Article 16. Revocability of Offer

• Text of Article 16
• Outline of issues
• Descriptors
• Coded case annotations
  -  Guide to case codes
• UNCITRAL case digest
• Annotated comparatives
  -  UNIDROIT Principles
  -  PECL comparative

TEXT OF ARTICLE 16

(1) Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance.

(2) However, an offer cannot be revoked:

(a) if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or

(b) 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.

OUTLINE OF ISSUES

Reproduced with permission of UNCITRAL

16A Revocation that reaches offeree prior to dispatch of acceptance

16B Restriction on revocability (art. 16(2))

DESCRIPTORS

Offers ; Irrevocability of offer ; Receipt rule ; Estoppel

CASE ANNOTATIONS: UNCITRAL DIGEST CASES PLUS ADDED CASES

United States 26 March 2009 U.S. District Court [Ohio] (Miami Valley Paper, LLC v. Lebbing Engineering & Consulting GmbH)
 

Germany 10 November 2006 Oberlandesgericht [Appellate Court] Dresden (Meat case) [translation available]
 

Canada 28 October 2005 Superior Court of Justice, Ontario (Chateau des Charmes Ltd v. Sabaté USA Inc. et al.)

Austria 23 March 2005 Oberlandesgericht [Appellate Court] Linz (Conveyor band case)
 

* United States 10 May 2002 U.S. District Court [Southern Dist. NY] (Geneva Pharmaceuticals Tech. Corp. v. Barr Labs. Inc.) 16B ; 16C
 

Germany 2 September 1998 Oberlandesgericht [Appellate Court] Celle [translation available]

Germany 28 April 2006 Landgericht [District Court] Dresden (Meat case)
 

* Germany 28 February 1996 Landgericht [District Court] Oldenburg (Egg case) [translation available]
 

Germany 9 June 1995 Oberlandesgericht [Appellate Court] Hamm [translation available]

Germany 23 May 1995 Oberlandesgericht [Appellate Court] Frankfurt
 

* Austria 15 June 1994 Vienna Arbitration award SCH-4318 [translation available]

UNCITRAL CASE DIGEST

A/CN.9/SER.C/DIGEST/CISG/16. [8 June 2004] Reproduced with the permission of UNCITRAL.

DIGEST OF ARTICLE 16 CASE LAW

1. Paragraph (1) of article 16 sets out rules for the effective revocation of an offer. (Article 24 defines when a revocation "reaches" the offeree.) Article 15(2) provides that an offeror may withdraw an offer as long as the withdrawal reaches the offeree no later than the time the offer reaches the offeree. After the offer has reached the offeree, article 16(1) empowers the offeror to revoke the offer if the revocation reaches the offeree before he has dispatched an acceptance unless the offer cannot be revoked by virtue of article 16(2). Although there have been citations to article 16,[1] there are no reported cases interpreting paragraph (1).

2. Sub-paragraph (a) of paragraph (2) provides that an offer cannot be revoked if it indicates that it is irrevocable, whether by stating a fixed time for acceptance or otherwise. There are no reported cases applying this sub-paragraph.

3. Sub-paragraph (b) of paragraph (2) provides that an offer cannot be revoked if the offeree relied on the offer and it was reasonable for him to do so. This sub-paragraph has been cited as evidence of a general principle of estoppel ("venire contra factum proprium").[2] It has also been held that domestic legal rules on promissory estoppel are not preempted except when the Sales Convention provides the equivalent of promissory estoppel, such as it does in sub-paragraph (b).[3]

FOOTNOTES

* The present text was prepared using the full text of the decisions cited in the Case Law on UNCITRAL Texts (CLOUT) abstracts and other citations listed in the footnotes. The abstracts are intended to serve only as summaries of the underlying decisions and may not reflect all the points made in the digest. Readers are advised to consult the full texts of the listed court and arbitral decisions rather than relying solely on the CLOUT abstracts.

[Citations to cisgw3 case presentations have been substituted [in brackets] for the case citations provided in the UNCITRAL Digest. This substitution has been made to facilitate online access to CLOUT abstracts, original texts of court and arbitral decisions, and full text English translations of these texts (available in most but not all cases). For citations UNCITRAL had used, go to <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.]

1. The following decision cites article 16 but because the case did not involve irrevocability of the offer -- see para. 2 -- the citation effectively refers to paragraph (1) of article 16: [GERMANY Landgericht [District Court] Oldenburg 28 February 1996, available online at <http://cisgw3.law.pace.edu/cases/960228g1.html>] (citing arts. 14, 15, 16, 17, 18 and 19).

2. CLOUT case No. 94 [AUSTRIA Vienna Arbitration Award No. SCH-4318, 15 June 1994, available online at <http://cisgw3.law.pace.edu/cases/940615a4.html>] (seller's continued requests for information about complaints induced buyer to believe that seller would not raise defense that notice of nonconformity was not timely).

3. [UNITED STATES Geneva Pharmaceuticals Tech. Corp. v. Barr Labs. Inc. Federal District Court [New York] 10 May 2002 available online at <http://cisgw3.law.pace.edu/cases/020510u1.html>] (finding limited to scope of promissory estoppel as claimed by buyer).

