general rule of art. 18(1) first sentence is provided in art. 18(3). According to that provision, an acceptance made by conduct becomes effective when the act is performed within the time indicated in art. 18(2), without it being necessary for the offeree's indication of assent to reach the offeror. The wording of art. 18(3) indicates some examples of conduct that become effective as an acceptance without notice to the offeror, such as the dispatch of the goods or the payment of the price. But this reference is just indicative and not exclusive; that means that other acts can be considered as conduct indicating assent, like the packaging of goods for dispatch or opening a letter of credit for the purchase price.[30] To define whether a conduct falls into the scope of art. 18(3) or not it would be wise to appraise the performed act under art. 8(3) and art. 9(1)(2), according to the practices established between the parties or to usages widely known and established in the particular trade concerned .[31]

An important question arises in situations under art. 18(3): is conduct alone effective as an acceptance or must the offeree additionally inform the offeror of his act? There are two different views concerning that question. According to Prof. Honnold's view, when performing an act signifies the acceptance, it is still necessary that the indication of assent be communicated to the offeror, in order for a contract to be concluded. [32] On the contrary, Prof. Schlechtriem argues that "a contract is formed under art. 18(3) by conduct amounting to acceptance even when it is not communicated to the offeror".[33] According to him, "the duty to inform the offeror is an ancillary duty and a matter to be determined by interpreting the contract." [34]

C. Acceptance with modifications

The Convention in art. 19(1) adopts the "mirror image" rule, according to which the acceptance should express the offeree's assent to the offer with no variation. If the reply to an offer that purports to be an acceptance alters the initial terms of the offer either by adding, limiting or changing generally the terms included in the offer, is considered as a counter-offer that obliterates the original offer.[35] In that case, the original offeror can either accept or reject the new offer.

A reply will be considered as an acceptance, unless it includes terms that alter the terms of the original offer "materially". The biggest problem in these situations is to define which alterations constitute "material modifications". The answer is given in art. 19 itself. Paragraph 3 provides a list of such alterations; changes in the way of payment or in the place of delivery of the goods are considered to be "material alterations". Nevertheless, sometimes even these modifications should not be considered "material" when general trade usages or practices between the parties consider them as "immaterial."[36] The list in paragraph 3 is not exhaustive; that means that other alterations that are not included in the list could be considered as "materially altering" the offer. That depends on the nature of the transaction or on practices established between the parties (art. 8(3)). For example, terms that arrange contractual penalties, the mode to pack or send the goods or the rights concerning the withdrawal, revocation or termination could be considered as changing the offer materially.[37]

Article 19(2) constitutes an exception to the general rule of art. 19(1). Therefore, if the reply contains additional or different terms that do not materially change the original offer, that reply constitutes an acceptance and the contract is concluded, unless the offeror objects to the discrepancy and informs the offeree without undue delay.

D. "The Battle of the Forms"

In modern transactions it is usual for the seller and buyer to send their "offer" and "acceptance" in forms that incorporate on the back their standard terms of contract. Usually the terms posed by each party will not coincide and it will be difficult to define if a contract has been concluded and if it has whose the general conditions apply. This situation is usually referred to as "the battle of the forms."[38]

The questions that arise are "is there a contract concluded?" and if it is, "whose terms apply?" "Does the Vienna Convention include any rules arranging this problem?"

The CISG does not include any clear and complete rules concerning the battle of the forms. The only provision that could be applied in situations like these is article 19.

According to Prof. Pilar Perales Viscasillas there are two different trends of opinions regarding the battle of the forms and the Convention.

On one hand, some commentators argue that the battle of the forms falls outside the scope of the Convention and the solution should be found in the applicable domestic law, in accordance with article 4(a).

