Reproduced with permission of 37 Virginia Journal of International Law 1 (Fall 1996) 1-105

I. INTRODUCTION: CONSENSUS, "DISSENSUS," AND CONTRACT

Under traditional notions of the nature of contract, binding "contractual" obligations come into being through manifestations of a corresponding common intent of the parties to a proposed transaction. The law then sanctions and gives value to this form of social ordering - upon satisfaction of certain requirements respecting form and content - by offering the power of the state in aid of the enforcement of those obligations.

The friction arises in identifying the contours of the transactors' common intent. Indeed, friction may be inherent in the very inquiry into shared intent itself, for the social institution of contract is part cooperative and part competitive in nature. In absence of a formal, final, integrated writing, it will thus be a rare case that the intent of the parties will correspond precisely. What is substantially more common in modern transactions is that the parties fail to reach an express agreement on all aspects of their relationship, but nonetheless acknowledge that they have concluded a binding deal. As a result of the flexibility and informality (or, sometimes, [page 1] the complexity) of their relationship, the parties then proceed with the performance of the contemplated transaction and disregard the lack of agreement on the "details" previously proposed by one or both of them.

Traditional contract doctrine in the United States lacks an overarching conceptual device to capture these types of flexible and informal relationships. Indeed, the classical rules of contracting would in effect deny their existence. Under traditional notions, the parties to a proposed transaction do not establish contractual obligations as long as they continue to disagree over matters raised in the course of their negotiations. Even under the more accommodating approach of article 2 of the Uniform Commercial Code (U.C.C.), the debate has often centered not directly on the parties' actual intent, but instead on the narrow effect of their "forms" (hence, the "battle of the forms"). Much of recent contract law literature has discounted the process of agreement entirely. Instead, scholars have focused the analysis primarily on an identification of the appropriate substantive background law (the "default rules") to fill gaps in extant contractual relations.

All of this has tended to obscure what should be the threshold issue in addressing these more flexible and informal relationships: the role of the absence of a complete agreement of the parties in the creation and definition of contractual obligations in the first instance. Accepted contract doctrine in this country in fact lacks even the terminology to frame the analysis of this issue at the appropriate level of abstraction. In this Article, I discuss this common state of affairs in terms of a "dissensus" between the parties. This concept, which parallels terminology sometimes used by continental European scholars, broadly embraces both an affirmative disagreement and a passive lack of agreement between the parties. Of specific interest is the role of what I refer to below as a "partial dissensus," for the critical interpretive issue arises when the dissensus between the parties is overcome by a more powerful consensus between them that they have nonetheless concluded a binding deal.

It is difficult to overstate the significance of this issue in conceptualizing the formation process in modern contractual relationships. Advancements in communications technology - electronic data interchange, e-mail, the internet, telefax, and the like - have made it possible for the parties to a proposed transaction to identify in a concrete form all terms of potential interest to them and to transmit those terms with a convenience and rapidity unimaginable [page 2] even twenty short years ago. The result is that in a substantial share of modern transactions both parties will make reference to their standard proposed terms in one form or another before they proceed with performance. Commonly, however, the parties have neither the time nor the desire expressly to agree on all issues raised in this routine manner. As a result, very often legally non-essential, but nonetheless commercially significant matters - such as the seller's common proposal to exclude statutory warranties and to limit liability for consequential damages - will remain unresolved. Herein lies the heart of a partial dissensus.

The entry into force of the United Nations Convention on Contracts for the International Sale of Goods (U.N. Sales Convention or Convention or CISG) has presented contract scholars with a unique opportunity to revisit the role of a partial dissensus in the formation of contractual obligations. Indeed, for two related reasons the resolution of this issue under the U.N. Sales Convention will have particularly significant implications. First, the Convention broadly applies, to the exclusion of contract principles of national law, to all contracts for the international sale of goods between residents of states party to the Convention. The second reason relates to the decreasing relevance of this last prepositional phrase. Only nine years after its entry into force, the Convention's reach extends to commerce between states whose economies account for over sixty percent of all world trade - and the trend is decidedly toward a rapid increase in both the roster of contracting states and the relative significance of international over purely domestic trade (just as interstate displaced purely intrastate commerce in the maturing of the economy in the United States).

Unfortunately, there is a noteworthy absence of any detailed theoretical discussion of the proper role of a partial dissensus in contract formation under the U.N. Sales Convention. Scholarly attention has instead tended to focus on the mere fact that the Convention hews closely to the traditional offer-acceptance formation scheme and that, in their practical effect, the provisions of the Convention transform nearly all acceptances whose terms deviate from those of the offer into a rejection and counteroffer. This adherence to traditional notions has led to an inclination to view the Convention's formation provisions as inflexible, prescriptive rules that apply irrespective of the actual intent of the parties.

Such interpretive rigidity has, in turn, infected the received wisdom on the treatment of a partial dissensus. The traditional weight of opinion holds that the offer-acceptance scheme itself provides [page 3] the solution to all such issues of contract formation. In the event of a partial dissensus, therefore, an adjudicator need merely observe that each deviating reply amounts to a counteroffer coupled with a rejection of all previous proposals. Traditionalist commentators have proceeded from this formalist premise to the conclusion that the last formal declaration exchanged between the parties must be given effect in its entirety if the parties subsequently proceed to perform.

I argue here that the principles and policies of the U.N. Sales Convention require a more refined analysis. Specifically, my thesis is that an appropriate understanding of the effect of a partial dissensus must begin with an analysis of the values the Convention seeks to protect in the recognition and enforcement of contractual obligations in the first instance. My examination of the treatment of a partial dissensus thus begins with a review in Part III.A. of the general principles of uniform international sales law that inform the interpretation of the Convention itself. With this foundation, I then turn, in Part III.B., to a study of what these general principles reveal about the core values that underlie the Convention's contract formation scheme.

The conclusion that emerges from this analysis is that the traditional approach to the treatment of a partial dissensus, though possessing a certain analytical purity, lacks sufficient justification in the core policies and principles of the Convention. Of particular significance among these policies and principles are the primacy of party autonomy, a heightened significance of flexibility in the search for intent, and a rejection of normative solutions for intent-based interpretive issues. Contrary to these values, the traditional approach proceeds on the static premise that the offer-acceptance scheme is both the beginning and the end of the analysis. In the event of performance in spite of a partial dissensus, the consequence of this premise is that the parties are deemed to assent to the "last shot" exchanged between them. The nature of the parties' prior relationship - the level of complexity, the degree of formality, and their prior declarations - becomes irrelevant to the analysis.

This Article maintains that such a formalist adherence to the offer-acceptance scheme is ill-suited to accommodate the role of a partial dissensus in the formation of modern contractual relationships. The approach I advocate in Part IV.B. instead seeks to refocus the analysis to the essential interpretive inquiry in such cases: the effect of the parties' prior declarations of intent where [page 4] they proceed to perform in knowing, mutual disregard of the absence of a complete agreement (that is, a partial dissensus) between them. I argue that the Convention's interpretive values require that the effect of such a partial dissensus be calibrated to the nature of the parties' prior relationship. Refocusing the analysis in this way to the essential interpretive inquiry will give particular emphasis to the parties' prior express declarations of intent. Thus, for example, where the offeror affirmatively declares her objection to terms that deviate from her own, her performance would not (without more) manifest her assent to any "last shot" proposed by the other party. In other words, the intent the traditional approach purports to imply from performance alone would not be of sufficient expressive weight to overcome this prior express declaration of a contrary intent.

The result in such cases is that the declarations and expressive conduct of neither party manifest unqualified assent to the formal declaration of the other. It is in such situations that the principle of party autonomy assumes its appropriate function in the hierarchy of norms of uniform international sales law. In the event of mutual performance, that principle will, first, require the recognition of enforceable contractual obligations. Party autonomy then operates to define the content of those obligations on the basis of the actual common intent that emerges from the parties' prior express declarations. In practical outcome, this means that the parties' respective writings (in particular their standardized business terms) will take effect only to the extent that the writings are in agreement. Where gaps remain, the substantive provisions of the Convention respecting the rights and obligations of buyer and seller likewise assume their appropriate function of defining the "background" to the parties' relationship.

Much of the analysis in support of the approach I advocate departs from the traditional notions of the manner by which private actors create binding obligations. The difficulty with these traditional process assumptions arises from the tendency to view them as irreducible values in themselves. The result has been that the assumptions have often transformed themselves into rigid rules decoupled from the interpretive values they purport to reflect. The received wisdom on the interpretation of the U.N. Sales Convention nonetheless seeks to import a similar prescriptive rigidity to its formation provisions. The sum of the argument I advance below is that a reasoned appreciation of the Convention's interpretive values counsels against an adoption of formation rules so rigid in their [page 5] application that the Convention ceases to be an aid and begins to be an independent impediment to the effectuation of the common intent of the parties to international sales transactions.

II. CONTRACT FORMATION AND THE UNITED NATIONS SALES CONVENTION (CISG) [1]

A. The Background

1. The Scope and Significance of CISG

It can be said with little risk of overstatement that the United Nations Convention on Contracts for the International Sale of Goods [2] represents one of history's most successful efforts at the unification of the law governing international transactions. The significance of the Convention is revealed not only by the number, but also by the geographic and political distribution of its contracting states - in the eight short years since it entered into effect in 1988, forty-seven states have either acceded to or ratified the Convention,[3] the combined economies of which account for over sixty percent of world trade.[4] Moreover, represented among this number are states from all corners of the globe, from all political perspectives (former socialist states, as well as traditional western democracies), and from all stages of economic development (highly and newly industrialized countries, as well as developing ones).[5] This worldwide acceptance has provided ample confirmation of the [page 6] observation of one German scholar as early as 1989 that the entry into force of the U.N. Sales Convention represented a "milestone in legal history."[6]

The U.N. Sales Convention in fact arose precisely from the failure of an earlier unification effort to address the diversity of cultures and legal traditions involved in international contracting. This earlier effort took the form of two separate conventions [7] - one governing contract formation [8] and the other the substantive rights and obligations of the parties [9] - adopted at a conference in The Hague in 1964. Although these "Hague Conventions" were comprehensive in their substantive application, nearly all participants in their creation represented industrialized western European states. As a consequence, neither developing states nor the then-socialist states viewed these conventions as a serious attempt at a worldwide unification of the law.[10] Thus, almost from their very adoption the 1964 Hague Conventions had "no chances for broad international acceptance."[11] [page 7]

With these developments as a backdrop, the United Nations Commission on International Trade Law (UNCITRAL) began as early as 1968 with the advance work for a comprehensive review of the Hague Conventions, and in 1969 established a Working Group charged with this responsibility.[12] This Working Group initially proceeded on the basis of separate documents governing formation and substantive sales law; after nearly ten years of drafting efforts, however, the drafters decided in 1978 to combine the drafts of the two conventions into one document.[13] In the course of these efforts, UNCITRAL also prepared and published extensive materials documenting the drafting history of the Convention. This travaux préparatoires provides a rich source of material for interpreting CISG's express provisions and for analyzing the meaning of the gaps in those provisions.[14]