1. Introduction to the issue of irrevocability of offers
2. The general rule of revocability of offers in the CISG and the UNIDROIT Principles
3. Exceptions to the general rule of revocability
   -   Indication of irrevocability contained in the offer (Article 16(2)(a) CISG;
        Article 2.4(2)(a) UNIDROIT Principles)
   -   Reliance by the offeree on irrevocability of the offer (Articles 16(2)(b) CISG;
        Article 2.4(2)(b) UNIDROIT Principles)
4. Conclusions
   -   Applicability of Article 2.4(1) UNIDROIT Principles to Article 16(1) CISG
   -   Applicability of Article 2.4(2)(a) UNIDROIT Principles to Article 16(2)(a) CISG
   -   Applicability of Article 2.4(2)(b) UNIDROIT Principles to Article 16(2)(b) CISG

1. INTRODUCTION TO THE ISSUE OF IRREVOCABILITY OF OFFERS

a. Article 16 CISG dealing with the revocation of an offer is a rather controversial provision of the Convention. Most of the difficulties derive from the different interpretative approaches of civil law and common law regarding the revocability of offers. While even the drafters of the CISG provision were determined to create a compromise solution between the approaches of the two systems, practical application of Article 16 CISG still reflects several ambiguities of interpretation.[1]

b. Before examining whether the Official Comments to Article 2.4 of the UNIDROIT Principles may be used to help interpret Article 16 CISG, regard shall be paid to different approaches of civil and common law in interpreting revocation of the offer.

c. In civil law systems a contract is concluded only if the acceptance reaches the offeror. Before that, the offeror impliedly gives the offeree a reasonable time to consider the offer, during which time the offer is irrevocable unless otherwise indicated by the offeror. If the offer states a time limit for acceptance, the offer is usually irrevocable, and if it does not, the offer is irrevocable for a reasonable period.[2]

d. In common law systems, however, the contract is concluded as soon as the offeree dispatches the acceptance. Prior to that point in time, the offer is revocable at any time, even if it must be accepted within a time period. This may sometimes also be the case even if the offeror expressly states that the offer is irrevocable.[3]

e. The structure of Article 16 CISG mixes the two competing approaches. Delegates from civil law countries approved of laying down the general rule of revocability in Article 16(1) CISG. In turn, the civil law idea of irrevocability in situations where there is a fixed time for acceptance or irrevocability is otherwise indicated, was embodied in Article 16(2)(a).[4] The second exception from the general rule of revocability, i.e., Article 16(2)(b) which is very similar to the principle of promissory estoppel,[5] is also of common law nature. Although civil law systems similarly do not allow for revocation in bad faith (venire contra factum proprium), the wording of the CISG seemed unfamiliar to civil law lawyers.[6] Some civil law characteristics are also recognizable in the application of the second exception to the revocability of offers, by the fact that it is applicable only if the offeree needs time to investigate whether or not he should accept the offer.[7]

f. The wording of Article 2.4 of the UNIDROIT Principles is exactly the same as that of Article 16 CISG,[8] yet each provision must be examined in its own context[9] and the UNIDROIT Principles may not be the most appropriate auxiliary rules to help interpret a provision of the CISG, since there are many obstacles to overcome concerning the interpretation of both of these instruments. In spite of this, however, the applicability of the UNIDROIT provisions to Article 16 CISG cannot be excluded but it should be handled with special care.

2. THE GENERAL RULE OF REVOCABILITY OF OFFERS IN THE CISG AND THE UNDROIT PRINCIPLES

g. The general rule of revocability of offers is set out in the provisions contained in Article 16(1) CISG and Article 2.4(1) UNIDROIT Principles, the latter literally taken from the former.[10] The provisions lay down two conditions for revoking an offer: (i) the revocation must be made before the contract is concluded; and (ii) it must reach the offeree before he has dispatched an acceptance. Seemingly, these conditions must be applied concurrently, but in practice that could cause several ambiguities.

h. Let us see what happens if the offeror sends a letter of revocation to the offeree which the latter receives only shortly after he dispatched his letter of acceptance. The first condition, i.e., a revocation can be made only prior to the conclusion of the contract, is fulfilled because pursuant to Articles 23 and 18(2) CISG and Articles 2.1 and 2.6(2) UNIDROIT Principles,[11] the letter of acceptance has not reached the offeror by the time the letter of revocation was received by the offeree. However, we come to a different conclusion if we examine the second condition, i.e., the letter of revocation is only effective if it reaches the offeree before he dispatches the letter of acceptance. In this case, it is evident that revocation would not be effective, either with regard to the CISG provision or to that of the UNIDROIT Principles.

i. Assuming the same situation with the difference that the offeree performs an act indicating assent instead of sending a letter of acceptance, pursuant to Articles 18(3) CISG and 2.6(3) UNIDROIT Principles, the contract is concluded upon the latter act and before the letter of revocation arrives.[12] Therefore, the revocation is not effective even if the offeror is not yet aware of the act indicating assent. As the time period for revocation is restricted by the performance of an act, only the "contract-conclusion" condition is applicable in such cases.

j. In order to avoid such misunderstandings, scholars [13] suggest and the Official Comments on the UNIDROIT Principles [hereinafter: UNIDROIT Comments] equally express that the "contract-conclusion" condition should only be applied in the case of oral negotiations or acceptance by conduct without giving notice to the offeror. If the offer is accepted in writing, the latter condition is not applicable and the time limit for revocation is restricted until the offeree dispatches the acceptance while the contract itself is concluded only when the acceptance reaches the offeror. Commentaries to Article 16 CISG acknowledge that the latter method of interpretation might be disadvantageous to the offeror who can never be sure about whether revocation can be made in time, whether the offeree has already sent his acceptance or indicated his assent by performing an act.[14]

k. Responding to this problem, Eörsi suggests that a higher level of good faith should be applied with regard to the rules of revocation by including into the wording of Article 16 CISG that "the offeree is bound to give notice if the revocation has reached him late".[15] Until this might happen, the approach taken by the UNIDROIT Comments might be applied to the CISG but not by all means and not restrictively: "It is, however, justified in the view of the legitimate interest of the offeree in the time available for revocation being shortened."[16] This view can be supported by the fact that it is the offeror who unilaterally gives the offeree the right to conclude the contract and that, unlike the offeree, the offeror has sufficient time before making an offer to weigh and asses the situation, possible risks and consequences. Of course, there might be situations where the offeror is forced to revoke an offer because of unexpected events, perhaps even independent of him, but those cases represent only a rather small part of all offers-acceptances. For instance, in the latter case, following the approach of the UNIDROIT Comments might not be appropriate because the legitimate interest of the offeror might collide with and actually prevail over that of the offeree. Thus, in such cases it is the legitimate interest of the offeror who will obviously be unable to perform a prospective contract, not to be forced to conclude such a contract because the offeree might have no chance to enforce performance. Of course, such subsequent impossibility of performance should be handled with care so as not to develop a malpractice where offerors can freely revoke an offer by referring to unexpected events or force majeure if they simply want to cancel the legal relationship with the offeree. Therefore, if we accept the approach set in the UNIDROIT Comments, each case must be examined separately and very carefully, and consistent trade and court practices must be developed.