On the other hand, some scholars agree that the problem is within the scope of the CISG, but they disagree on the provisions that should be applied. Some hold that the solution lies in art.7 and that the general principles of the CISG should be applied in order to arrange problems that are not expressly settled by the Convention. By applying the principle of good faith, a solution can be found similar to the US "knock-out rule"; the terms of the contract are those with which the parties agree, the rest cancel each other out and the norms of Part III of the Convention replace them. Some others hold that the solution can be found under specific provisions of the Convention. This is likely to lead to the application of the "last shot rule": the general conditions of the person that is the last to send his form prevail and therefore, he is the person who "wins the battle."[39] On various occasions, the Courts have tried to solve problems like these by applying the 'last shot rule.'[40]

The solution to the problem of the battle of the forms could lie to an implementation of a harmonious system of rules of interpretation; "in those areas where the Convention is not explicit, it should be the responsibility of the courts to develop a consistent policy in implementing a coherent set of guidelines."[41]

E. Time limits for acceptance

Article 20(1) provides the way of calculating the period for acceptance fixed by the offeror in a telegram or letter. This period begins from the date shown on the letter or when there is not one, from the date shown on the envelope. In case of a telegram. the period begins from the moment the telegram is handed in for dispatch. If the offer is made by means of instantaneous communication (fax, e-mail, etc) the period begins from the moment that the offer reaches the offeree.

Article 20(2) is a subsidiary provision, according to which official holidays and non-business days are included in the period set for acceptance. Nevertheless, if the notice for acceptance cannot be delivered to the offeror because the last day of the period is an official holiday or a non-business day, the period is extended to the next business day.

F. Late acceptance

In case of a late acceptance the offeror can decide whether he wants to accept it or not. If he does, he should inform the offeree that he considers his acceptance effective despite the lateness (art. 21(1)). Art. 21(1), therefore, provides an exception to the general rule of art. 18(2).[42]

Nevertheless, sometimes the acceptance arrives late not because of the offeree's fault but because of a delay in transmission, caused for example by a strike in the post office. In these situations, article 21(2) applies: the late acceptance is considered as effective and the contract is concluded when it reaches the offeror. It is necessary, though, to be clear that in normal conditions the acceptance would have reached the offeror on time. "Article 21(1), thus, puts a burden on the offeror to inspect a late acceptance to determine whether the cause of its lateness rests with the offeree or the post office. If it is clear from the face of the acceptance that the offeree is not at fault, the offeror must object or find himself bound."[43] In the cases of para 2 the offeror has the right to oppose to the conclusion of the contract, informing the offeree for his decision.[44]

Suppose that the delay in transmission is quite a long time. Would the offeror still be able to consider the acceptance effective and the contract concluded? A positive answer would be unfair to the offeree, whose acceptance, probably after such a long time, would not indicate assent to the offer, if intervening events had made the contract unfavourable to him.[45]

G. Withdrawal

According to article 22, the withdrawal of the acceptance is effective if it reaches the offeror before or at the same time with the acceptance.[46]

III. TIME OF CONCLUSION OF CONTRACT

Article23 provides that the contract is concluded at the time when the acceptance becomes effective. That is, at the time when the acceptance reaches the offeror (art. 18(2)), or when the act amounting to acceptance is performed (art. 18(3)).

CONCLUDING REMARKS

There is no doubt that the "CISG possesses a number of ambiguities, inconsistencies and shortcomings. This is inevitable in any Convention in a major field of law involving such a number of Contracting States... The Convention seeks to maintain a delicate balance between the contrasting attitudes and concepts of the civil law and of the common law and very often rules have to be blurred or omitted in order to produce an acceptable compromise."[47] Nevertheless, even more undoubtedly the CISG is a coherent set of provisions, which include improved terms in relation with its predecessor.[48] The significance of the Vienna Convention is granted, considering its acceptance from a large number of States and the fact that "many of the CISG rules and principles have now been incorporated into the UNIDROIT principles of international commercial contracts and the principles of European Contract Law -- two very important recent developments in the field of harmonisation of Commercial Law." [49]


BIBLIOGRAPHY

A. Books

  1. H. Bernstein and J. Lookofsky, "Understanding the CISG in Europe", 1997, Kluwer Law International.
  2. C.M. Bianca-M.J. Bonell (eds), "Commentary on the International Sales Law. The 1980 Vienna Sales Convention", 1987.
  3. I. Carr and R. Kidner, "Statutes and Conventions on International Trade Law", 3rd edition, 1999, Cavendish Publishing Limited.
  4. L. D'Arcy, C. Murray and B. Cleave, "Schmitthoff's Export Trade: The Law and Practice of International Trade", 2000, Sweet and Maxwell Ltd.
  5. R. Goode, "Commercial Law", 2nd edition, 1995, Penguin Books.
  6. J.O. Honnold, "Uniform Law For International Sales", 3rd edition, 1999, Kluwer Law International.
  7. P. Schlechtriem, "Commentary on the UN Convention on the International Sale of Goods (CISG)", 2nd edition, 1998, Clarendon Press Oxford.

