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

Digest of Article 18 case law [reproduced with permission of UNCITRAL] [*]

[Text of article
Overview
Indication of assent to an offer
Silence or inactivity as assent to an offer
Effectiveness: time limits for acceptance
Effectiveness by performance of an act]

Article 18

(1) A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance. Silence or inactivity does not in itself amount to acceptance.
(2) 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.
(3) 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.

OVERVIEW

1. Article 18 is the first of five articles that deal with the acceptance of an offer. Paragraph (1) of article 18 addresses what constitutes the acceptance of an offer, while paragraphs (2) and (3) determine when an acceptance is effective. Article 19 qualifies article 18 by providing rules for when a purported acceptance so modifies an offer that the reply is a counter-offer.

2. Decisions have applied article 18 not only to offers to conclude a contract but also to acceptance of counter-offers,[1] proposals to modify the contract [2] and proposals to terminate the contract.[3] The provisions of article 18 have also been applied to matters not covered by the Sales Convention.[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.]

Indication of assent to an offer

3. Pursuant to article 18(1), an offeree accepts an offer by a statement or other conduct indicating assent. Whether or not the statement or conduct indicates assent is subject to interpretation in accordance with the rules of paragraphs (1) and (2) of article 8.[5] All the circumstances, including negotiations prior to conclusion of the contract and the course of performance after conclusion, are to be taken into account in accordance with paragraph (3) of article 8.[6] If a statement or conduct indicating assent to an offer cannot be found, there is no contract under Part II of the CISG.[7]

4. Only the offeree of a proposal to conclude a contract is entitled to accept the offer.[8]

5. Whether an offerees reply indicating assent to an offer but modifying that offer is an acceptance or a counter-offer is determined by article 19.[9] Whether a counter-offer is accepted is then determined by article 18.[10]

6. An indication of assent may be made by an oral or written statement [11] or by conduct.[12] The following conduct has been found to indicate assent: buyer's acceptance of goods;[13] third party's taking delivery of goods;[14] issuance of letter of credit;[15] signing invoices to be sent to a financial institution with a request that it finance the purchase;[16] sending a reference letter to an administrative agency.[17]

Silence or inactivity as assent to an offer

7. In the absence of other evidence indicating assent to an offer, an offerees silence or inactivity on receiving an offer does not amount to an acceptance.[18] By virtue of article 9(1), however, parties are bound by practices established between themselves and these practices may indicate assent to an offer notwithstanding the silence or inactivity of the addressee.[19] Parties are also bound by usages as provided in paragraphs (1) and (2) of article 9, and these usages may give rise to acceptance of an offer notwithstanding the addressees silence or inactivity.[20] One court stated that a course of dealing between the parties required an offeree to object promptly to an offer, and that the party's delay in objecting constituted acceptance of the offer.[21] A buyer's failure to exercise any remedy under the Convention in response to the seller's proposal that the buyer examine the delivered goods and resell them was construed as acceptance of an offer to terminate the contract.[22]

Effectiveness -- time limits for acceptance

8. Paragraph (2) of article 18 provides that, except in the circumstances set out in paragraph (3), an acceptance becomes effective at the moment the indication of assent reaches the offeror provided it does so within the time limit for acceptance. The acceptance "reaches" the offeror when article 24 is satisfied. By virture of article, 23 a contract is concluded when the acceptance becomes effective.[23]

9. To be effective, however, the acceptance must reach the offeror within the time limits set by paragraph (2) of article 18 as modified by article 21 on late acceptance. Article 20 provides rules of interpretation for determining the time limits for acceptance. As provided in article 21, an offer cannot be accepted after the time limit expires unless the offeror informs the offeree without delay that the acceptance is effective.[24]

10. An acceptance is effective at the moment the offeree performs an act indicating assent to the offer, provided the offeree is authorized, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, to indicate its acceptance of the offer by an act without notice to the offeror. Several decisions have cited paragraph (3) rather than paragraph (1) for the proposition that a contract may be concluded by the performance of an act by the offeree.[25]


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:

   -    To enhance access to contents by computer search engines, we present in html rather than pdf;
 
   -    To facilitate direct focus on aspects of the Digests of most immediate interest, we inserted linked tables of contents at the outset of most presentations;
 
