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2008 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods

Digest of Article 16 case law [reproduced with permission of UNCITRAL] [*]

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.

OVERVIEW - Article 16(1)

1. Paragraph (1) of article 16 sets out rules for the effective revocation of an offer. "Revocation" of an offer under article 16(1) is distinguished from "withdrawal" of an offer under article 15(2): withdrawal refers to a retraction of an offer that reaches the offeree before or at the same time as the offer reaches the offeree, whereas revocation refers to a retraction of an offer that reaches the offeree after the offer has reached the offeree.[1] Until a contract is conclude, article 16(1) empowers an offeror to revoke the offer provided the revocation reaches the offeree before he has dispatched an acceptance, unless the offer cannot be revoked by virtue of article 16(2). Under articles 18 and 23, a contract is not concluded until the offerees indication of assent reaches the offeror (except where article 18(3) applies); thus the rule of article 16(1) precluding revocation from the time an acceptance is dispatched may block revocation for a period before the contract is concluded. Although there have been citations to article 16,[2] there are no reported cases interpreting paragraph (1).

OVERVIEW - Article 16(2)

2. Subparagraph (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 subparagraph.

3. Subparagraph (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 subparagraph has been cited as evidence of a general principle of estoppel ("venire contra factum proprium").[3] It has also been held that domestic legal rules on promissory estoppel are not pre-empted except when the Sales Convention provides the equivalent of promissory estoppel, as it does in subparagraph (b).[4]

[See also the overview comments UNCITRAL has prepared to introduce all of the Formation provisions of the CISG (articles 14 through 24). They discuss the following subjects: Permitted Reservations by Contracting States, Exclusivity of Part II, Validity of Contract, Formal Requirements, Incorporating Standard Terms, and Commercial Letters of Confirmation.]


NOTES

* This presentation of the UNCITRAL Digest is a slightly modified version of the original UNCITRAL text at <http://www.UNCITRAL.org/pdf/english/clout/CISG_second_edition.pdf>. The following modifications were made by the Institute of International Commercial Law of the Pace University School of Law:

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In addition, this presentation introduces each section of the UNCITRAL Digest with a Google search button. This is to help you access doctrine (relevant material from the over 1,200 commentaries, monographs and books on the CISG and related subjects that we present on this database) as well as the texts of the cases that UNCITRAL cites in its Digests and that we present in our updates to UNCITRAL's Digests.

1. Article 24 defines when an offer or other expression of intentionpresumably including a withdrawal or a revocation of an offer -- "reaches" the offeree.

2. 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 Oldenburg 28 February 1996 (Egg case)] (citing arts. 14, 15, 16, 17, 18 and 19).

3. [AUSTRIA Arbitration-Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft-Wien 15 June 1994 (SCH-4318) (Rolled metal sheets case)] (seller's continued requests for information about complaints induced buyer to believe that seller would not raise defence that notice of non-conformity was not timely).

4. [UNITED STATES Federal District Court, Southern District of New York 10 May 2002 (Geneva Pharmaceuticals v. Barr Labs)] (finding limited to scope of promissory estoppel as claimed by buyer).


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