B. Articles

  1. J.C. Kelso, "The United Nations Convention on Contracts for the International Sale of Goods: contract Formation and the Battle of the Forms", 21 Columbia Journal of Transnational Law (1982), 529-556.
  2. A.F.M. Maniruzzaman, "Formation of International Sales Contracts: a Comparative Perspective", International Business Lawyer, December 2001, 483-489.
  3. F. Vergne, "The "Battle of the Forms" Under the United Nations Convention on Contracts for the International Sale of Goods", 33 American Journal of Comparative Law (1985), 233-258.
  4. P. Winship, "Formation of International Sales Contracts under the 1980 Vienna Convention", International Lawyer (1983), 1-15.

C. Websites

  1. Bezirksgericht St. Gallen, 3PZ97/18, of 3 July 1997, CISG Database- Pace University, <http://cisgw3.law.pace.edu/cases/970703s1.html>, accessed 07/11/02.
  2. Case 203, Court of Appeals of Paris, on 13 December 1995, UNCITRAL Database- CLOUT, <http://www.uncitral.org/english/clout/abstract/abstr15.htm>

FOOTNOTES

* This paper is dedicated to my sister, Catherine, who is and has always been my guardian angel.

1. P. Schlechtriem, "Commentary on the UN Convention on the International Sale of Goods(CISG)", 2nd edition, 1998, Clarendon Press Oxford, Intro. to arts. 14-24, para 10.

2. J.O. Honnold, "Uniform Law For International Sales",3 nd edition, 1999, Kluwer Law International, 132.1.

3. P. Schlechtriem, "Commentary on the UN Convention on the International Sale of Goods (CISG)", 2nd edition, 1998, Clarendon Press Oxford, Intro. to arts. 14-24, para 2.

4. Ibid., para 3.

5. In such cases, when those elements are not provided there is no valid contract, unless the usages and practices between the parties indicate otherwise, according to arts. 8 and 9.

6. E. Eörsi in C.M. Bianca-M.J. Bonell (eds), "Commentary on the International Sales Law. The 1980 Vienna Sales Convention", 1987, art. 14, 2.2.4.3.

7. Article 55 CISG provides: "where a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price ...".

8. H. Bernstein, J. Lookofsky, "Understanding the CISG in EUROPE", Kluwer Law International, 1997, para 3.3.

9. The second view was followed in a case upon a Swiss Court (Bezirksgericht St.Gallen, 3PZ 97/18, of 3 July 1997), which decided, by applying art. 55, that even though the parties had not fixed the price at the moment of the conclusion of the contract, the contract was validly concluded. "A Dutch seller and a Swiss buyer entered into an agreement for goods to be manufactured by the buyer with the raw material delivered by the seller. After the buyer had used 10% of the raw material, the cooperation between them was terminated and the remaining goods returned to the seller. The seller sued the buyer for the purchase price of the entire shipment. The Court held that that the buyer had to pay the price for all of the material and not only for the 10% used. The Court relied, in the first place, on the buyer's subsequent conduct (art. 8(3) CISG). The buyer had asked the seller to send the invoice without any reservations although the buyer already knew that the whole material would not be used. The purchase price had not been fixed by the parties and was determined by the Court in application of article 55 of the CISG...". CISG DATABASE-Pace University, <http://cisgw3.law.pace.edu/cases/970703s1.html>. accessed 07/11/02.

10. P. Schlechtriem, "Commentary on the UN Convention on the International Sale of Goods (CISG)", 2nd edition, 1998, Clarendon Press Oxford, art. 14, para 15.

11. E. Eörsi in C.M. Bianca-M.J. Bonell (eds), "Commentary on the International Sales Law. The 1980 Vienna Sales Convention", 1987, art. 14, 2.2.3.

12. P. Schlechtriem, "Commentary on the UN Convention on the International Sale of Goods (CISG)", 2nd edition, 1998, Clarendon Press Oxford, art. 24, para 12.