In conclusion, it must be noted that in spite of the general principle of revocability, recent trends in national and international practice are towards strengthening irrevocability of offers.[17]

3. EXCEPTIONS TO THE GENERAL RULE OF REVOCABILITY

l. Articles 16(2)(a)&(b) CISG and 2.4(2)(a)&(b) UNIDROIT Principles provide for one civil law and one common law exception from the general common law-rooted principle of revocability of offers.

-   Indication of irrevocability contained in the offer (Article 16(2)(a) CISG;
    Article 2.4(2)(a) UNIDROIT Principles)

m. A practical interpretation of this provision is not easy. The wording of the provision derives from the civil law countries' wish to incorporate a rule following their legal traditions but the wording is not unambiguous, which raises several questions.

n. The first problem is that for a common law attorney, indication of a fixed time for acceptance would only mean that the offer, which is still revocable, will lapse after that time, while for a civil law attorney, the offer is also irrevocable up until then. Furthermore, as wording of the CISG does not balance the two opposing views - this contradiction is enhanced even further when a legal relationship is exclusively between parties from a common law country or a civil law country - it allows revocation of offers in relationships between parties from common law countries.[18] If the parties are from countries belonging to different legal systems, the communications and intentions of the parties, the exact circumstances of the particular case in the light of their dealing and usage of trade shall be taken into account in order to determine the status of the offer.[19]

At this point it might be useful to supplement the CISG provisions on interpretation with the more detailed rules set out in Chapter 4 of the UNIDROIT Principles, dealing with interpretation of the contract. For example, by the interpretation of the intent, statements and conduct of the parties, besides negotiations, practices, usages and subsequent conduct, the nature and purpose of the contract and the meaning commonly given to terms and expressions in the trade concerned should also be taken into account.[20] Such reference could perhaps assist in determining whether a particular offer was meant to be revocable or irrevocable.

o. Another problem concerning the indication of irrevocability contained in the offer relates to the wording used by the parties. It is undoubted that if an offer expressly states that it is irrevocable, then, pursuant to Article 16(2)(a), the offeror cannot revoke it. The question is, however, how should a statement of a time fixed for acceptance be interpreted, whether it by itself means that such an offer is irrevocable, and what "other ways" are appropriate for expressing irrevocability of an offer?

Expressing irrevocability in other ways can be inferred by determining the intent of the parties with regard to their statements and conduct.[21] As suggested by the UNIDROIT Comments, this should be done case by case.[22]

p. Concerning the indication of a fixed time for acceptance, some scholars believe that it makes the offer irrevocable,[23] others like Honnold [24] deny such effect. Not even the UNCITRAL deliberations were unanimous because at one place automatic irrevocability in "fixed-time" cases is declared, and denied at another place.[25] Malik suggests that "para (2) [of Article 16] is to be taken in the spirit of civil law whose rule it embodies", i.e., stating a fixed time should mean irrevocability. Yet, this should not be automatic and, in that, the Comments to the UNIDROIT Principles on Article 2.4(2)(a) serve as useful guidelines to interpret Article 16(2)(a) CISG.[26] That includes that "the indication of a fixed time for acceptance may, but not necessarily, amount by itself to an implicit indication of an irrevocable offer. The answer must be found in each case through a proper interpretation of the terms of the offer in accordance with the various criteria laid down in the general rules of interpretation in Chapter 4 [UNIDROIT Principles]".[27]

q. Here, again, besides Article 8 CISG, one could pay attention to the rules of interpretation of the UNIDROIT Principles in order to determine whether an offer, under Article 16(2)(a) CISG, shall be treated as revocable or irrevocable. Furthermore, distinction shall be made between stating a fixed date for acceptance as a simple expiration date, in which case the offer is not irrevocable during that time, and limiting the time for acceptance, meaning that such an offer is irrevocable.[28]

r. Last but not least, even the UNIDROIT Comments repeat the above-mentioned problematic interpretation dichotomy that, beyond all other details, when interpreting the parties' intent concerning the revocability issue, legal traditions of the respective legal systems must be paid attention to. In other words, if the offeror comes from a country where fixing a time for acceptance indicates irrevocability then "it may be assumed" that the offer is considered to be irrevocable, and also the other way round with revocability. Although this suggestion does not serve the mandate of uniform interpretation of the CISG [29] very well, yet it is undeniable that in practice making an offer frequently relies upon domestic legal traditions. In this meaning, that last remark of the UNIDROIT Comments might not be helpful to interpret Article 16(2)(a) CISG.

-   Reliance by the offeree on irrevocability of the offer (Articles 16(2)(b) CISG;
    Article 2.4(2)(b) UNIDROIT Principles)

s. The reliance provisions do not raise as many questions as do the previous ones. Pursuant to these provisions, an offer is also irrevocable 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". These are two concurrent conditions upon which reasonable reliance on the offer is substantiated if, e.g., the offeree had a good reason to believe that the offer was irrevocable (e.g., as a result of the circumstances in case of urgent orders) [30] or if the offeror was aware that the offer was in connection with the fulfilment of another obligation on the offeree's side, and by performing acts like examining the offer, carrying out a costly investigation or preparing an offer to a third person.[31]

t. The UNIDROIT Comments do not go any further than that, except for providing further examples of acts as a result of reliance. Among them the following are listed: making preparations for production, buying or hiring materials or equipment and incurring expenses - they can be useful in interpreting unclear CISG cases as well. Furthermore, the UNIDROIT Comments determine the general conditions of justifying such acts by stating that they must be regarded as normal in the trade concerned, or should otherwise have been foreseen by, or known to, the offeror.[32] These conditions are also very useful in interpreting whether a certain act is justifiable under Article 16(2)(b).