   -    To support UNCITRAL's recommendation to read more on the cases reported in the Digests, we provide mouse-click access to (i) CLOUT abstracts published by UNCITRAL (and to UNILEX case abstracts and other case abstracts); and also (ii) to full-text English translations of cases with links to original texts of cases, where available, in [bracketed citations] that we have added to UNCITRAL's footnotes; and
 
   -    To enable researchers to themselves keep the case citations provided in the Digests constantly current, we have created a series of tandem documents, UNCITRAL Digest Cases + Added Cases. The new cases and other cases that are cited in these updates are coded in accordance with UNCITRAL's Thesaurus.

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. [GERMANY Oberlandesgericht Frankfurt a.M. 23 May 1995 (Shoes case)] (delivery of 2,700 pairs of shoes in response to order of 3,400 pairs was a counter-offer accepted by buyer when it took delivery).

2. [SWITZERLAND Handelsgericht des Kantons Zürich 30 November 1998 (Lambskin coat case)] (no acceptance in communications regarding modification) (see full text of the decision); [GERMANY Oberlandesgericht Dresden 9 July 1998 (Terry cloth case)] (proposal to modify in commercial letter of confirmation not accepted) (see full text of the decision); [SWITZERLAND Handelsgericht des Kantons Zürich 10 July 1996 (Plastic chips case)] (proposal to modify not accepted by silence of addressee); [GERMANY Oberlandesgericht München 8 February 1995 (Automobile case)] (proposal to modify time of delivery not accepted) (see full text of the decision); [FRANCE Cour d'appel, Paris 13 December 1995 (Packaging for biscuits case)] (proposal to modify in letter of confirmation not accepted).

3. [GERMANY Oberlandesgericht Köln 22 February 1994 (Rare hard wood case)] (acceptance of proposal to terminate contract); [CHINA CIETAC Arbitration Award of 1 April 1993 (Steel products case)] (acceptance of proposal to terminate).

4. [AUSTRALIA Federal Court of Adelaide 28 April 1995 (Roder v. Rosedown)] (applying art. 18 to determine whether retention of title clause accepted).

5. [GERMANY Oberlandesgericht Frankfurt a.M. 30 August 2000 (Yarn case)] (sending of promissory note interpreted as not an acceptance).

6. See, e.g., [MEXICO Compromex Arbitration Award 29 April 1996 (Canned fruit case)] (alleged seller's letter in reply to offer, letter of credit naming it as payee, and subsequent conduct of the parties evidenced conclusion of contract); [UNITED STATES Federal District Court, Southern District of New York 14 April 1992 (Filanto v. Chilewich)] (course of dealing created duty to respond to offer).

7. [HUNGARY Fovárosi Biróság 17 June 1997 (Candies case)] (no clear agreement to extend distribution contract); [GERMANY Oberlandesgericht Frankfurt a.M. 31 March 1995 (Test tubes case)] (correspondence did not reach agreement on quality of glass ordered).

8. [AUSTRIA Oberster Gerichtshof 18 June 1997 (Shoes case)] (remand to determine whether the offer was made to a mercantile agent).

9. [FRANCE Cour de cassation 16 July 1998 (Aluminium hydrate case)] (reply with different jurisdiction clause was a material modification under art. 19 and therefore a counter-offer); [GERMANY Oberlandesgericht Hamm 22 September 1992 (Frozen bacon case)] (reply with reference to "unwrapped" bacon a counter-offer under art. 19 and not acceptance under art. 18).

10. [GERMANY Oberlandesgericht München 11 March 1998 (Cashmere sweaters case)] (buyer, by performing contract, accepted seller's standard terms that modified buyer's offer) (see full text of the decision); [GERMANY Oberlandesgericht Hamm 22 September 1992 (Frozen bacon case)] (buyer accepted counter-offer when its reply did not object to counter-offer).

11. [SPAIN Tribunal Supremo 28 January 2000 (Jute case)] (faxed unconditional acceptance); [AUSTRALIA Federal Court of Adelaide 28 April 1995 (Roder v. Rosedown)] (statement in offeree's letter interpreted as an acceptance) (see full text of the decision).