After the preparation of a commentary by the General Secretariat of UNCITRAL,[15] the United Nations General Assembly convened a diplomatic conference in Vienna in April 1980 to debate the resulting unified draft convention. The delegates to the Vienna Conference unanimously adopted the Convention, with some revisions, on April 11, 1980.[16] The Convention then entered into effect according to its terms on January 1, 1988, after the ratifications of [page 8] the United States, China, and Italy exceeded the required threshold of 10 member states.[17]

The significance of this event arises not only from the ever increasing number of states party to the Convention, but also from its very nature and status in the hierarchy of contract law norms.[18] Upon its ratification, the Convention applies as an independent contract law regime that supersedes national law principles for all contractual relationships within its scope. In the United States, the Convention functions as a self-executing treaty which applies by force of federal preemption without the need for any action by the fifty states.[19] In other words, the Convention is not merely a form of restatement of (international) contract law,[20] nor is it simply a "model law" which would be subject to modification by contracting [page 9] states to address local concerns; rather, upon ratification CISG applies of its own force to all proposed contractual relationships that satisfy its "internationality" requirements.[21]

Briefly summarized, the sphere of application of the Convention is defined by three requirements. The primary element of "internationality" concerns the entities involved in the transaction. Article 1 of the CISG requires for the applicability of the Convention that the parties to the putative contractual relationship have their "places of business"[22] in different states and that either (a) both of those states are CISG contracting states or (b) conflict of laws principles (known by the civil law label "private international law") lead to the application of the law of a member state.[23] The second requirement concerns the subject matter of the contract itself. Similar to the Uniform Commercial Code in this country,[24] CISG applies only to the sale (that is, not countertrade transactions) of moveable goods.[25] Finally, and not surprisingly, the contract at issue must have been concluded (or, if the issue is one of formation, the offer must have been made) after the relevant states became parties to the Convention.[26] [page 10]

If a proposed transaction satisfies these elements, the Convention applies directly and automatically, and displaces (with certain limited exceptions identified in the Convention itself) [27] the various systems of contract law of its member states in their entirety.[28] The implications of this conclusion for international sales transactions are profound indeed, and no more so than on the issue of contract formation. What is often not sufficiently appreciated is that individual participants in sales transactions that are international in the sense of article 1 cannot - by clever drafting of general business terms or otherwise - avoid the initial application of the Convention's formation principles. To be sure, article 6 permits the parties to an international sales contract to exclude the application of the Convention or derogate from its provisions, a subject I explore in detail below.[29] A very significant subtlety emerges from the plural form of this provision, however. Although the principle of the primacy of "party autonomy" established by article 6 [30] extends even to contract formation issues,[31] the language of that article makes clear that this result obtains only in the case of an express or implied common intent of the parties on the subject.[32] [page 11]

This principle prevents a party to an international sales transaction from excluding the application of the Convention by unilateral action. The common practice of including a choice-of-law clause in one's standard business terms, taken alone, thus avails a party nothing: Whatever terms a party proposes, the Convention's policies and principles governing contract formation will apply in the first instance to determine whether the parties have reached a binding agreement. It is only if - in application of those policies and principles - the agreement includes an exclusion of the Convention that the uniform law will, in fact, be so excluded. In short, within its sphere of application the U.N. Sales Convention's contract formation principles will apply as an initial matter, and there is little that one party can do, by unilateral action, to avoid that result.[33]

The nature of the Convention as a directly applicable, independent contract law regime is reinforced by the principles governing matters not expressly resolved by its provisions. CISG article 7(2) prohibits reference to (non-uniform) national law on matters within its scope even if specific contract issues remain unsettled by its express provisions. Instead, the Convention establishes as the primary principle in such cases that gaps in its provisions must "be settled in conformity with the general principles on which it is based." Matters left unsettled by the Convention, in other words, are to be resolved on the basis of the principles of the Convention itself.[34] It is only in the (rare) cases in which those principles do [page 12] not provide guidance that article 7(2) permits reference to national law to resolve gaps in CISG's provisions.[35]

Contract law issues falling in this latter category should be rare indeed, for the Convention broadly addresses not only the formation of international sales contracts (CISG Part II) but also the substantive rights and obligations of the parties to such contracts (CISG Part III). The scope of the Convention on matters of contract formation is particularly expansive. As a "structural" matter, CISG contains detailed provisions in articles 14 through 24 on the traditional manner by which contracts come into being.[36] Moreover, CISG identifies in articles 6 though 11 certain "general principles" whose application informs the identification of the policies that underlie the Convention's formation scheme.[37] The interaction between these general principles and specific provisions thus leaves little room for resort to principles of domestic law to resolve formation issues in transactions within CISG's sphere of application.[38]

The difficulty with this observation for present purposes issues from the very nature of a multilateral international treaty such as the Convention. The drafting history of the Convention is replete with compromises on matters over which the legal and cultural backgrounds of the delegates differed.[39] A derivative effect of these differences was that certain issues deemed too controversial [page 13] to permit an express consensus between the delegates were simply left unresolved in CISG's express provisions.

As I explore in detail below,[40] one such issue is the treatment of contractual relationships in which the declarations and expressive conduct of the parties do not track the traditional lock-step model of offer and unconditional acceptance. Because such an issue of contract formation is certainly a "matter[ ] governed by [the] Convention," the resolution of the treatment of a partial dissensus must be divined by reference to the core values of the Convention as revealed by both the "general principles" on which it is based and the rules that emerge from its more specific contract formation provisions. I turn to a brief review of these latter rules first.

2. Contract Formation Under CISG: The Basics

It is now common wisdom that the U.N. Sales Convention generally adheres to the "classical" or "traditional" conception of the manner in which private actors create contractual obligations.[41] The contract formation provisions of CISG thus reflect the traditional assumption that the determinative agreement of the parties to create such obligations arises out of two constitutive declarations of intent. That is, in the words of the General Secretariat's commentary to the 1978 "New York Draft" of the Convention, "contractual obligations arise out of expressions of mutual agreement."[42] It thus approaches a mere truism to observe that under the U.N. Sales Convention a contract is formed and defined by the [page 14] manifested common intent, or "consensus,"[43] between the parties.[44]

With this general principle of consensus as a foundation, the Convention turns to what would appear to be the specifics,[45] that is, to the assumed "mechanics" of how that consensus typically will come into being. It is here, perhaps, that the Convention reveals itself most clearly as the "lowest common denominator" among the various legal systems represented in its preparation, for the basic "structural" contract formation provisions of the Convention will surprise neither common law nor civil law jurists and will challenge few with their complexity.[46] Only a brief examination of this basic formation scheme is thus necessary here. [page 15]

In accordance with traditional notions, the Convention identifies an offer and its acceptance as the basic "structural" components of a contract.[47] In conformance with traditional notions, an offer under the Convention sets the formation process in motion by "empowering" the offeree to conclude a contract solely with a corresponding expression of intent to be bound to the deal as proposed.[48] In other words, an offer within the sphere of application of CISG must alone be sufficient not only as a declaration of intent of the offeror but also as a definition of the necessary reciprocal obligations of the parties. In the language of article 14, an offer is a proposal to conclude a contract that both reveals an "intention of the offeror to be bound in case of acceptance" and is "sufficiently definite."[49]

The intent element of this standard, of its essence, involves interpretive considerations. This conclusion is made all the more clear by article 14's admonition that an effective offer need only "indicate" the offeror's intent to be bound.[50] The sum of the intent "requirement" of article 14 is thus a mere reference to the general [page 16] interpretive provisions of the Convention (article 8), which define the standards for assessing the meaning of the declarations and expressive conduct of the parties.[51]

The focus of the "definiteness" requirement is the substantive elements of a sales contract. Article 14(1) thus sets forth the elemental proposition that in order to rise to the level of an "offer" a proposal to conclude a contract must identify the subject of the transaction (that is, the goods), as well as "the quantity and the price."[52] In other words, an offer under CISG must identify the essential elements of the contract, often known in civil law jurisdictions as the "essentialia negotii" [53] and in the United States by Professor Llewellyn's now famous "dickered terms."[54] [page 17]

Although this irreducible core of a sales contract will be significant in determining whether there has been a complete failure of agreement of the parties,[55] the appropriate treatment of a partial dissensus is to be found in the standards for acceptance by the offeree. At the core of the definition of an acceptance under the Convention is the requirement of manifested assent. Article 18(1) of the Convention provides that in order to qualify as an acceptance, the response of the offeree must "indicate assent to [the] offer ...." [56] This indication of assent can take a variety of forms. In a noteworthy improvement on the unclear language of the 1964 Hague Convention Relating to a Uniform Law on the Formation of Contracts for the International Sale of Goods (Hague ULF),[57] article 18(1) of the CISG instructs that the essential indication of assent can take the form of either a statement (that is, a return promise) or "other conduct."[58]

With the use of the term "indicates assent," CISG once again makes clear the central significance of the general interpretive provisions of article 8 for contract formation issues. The common case of a statement of the offeree communicated to the offeror will often pose few interpretive difficulties. But even here, confirmations of receipt, conditional responses, and ambiguous "order acknowledgments" will require an application of the principles outlined in article 8 to determine the import of the expressions contained in the response to the offer.[59] [page 18]

Such an inquiry into the intent of the offeree becomes significantly more challenging when the only relevant external manifestation of that intent is the offeree's conduct. To be sure, article 18(1) sanctions the possibility of divining a valid indication of assent in conduct alone.[60] A closer examination of article 18 cautions restraint in doing so, however. First, the grammatical structure of the first sentence of article 18(1) makes clear that the analysis of a claimed implied acceptance is subject to no less exacting standards than an express statement of acceptance.[61] Moreover, concerns by the drafters about an overly liberal interpretation of article 18(1) led to the inclusion in that article of a specific admonition that "silence or inactivity does not in itself amount to acceptance."[62] This provision is unique among the contract formation provisions of CISG, for - although the principle that silence alone does not indicate assent is well established in civil and common law jurisdictions alike [63] - no such explicit admonition is to be found with reference to any other expressions of intent contemplated by the Convention.[64]

The difficulty of discerning whether the conduct of a merchant in international commerce is an indication of her unqualified assent is compounded when one considers that the focus of the inquiry is not simply on assent to the creation of contractual obligations in general. Rather, what is required is assent to the specific offer as proposed. Admittedly, the flexibility inherent in article 18(1) will permit the general statement that even silence may amount to acceptance when coupled with other "relevant circumstances" in [page 19] the sense of the interpretive standards of article 8.[65] The word "may" is significant here, however. It is essential to observe even at this initial stage in the analysis that whether the actions of a party attain a level equivalent to an affirmative and unconditional expression of assent is a fact-specific inquiry that will be driven by the circumstances of each case (including, in particular, the statements and actions of the parties both prior and subsequent to the conduct at issue).[66] It is here, perhaps more than with any other inquiry in the formation process, that the values that underlie the recognition of contractual obligations under the Convention,[67] in particular the interpretive standards of article 8,[68] will play a decisive role.[69]