The CISG provision is similar to the common law principle of promissory estoppel, but it also has some civil law characteristics since it is applicable only if the offeree needs time to investigate whether or not he should accept the offer.[33]

4. CONCLUSIONS

In interpreting what is the fixed time for acceptance or another indication of irrevocability, it might be useful to supplement the provisions of Article 8 CISG with the application of Chapter 4 UNIDROIT Principles. On the other hand, the interpretation method suggested in the Official UNIDROIT Comments - i.e., that in determining whether an offer was meant to be revocable or irrevocable, special regard shall be paid to the legal traditions of the respective countries - if applied to the CISG could, in one sense, be said to undermine the mandate of uniform interpretation of the CISG. Yet, this is only one way of looking at the issue. Another way is to accept that autonomy of the parties,[34] is one of the most fundamental principles of the CISG, and that the parties' intent [35] trumps the provisions of the Convention. In cases where the offeror and the offeree are both from common law countries or both from civil law countries (meaning similar legal traditions), the presumed intent of the parties should therefore play a role in the impact of Article 16(2)(b) CISG on Article 16(1). Rather than regarding this as an undermining of the mandate of uniform interpretation, a special kind of uniform interpretation will be present for parties from specific, and similar, legal backgrounds ... an interpretation that pays special heed to principles of party autonomy and presumed intent. Accordingly, it will be useful to pay attention to that where both parties are either from common law or civil law countries and, when examining a certain case, bearing in mind that uniform interpretation of the CISG is required, the latter should be carried out separately with regard to situations where both parties are from the same legal background (i.e., both common law or both civil law).

- Applicability of Article 2.4(2)(b) UNIDROIT Principles to Article 16(2)(b) CISG

The Comments to Article 2.4(2)(b) UNIDROIT Principles, providing for the exact meaning and conditions of reliance, are useful in the interpretation of the counterpart CISG article as well.

FOOTNOTES

* Master of Laws (in Hungarian law), University of Miskolc, Hungary, 2002. Ph.D. candidate at the Department of European Law and Private International Law, University of Miskolc, specializing in international business and investment law and international commercial arbitration. She is working on her Ph.D. thesis on jurisdictional issues in ICSID arbitration.

1. 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, at 'B', at <http://cisgw3.law.pace.edu/cisg/text/leete16.html#bl94>.

2. See Alejandro M. Garro, Reconciliation of Legal Traditions in the U.N. Convention on Contracts for the International Sale of Goods, II. 2., at <http://cisgw3.law.pace.edu/cisg/biblio/garro1.html>; Gyula Eörsi, Problems of Unifying Law on the Formation of Contracts for the International Sale of Goods, at <http://cisgw3.law.pace.edu/cisg/text/eorsi16.html>; Leete, supra note 1; Kazuaki Sono, Formation of International Contracts under the Vienna Convention: A Shift above the Comparative Law, Ch. 1., at <http://cisgw3.law.pace.edu/cisg/biblio/sono2.html>.

3. Garro, supra note 2; Leete, supra note 1; Kazuaki Sono, supra note 2.

4. Garro, supra note 2; Shahdeen Malik, Offer: Revocable or Irrevocable. Will Art. 16 of the Convention on Contracts for the International Sale Ensure Uniformity?, Ch. III. 2., at <http://cisgw3.law.pace.edu/cisg/biblio/malik.html>.

5. For a commentary on the equitable principle of estoppel as a general principle of the CISG, citing Art. 16 (2) (b) as an example - Art. 29 also - see Colin King, "The CISG - Another One of Equity's Darlings?", 8 Vindobona Journal of International Commercial Law and Arbitration (2004), 264-267.

6. Eörsi, supra note 2; Maria del Pilar Perales Viscasillas, The Formation of Contracts and the Principles of European Contract Law, Ch. VII, at <http://cisgw3.law.pace.edu/cisg/biblio/perales3.html>.

7. Leete, supra note 1, at "B".

8. The PECL, by way of contrast, took a different approach. Although a real balance between civil and common law principles could not be reached in either the Convention or the UNIDROIT Principles, the PECL managed to achieve this goal. Perales Viscasillas, supra note 6, Ch. 1. Perales Viscasillas explains here that the Principles of European Contract Law "achieved a set of rules balanced between the different principles that inspire both common law and civil law systems" not by selecting the "most appropriate rules" of the two different legal systems and not by summarizing the rules common to both of them. The PECL created a system of its own, built on the basis of enabling commercial exchange between the EU Member States and providing an autonomous interpretation of the rules of international trade and also influenced by trade practices.

9. "Caveat" in "Data on the pre-UNCITRAL legislative history of the CISG" at <http://cisgw3.law.pace.edu/cisg/text/roadmap/RoadmapL-16.html>.

10. Official Comments to Article 2.4. UNIDROIT Principles, Comment 1, op. cit.

11. These provisions are nearly the same, the CISG being a bit more specific in places.

See Article 23 CISG: "A contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention."

Cf. Article 2.1. UNIDROIT Principles: "A contract may be concluded either by the acceptance of an offer or by conduct of the parties that is sufficient to show agreement."

See also Article 18(2) CISG: "An acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror. 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, including the rapidity of the means of communication employed by the offeror. An oral offer must be accepted immediately unless the circumstances indicate otherwise."

Cf. Article 2.6. (2) UNIDROIT Principles: "An acceptance of an offer becomes effective when the indication of assent reaches the offeror."

12. See Article 18(3) CISG: "However, 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, such as one relating to the dispatch of the goods or payment of the price, 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 the preceding paragraph."

Cf. Article 2.6. (3) UNIDROIT Principles: "However, 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 without notice to the offeror, the acceptance is effective when the act is performed."

13. Malik, supra note 3, Ch. III. 1; Fritz Enderlein & Dietrich Maskow, International Sales Law - United Nations Convention on Contracts for the International Sale of Goods, Commentary, at <http://cisgw3.law.pace.edu/cisg/biblio/enderlein-art16.html>.

