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

Digest of Article 19 case law [reproduced with permission of UNCITRAL] [*]

[Text of article
Overview
Material modifications
Immaterial modifications
Conflicting standard terms]

Article 19

(1) A reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer.
(2) However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offeror, without undue delay, objects orally to the discrepancy or dispatches a notice to that effect. If he does not so object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance.
(3) Additional or different terms relating, among other things, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially.

OVERVIEW

1. Article 19 qualifies article 18 by providing that a purported acceptance which modifies the offer is a rejection of the offer and is considered instead to be a counter-offer.[1]

Paragraph (1) of article 19 states this basic proposition, while paragraph (2) makes an exception for immaterial modifications to which the offeror does not object. Paragraph (3) lists matters which are considered material.

[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.]

Material modifications

2. Paragraph (1) provides that a reply to an offer that adds to, limits or otherwise modifies the offer is a rejection of the offer. Several decisions have reviewed the parties exchange of multiple communications and have concluded, without specifying the modifications, that at no point was there an acceptance of an offer.[2]

3. Paragraph (3) lists matters that, if they are the subject of a modification in a reply to an offer, render the modification material. Modifications relating to the following listed matters have been found to be material: price;[3] payment;[4] quality and quantity of the goods;[5] place and time of delivery;[6] settlement of disputes.[7] One decision has stated, however, that modifications of matters listed in paragraph (3) are not material if the modifications are not considered material by the parties or in the light of usages.[8]

Immaterial modifications

4. Paragraph (2) provides that a reply with immaterial modifications of the offer constitutes an acceptance (and that the resulting contract includes the modified terms of the reply) unless the offeror notifies the offeree without undue delay that the offeror objects to the modifications.[9] One court has stated that modifications that favour the addressee are not material and do not have to be accepted expressly by the other party.[10]

5. The following modifications have been found to be immaterial: language stating that the price would be modified by increases as well as decreases in the market price, and deferring delivery of one item;[11] seller's standard term reserving the right to change the date of delivery;[12] a request that buyer draft a formal termination agreement;[13] a request to treat the contract confidential until the parties make a joint public announcement;[14] a provision requiring that buyer reject delivered goods within a stated period.[15]

Conflicting standard terms

6. The Convention does not have special rules to address the issues raised when a potential seller and buyer both use standard contract terms prepared in advance for general and repeated use (the so-called "battle of the forms"). Several decisions conclude that the parties' performance notwithstanding partial contradiction between their standard terms established an enforceable contract.[16] As for the terms of these contracts, several decisions would include those terms on which the parties substantially agreed, and replace those standard terms that (after appraisal of all the terms) conflict [17] with the default rules of the Convention; several other decisions give effect to the standard terms of the last person to make an offer or counter-offer that is then deemed accepted by subsequent performance by the other party.[18] Another decision refused to give effect to the standard terms of either party: the seller was not bound by the buyer's terms on the back of the order form in the absence of a reference to them on the front of the form, while the seller's terms -- included in a confirmation letter sent after the contract was concluded -- were not accepted by the buyer's silence.[19]


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;
 
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   -    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. But see [AUSTRIA Oberster Gerichtshof 20 March 1997 (Mono ammonium phosphate case)] (the reply must satisfy the definiteness requirements of art. 14(1) in order to be a counter-offer). For discussion of the article 14(1) definiteness requirement, see paragraphs 6 and 7 of the Digest for article 14.

2. See, e.g., [SWITZERLAND Handelsgericht des Kantons Zürich 30 November 1998 (Lambskin coat case)] (no agreement on termination of contract) (see full text of the decision); [HUNGARY Fovárosi Biróság 17 June 1997 (Candies case)] (no clear agreement to extend distribution contract).

3. [AUSTRIA Oberster Gerichtshof 9 March 2000 (Roofing material case)]; [AUSTRIA Obster Gerichtshof 9 March 2000 (Roofing material case)]; [UNITED STATES Federal District Court, Northern District of Illinois 7 December 1999 (Magellan International v. Salzgitter Handel)] (see full text of the decision); [SWITZERLAND Handelsgericht des Kantons Zürich 10 July 1996 (Plastic chips case)] (see full text of the decision).