The formation process is completed under the Convention at the moment the acceptance of the offer "becomes effective."[70] In conformance with traditional civil law notions, an acceptance becomes effective when the requisite indication of assent "reaches the offeror,"[71] as long as it does so within the time specified in the offer, or in absence of such a specification, within a "reasonable time." [72] [page 20]

3. The Treatment of Deviating Acceptances

a. The Background and Structure of CISG Article 19

The issue of the appropriate treatment of a declaration that purports to be an acceptance but contains terms that differ from those of the offer has been a vexatious one in the United States and elsewhere for decades. Traditional contract doctrine adheres to a rigid assumption on this score: If a reply is not a "mirror image" of the offer, no contract is formed.[73] In recent decades, this rigid conclusion has become the subject of increasing criticism in light of, among other things, the widespread use of the preprinted, standard business terms that are exchanged as routine supplements to the respective contract declarations of the parties. To address these developments, the drafters of article 2 of the Uniform Commercial Code in the United States adopted a more flexible approach. The basic policy of U.C.C. 2-207 is to recognize a binding contract if "in commercial understanding" the deal between the parties "has in fact been closed."[74] Although this undoubtedly represented a significant advancement in the recognition of mutually-intended contractual obligations, the particular solution of 2-207 with respect to the content of the resultant contract has not, to put it mildly, received broad support among scholars [75] and the courts,[76] with the commentary of the former being particularly acerbic.[77] [page 21]

It is not surprising, then, that the treatment of a deviating acceptance likewise was among the most controversial issues in the deliberations over the contract formation provisions of the U.N. Sales Convention. Unfortunately, hopes for a comprehensive solution to this fundamental problem were left unsatisfied. In the end, the severe differences among the drafters on this issue allowed only a narrow compromise, now reflected in article 19, a prime objective of which remains to protect parties from the imposition of contractual obligations where they have failed to reach a clear agreement on the content of their relationship.[78]

The determinative issue on the effect of a deviating acceptance under the compromise of article 19 is, briefly, whether the "acceptance" contains terms that "materially alter" those of the offer.[79] The first paragraph of the article sets forth the traditional "mirror image" rule that a deviation in the reply to the offer has the twin effects of rejecting the offer and transforming the reply into a counteroffer. The second paragraph then purports to ameliorate the harsh effect of this rule in the case of "nonmaterial" terms in the "acceptance" declaration.[80] What the second paragraph giveth, however, the third paragraph taketh away, for the latter defines as material effectively all terms that could be of significance in international sales contracts.[81]

Surprisingly, the basic rule in article 19(1) that a deviating acceptance does not, in principle, operate to conclude a contract [page 22] was not particularly contentious in the drafting process. The original proposal of the Secretary-General [82] on this score was only slightly amended in the deliberations of the Working Group.[83] The sum effect of the amendments was to make clear that a reply to an offer that merely makes inquiries or suggests, but does not insist on, possible additional terms does not invoke the rule of article 19(1).[84]

By contrast, the issue of whether more detailed provisions were appropriate beyond the simple rule of article 19(1) was among the most disputed matters of the entire Convention. The draft of article 19 initially [85] approved by the Working Group included only paragraph (1) along with a second permitting contract formation notwithstanding "nonmaterial" deviations.[86] It was this latter principle that proved to be a nexus of friction among the delegates. The dispute over this provision arose between, on the one hand, [page 23] traditionalist scholars and representatives of socialist countries, who preferred only the strict mirror image rule and thus desired to strike the provision in its entirety,[87] and on the other, certain industrialized countries that supported a more flexible solution. When efforts to strike the second paragraph failed,[88] the former group sought to limit the definition of "nonmaterial" alterations to "mere differences in wording, grammatical changes, typographical errors" and similar insignificant matters.[89]

The dispute between the two camps led to the formation of a special working group charged with defining the contours of the term "material" in the context of deviating acceptances.[90] The result of the efforts of this working group was a proposed additional paragraph for article 19 (the present article 19(3)) which set forth a non-exhaustive list of terms that would be deemed material. This draft also included, however, a controversial final clause that would have given effect to an acceptance containing material alterations if the offeree had "reason to believe" such terms would be "acceptable to the offeror."[91] In spite of this controversy, the Working Group adopted this draft of article 19(3) in 1978 and included it within the comprehensive New York Draft of the Convention of the same year.[92]

Both of the latter two paragraphs of article 19 nonetheless remained controversial and were the subjects of attacks from both traditionalists and reformers at the Vienna Conference in 1980. Proposals made during the Conference to strike both paragraphs in their entirety failed, however.[93] Traditionalists were nonetheless successful to a limited extent at the Conference in that they were able to defeat France's proposal to limit the list of "material" terms in article 19(3) to price, quality, and quantity of the goods.[94] They [page 24] likewise succeeded in deleting from the final text of article 19(3) the controversial proposal to give effect to materially deviating acceptances if there was "reason to believe" that the deviations were acceptable to the offeror.[95]

b. Deviating Acceptance with Material Alterations

The result of the "timorous"[96] compromise of article 19 was, in a practical sense, a departure in form only from the strict mirror image rule. The second paragraph of article 19 purports to mitigate the harsh effects of that rule for acceptances that deviate from the offer in nonmaterial respects only. Further examination reveals, however, that the relief afforded by article 19(2) is merely illusory, for article 19(3) then proceeds to define as "material" all terms worthy of mention.

The article 19(3) list of presumptively material terms in a deviating acceptance is indeed comprehensive. One finds there not only the "usual suspects" of price, quantity, and time of delivery (that is, the essentialia negotii) but also less "essential" terms such as those "relating to payment, quality ... of the goods, place ... of delivery, extent of one party's liability to the other or the settlement of disputes." And the scope of article 19(3) does not end there. The provision makes clear that the listed terms are only "among other things" that may be considered "to alter the terms of the offer materially." Thus, the materiality of terms beyond those expressly identified may also arise from the particular circumstances of a transaction.[97]

This latter category should be of limited practical significance, however. This follows from the simple fact that the terms listed in [page 25] article 19(3) embrace "most aspects of the contract,"[98] and in any event effectively all subjects that would be of significance in the typical sales transaction. Thus, the practical consequence of the broad list in article 19(3) is that in transactions within the sphere of application of the U.N. Sales Convention nearly all purported acceptances that are not limited to a simple "yes" will be deemed to alter the terms of the offer "materially" as contemplated by article 19(3).

The legal consequence in such a case is a straightforward one: As the "nonmaterial alteration" exception of article 19(2) does not apply, the reply, even though intended as an acceptance, is not one; rather, it constitutes a rejection of the offer by operation of article 19(1). At the same time, the deviating acceptance becomes a counteroffer, which, to form a contract, would in turn require a valid acceptance in the sense of article 18(1) of the CISG.[99] At this executory stage in the parties' relationship, application of article 19(1) thus leads to the practical result that no contract is formed on the basis of the parties' formal declarations.

It is here that the regulatory scheme of the Convention breaks down. As I discuss in Part II.B., article 19, though it supplies a clear rule at the executory stage of the parties' relationship, fails to address the case in which the parties nonetheless proceed to carry out the perceived "contract." The express provisions of the Convention, in short, fail to provide definitive guidance on the issue of the proper treatment of such a "partial dissensus" where the parties nonetheless manifest a broader agreement on the conclusion of a binding deal.[100]

c. Deviating Acceptance with Nonmaterial Alterations

Taken literally, the provisions of article 19(2) operate as an exception to the strict mirror image rule of the first paragraph of the article. According to article 19(2), additional or different terms [page 26] in a deviating acceptance that do not materially alter the terms of the offer likewise do not prevent the formation of the contract. The contrary result obtains only if the offeror, "without undue delay, objects orally to the discrepancy or dispatches a notice to that effect." If the offeror does not so object, the contract is concluded on the basis of the offer as supplemented by the modifications in the acceptance.[101]

As the list of terms deemed material by article 19(3) encompasses effectively all matters of significance, and as the purpose of the general terms of business in widespread use in such transactions is precisely to address such matters, the provisions of article 19(2) will rarely be of practical relevance. Indeed, as Professor Farnsworth has correctly observed, "it is difficult to imagine" modifications in an acceptance "that would not be material" in the sense of article 19(3).[102] As a consequence, it will be a rare case indeed where article 19(2) will operate to "save" a formation of a contract in the case of a deviating acceptance.[103] [page 27]

B. The Problem: The Role of Partial Dissensus in Contract Formation

Although a system of contract formation founded on two constitutive declarations of intent may appear familiar to many western scholars, there has been no shortage of criticism of the particular formation scheme set forth in the U.N. Sales Convention with regard to the treatment of a partial dissensus.[104] This criticism is directed less at what the Convention does than at what it fails to do. The conceptual constructs of offer and unqualified acceptance can, of course, accurately describe the agreement process for some relationships. That a contract is formed through reciprocal expressions of assent may in fact be implied from the very nature of a formation scheme that founds contractual obligation on the manifested intent of the parties.[105]

The friction arises from the ability of the offer-unconditional acceptance scheme to accommodate the less formal relationship that perhaps more accurately describes modern commercial transactions.[106] These informal relationships may take a variety of forms. In some transactions, the parties may exchange a number of informal communications, none of which can be identified as a formal "offer" or "acceptance," but the sum of which reveals an agreement on the creation of binding obligations. In a similar vein, the parties may have a continuing commercial relationship founded on a mix of oral, written, and other informal understandings, such that the import of any one exchange of communications is unclear. [page 28] In other transactions, the parties may indeed enter into negotiations toward a more structured and substantial contractual relationship. The point at which their negotiations cross the contractual threshold (with the result that all subsequent communications are viewed as mere proposals to supplement the contract), however, remains indeterminate. In still other transactions, the parties may informally agree on the essential elements of the deal, but their respective employees nonetheless exchange unread standard forms whose terms extend far beyond the business arrangement of their principals.

This short list is not intended to be exhaustive but descriptive. What is significant in these relationships is what they have in common: flexibility and informality, circumstances that are made possible by and remain a reflection of the convenience of modern means of communication. Electronic data interchange,[107] telefax, e-mail, the internet,[108] and the like have enabled transactors to transmit relevant information with an ease and rapidity certainly beyond the imagination of traditionalist U.S. scholars who shaped the law of contracts many decades ago and most likely beyond that of those who drafted the U.N. Sales Convention in the 1970s. The consequence of this convenience and rapidity is a flexibility in the formation of commercial relationships that permits each party to communicate the entirety of her standard business terms as a matter [page 29] of routine in the course of the discussions over a proposed relationship.

Fortunately (or unfortunately), businesspersons have neither the time nor the capacity to accommodate fully these facets of modern communication. The common outcome in these flexible modern relationships is thus equally important. Precisely because of the complexity, flexibility or informality of their relationship, parties commonly are unwilling or unable to take the time, assume the effort or incur the cost necessary to reach an express agreement on all routine matters raised in the course of their relationship. In the common case, the parties nonetheless proceed with performance of the essential commercial elements of the transaction once they have expressly agreed on those elements.