14. Enderlein & Maskow, supra note 13; Eörsi, supra note 2.

15. Eörsi, supra note 2.

16. Comments to Article 2.4. UNIDROIT Principles, para 1 at http://cisgw3.law.pace.edu/cisg/principles/uni16.html>.

17. See Malik, supra note 4, Ch. II referring to recent trends in England, the United States (U.C.C., New York General Obligations Law) or Canada. In Chapter V, Malik also points out that for CISG to become the law of the future, a more liberal irrevocability approach should be taken. This would also serve the interest of developing countries which, in selling their raw materials, are very much dependant on far commodity markets which determine the prices of raw materials.

18. Eörsi, supra note 2; Leete, supra note 1, at "B".

19. Garro, supra note 2; Eörsi, supra note 2.

20. Article 4.3. UNIDROIT Principles

21. See Article 8 CISG, dealing with the interpretation of statements or other conduct of the parties.

22. Official Comments to Article 2.4. UNIDROIT Principles, Comment 2, op. cit.: "The answer must be found in each case through a proper interpretation of the terms of the offer in accordance with the various criteria laid down in the general rules on interpretation in Chapter 4."

23. J.D. Feltham, UN Convention on Contracts for International Sale of Goods, Journal of Business Law (1981), p. 339, 346; and S.K. Date Bah, UN Convention for Contracts for Sale of Goods: Overview", Rev. Ghana L., vol. 11 (1979), p. 50 at pp. 57-58, both cited by Malik, supra note 4, CH. III.2.

24. J. Honnold, Uniform Law for International Sales Under the 1980 United Nations Convention, Kluwer Academic, Netherlands, 1982, n. 34, p. 171.

25. See Malik, supra note 4, Ch. III.2.

26. See also Henry Mather, Firm Offers under the UCC and the CISG, Ch. II E., at <http://cisgw3.law.pace.edu/cisg/biblio/mather2.html>.

27. Supra note 20.

28. Mather, supra note 26.

29. See Article 7(1) CISG.

30. Mather, supra note 26, II. F, Enderlein & Maskow, supra note 13, at [8].

31. Mather, supra note 26, II. F; Malik, supra note 4, Ch. III.3.

32. Official Comments to Article 2.4. UNIDROIT Principles, Comment 2.

33. Leete, supra note 1, at "B". Furthermore, in Geneva Pharmaceuticals Tech. Corp. v. Barr Inc. the U.S. District Court expressed that promissory estoppel is actually different from what is written in Article 16(2)(b) CISG since the latter would preempt domestic law only if a plaintiff were to bring a promissory estoppel claim to avoid the need to prove the existence of a firm offer. The Court argued that "the latter did not expressly require that the offeree's reliance must have been foreseeable to the offeror and does not expressly require that the offeree's reliance be detrimental" resulting that the court dismissed the claim which was originally based on the promissory estoppel. The court also stated that the CISG establishing a modified version of promissory estoppel would contradict the CISG and stymie its goal of uniformity. See <http://cisgw3.law.pace.edu/cases/020510u1.html>. Pilar Perales Viscasillas opines that the Court failed to analyze the problem based on the core provisions of the CISG itself. She explains that the CISG governs contract formation either in a traditional offer-acceptance form or in other ways where sufficient agreement of the parties is present, and protection of the party relying ont the other party's statements or conduct is an inherent requirement of the CISG. Therefore, this latter principle is applicable to cases where "the promise and the acts done in reliance on the promise (statements or conduct made by the other party) are enough to show an indication of assent to a contract, i.e. an intention to be bound". It is also important to mention that such reliance cases do not equal precontractual liability which is not governed by the CISG. (See The Draft UNCITRAL Digest and Beyond: Cases, Analysis and Unresolved Issues in the U.N. Sales Convention - Papers of the Pittsburgh Conference Organized by the Center for International Legal Education (CILE), Franco Ferrari, Harry Flechtner & Ronald A. Brand eds., Sweet & Maxwell, Thomson, Sellier, 2004, p. 262-264.

A contrary decision was made in Vienna Arbitration proceeding SCH-4318 (Austria, 15 June 1994) where the tribunal held that although estoppel is not expressly settled by the CISG, it forms a general principle underlying the CISG (being "venire contra factum proprium"). See <http://cisgw3.law.pace.edu/cases/940615a4.html>.

34. Art. 6 CISG: "The parties may exclude the application of the Convention or [...] derogate from or vary the effect of any of its provisions." The principle of party autonomy ensconced in Art. 6 is arguably the most important general principle of the Convention. See <http://cisgw3.law.pace.edu/cisg/text/e-text-06.html>, for a presentation including legislative history as well as relevant doctrine and jurisprudence on that provision.

35. The intent of the parties can be derived by reference to the provisions in Art. 8 CISG, which deals with the intepretation of statements and other conduct of the parties, and Art. 9 CISG, which deals with usages and established practices applicable to the contract.

1. Revocation of an offer - CISG Article 16(1)
2. Public offers - PECL Article 2:202(2) and the CISG
3. Irrevocability of an offer - CISG Article 16(2)
4. Interpretation of the contract
5. Reliance - CISG Article 16(2)(b)
6. Conclusions
   a) PECL Article 2:202(1) and CISG Article 16(1)
   b) PECL Article 2:202(2) and the CISG
   c) PECL Article 2:202(3)(a), (b) and CISG Article 16(2)(a)
   d) PECL Article 2:202(3)(c) and CISG Article 16(2)(b)

1. Revocation of an offer - CISG Article 16(1)

Both the Convention and the PECL distinguish between the revocation of an offer and the withdrawal of an offer. In the Convention, revocation of an offer that has reached the offeree and is effective is regulated by Article 16; withdrawal of an offer that has not yet reached the offeree is regulated by Article 15(2).[1]

Similarly, under the PECL, an offer becomes effective when it reaches the offeree (Article 1:303(2) and (6)) and a subsequent revocation of the offer is regulated by PECL Article 2:202. However, the offer may be withdrawn before it reaches the offeree. In that situation, it will not become effective (PECL Article 1:303(5)).

     b. There is divergence in the way in which different legal systems deal with the matter of revocation of an offer. In common law systems, the offeror, in the absence of consideration given by the offeree, has been granted the freedom to revoke the offer before the contract is concluded, e.g., in the case of written assent, before the offeree dispatches the acceptance, thus weakening the binding force of an offer.