12. [GERMANY Oberlandesgericht Frankfurt a.M. 30 August 2000 (Yarn case)] (sending fax and promissory note could be acts indicating acceptance, but interpretation of documents showed no such acceptance); [GERMANY Oberlandesgericht Frankfurt a.M. 23 May 1995 (Shoes case)] (seller's delivery of fewer pairs of shoes than ordered was a counter-offer accepted by buyer taking delivery).

13. [GERMANY Oberlandesgericht Saarbrücken 13 January 1993 (Doors case)] (buyer's acceptance of goods indicated assent to offer, including standard terms in letter of confirmation) (see full text of the decision).

14. [SWITZERLAND Handelsgericht des Kantons Zürich 10 July 1996 (Plastic chips case)] (third party taking delivery for third party was act accepting increased quantity of goods sent by seller) (see full text of the decision).

15. [UNITED STATES Federal District Court, Northern District of Illinois, United States, 7 December 1999 (Magellan International v. Salzgitter Handel)] (pleading stated cause of action by alleging facts showing parties concluded contract of sale).

16. [ARGENTINA Cámara Nacional de Apelaciones en lo Comercial 14 October 1993 (Machinery case)].

17. [UNITED STATES Federal District Court, Southern District of New York, 10 May 2002 (Geneva Pharmaceuticals v. Barr Labs)].

18. [DENMARK Østre Landsret 23 April 1998 (Women's clothing case)] (parties had no prior dealings); [FRANCE Cour de cassation 27 January 1998 (Electrical connectors case)] (without citation of the Sales Convention, court of cassation finds that court of appeal did not ignore rule that silence does not amount to an acceptance); [SWITZERLAND Handelsgericht des Kantons Zürich, 10 July 1996 (Plastic chips case)] (no acceptance where addressee was silent and there was no other evidence of assent).

19. [FRANCE Cour d'appel, Grenoble 21 October 1999 (Footwear case)] (in prior transactions seller had filled buyer's [order] without notifying the buyer); [UNITED STATES Federal District Court, Southern District of New York, 14 April 1992 (Filanto v. Chilewich)] (course of dealing created duty to respond to offer).

20. [NETHERLANDS Gerechtshof 's-Hertogenbosch 24 April 1996 (Yarn case)]; [GERMANY Oberlandesgericht Dresden 9 July 1998 (Terry cloth case)] (buyer who sent commercial letter of confirmation did not establish existence of international usage by which silence constitutes assent). See also Opinion of Advocate General Tesauro [EUROPEAN COURT OF JUSTICE Case C-106/95 of 20 February 1997 (Mainschiffahrts-Genossenschaft eb (MSG) v. Les Gravihres SARL)] (commercial letter of confirmation enforceable notwithstanding recipient's silence if international usage established).

21. [UNITED STATES Federal District Court, Southern District of New York, 14 April 1992 (Filanto v. Chilewich)]. See also [FRANCE Cour d'appel, Grenoble 21 October 1999 (Footwear case)] (seller with manufacturing samples and original material in its possession should have questioned buyer about absence of order from buyer).

22. [GERMANY Oberlandesgericht Köln 22 February 1994 (Rare hard wood case)].

23. [FRANCE Cour d'appel, Paris 13 December 1995 (Packaging for biscuits case)] (contract concluded before receipt of letter of confirmation so no acceptance of the standard terms referred to in letter).

24. [ICC International Court of Arbitration, Award 7844 of 1994 (Radio equipment case)].

25. [UNITED STATES Minnesota State District Court 9 March 1999 (KSTP-FM v. Specialized Communications)] (if Convention applicable, party accepted by performance under art. 18(3)) (see full text of the decision); [SWITZERLAND Handelsgericht des Kantons Zürich 10 July 1996 (Plastic chips case)] (third party taking delivery of greater number of goods than had been contracted for was an acceptance under art. 18(3), but not acceptance of seller's proposal to modify price); [GERMANY Oberlandesgericht Frankfurt a.M. 23 May 1995 (Shoes case)] (delivery of goods could constitute an acceptance of an order under art. 18(3), but because the delivered quantity differed materially from the order the acceptance was a counter-offer under art. 19).


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