From a perspective of the law of contract formation, the significant, common element among these relationships is the absence of a complete agreement between the parties. In terminology familiar to many continental-European scholars, I have labeled this state of affairs a "dissensus" between the parties.[109] In particular, the defining feature of this dissensus is that it affects only some aspects of the parties' relationship, that is, it is only "partial." Traditional contract doctrine in the United States lacks an overarching conceptual device to capture this phenomenon.[110] Instead, the common law has developed a variety of specific rules ("mirror image," "last shot," etc.) whose narrow focus either does not address all aspects of a partial dissensus or imposes a blanket result that often affirmatively disregards the core interpretive values the [page 30] rules purport to apply.[111] Alternatively, even under the more flexible Uniform Commercial Code scholarly discussion has often concentrated narrowly on the popular label "battle of the forms."[112] The extrapolation of the supposed lessons from this concentration on "the forms" brings with it a serious risk of infecting the analysis of other, now increasingly common types of less formal relationships founded on communications other than a lock-step exchange of preprinted documents.

A principled analysis of the broad issues that result from the increased flexibility and informality of modern contractual relationships thus requires that scholars and adjudicators return to first principles. The foundational precept of contract law is that contracts are formed and defined by a corresponding common intent of the parties. The analysis of these flexible modern relationships should, therefore, focus on an identification of appropriate standards to effectuate a common intent of the parties to form binding obligations in knowing, mutual disregard of the absence of a complete agreement (that is, a dissensus) between them.

There are three necessary elements of this common state of affairs of a "partial dissensus" in modern contractual relationships: (1) the dissensus between the parties cannot relate to those "essential" terms (the "essentialia negotii") [113] which define the irreducible core of a sales contract under the Convention (the goods, quantity, and - perhaps [114] - price);[115] (2) at least one, though more commonly [page 31] both, of the parties must have proposed other terms in the course of the formation of their relationship over which they have either affirmatively disagreed or passively failed to agree; and (3) the other declarations and/or expressive conduct of the parties must manifest a broader consensus between them that they have nonetheless created binding contractual obligations.

In the absence of the first or third element, the consequence of a partial dissensus between the parties to an executory relationship governed by the U.N. Sales Convention is clear: (1) if the parties have failed to agree on the "essentialia negotii," pursuant to article 14 no sales contract has been formed in the contemplation of the Convention;[116] (2) likewise, if the parties do not in some manner manifest a common intent sufficient to overcome the dissensus on the non-essential terms previously proposed by one or both of them, the basic mirror image rule in principle adopted in article 19(1) will preclude the recognition of enforceable contractual obligations.[117]

When all three elements of a partial dissensus are satisfied, however, the Convention provides little explicit guidance on the definition of the parties' relationship. Uncertainty about this issue for a time led some commentators to argue that the problem was insoluble with the conceptual tools provided by the Convention. The result for these commentators was that adjudicators would have to resort to principles of the otherwise-applicable (and non-uniform) domestic law of the contracting states.[118] In light of the principles [page 32] of article 7(2), a majority of scholars correctly reject this approach.[119] Because issues of contract formation certainly fall within the "matters governed by [the] Convention," and because the Convention sets forth "general principles" that inform the analysis of the role of a partial dissensus in contract formation, article 7(2) mandates that this issue be resolved within the Convention itself.[120]

III. THE NATURE OF CONTRACTUAL OBLIGATION UNDER CISG

The issue of contract formation in spite of a partial dissensus between the "contracting" parties arises at the very core of contract doctrine. Traditional contract theory, in its purest form, would seem to tell us that "contract" and "dissensus" are mutually exclusive propositions. By classical definition, a contract comes into being through a corresponding complete agreement between the parties. So far, so good. The friction occurs when an agreement on formation collides with a dissensus on content, specifically where the conduct and words of the parties unambiguously reveal a mutual assent to the creation of binding obligations notwithstanding a lack of agreement or outright disagreement on terms proposed by one or both of them. Traditionally, contract law resolves such frictions by adopting so-called "default" rules whose purpose it is to fit the practice into the doctrinal mold (or, occasionally, vice versa).

The subject of default rules has spawned considerable debate in U.S. academic literature in recent years. Although the terminology has differed, much of this debate has focused on the distinction between what can be labeled "mutable" and "immutable" default rules, or, in other words, between those rules that yield to a contrary [page 33] will of the parties and those that do not.[121] The focus of this debate, though important in itself, has been directed, however, more to the definition of the substantive background law that serves to "fill the gaps" in extant contracts than to what Richard Craswell has termed the "agreement rules." [122] These rules govern the process by which the parties create and shape contractual obligations in the first instance.

It is important to observe at the outset that these "agreement rules" are of a fundamentally different nature from the "background law" that has occupied much of the recent contract law literature.[123] Although, as with the background law, the parties also retain the power to deviate from the rules governing the formation process,[124] the essential question with agreement rules is not what to do with gaps in the parties' relationship; rather, the function of such rules is to determine whether the parties have in fact so agreed to deviate from otherwise-applicable law (that is, whether the parties have validly created obligations and on what they have agreed).[125] The task in the treatment of a partial dissensus is thus to craft the appropriate rule to govern the process of agreement itself where the parties have not achieved an express understanding on the subject.

As with any other system of contract law, an analysis of such rules governing the process of contract formation under the CISG implicates the very grounds for recognizing and enforcing "contractual" [page 34] obligations. In other words, in order to define the "rules of the contracting game," we must first identify the values CISG seeks to further by enforcing contractual promises in the first place.[126] Fortunately, at a certain level an analysis of the grounds for enforcing promises under CISG is met with unique clarity: In contrast to a common law system - which by its nature admits of substantial flexibility in reexamining even established doctrine - CISG is an international treaty whose very purpose is to bring uniformity to international transactions involving participants from differing cultural and legal backgrounds.[127] In furtherance of this goal, CISG's drafters identified in the treaty's text itself certain express principles of general application (in particular, articles 6 through 11) whose purpose it is to inform the interpretation of the remainder of the Convention.

These principles fulfill their essential function in the context of issues that are not resolved by the Convention's express provisions.[128] As we have seen, one such matter on which the provisions [page 35] of the Convention provide little explicit guidance is the treatment of a partial dissensus where, through their performance or otherwise, the parties manifest a broader agreement on the conclusion of binding obligations.[129] The principles of general application reflected in articles 6 through 11 will thus assume a particular significance in resolving this fundamental gap in the formation provisions of the Convention.[130]

As a foundation for an analysis of the appropriate "agreement rule" to govern contract formation in spite of a partial dissensus between the parties under the U.N. Sales Convention, this section will, accordingly, first address the relevant "general principles" on which the Convention is based. It will then turn to a more specific examination of what these core principles reveal about the values that underlie the enforcement of contractual obligations under the Convention.

A. The Core Principles of the U.N. Sales Convention

1. Party Autonomy

It can fairly be said that there is no provision more significant to an understanding of the policies and principles of the U.N. Sales Convention than article 6. At first glance, article 6 appears only to address the limited issue of the right of contracting parties to determine the law that is to govern their relationship. An analysis with a more discerning lens reveals something much more fundamental.

Article 6 initially sets forth the basic principle that the parties to a sales contract that is "international" in the sense of article 1 may nonetheless agree that the Convention should not govern their contractual relationship. As they did with many other provisions of CISG, the drafters distilled this principle into a few short words: "The parties may exclude the application of this Convention ...."[131] The proposition that the parties retain the power to [page 36] exclude the application of uniform international law traces its origin to article 3 of the 1964 Hague Convention Relating to a Uniform Law on the International Sale of Goods (Hague ULIS) and was never seriously questioned in the preparation of the CISG. The only noteworthy limiting proposal - that in order effectively to exclude the application of the Convention in its entirety the parties must affirmatively identify what other system of laws will govern their relationship - failed to muster sufficient support in the drafting process.[132] Instead, there was general agreement already by the second meeting of the Working Group that the basic (unrestricted) principle of the Hague ULIS should be retained.[133]

The proposition that contract parties retain a choice-of-law power for their contractual relationship may not be surprising in itself.[134] The real message of article 6, however, is much broader and more fundamental to an understanding of the hierarchy of norms prescribed in the Convention. What is sometimes overlooked in resolving unclear issues under the Convention is the elemental principle established by article 6 of the preeminence of "party autonomy" in general, that is, the supremacy of the will of the parties even over the express provisions of the Convention itself. The drafters accomplished this policy of party autonomy through the latter half of article 6. In a marked improvement on the elliptical language of article 3 of the Hague ULIS,[135] article 6 [page 37] makes clear that the parties retain extensive power to "derogate from or vary the effect of any of [the Convention's] provisions."

This language goes far beyond simply permitting the parties to exclude, by express reference, the application of specific provisions of the Convention. Rather, the Working Group reserved to the parties the power to "vary the effect" of the rules of CISG with the broader purpose of clarifying "the relationship of the agreement of the parties and particular provisions of the Uniform Law" in general.[136] By permitting the parties to "vary the effect of" the provisions of the Convention, article 6 prescribes, namely, that the rules of the Convention are purely "background law." In the words of the Working Group, article 6 establishes, in short, that the express provisions of the Convention merely "are supplementary and yield to the agreement of the parties."[137]

Although this precept, too, may appear less than revolutionary, the drafting history makes clear that article 6 sets forth much more than a simple contract law truism. Rather, from the very beginning of the deliberations over the Convention the drafters saw the principle of party autonomy as essential not only to effectuate the common intent of the parties but also, and of equal importance, to ensure flexibility in the development of the law governing international commercial transactions. A study submitted to UNCITRAL in 1970 at the request of the Secretary-General forthrightly rejected suggestions [138] that the drafting of the Convention ought to proceed from a premise of inflexible, mandatory principles not subject to modification by the contracting parties.[139] Such an approach, the study concluded, "would frustrate the natural evolution of commercial practice to meet changing situations and new demands, and thereby impede the development of international [page 38] trade."[140] Following these sentiments, the drafters had already reached a general consensus in that same year in favor of a flexible principle of party autonomy and thereby against a policy of restrictive mandatory provisions in the Convention.[141]

The significance of the flexibility inherent in this "general principle of party autonomy"[142] becomes apparent in a variety of more subtle, but equally important, policy determinations made in connection with the adoption of article 6. First, and perhaps most significant for present purposes, the preeminence of party autonomy applies not only to the power of the parties to shape their respective substantive rights and obligations as buyer and seller but also to their control of the contract formation process in the first instance. This conclusion follows directly from the location of article 6 in Part I of the Convention, which sets forth those provisions that apply to both Part II (Formation of the Contract) and Part III (Sale of Goods). Indeed, the drafters of the Convention had concluded even at the earliest stages of the (then separate) "Formation Draft" that - although the language of the corresponding provision in that draft differed slightly from the present article 6 [143] - the principle of the primacy of party autonomy would apply with equal vigor to agreements affecting formation issues.[144] Ultimately, the Working Group decided to conform the language of the Formation [page 39] Draft to that of the Sales Draft.[145] Upon consolidation of the two drafts in 1978, it thus adopted a single "party autonomy" provision (the present article 6) as a general principle applicable to all provisions of the Convention.[146]