On the other hand, in civil law systems, generally, a firm offer cannot be revoked until its rejection or expiry; therefore, the offeror is bound by the offer for a reasonable time. In the latter regimes, the offeror, with his offer, impliedly grants the offeree a certain reasonable time to consider and respond to the offer. In this context, if the offeror does not indicate otherwise, there is the presumption of irrevocability for a reasonable time, unlike in the common law systems.

     c. Article 16(1) of the Convention provides that an offer is generally revocable;[2] the right of the offeror to revoke his offer terminates at the moment the contract is concluded. However, it must be noted that in the case in which an offer is accepted by a written indication of assent, CISG Article 16 provides that the right of the offeror to revoke the offer terminates at the moment the offeree has dispatched his acceptance, and not at the moment the acceptance reaches the offeror.[3] That common law "mailbox rule" or dispatch rule is adopted in the Convention, even though CISG Art. 18(2) provides that "acceptance is thus effective when it reaches the offeree."[4] It has been commented that the Convention, in article 16(1), assumes the common law presumption of revocability.[5]

Here, it is worthwhile to mention briefly how the UNIDROIT Principles deal with this issue. Article 2.4 of the UNIDROIT Principles regulates the revocation of an offer.[6] Article 2.4 regulates the issue in the same manner as CISG Article 16. In this regard, one can argue that the UNIDROIT Principles also assume the common law presumption of revocability.

PECL Article 2:202(1) adopts an approach to the revocation of an offer that is similar to CISG Article 16(1) and Article 2.4 of the UNIDROIT Principles. PECL Article 2:202 provides that, generally, an offer is revocable, but that it may follow from the offer or from the circumstances of the specific case that it is irrevocable.

PECL Art. 2:202(1) states that an offer may be revoked if the revocation reaches the offeree before he has dispatched his acceptance. Also, an offer may be revoked if the contract has not been concluded by an act of performance or conduct by the offeree under Article 2.205(2) or (3).[7] In this type of acceptance, the contract is concluded when the offeror learns of the offeree's conduct and therefore, the revocation of the offer must reach the offeree before the offeror has learned of the conduct. Furthermore, in the case of acceptance through performance, the revocation should reach the offeree before the performance of the offeree.

2. Public offers - PECL 2: 202(2) and the CISG

     d. Although the Convention does not include a provision dealing expressly with the revocation of an offer made to the public,[8] the PECL 2:202(2) statement that: "An offer made to the public can be revoked by the same means as were used to make the offer" appears consistent with the intent of the Convention. See, for example, the reference to "due account being taken of the circumstances of the transaction" in CISG Article 18(2), and the concept of "reasonableness" as a general principle of the Convention.[9]

3. Irrevocability of an offer - CISG Art. 16(2)

     f. The most controversial part of article 16 of the Convention is paragraph 2(a), which reflects a drafting compromise between the civil law and the common law by accommodating different views and therefore lacks definitional clarity.[10] On the other hand, Article 2:202 of the PECL provides a more clarified regulation on the problem.

At the Diplomatic Conference on the Convention, the wording of CISG Art. 16(2)(a) had caused disagreements among the delegates representing countries from the civil and common law systems.[11] In Article 16(2) of the Convention there are two restrictions to the concept of revocability.[12] One of the restrictions provides that an offer is irrevocable if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; the second restriction provides that offers on which the offeree has acted in reliance are also irrevocable.[13] Generally, for irrevocability, the offeror should intend to make his offer irrevocable and his offer should indicate that fact.[14] However, CISG Article 16(2)(a) has not cleared the controversy as to whether the mere fixing of a time for acceptance makes the offer irrevocable.[15] In the Convention, the question as to whether mere fixing a time for acceptance makes the offer irrevocable has been left to Article 8 of the Convention, which deals with intent and the interpretation of statements.[16] In the PECL, Article 2:202 provides that an offer is revocable, but also provides three exceptions to that general rule: (i) if the offer indicates that it is irrevocable (Art. 2:202(3)(a));[17] (ii) if it states a fixed time for its acceptance (Art. 2:202(3)(b)); (iii) 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 (Art. 2:202(3)(c)).

The wording of PECL Article 2:202(3)(b) clears any doubt in CISG Art. 16(2)(a), by stating that a revocation of an offer is ineffective even if it merely states a fixed time for its acceptance. Accordingly, "the offer if accepted becomes binding even though it was purportedly revoked before it was accepted."[18]

     g. In the common law legal system, if an offer indicates a fixed time for acceptance, the offer lapses after expiry of this certain period;[19] the offeror may revoke his offer any time during this fixed period, unless consideration has been paid by the offeree. On the other hand, in most legal systems where civil law is adopted, "every 'open offer' is a 'firm offer' simply because it expressly states that it is irrevocable or implicitly indicates so by stating a fixed period for acceptance."[20]

However, in the Convention fixing a time for acceptance is one of the pillars indicating the intention to be bound and there must be additional grounds for irrevocability. In this regard, there is a real danger that lawyers from different legal systems may interpret Article 16(2)(a) in divergent directions, representing their different jurisprudential heritage. According to this, there might be two possible types of interpretations. For a civil law attorney, if an offer states a fixed time for acceptance, as provided under CISG Article 16(2)(a), then the offer is irrevocable until the expiration of the stated fixed time. For a common law attorney, however, a fixed time for acceptance means that the acceptance must be given in that period and also that the offeror can revoke the offer any time until the expiration date; therefore, more precise language or additional grounds are necessary to make the offer irrevocable.[21] PECL Article 2:202(3)(b), on the other hand, explicitly obviates the doubt as to whether fixed time for acceptance makes the offer irrevocable. One of the main reasons why PECL regulates this issue explicitly without leaving any doubt might be that the majority of the laws of European states whose lawyers participated in the drafting of the PECL have civil law origin.[22]