13. E. Eörsi in C.M. Bianca-M.J. Bonell (eds), "Commentary on the International Sales Law. The 1980 Vienna Sales Convention", 1987, art. 15, 2.1.2.

14. According to the common law rules an offer is revocable even if a promise has been made not to revoke it, unless something has been given as consideration, whereas in civil law systems the offer is binding and thus irrevocable, unless it states that it's revocable.

15. On the contrary the CISG uses the "receipt rule" in the articles 15, 18(2), 22 and 23.

16. E. Eörsi in C.M. Bianca-M.J. Bonell (eds), "Commentary on the International Sale Law. The 1980 Vienna Sales Convention", 1987, art. 16, 3.1.

17. See P. Schlechtriem, "Commentary on the UN Convention on the International Sale of Goods (CISG)", 2nd edition, 1998, Clarendon Press Oxford, art. 16, para 8.

18. P. Winship, "Formation of International Sales Contracts under the 1980 Vienna Convention", International Lawyer (1983), 1-15, p. 7.

19. A.F.M. Maniruzzaman, "Formation of International Sales Contracts: a Comparative Perspective", International Business Lawyer, December 2001, 483-489, p. 486.

20. E. Eörsi in C.M. Bianca-M.J. Bonell (eds), "Commentary on the International Sales Law. The 1980 Vienna Sales Convention", 1987, art. 16, 2.2.2.

21. See A.F.M. Maniruzzaman, "Formation of International Sales Contracts: a Comparative Perspective", International Business Lawyer, December 2001, 483-489, p. 485.

22. See P. Schlechtriem, "Commentary on the UN Convention on the International Sale of Goods (CISG)", 2nd edition, 1998, Clarendon Press Oxford, art. 17, para 6.

23. P. Schlechtriem, "Commentary on the UN Convention on the International Sale of Goods (CISG)", 2nd edition, 1998, Clarendon Press Oxford, art. 18, para 4.

24. Ibid., para 5.

25. Ibid., para 7.

26. For example if an offeror states: 'I can sell you five freezers for only 500 pounds each. If I don't get your reply in two weeks time, I'll assume you have accepted', and the offeree does not reply, that doesn't mean that he had accepted, and consequently no contract was concluded.

27. It could be considered though as a counteroffer, according to article 19(1). Moreover, a late acceptance might not lapse, if the offeror informs immediately the offeree that he accepts it. According to article 21(1) CISG "an acceptance even if it's late can still be considered as effective, if the offeror informs the offeree to that effect". See E.A. Farnsworth in C.M. Bianca-M.J. Bonell (eds), "Commentary on the International Sales Law, The 1980 Vienna Sales Convention', 1987, art. 18, 2.6.

28. If the offeror communicated his offer by e-mail or telegram then a quick response should be expected- that means that the reasonable time in that case should be short. On the contrary if he made the offer by letter, then the 'reasonable time' could be longer (considering the time needed with the mail). Even art. 9(2) could help in defining the 'reasonable time', according to usages and practices widely known to international trade.

29. E.A. Farnsworth in C.M. Bianca-M.J. Bonell (eds), 'Commentary on the International Sales Law, The 1980 Vienna Sales Convention', 1987, art. 18, 2.6.

30. See P. Schlechtriem, op cit 1, art. 18, para 7.

31. The wording of art. 18(3) expressly states that: "..if by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent by performing an act...".

32. J.O. Honnold, "Uniform Law for International Sales", 3rd edition, 1999, Kluwer Law International, para 164.

33. P. Schlechtriem, "Commentary on the UN Convention on the International Sale of Goods (CISG)", 2nd edition, 1998, Clarendon Press Oxford, art .18, para 23.