The core policy determination that emerges from this comprehensive applicability of article 6 is that the Convention ensures flexibility in the formation of contractual relationships as well. One party cannot, of course, unilaterally impose contract formation rules on the other.[147] The flexible principle of party autonomy embodied in article 6 nonetheless ensures that an agreement between the parties regarding their contractual relationship and how it comes into being will preempt any contrary rule set forth in Part II of the Convention.[148]

The liberality of the Convention toward the autonomy of the parties is perhaps no more manifest than with respect to the manner in which the parties may arrive at an agreement sufficient to "derogate from or vary the effect of" its provisions. The drafting history of the Convention makes clear that there are no formal requirements for an effective agreement as contemplated by article 6. That is, the modification of specific CISG rules need not be expressly agreed upon, but may arise solely by implication from the [page 40] conduct of the parties or otherwise as determined by the Convention's interpretive standards.[149] Indeed, the drafters repeatedly rejected attempts during the drafting process to limit party autonomy to a corresponding express agreement between the parties.[150] A proposal by the Secretary-General to permit modification of the contract formation rules of the Convention only if the modification resulted in "more stringent" formation requirements likewise failed to find support in the drafting process.[151]

The principle of party autonomy set forth in article 6, in short, makes clear that the provisions of the Convention - whether affecting substantive rights and obligations or formation issues - function as mere background rules that yield to the common intent of the parties. Although this alone may be unsurprising, what is often overlooked in analyses of the Convention is the consequence of this policy determination. By giving effect even to implied modifications of its formation rules, the Convention broadly permits, indeed promotes, a flexible approach to the recognition and definition of contractual obligations in international sales transactions. Viewed in this light, article 6 will be of particular significance in [page 41] resolving uncertainties created by gaps in the provisions of the Convention itself.[152] The simple message of article 6 in such cases is that the principle of flexible party autonomy counsels against a rigid application of CISG's background rules and in favor of a flexible analysis that proceeds from a primary goal of effectuating the common intent of the parties.

2. Interpreting Intent

Although article 6 establishes the principle of the preeminence of the common intent of the parties, it does not prescribe how that intent is to be identified. Article 8 fulfills that function. That is, as a complement to the principle of party autonomy article 8 sets forth the standards for interpreting the meaning of the declarations and conduct of the parties. We are instructed in this regard that the task of interpretation must begin with the premise that a party's actual intent is to be given effect. It is only if that intent cannot be determined that reference to more objective factors is appropriate. Such interpretive standards are naturally of necessity found in civil and common law systems alike.[153] In its unique domain of interpreting the expressions of contracting parties from widely divergent cultures and legal traditions, however, article 8 will play a particularly significant role in identifying and accommodating the determinative common intent of the parties as contemplated by article 6.

Article 8 applies broadly to all statements and conduct of relevance under the Convention. The article's interpretive rules thus apply not only to the determination of the meaning of contractual terms but also to the interpretation of the declarations and conduct relevant to the formation of a contract in the first place.[154]

The structure of article 8 defines a clear order of priority in the interpretation of such declarations and conduct. The primary test [page 42] for interpreting a party's expressions of intent is a subjective one. According to article 8(1), the statements and other conduct of a party "are to be interpreted according to [her] intent where the other party knew or could not have been unaware what that intent was." In a substantial victory over the rigid objective tests of classical contract law,[155] the focus of the primary rule of interpretation in paragraph (1) is, in other words, on the actual intent of the speaker or actor.[156] This intent will govern where there is a common understanding between the parties of what that intent is, even if idiosyncratic or otherwise inaccessible to third parties. To be sure, article 8 continues the traditionalist presumption that a contract is the product of unilateral expressions of intent.[157] Where there is a mutually held subjective understanding between the parties, however, under the primary interpretive rule of article 8(1) that understanding will prevail.[158]

In the typical case, it may of course be a difficult task for a party to prove that the other party had actual knowledge of her unexpressed subjective intent. The more significant aspect of article 8(1) thus may well be the latter half of its interpretive standard. This supplement to the "subjective" standard provides that the actual intent of the speaker or actor will govern if the other party "could not have been unaware" of that intent. [159] The effect of this language is to bolster the significance of the actual intent of a speaker or actor in the interpretive values of the Convention in [page 43] that it decreases the risk of false claims by the other party that she subjectively did not "know" what the speaker's actual intent was.[160] The fortification of the subjective standard thus has the effect of providing greater protection to the actual intent of the speaker where under the circumstances known to both parties the addressee of a statement or act could not fail to understand what was actually intended.[161]

If the subjective standard of article 8(1) does not apply, the focus of interpretation switches to the understanding of a reasonable person in the position of the addressee. In such a case, article 8(2) prescribes that the ambiguous statement or unclear conduct is to be interpreted "according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances."

It is important to observe at the outset that this form of objective interpretation does not impose a normative resolution. Article 8(2) does not call upon a court or arbitral tribunal to decide what is the "better," "preferred" or even "normal" interpretation of an ambiguous statement or action. Indeed, the drafters of the provision specifically rejected proposals to subject ambiguous expressions to the interpretation "usually" given them in the relevant branch of commerce.[162]

Rather, the standard contemplated by article 8(2) remains squarely rooted in a factual analysis of what a reasonable person would have understood "in the same circumstances" as actually experienced by the addressee of the statement or action. By its nature the "objective" standard will admittedly require an adjudicator to extend beyond the simple observable facts and apply the understanding of a "reasonable" person. However, as the delegates to the Vienna Conference emphasized (by inserting in article [page 44] 8(2) - after much debate - the modifier "of the same kind as the other party"),[163] the viewpoint of this reasonable person is directly controlled by the specific circumstances of each particular case. That is, the "understanding" of this reasonable person will include knowledge of the prior dealings and prior negotiations of the parties, the skill and expertise of the other party, et cetera. Even the subsidiary objective standard of article 8 thus affirms the significance of actual intent in the interpretive values of the Convention.[164]

The flexibility mandated by article 8 is reinforced by the scope of the factors that are to be considered in applying its interpretive standards. In a further rejection of the rigid evidentiary rules found in some legal systems, the third paragraph of article 8 provides that in applying the subjective as well as the objective standard "due consideration" must be given to "all relevant circumstances of the case." [165] The paragraph then specifically defines such circumstances to include "the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties." To American jurists, this concept may not at first blush appear particularly challenging.[166] There is more here than is initially apparent, however. The deliberations over this language in article 8(3) reveal a clear policy decision to promote a flexible analysis of all circumstances that would reflect on the intent of the parties - specifically including [page 45] perhaps the most indicative factor, the pre-contractual negotiations of the parties [167] - and thereby to reject the rigid evidentiary rules of some legal systems that restrict inquiry into the actual intent of the parties.[168] Here as well, the drafters of the Convention chose a policy of flexibility over static rules that would prescribe a result detached from or in disregard of the actual intent of the parties.

The ultimate message of article 8 thus is part principle and part emphasis. The basic principle established is the importance of flexibility in the search for actual intent over the sterile objective standard applied in some legal systems. The emphasis provided by article 8 is on the importance of intent in a system of contract law constructed on the primacy of party autonomy. With its primary focus on the actual intent of the parties and its rejection of rigid rules in favor of flexible standards to define that intent, article 8 serves to remind us that the traditional rules originally developed to guide the determination of intent in specific contract formation issues should not be applied in such an inflexible manner as to obscure the ultimate issue of what that intent is.[169]

In contrast to such prescriptive or normative rules, the interaction of the principles in article 8 and article 6 mandates that issues not addressed by the express provisions of the Convention are to be resolved with a primary focus on the actual intent of the parties where that intent can be determined or, of equal importance, where one party cannot reasonably be in doubt over the actual intent of the other. As discussed in Parts IV.A. and IV.B., these considerations will be of particular significance in interpreting the content of "contractual" relationships not formed in accordance with the lock-step process assumed in Part II of the Convention.

3. The Role of Trade Usages and Established Practices

The above analysis shows that the basic policy of the U.N. Sales Convention on issues of contract formation and content favors a flexible analysis over prescriptive rules. Article 9 of the Convention [page 46] carries forward - and reinforces - this approach on perhaps the most controversial issue in the drafting of the Convention, the application of trade usages and party practices.

There was little disagreement in the drafting process over the treatment of express agreements between the parties to be bound to particular commercial usages or practices. Pursuant to article 9(1), the parties are bound by "any usage to which they have agreed," as well as "any practices which they have established between themselves." This largely uncontroversial conclusion is common to numerous legal systems [170] and arguably is merely a specific reflection of the general principle of party autonomy set forth in article 6.[171]

The more significant issue for purposes of divining the core values of the Convention is the treatment of commercial usages not expressly agreed to by the parties. The direct antecedent of article 9 of the U.N. Sales Convention, article 9(2) of the Hague ULIS, prescribed a purely normative approach on this issue. Under the second paragraph of that article, the parties are deemed bound by usages that "reasonable persons" in the same circumstances "usually consider to be applicable to their contract."[172] This approach thus permitted the inclusion of contractual terms even without the knowledge or consent of the parties. As a result, it provided fertile ground for criticism in the drafting of the Convention. The then-socialist countries and the developing world, in particular, strenuously objected to the application of normative trade usages that, in [page 47] their view, had been established solely to promote the interests of parties from industrialized, western states.[173]

In contrast to the Hague ULIS, the compromise adopted in the drafting process for the U.N. Sales Convention resulted - after much heated debate - in a clear rejection of a purely normative approach.[174] In its place, article 9 reaffirms the core value of the Convention that parties become bound to contractual terms only through corresponding express or implied declarations of intent.[175] Article 9(2) thus provides a rule that focuses on the intent that can fairly be implied as to specific trade usages: The parties are "considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation" those usages meeting certain defined criteria. In delineating those criteria, article 9(2) initially states that the parties are bound to usages of which they either knew or "ought to have known." It then sets forth, however, a series of strict, independent requirements,[176] the sum effect of which is that usages will apply in a particular transaction only where the circumstances permit a conclusion that there is a corresponding actual intent of the parties. [177] [page 48]

Ultimately, the rules of the Convention on the applicability of trade usages, like the general interpretive standards of article 8, are properly viewed as more specific expressions of the fundamental principle set forth in article 6 of the preeminence of party autonomy. Where there is a common understanding between the parties on the applicability of a particular usage, whether express or reasonably implied from the circumstances, article 6 mandates that that understanding supersede even the express rules of the Convention.[178] Indeed, attempts to subordinate trade usages implied pursuant to article 9(2) to conflicting provisions of the Convention were specifically rejected in the drafting process.[179] As a result of the acceptance of an amendment to article 9(2) proposed by Professor Farnsworth of the U.S. delegation,[180] even usages affecting issues of contract formation will preempt the corresponding formation rules of the Convention.[181]

4. Proving the Common Intent

As the above examination of the core values of the U.N. Sales Convention reveals, article 6 establishes, and articles 8 and 9 reinforce and apply, a basic, flexible principle of party autonomy. Article 11 of the Convention serves to complete the circle. Whereas those former provisions set forth flexible standards for establishing and interpreting the common intent of the parties, article 11 mandates a flexible approach in proving that intent.