4. Interpretation of the contract

     h. Interpretation of the contract gains significant importance in the application of CISG Art. 16(2)(a), because "the rules on interpretation of contract are necessary when the meaning of certain provisions is ambiguous."[23] In this context, "under the CISG [whether mere fixing a time for acceptance makes the offer irrevocable] is to be solved by the rules in [its] Article 8 on intent and interpretation of statements."[24] According to CISG Article 8(3), 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. In this regard, if the trading parties are both from common law jurisdictions, their understandings and intentions will be interpreted according to common law regulation of the matter; on the other hand, if the parties are both from civil law jurisdictions, it will be interpreted according to civil law regulation of the matter. However, the most important question is: What if the parties are from different jurisdictions? - one from common law, the other from civil law.

     i. Article 8 of the Convention will be decisive in the interpretation of the intention of the parties; it would supplement Article 16(2)(a). As mentioned elsewhere, the intention to make the offer irrevocable and indicating this fact clearly [25] can be sufficient for irrevocability. Also, when the interpretation is made in the light of CISG Article 8(3) the intention of the parties can be found from "circumstances extraneous to the offer."[26] If the parties are from legal systems that regard an offer made subject to a time limit as binding, then according to Article 8(1) of the Convention, it may be presumed that the offeror intended his offer to have such an effect.[27] On the other hand, if the parties are both from common law systems, by virtue of Article 8(2) of the Convention, it may be presumed that unless there are additional grounds to be bound, the offeror does not intend to bind himself with the offer for that period.[28] Article 8(2) requires that the interpretation must be made according to the understanding of the recipient; this is important in an offer made from a country where common law is the legal system to a country where the civil law system governs, otherwise, an offeror from a common law system may be bound with his offer since the understanding of the recipient governs in the aforementioned case. In Article 5:101(1) of the PECL, the common intention of the parties has been used and in Article 5:101(2), only in exceptional circumstances may one party's intention be used to interpret. On the other hand, if CISG Article 8 were read literally, the Convention's way of interpreting intention can be based on one party's intention. In issues regarding irrevocability, common intention of the parties is vital especially when the parties are from different legal systems.

5. Reliance - CISG Article 16(2)(b)

6. Conclusions

d) PECL Article 2:202(3)(c) and CISG Article 16(2)(b)

As PECL Article 2:202(3)(c) and CISG Article 16(2)(b) are substantively identical, the illustrations and interpretive guidance that accompany PECL 2:202(3)(c) could well be relevant to the interpretation of CISG 16(2)(b).

FOOTNOTES

* LL.B. Dokuz Eylul University School of Law, Turkey; LL.M. University of Georgia School of Law, USA; M.A. Istanbul Bilgi University School of Law, Turkey; PhD Candidate University of Manchester School of Law, 2003. The author is an attorney at law and member of the Izmir and Turkish Bar Associations.

1. CISG Art. 15 reads: "(1) An offer becomes effective when it reaches the offeree. (2) An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer." See also Schlechtriem, Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods 52 (1986) [available online at <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem.html>].

2. See Secretariat Commentary on article 14 of the 1978 Draft [draft counterpart of CISG article 16], Comment 1, which makes clear that this provision "states that offers are in general revocable and that the revocation is effective when it reaches […] the offeree." [Hereinafter, Secretariat Commentary, also available on-line at: <http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-16.html>].

See also CISG Art. 24, which provides a definition of the term "reaches".

3. See Secretariat Commentary, Comment 4.

For comments and comparison with UCC Article 2 see Peter Schlechtriem, Commentary on the UN Convention on the International Sale of Goods (CISG) 119 (Peter Schlechtriem ed. 1998) stating that "[CISG Article 16] restricts [revocability] by providing that not only the conclusion of the contract but even the dispatch of an acceptance rules out the revocation of an offer. The offeror can make his offer binding without the need for 'consideration' or the observance of particular forms and without a time period being prescribed during which the offeror is bound by his offer."

4. CISG Art. 23 reads: "A contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention." The Secretariat Commentary explains that the basic rule - i.e., the offeror's right to revoke the offer terminates at the moment the contract is concluded - applies only in those cases in which the offeree orally accepts the offer and in those cases in which the offeree accepts the offer in conformity with article 18(3); see Comment 2.

CISG Art. 18(3) provides 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, such as one relating to the dispatch of the goods or payment of the price, without giving notice to the offeror, the acceptance is effective at the moment the act is performed." In that context, since the acceptance is effective and the contract is concluded at the moment the act is performed, the right of the offeror to revoke his offer terminates at that same moment; see Comment 3.

5. See Alejandro Garro, Reconciliation of Legal Traditions in the U.N. Convention on Contracts for the International Sale of Goods, 23 Int'l Law. 443 (1989) [available online at <http://www.cisg.law.pace.edu/cisg/biblio/garro1.html>; see also Honnold, Uniform Law for International Sales 167 (2d ed. 1987).

Cf. Secretariat Commentary, Comment 5: "The value of a rule that a revocable offer becomes irrevocable prior to the moment at which the contract is concluded lies in the fact that it contributes to an effective compromise between the theory of general revocability of offers and the theory of general irrevocability of offers. Although all offers except those which fall within the scope of article 14(2) [draft counterpart of CISG article 16(2)] are revocable, they become irrevocable once the offeree makes his commitment by dispatching the acceptance."

See also P. Schlechtriem, Uniform Sale Law - The U.N. Convention on Contracts for the International Sale of Goods 52 (1986), who states that "the possibility of withdrawing an offer until, or in any case simultaneously with, its arrival coincides with ULF Article 5(1) and § 130(1) sentence 2 of the German Civil Code"; [available at: <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem-16.html>].

6. Article 2.4 of the UNIDROIT Principles reads: "(1) Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before it has dispatched an acceptance. (2) However, an offer cannot be revoked (a) if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or (b) 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."