4. [AUSTRIA Oberster Gerichtshof 6 February 1996 (Propane case)] (time of payment) (see full text of the decision).

5. [GERMANY Oberlandesgericht Frankfurt a.M. 23 May 1995 (Shoes case)] (delivery of fewer pairs of shoes than ordered); [GERMANY Oberlandesgericht Frankfurt a.M. 31 March 1995 (Test tubes case)] (difference in quality of glass test tubes); [GERMANY Oberlandesgericht Frankfurt a.M. 4 March 1994 (Special screws case)]] (acceptance ordering additional kinds of screws); [GERMANY Oberlandesgericht Hamm 22 September 1992 (Frozen bacon case)] (acceptance offering to sell "unwrapped" rather than wrapped bacon).

6. [UNITED STATES Federal District Court, Southern District of New York, 6 April 1998 (Claudia v. Olivieri Footwear)] (delivery terms) (see full text of the decision); [GERMANY Oberlandesgericht München 8 February 1995 (Automobile case)] (time of delivery) (see full text of the decision).

7. [FRANCE Cour de cassation 16 July 1998 (Aluminium hydrate case)] (differing choice-of-forum clause); [UNITED STATES Federal District Court, Southern District of New York, 14 April 1992 (Filanto v. Chilewich)] (inclusion of arbitration clause) (see full text of the decision).

8. [AUSTRIA Oberster Gerichtshof 20 March 1997 (Mono ammonium phosphate case)].

9. [BELGIUM Tribunal Commercial de Nivelles 19 September 1995 (Industrial machinery / vulcanization machinery case)].

10. [AUSTRIA Oberster Gerichtshof 20 March 1997 (Mono ammonium phosphate case)].

11. [FRANCE Cour d'appel, Paris 22 April 1992 (Electronic components case)] affirmed [FRANCE Cour de cassation 4 January 1995 (Electronic components case)] (affirming with no specific reference to the Convention) (see full text of the decision).

12. [GERMANY Oberlandesgericht Naumburg 27 April 1999 (Automobile case)] (delivery clause interpreted in accordance with art. 33(c)).

13. [CHINA CIETAC Award of 1 April 1993 (Steel products case)].

14. [HUNGARY Fováosi Biróság (Metropolitan Court) Budapest 10 January 1992 (Airplane engines case)] reversed on other grounds [HUNGARY Legfelsóbb Biróság 25 September 1992 (Airplane engines case)].

15. [GERMANY Landgericht Baden-Baden 14 August 1991 (Wall tiles case)] (see full text of the decision).

16. [GERMANY Bundesgerichtshof 9 January 2002 (Powdered milk case)]; [GERMANY Landgericht Kehl 6 October 1995 (Knitware case)] (parties' performance established that parties either derogated from art. 19 or waived enforcement of conflicting standard terms); [GERMANY Oberlandesgericht München 11 March 1998 (Cashmere sweaters case)] (buyer accepted standard terms that differed from its offer by performing contract) (see full text of the decision).

17. [GERMANY Bundesgerichtshof 9 January 2002 (Powdered milk case)]; [GERMANY Landgericht Kehl 6 October 1995 (Knitware case)] (enforcing only standard terms that the parties had in common).

18. [GERMANY Oberlandesgericht München 11 March 1998 (Cashmere sweaters case)] (by performing buyer accepted standard terms that differed from its offer); [ICC International Court of Arbitration, Award 8611 of 23 January 1997 (Industrial equipment case)] (if standard terms were considered a counter-offer, recipient accepted those terms by taking delivery of goods along with an invoice to which the standard terms were attached). See also [NETHERLANDS Hof 's-Hertogenbosch 19 November 1996 (Computer software case)] (seller's acceptance stated that its standard terms applied only to the extent they did not conflict with buyer's standard terms).

19. [FRANCE Cour d'appel, Paris 13 December 1995 (Packaging for biscuits case)].


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