The principle established by article 11 is a simple one: "A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form." The obvious [page 49] targets of this rule are form requirements prescribed by some domestic laws (such as the Statute of Frauds) [182] for the enforceability of certain types of contracts. The drafters of the Convention could hardly have been clearer on this score: Contracts within the sphere of applicability of CISG are not subject to any requirement as to form.[183] Indeed, to emphasize the point, the drafters appended a second sentence clarifying that this principle extends with equal vigor to form requirements cloaked as evidentiary rules. Accordingly, a contract of sale "may be proved by any means, including witnesses."[184]

Here, again, the basic policy that emerges is the promotion of the freedom of the parties to structure their contractual relationship in a flexible manner unimpeded by prescriptive rules. In a clear recognition of the particular significance of flexibility for international commercial transactions,[185] article 11 accomplishes this objective by renouncing all form requirements for the conclusion and proof of sales contracts. By so reaffirming the power of the parties to define for themselves the manner by which they arrive at a contractual understanding, article 11 both reflects and reinforces the Convention's basic principle of the primacy of the common intent of the parties.[186]

The policy of flexibility promoted in article 11 is a broad one indeed. The freedom of the parties from form requirements applies not only to the fact of the conclusion of the contract, but [page 50] also to proof of its contents.[187] The article permits a party to prove, "by any means, including witnesses," even an oral or other informal agreement that conflicts with express provisions of the Convention itself. This policy of flexibility is mirrored by the rule in article 29(1) of the Convention that even written contracts can be modified by "mere agreement" of the parties.[188] In this respect, article 11 (as bolstered by article 29(1)) reinforces the principle of party autonomy of article 6 in a particular way, because it sweeps away the formal impediments to the proof of the requisite common intent of the parties to "derogate from or vary the effect of" the provisions of the Convention.

The impact of article 11 may be most profound with respect to the process of contract formation. By broadly abolishing the restrictions on the proof of both the fact and the content of sales contracts, article 11 supplies the conceptual tools for proving the existence of a contract concluded in a manner that deviates from the process assumptions defined in Part II of the Convention. Thus, significantly, where the parties arrive at a contractual understanding other than through a formal "offer" and a formal "acceptance," article 11, in conjunction with article 6, permits an adjudicator to give effect to such a contract.[189] Indeed, the language of article 11 reflects an intentional deviation from the wording of its antecedent in the Hague ULF - which phrased the principle in terms of the proof of the "offer" and the "acceptance"[190] - thus embracing contracts formed through protracted negotiations or other informal statements and conduct where the expressions of intent of the parties cannot be parsed into an offer and its unqualified acceptance.[191] [page 51]

5. The Hierarchy of Norms of the Convention

Through the identification of its core principles in articles 6, 8, 9, and 11, the U.N. Sales Convention defines a straightforward hierarchy of norms for the conclusion and content of international sales contracts. It should now be clear that the preeminent principle of the Convention is the primacy of the common intent of the parties ("party autonomy"). In recognition of the importance of flexibility in international commercial transactions, articles 8 and 11 then make clear that this common intent may be express or implied and, freed from the strictures of formality, may be proved by any means. Next in line of priority come usages of trade and party practices. These are on equal footing with party autonomy if expressly agreed, but of subordinate importance if their applicability arises only by implication under article 9(2). It is only then, if no express or implied agreement of the parties is established, that resort may be had to the express provisions in Parts II and III of the Convention.

It is equally important in the context of the role of party autonomy under the Convention to emphasize the converse of this latter statement. The express substantive provisions of the Convention themselves represent important values in its hierarchy of norms. After more than ten years of drafting work and a multitude of significant compromises to accommodate the divergent interests represented in the process, the drafters settled upon certain value judgments about the appropriate relationship between the parties to an international sales contract, in particular about the appropriate allocation of benefits and burdens between buyer and seller. The important negative implication that emerges from the preeminence of party autonomy in article 6 is that these important value judgments should be displaced only where a party can establish a contrary, common intent of the parties.[192]

B. The "Formation Values" of the Convention

As the initial foundation for an analysis of the treatment of partial dissensus under the U.N. Sales Convention, the discussion above has, in accordance with the mandate of article 7(2), identified and examined the relevant "general principles" on which the Convention is based. Like the parts of a disassembled machine, [page 52] however, the principles in articles 6, 8, 9, and 11 fail to explain fully the essence of the Convention's contract formation scheme. The question left unanswered is whether those "general principles" can be distilled into a unifying set of values that underlie the recognition and enforcement of contractual obligations under the Convention, which I will refer to here as its "formation values."

As is often the case in such inquiries, it is much easier as an initial matter to identify the grounds for enforcing promises that are not of significance in the formation values of the Convention than it is to divine a unifying theme for the nature of contractual obligation under its formation scheme. One such set of values that is not implicated in the Convention's formation scheme is a purely normative approach to the definition of contractual obligation [193] (whether on the basis of idealized norms or in the form of extant societal norms).[194] The drafters of the Convention repeatedly rejected proposals in the drafting process that would have permitted normative assessments of contractual relationships and their [page 53] creation. The lively debate over the role of trade usages,[195] for instance, was resolved in favor of a clear rejection of the purely normative approach of the Hague Conventions.[196] This rejection of normative trade usages also carried with it a refusal to grant broad effectiveness to the contents of a written confirmation of a previously concluded contract based on normative considerations of a duty on the part of merchants to object to proposed terms.[197]

Indeed, the drafters were even unable to agree on the precise role of "good faith" in the conclusion and performance of contracts.[198] The records of the drafting process reveal that the national representatives were unable to achieve a consensus on such a norm precisely because of their concerns about the widely differing conceptions of "good faith" among the various legal and cultural traditions represented in the creation of the Convention.[199] In the interests of uniformity in application, therefore, the drafters adopted a compromise which deleted a provision in early drafts that would have imposed such an obligation on the parties in the formation process;[200] in its place the drafters inserted a clause [page 54] merely requiring that in the interpretation of the provisions of the Convention, "regard is to be had to ... the observance of good faith in international trade."[201]

Ultimately, the drafters of the Convention determined to avoid many normative issues by carving from the scope of the Convention those issues that typically underlie the concerns of communitarian theorists. Most significant, pursuant to article 2 the Convention does not apply to transactions with consumers.[202] In addition, the drafters left room for contracting states to apply national public policy principles relating to the "validity" of contracts, such as rules on incapacity and infancy.[203] In this way, adjudicators are permitted to address issues of "unconscionability" and related concepts outside of the Convention.[204]

Identifying the role of individual autonomy [205] in creating contractual obligations under the Convention presents a more [page 55] challenging and for present purposes more significant task. Notions of individual autonomy may have little to offer in determining the content of the "background" law that serves to fill gaps in extant contractual relations. As Richard Craswell has observed, because the principle of individual autonomy is essentially content neutral, and because the law imposes no compulsion to conclude contracts, "any default rule would ... be consistent with individual freedom, as long as the parties are allowed to change the rule by appropriate language."[206]

The value of individual autonomy in recognizing contractual obligation may be of controlling significance, however, in defining the process by which the parties must reach agreement sufficient to displace such substantive background rules, whatever their content.[207] The choice of the appropriate rules governing how parties become bound in the first instance (the "agreement rules") will be [page 56] guided decisively by the extent to which the enforcement of contractual obligations requires actual consent (that is, is controlled by notions of individual autonomy). An identification of the appropriate "agreement rule" for the treatment of a partial dissensus under the U.N. Sales Convention must therefore include an assessment of the significance of individual autonomy in the values that underlie its formation scheme.[208]

At a theoretical level, we have seen from the above examination of the basic principles of contract formation [209] that the Convention conceives of a contract as a conformity between the declarations of intent of the parties. In accordance with traditional conceptions, an essential element of both offer and acceptance under CISG is that they reflect an intent to bind oneself to contractual obligations.[210] As the Convention imposes no duty to engage in "contractual" behavior, the journey to a conclusion that individual autonomy is the primary guiding value in recognizing contractual obligation would appear to be a short one.

Upon further examination, however, one confronts in the CISG the same tension found in other legal systems between "intent" in its purest, subjective form and the interactive, social nature of the institution of contract.[211] If one merely scratches the surface of CISG's provisions, it becomes apparent that the focus is not on intent alone but rather on the expressions of that intent.[212] It would appear, therefore, that the salient characteristic of the accepted constitutive elements of a contract is not that the parties in fact intend to bind themselves with the expressions used, but rather that the expressions merely "indicate" that such an intent exists.[213] This fact has led some European commentators to [page 57] observe as a general proposition that the Convention is concerned only with the "external consensus"[214] of the parties, or in other words "the externally perceivable convergence of offer and acceptance." [215]

In light of this tension between the role of subjective intent and the necessity of evaluating "contractual" expressions by external criteria, the interpretive provisions of article 8 will assume decisive significance in resolving the central inquiry into the formation values of the Convention. The core values that emerge from these provisions are perhaps best illustrated by their simple hierarchy of interpretive standards. In spite of vigorous attempts by traditionalists to adopt a strict objective approach,[216] the primary rule of interpretation under article 8 is that a party's subjective intent must be given effect if the other party knew or "could not have been unaware" of that intent.[217]

An analysis of article 8 and its role in the CISG formation scheme reveals, moreover, that even under the subsidiary objective standard of article 8(2) the goal remains to identify and give effect to the actual intent of the parties. To be sure, the language of article 8(2), taken alone, does not refer to actual intent; the subject of the interpretive inquiry there is, rather, the "understanding" of a "reasonable person." In the context of contract formation, however, the critical "understanding" relates directly to the intent of the speaker or actor. In determining whether a statement or conduct has effectively concluded a contract, the essential interpretive issue is whether a "reasonable person" would understand the statement or conduct as "indicating assent"[218] to the assumption of contractual obligations on the basis of the terms proposed by the other [page 58] party. The focus of the interpretive inquiry in this context remains, therefore, the actual intent of the speaker or actor.[219]

This conclusion is confirmed by the nature of the objective standard of article 8(2) itself. As with all such "objective" rules, article 8(2) necessarily implies a normative component, for the standard to be applied is the understanding of a "reasonable" person. This on the one hand makes clear that the effectuation of subjective intent alone is not the sole formation value of the Convention. Separated from its interpretive context, however, the adjective "reasonable" tells us little about the relative significance of this normative component as compared to the role of the specific factual circumstances in which the relevant expression is made.