7. PECL Article 2:205 (2) and (3) read: "(2) In case of acceptance by conduct, the contract is concluded when notice of the conduct reaches the offeror. (3) If by virtue of the offer, of practices, which the parties have established between themselves, or of a usage, the offeree may accept the offer by performing an act without notice to the offeror, the contract is concluded when the performance of the act begins."

8. Schlechtriem, supra note 5, at fn. 170, notes: "Unfortunately, a British proposal […] concerning the withdrawal of a public offer found no support because of the misunderstanding that there is no such thing as a real public offer."

See also Jacob Ziegel, who comments on CISG Art. 16 and the question of revocation of an offer made to the public: "This seems inconsistent with art. 14(2) which […] does recognize the validity of offers made to non-specific persons if this was the intention of the person making the proposal. Presumably the meaning of "reaches" must be relaxed accordingly and, in the case of an offer made to the public, or a part thereof, an offer will be effectively revoked if reasonable steps are taken to bring it to the attention of the offerees." Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods", [available at: <http://www.cisg.law.pace.edu/cisg/text/ziegel16.html>].

On the other hand, PECL Art. 2:202(2) avoids any uncertainty over the matter by making it explicitly clear that "an offer made to the public can be revoked by the same means as were used to make the offer." Accordingly, revocation of offers to the public which are not irrevocable under PECL Article 2:202(2) can be made by the same means as the offer. See PECL Comment C, which states that the revocation must be "as conspicuous as the offer." [PECL Comments and Notes are also available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp16.html#cnpc>].

9. See Comments on Reasonableness as a general principle of CISG <http://www.cisg.law.pace.edu/cisg/text/reason.html>.

10. Schlechtriem, supra note 3, at 119.

11. See Summary Records of Meetings of the First Committee (9th Meeting), A/Conf.97/C.1/L.48, L.84 [available online at <http://www.cisg.law.pace.edu/cisg/firstcommittee/Meeting9.html>; also see Garro, supra note 5, n.56 and accompanying text.

12. It must be noted that Secretariat Commentary explains that this provision "does not require a promise on the part of the offeror not to revoke his offer nor does it require any promise, act, or forbearance on the part of the offeree for the offer to become irrevocable. It reflects the judgement that in commercial relations, and particularly in international commercial relations, the offeree should be able to rely on any statement by the offeror which indicates that the offer will be open for a period of time." Comment 6.

13. CISG Art. 16(2) provides the instances where an offer cannot be revoked: "(a) if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or (b) 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."

See also the Secretariat Commentary, which explains that the offer may indicate that it is irrevocable in different ways: "The most obvious is that the offer may state that it is irrevocable or that it will not be revoked for a particular period of time. The offer may also indicate that it is irrevocable by stating a fixed time for acceptance." Comment 7.

14. See Schlechtriem, supra note 3, at 120.

15. See Principles of European Contract Law: Parts I and II, 167 (Ole Lando & Hugh Beale eds. 2000)

16. See Id., at 167; Schlechtriem, supra note 3, at 120 et seq.; Summary Records of Meetings of the First Committee (9^th Meeting), para. 35, A/Conf.97/C.1/L.48, L.84 [available online, supra note 11].

17. The indication that the offer is irrevocable must be clear; it may be made by declaring that the offer is a "firm offer" or by other similar expressions and it may also be inferred from the conduct of the offeror; see PECL Comment E, available at <http://www.cisg.law.pace.edu/cisg/text/peclcomp16.html#cnpc>.

18. The PECL Comments explain that if the offeror does not perform the contract he could become liable for non-performance, and would have to pay damages under the relevant PECL provisions contained in chapter 9, section 5. See Principles of European Contract Law, supra note 15, at 165; Comment D, also available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp16.html#cnpc>.

19. See Farnsworth, Formation of Contract, §3.04 sub 3-11(2); Feltham, The United Nations Convention on Contracts for the International Sale of Goods, [1981] 24 J.Bus.L., 346, at 352.

20. See Garro, supra note 5.

21. For different viewpoints see Report of the United Nations Commission on International Trade Laws on the Work of its Eleventh Session (New York 30 May-16 June 1973), [1978], 9 UNCITRAL Y.B. 41 U.N. DOC. A/CN.9/SER.A/(1978); see also Schlechtriem, supra note 1, at 53 & nn.172-172a stating that "[A] fixed time, which was understood by some delegates to be an irrebuttable presumption of an intent to be bound may be subject to different interpretations depending on the legal system in which the offeror lives."

22. Under laws of some European States offers are generally irrevocable see Principles of European Contract Law, supra note 15, at 167, e.g., Germany BGB § 145; Austria ABGB § 862; Greece CC art. 185.

23. See Maja Stanivukovic, "Remarks on the manner in which the Principles of European Contract Law may be used to interpret or supplement Article 8 of the CISG", para C., available on-line at <http://www.cisg.law.pace.edu/cisg/text/peclcomp8.html#er>.

24. See Principles of European Contract Law, supra note 15, at 167. See also, J. Ziegel, op. cit., commenting on the application of CISG Art. 16, who states: "Since it is often in the interests of the offeror that the offeree should have a reasonable opportunity to determine whether or not to accept the offer, the implication of a firm offer as provided in Art. 16(2)(b) seems to be a fair interpretation of the offeror's intention. Whether the implication should be drawn in a particular case will of course depend on all the circumstances, including the relevant trade practices and usages."

25. For unambiguous and clear wording See Schlechtriem, supra note 3, at 121 stating that "'firm offer', 'will be held open' or words which are understood in the particular trade to express an intention to be bound, for example, 'open offer', 'option', 'guarantee'."

26. See Schlechtriem, supra note 3, at 121 & n.25; see also Schlechtriem, supra note 1, at 53 stating that "[The offeror] does not need to do [the declaration of the offer to be irrevocable] expressly, but rather his intent to be bound can be deduced from the circumstances relevant to the interpretation of the offer and particularly from his setting a fixed period during which the offer is open."

27. See Schlechtriem, supra note 3, at 121.

28. See Schlechtriem, supra note 3, at 121.

29. PECL Notes, para. 2, available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp16.html>.