34. Ibid., para 23.

35. An illustrative ruling may be found in case no 203 of the UNCITRAL Database- CLOUT. The case was decided by the Court of Appeal of Paris, on 13 December 1995."A French company placed an order with an Italian company for outer wrappings of packets of biscuits. The order form of the French company, which carried on its reverse side a jurisdiction clause in favour of the Commercial Court of Paris, was sent back by the Italian company with its' representative's signature. Ten days later, the Italian company confirmed the order, referring to its sales conditions, which included a jurisdiction clause in favour of the Court of Tortona. Considering the wrappings sold to be defective, the French buyer sued its seller before the Commercial Court of Paris. Having raised a plea asserting lack of jurisdiction, the seller lodged an objection, invoking articles 18 and 19(2) CISG, but the Court of Appeal of Paris ruled to retain its jurisdiction.... The Court noted that in conformity with art. 18(2) CISG, the contract had been formed at the moment the French company received the order form. It considered, however, that in the absence of an explicit reference on the front side of the form to the sales conditions indicated on the reverse side, the seller could not be deemed to have accepted those conditions. The Court of Appeal of Paris likewise rejected the applicability of the general sales conditions of the Italian company on the ground that the confirmation of the order, which was subsequent to the formation of the contract, was to be interpreted as a counteroffer within the meaning of Art. 19(1) CISG and was rendered absolutely inapplicable by the lack of acceptance by the buyer..." CLOUT Database <http://www.uncitral.org/english/clout/abstract/abstr15.htm>, accessed 12/11/02.

36. See P. Schlechtriem, "Commentary on the UN Convention on the International Sale of Goods (CISG)", 2nd edition, 1998, Clarendon Press Oxford, art. 19, para 8.

37. Ibid., para 9.

38. See L. D'Arcy, C. Murray and B. Cleave, "Schmitthoff 's Export Trade: The Law and Practice of International Trade", 2000, Sweet and Maxwell Ltd, p. 64.

39. See Pilar Perales Viscasillas, "Cross reference editorial analysis of CISG article 19, CISG W3 Database, Pace University School of law", <http://www.cisg.law.pace.edu>, December 1996, accessed 09/11/02, <http://www.cisg.law.pace.edu/cisg/text/cross19.html >.

40. "A case law example of the application of the last-shot rule is: Example: A German buyer ordered doors that had to be manufactured by the seller according to the buyer's specifications. The seller sent the buyer a confirmation letter that contained his general conditions of sale on the back. Those conditions included the statement that 'the seller must be notified of any defects in the goods within 8 days of delivery'. Subsequently, the seller delivered the goods and the buyer received them. In this case, the seller's confirmation letter was considered a counter-offer that was implicitly accepted by the buyer's conduct when he received the goods. The Court's reasoning was: When forms are used, the rules of the Convention also apply; consequently, any variations of these forms would be a counter-offer. Such a counter-offer would most certainly be accepted through some type of act of performance". Pillar Perales Viscasillas, 'Battle of the Forms and the burden of Proof. An analysis of BGH 9 January 2002', 6 Vindobona Journal of International Commercial Law and Arbitration (2002), No 2, 217-228, <http://cisgw3.law.pace.edu/cisg/biblio/perales2.html>, accessed 10/12/02.

41. F. Vergne, "The "Battle of the Forms" Under the United Nations Convention on Contracts for the International Sale of Goods", 33 American Journal of Comparative Law (1985), 233-258, p. 258.

42. According to article 18(2) "...An acceptance is not 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,..."

43. J.C. Kelso, "The United Nations Convention on Contracts for the International Sale of Goods: Contract Formation and the Battle of Forms", 21 Columbia Journal of Transnational Law (1982), 529-556, p. 540.

44. It's worth noting that in para 1 the contract is concluded only if the offeror informs the offeree that he considers his late acceptance as effective, whereas in para 2 the contract is concluded if the offeror remains silent.

45. See E.A. Farnsworth in C.M. Bianca-M.J. Bonell (eds), "Commentary on the International Sales Law. The 1980 Vienna Sales Convention", 1987, art. 21, 3.4.

46. The CISG uses the "receipt" rule for the withdrawal of the acceptance, whereas it uses the "dispatch" rule for the revocation of the offer. That could be unfair to the offeror who is bound from the time that the offeree had "dispatched" the acceptance. On the contrary, the offeror is bound from the time that the offeror has "received" the acceptance. That means that during the intervening time the offeree can withdraw his acceptance according to his own interests.

47. R. Goode, "Commercial Law", 2nd edition, 1995, Penguin Books, p. 927.

48. The Hague Uniform Law on the Formation of Contracts for the International Sale of Goods 1964-(ULF).

49. A.F.M. Maniruzzaman, "Formation of International Sales Contracts: a Comparative Perspective", International Business Lawyer, December 2001, 483-489, p. 489.


Pace Law School Institute of International Commercial Law - Last updated March 15, 2004
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