In the context of default rules, David Charny has appropriately termed these dimensions of interpretive standards "idealization" and "generality."[220] "Generality" relates to the importance of interpretation in its strictest sense, that is, to "the extent to which the adjudicator particularizes her formulation to the particular transactors whose dispute is before her." As the subject of interpretation switches from the individual to the group of which she is a member, the role of normative considerations increases. "Idealization," on the other hand, will expose the degree to which values other than the effectuation of the intent of the parties are of significance in the interpretive inquiry.[221] Here, the extent to which an adjudicator may prefer the "better" or "fairer" interpretation will define the importance of the normative component of an objective standard. Where the rules of a particular legal system fall on these dual spectra [222] - generality vs. particularization, interpretation of [page 59] intent vs. application of societal norms - will reveal a significant amount about the values that underlie its interpretive scheme.[223]

Even a cursory examination of article 8 reveals that the "objective" standard of its second paragraph falls squarely on both the most particularized and least idealized ends of these spectra. The drafters made clear that the analysis of the understanding of a reasonable person must proceed on the basis of the specific circumstances actually experienced by the addressee of the relevant statement or action.[224] In doing so, the drafters rejected attempts of traditionalists to subject ambiguous expressions to a more normative interpretation, specifically the interpretation "usually" given these expressions in the relevant branch of commerce.[225] Even as late as the final conference in Vienna, the delegates continued to refine the importance of a particularized and non-idealized interpretation. Modernist delegates succeeded, over vigorous objection, in inserting a modifier in article 8(2) to make clear that the perspective of the relevant "reasonable person" was to be determined with specific reference to the position of the actual addressee - with knowledge of the prior dealings and prior negotiations of the parties, the skill and expertise of the other party, et cetera - as opposed to an idealized reasonable person in the relevant branch of commerce in general.[226]

The final paragraph of article 8 reinforces this situation-specific form of "objective" interpretation by mandating effectively unrestricted evidentiary flexibility in seeking out the actual intent of the parties.[227] Particularly significant in article 8(3) is the express rejection of the evidentiary restrictions of some national systems that limit the consideration of "parol evidence" as well as [page 60] the subsequent conduct of the parties in identifying actual intent.[228] This flexibility in the search for actual intent is validated with particular reference to contract formation in article 11. That provision broadly abolishes all form requirements for the creation of contractual obligations, as well as similar evidentiary restrictions on the proof thereof.[229] The interaction of the particularized standard of article 8(2) and the interpretive flexibility mandated by article 8(3) precludes generalized or normative conclusions about how transactors in international commerce express their intent.

The interpretive flexibility mandated by article 8(3) also has implications in the context of the allocation of burdens of proof.[230] An analysis of the structure of the interpretive standards of article 8 reveals that the burden of proof regarding "objective" meaning will fall on the recipient of the relevant statement or expressive conduct. Where a party seeks to rely upon favorable terms in a putative contract, in other words, the burden will be hers to prove that the other party's statements and conduct must be interpreted as indicating a corresponding assent (that is, that the parties in fact concluded a contract on such basis). Where the speaker or actor contends that a contrary subjective intent should control in this regard, the burden will switch to her to prove that the recipient "knew or could not have been unaware" of that intent.[231]

As a consequence of the flexibility prescribed by article 8(3), it should rarely be necessary for a speaker or actor to assume this burden. The sum effect of article 8(3) is a charge that all facts of which the recipient of an "indication" of intent knew or reasonably should have known must be considered even (and perhaps especially) under the objective approach of article 8(2). As a consequence, it will be a rare case indeed that the burden will fall on the speaker or actor to prove that the recipient knew or could not have [page 61] been unaware of an intent not otherwise indicated by available facts.[232]

The flexibility in the interpretive standards of article 8 does not mean, however, that all indicative factors are of equal expressive weight. Notwithstanding the list of secondary factors identified in article 8(3), the primary interpretive material remains the parties' express declarations of intent.[233] In this sense, the objective standard of article 8(2) can, paradoxically, play a protective role for the speaker or actor: Where a party has made an express declaration of her intent, the burden imposed by article 8(2) on the other party to show a contrary implied intent from the secondary factors of article 8(3) will be an onerous one.

This latter point is worthy of emphasis with respect to the recognition of contractual obligations in the first instance. The objective standard of article 8(2) will often operate to protect the expectations of the recipient of an indication of intent. Under this standard, however, such a recipient must prove that her expectation was "reasonable." In light of the general preference in favor of express indications of intent, the latitude for such a party in claiming a "reasonable" misunderstanding will decrease as the degree of clarity in the declarations and expressive conduct of the speaker or actor increases. Where the speaker or actor has declared her intent expressly, the policies underlying the three subparts of article 8 will [page 62] effectively preclude proof of an assertion that the recipient "reasonably" understood a contrary implied intent.

Finally, the flexible interpretive standards defined in article 8 find support in specific protective provisions elsewhere in the Convention. These provisions achieve the goal of limiting the risk of inaccurate determinations of intent by creating presumptions in certain circumstances against finding an intent to be bound to contractual obligations. Such is the primary role of article 19. One essential function of that article is to establish a presumption that one party (the offeree) lacks an intent to be bound where she has proposed terms that deviate from those of the offer.[234] This proposition was sufficiently clear to the drafters that they deemed it unnecessary to include a more straightforward statement (found in some national systems) [235] that the parties have not established mutual contractual obligations at the executory stage in their relationship as long as they have failed to reach an agreement on all terms proposed in the negotiation process.[236]

A complementary protective presumption arises from the general provision of article 18(1) governing acceptances. This provision requires that a valid acceptance not merely indicate an intent to be bound to contractual obligations in general, but that it express an assent to contract formation specifically on the basis of the terms proposed in the offer.[237] The admonition in article 18(1) that "silence or inactivity" cannot alone be the basis for a conclusion of "assent" to such obligations has a like function: it operates to protect against the imposition of contractual obligations based [page 63] on normative considerations of a "duty to speak."[238] Similar policy determinations led to the refusal to grant broad effectiveness to the contents of a written confirmation of a previously concluded contract based on normative considerations of a duty to object to proposed terms.[239]

Ultimately, the tension between the moral significance of intent in recognizing binding obligations and the practical difficulties in divining that intent may frustrate any attempt to discern a single, unifying theme for the nature of contractual obligation under the U.N. Sales Convention. Nonetheless, the above analysis of the policies and principles of the Convention has identified certain values that underlie the recognition and enforcement of contractual obligations in international sales transactions within the Convention's scope:

1. One core value that emerges from the principles and policies of the Convention is a reaffirmation of the significance of actual intent in the recognition of contractual obligation. Risks of an inaccurate identification of intent necessarily attend a reference to the subsidiary "reasonable person" interpretive standard of article 8(2). Nonetheless, even with this "objective" standard the Convention reinforces a primary policy goal of giving effect to actual intent by mandating a highly particularized, non-idealized interpretive analysis that concurrently rejects the imposition of normative standards.

2. As a corollary to the central role of actual intent in its interpretive values, the Convention mandates effectively unrestricted flexibility in the identification of that intent. The confluence of the particularized standard of article 8(2) and this interpretive flexibility prescribed by article 8(3) amounts to an injunction against the application of generalized or normative conclusions about how parties to international sales contracts express intent.

3. These flexible interpretive standards likewise reveal a general hostility to theories of contract obligation that proceed on the basis of normative fictions. Where the intent of the parties is clearly established or where one party has otherwise unambiguously expressed her intent, [page 64] normative considerations should not operate to frustrate that intent.

4. Although articles 14 through 24 identify an offer and its unqualified acceptance as the assumed building blocks of contracts, in its general, foundational principles, the Convention establishes the effectuation of the common intent of the parties as the primary value in its hierarchy of norms. Together with the mandate of flexibility in the search for that intent, this principle of the primacy of party autonomy makes clear that express provisions of the Convention are not to be applied in such a rigid, prescriptive manner as to frustrate that common intent.

IV. CONTRACT FORMATION AND PARTIAL DISSENSUS UNDER THE U.N. SALES CONVENTION

As a device for conceptualizing the relationship between the parties to a proposed transaction, the notion of a "partial dissensus" departs substantially from the traditional assumptions about the manner by which private actors create binding obligations. Accepted doctrine would seem to require that a complete agreement be established by (or imposed on) the parties before the law will recognize contractual obligations. Within the scope of the U.N. Sales Convention, traditionalist commentators have pointed to the offer-acceptance scheme in general, as well as to the language of article 19(1), and have argued that the same rule should obtain there.[240]

The problem from a conceptual perspective arises when the parties proceed with the performance of their contemplated reciprocal "obligations" notwithstanding either a failure to agree or an outright disagreement on terms proposed by one or both of them at an earlier point in their relationship. Two principal solutions to this deviation from the lock-step model of contract formation present themselves: First, contract law could view the relationship between the parties simply as a failed attempt to create binding obligations. To the extent the common error of the parties has created imbalances as compared to their relative positions ex ante, the parties to a transaction otherwise within the scope of the U.N. Sales Convention would then be left with the appropriate restitutionary remedy under otherwise applicable national law. Alternatively, the law [page 65] could cast the relationship as a "contractual" one and apply an appropriate standard to define the contours of the parties' obligations (that is, adopt an "agreement rule" to resolve the effect of the "partial" element of the dissensus).

There is an almost intuitive allure to the first of these two solutions. An examination of the drafting history and provisions (in particular articles 18(1) and 19(1)) of the Convention reveals a general policy of restraint against imposing contractual obligations on the parties while they continue to disagree over terms proposed in the course of their negotiations.[241] A straightforward application of this policy would seem to mandate a conclusion that, notwithstanding the performance of perceived duties, the parties have failed to achieve the form of untainted agreement required for the recognition and enforcement of contractual obligations.

This option does not survive a more penetrating examination, however. Whatever the nature of their pre-performance declarations,[242] where the parties have actually carried out the core elements of a sales contract (delivery of goods, payment of price), they have at a minimum manifested a common intent on the creation of some form of binding mutual obligations. The principle of the primacy of party autonomy mandates that this common intent be recognized as an enforceable contract.[243] To be sure, the general protective policy of the Convention against the imposition of contractual obligations will add color to the analysis of the scope of the parties' respective rights and obligations; it does not, however, defeat the determinative common intent of the parties where their conduct unambiguously confirms an agreement on the conclusion of a binding deal. In other words, as Professor Farnsworth has remarked in the case of mutual performance, "it is clear that a contract has been concluded and the dispute is over the terms of that contract."[244]

This observation, though certainly correct when taken alone, may nonetheless plant the seeds of a misunderstanding if applied [page 66] beyond its limited context. There has been an unmistakable trend in recent academic literature in the United States to focus the analysis more on an identification of the appropriate substantive background rules to fill gaps in extant contracts, and less on the significance of the process of contract formation where the mutual intent of the parties to assume contractual obligations is clear.[245] This focus on the substantive "default" rules, although important on its own plane, is one essential step removed from the analysis at issue here. In order to reach the issue of the appropriate background rules, one must first identify where there is a gap (a "default") in the agreement of the parties in the first place. The more significant inquiry in assessing the role of partial dissensus in the formation process appears, therefore, at the threshold itself: What are the standards in such a case for determining what the agreement of the parties is?

The received wisdom on this score applies a fiction of assent in order to reconstruct the agreement process of the parties to fit a rigid lock-step mold of contract formation. I argue below that this approach contradicts the policies that underlie the nature of contractual obligation under the Convention and that it should thus be rejected. I contend that the better-reasoned approach begins with first principles, and thus defines the contractual obligations of the parties in the first instance by the scope of the express agreement between their competing terms.

A. The Traditional Solution [246]

1. The "Fictional Assent" Rule

The received wisdom on the treatment of a partial dissensus offers a deceptively appealing simplicity in terms of both its content and its scope. The argument under this approach proceeds as follows: The traditional rules of contract formation followed in principle in the Convention identify as the "building blocks" of contracts an offer and its unqualified acceptance. Where a reply to a proposal to conclude a contract deviates in any respect worthy of [page 67] note,[247] article 19 prescribes a straightforward result: The reply is converted into a rejection of the offer coupled with a counteroffer. If the parties then proceed with performance notwithstanding the resultant dissensus between them, the (constructive) counteroffer is deemed accepted in its entirety by the original offeror solely as a result of her conduct.[248]

The parallel simplicity of this approach is comprehensive scope. It applies broadly to all "contractual" relationships irrespective of their structure, complexity or level of formality, and without regard to the particular circumstances in which the parties formed their relationship. Once it is determined that the parties have manifested a mutual intent to create binding obligations, an adjudicator need merely reconstruct the chronological sequence of their respective formal declarations and identify the most recent one. This declaration is then deemed the entirety of the contract of the parties.

Although there has been little theoretical examination of the foundation for this approach under the U.N. Sales Convention, it would appear that it proceeds from a simple premise. As conceptual constructs, "offers" and "acceptances" are indispensable and irreducible elements of the formation process. Where the parties proceed to perform following a deviating acceptance in the sense of article 19(1), therefore, the only permissible interpretation is that they have agreed to the (constructive) counteroffer as the exclusive basis for their contractual relationship. The "last shot" rule, in other words, merely operates as a self-evidently correct extension of the "mirror image" rule.[249] One would assume, then, that proponents of this approach would view a "partial dissensus" as either wholly irrelevant or an oxymoron - irrelevant because the constructive assent through performance supersedes any "partial" disagreements, an oxymoron because its counterpart ("partial consensus") [page 68] is for purposes of contract doctrine not a "contractual" agreement at all.

A review of the literature on this traditional approach nonetheless reveals some lack of clarity about its precise effect. Some commentators seem to suggest that the approach is merely of a presumptive nature.[250] This version would hold that even where both parties have proposed terms in the course of their negotiations there is a presumption of mutual assent to the last proposal exchanged between them. Although this presumption is rebuttable, the burden falls on the disadvantaged party to prove that she did not, in fact, express assent to the proposal. Other authors appear to support an even more rigid approach. Under this version, performance of the (perceived) obligations is deemed to constitute, apparently conclusively,[251] the mutual assent of the parties to "last shot" before such performance.[252]

The indication of assent required to impose contractual obligation, in other words, is taken as given. This conclusion apparently applies regardless of the complexity of the parties' previous relationship, the clarity of the disadvantaged party's previous insistence on the inclusion of her own substantive terms and/or [page 69] rejection of foreign terms,[253] as well as the circumstances attending the performance itself.[254] Closely related to this fiction of assent is an implication of a prescriptive rigidity in the formation provisions of the Convention. In its practical application, the traditional rule requires that in all cases the statements and conduct of the parties be parsed into a formal offer and a formal acceptance and that the last express (often, the last written) declaration is the exclusive indication of intent of interest in the recognition of contractual obligations.

Whatever the allure of the simplicity of its analysis, the traditional approach in its substance is founded on a premise that often operates directly contrary to, or at best gives only superficial deference to, the formation values of the Convention. The elemental flaw of the approach is that it proceeds on the basis of a fiction of assent. The fiction is that the mere performance of the essential elements of a sales transaction (shipment or payment) necessarily expresses the unqualified intent of a party to bind itself to contractual obligations solely on the substantive basis of the declaration fortuitously deemed the last one. This rigid conclusion of unqualified assent disregards CISG's primary policy goal of identifying and giving effect to actual intent, a directive which emerges not only from the hierarchy of interpretive norms in article 8, but also from the nature of its subsidiary objective standard itself. At this level alone, the values of the Convention reveal a hostility to rules that apply a fiction of assent based on stylized assumptions of intent and meaning.[255]

Moreover, it is difficult to reconcile the fictional assent rule with the Convention's policy of flexibility in interpretive inquiries (as revealed by articles 6, 8(2), 8(3), and 11). The sum of this policy is a mandate that an adjudicator consider all circumstances that could reflect on a party's actual intent, and that as a general proposition [page 70] the adjudicator prefer express declarations of intent over a presumed intent that can only be surmised through implication. The distilled essence of a fictional assent approach, in contrast, is that mere performance in all cases amounts to unqualified assent to the "last" declaration, apparently irrespective of the actual prior relationship between the parties.

To be sure, article 19(1) contains a specific rule that defines a specific result: A deviating acceptance does not conclude a contract but amounts to a counteroffer.[256] That provision does not, however, define what happens next. The essential question left unanswered is how to describe the parties' relationship where the original offeror's declarations and conduct do not express the requisite assent [257] to such counteroffer, but the circumstances nonetheless indicate a mutual intent of the parties to conclude a contract. A reference to article 19 is circular, for the ultimate inquiry remains an interpretive one: Have the parties reached an agreement on contract formation on the basis of the counteroffer resulting from the application of article 19, or on some other basis? In other words, the structure of article 19 does not answer the essential interpretive issue of whether, in fact, the other party has "indicated assent to [the] counteroffer" as required by article 18(1) for the recognition of contractual obligations.[258]

Indeed, a reference to the policies underlying articles 18(1) and 19(1) would seem to require a conclusion directly contrary to a fictional assent theory. One basic purpose underlying these provisions is to protect against the imposition of contractual obligations where the parties have failed to agree on material matters raised by [page 71] either of them in their negotiations.[259] It would indeed be anomalous for one to use precisely those provisions as the conceptual basis for doing so.

2. The Issue of Continuing Intent

The central flaw in the fictional assent (or "last shot") theory is that it fails to separate the narrow role of the specific provisions of the Convention from the broader, determinative inquiry into the actual (or reasonably perceived) intent of the parties. Recall that the premise of this traditional approach is a formalist one: By operation of the rule in article 19(1) a deviating "acceptance" is transformed into a rejection and a counteroffer. The predicate for the conclusion of assent to this counteroffer arises from a derivative consequence of the rejection, namely, that the formal legal construct of "offer" is "terminated" upon the original offeror's receipt of the deviating acceptance.[260] From this predicate, the traditional rule makes a subtle, but significant leap to a factual conclusion about the intent of the original offeror: The formal legal rejection of the "offer" set forth in article 19 carries with it the much broader factual effect of "wiping clean the intent slate;" all prior statements, declarations of intent, and understandings of the parties thus wither to irrelevance. As a result, as of the deviating reply the original offeror apparently no longer has any relevant intent for purposes of contract formation. By default - so the traditional logic runs - her subsequent performance must amount to an implied assent to the only extant (albeit constructive) proposal, the counteroffer arising from the deviating acceptance rule of article 19(1).

The misapprehension of this reasoning lies in a failure to recognize that, notwithstanding the legal effect prescribed by the mirror image rule, the declarations made in and other circumstances attending the original offer do not cease to be a factual indication of the intent of the original offeror. The formal legal termination of the original offer may indeed mean that, as a general proposition,[261] the offeree's power to accept the formal offer is extinguished.[262] [page 72] The flexibility mandated by the interpretive values of the Convention - in particular the injunction of article 8(3) that in interpretive inquiries an adjudicator consider "all relevant circumstances" - makes clear, however, that the indications of intent of the original offeror preceding this event cannot simply be disregarded in assessing the meaning of that party's subsequent performance.

This issue might be termed one of "continuing intent." The question here is whether a party is able to declare her intent with respect to the conditions for the assumption of contractual obligations with sufficient clarity and prominence that the expressive value of the declaration survives a negative response from the other party. The interpretive flexibility prescribed by article 8(3) provides the answer. The first factor expressly identified by that provision as among the "relevant circumstances" an adjudicator must consider in the interpretive standards of article 8 is "the negotiations" between the parties.[263] As evidence of the broad significance of such indications of the parties' intent, the Working Group deleted from an early draft of article 8(3) a proposed limitation that would have required consideration of only "preliminary" negotiations.[264] The purpose of this deletion was to make clear "that all negotiations would be relevant" in the interpretive standards of article 8.[265] The message here is that prior negotiations set the context for the interpretation of subsequent events, and thus shed important light on the meaning of subsequent statements and expressive conduct. The premise of the traditional "last shot" rule - that all prior declarations of intent become irrelevant upon a deviating acceptance - disregards this message entirely.[266] [page 73]

The required consideration of prior declarations and expressive conduct also addresses any argument that the original offeror failed to take advantage of a "last clear chance" prior to performance. Proponents of the fictional assent rule might point to the "reasonable person" standard of article 8(2) and argue [267] that the original offeror's performance with (constructive) knowledge of the effect of article 19(1) and without further objection necessarily amounts to her assent to the terms of the (constructive) counteroffer. There is a superficial appeal to this argument. But in the end it is merely a restatement of the same normative conclusion about a party's failure to object to proposed terms. The drafters of the Convention refused to grant dispositive effect to proposed terms in such circumstances based solely on normative notions of a "duty to speak."[268] And where a party has declared her continuing intent not to be bound to foreign terms with sufficient clarity and prominence,[269] the Convention's flexible interpretive values require that [page 74] an adjudicator weigh this "relevant circumstance" in interpreting the meaning of the party's subsequent conduct.

The application of the rule of article 19(1) to a deviating acceptance will indeed permit the conclusion of a contract on the basis of the counteroffer if the original offeror makes a corresponding expression of assent.[270] This is a very important "if," however. In the event of performance of the basic elements of the proposed transaction, the fictional assent approach would disregard the conditional form of this statement entirely and simply take the assent as given. The interpretive inquiry is over before it begins. Admittedly, the relevant interpretive standard under article 8 will often be the understanding of a "reasonable" person. But as we have seen, this too is a flexible standard that rejects static or similar normative conclusions for intent-based interpretive inquiries.

A reference to the deviating acceptance rule of article 19(1) alone thus tells us nothing about the essential interpretive inquiry in the case of a partial dissensus. The indicative value of the declarations and expressive conduct of the original offeror prior to a deviating acceptance will, of course, vary according to their relative clarity and context.[271] In any event, in light of the f