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Reproduced with the permission of Oceana Publications

excerpt from

INTERNATIONAL SALES LAW

United Nations Convention on Contracts for the International Sale of Goods

Convention on the Limitation Period in the International Sale of Goods

Commentary by
Prof. Dr. jur. Dr. sc. oec. Fritz Enderlein
Prof. Dr. jur. Dr. sc. oec. Dietrich Maskow

Oceana Publications, 1992

Article 18 [Acceptance; Time of effect of acceptance]

[TEXT OF THE UNIFORM LAW]

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

(2) An acceptance of an offer becomes effective [4] at the moment the indication of assent [5] reaches [6] the offeror. An acceptance is not effective [7] if the indication of assent does not reach the offeror within the time he has fixed [8] or, if no time is fixed, within a reasonable time [9], due account being taken of the circumstances of the transaction, including the rapidity of the means of communication employed by the offeror. An oral offer [10] must be accepted immediately unless the circumstances indicate otherwise [11].

(3) However, if, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage [13], the offeree [12] may indicate assent by performing an act, such as [14] one relating to [15] the dispatch of the goods or payment of the price, without notice [16] to the offeror, the acceptance is effective [17] at the moment the act is performed, provided that the act, is performed within the period of time laid down in the preceding paragraph.

[WORDS AND PHRASES, CONCEPTS

1. statement made by offeree indicating assent
2. other conduct of offeree indicating assent
3. silence or inactivity in itself
4. time of effect of the acceptance
5. indication of assent
6. effect of dispatch of acceptance
7. acceptance must be received within the fixed period of time
8. fixing the period of time
9. if no time fixed, within a reasonable time
10. oral offers
11. oral negotiations
12. para. 18(3) an exception to para. 18(2)
13. usages and practices
14. examples of conduct implying intent
15. assent by performing an act relating to
16. notice of performance of act
17. acceptance is effective at the moment the act is performed, provided that ]

[COMMENTARY]

[1] [statement made by offeree indicating assent]

Generally, a contract is made by way of two corresponding statements of intention: the offer and the acceptance. But in case there is agreement between the parties (e.g. by way of signing a document) there will also be a contract, even if offer and acceptance are not identifiable (Rehbinder/Freiburg, 166; c. also Article 14, note 1).

The statement of acceptance does not expressly have to declare acceptance of the offer; it is necessary that assent to the offer be expressed by the offeree. The statement or conduct is interpreted pursuant to Article 8. The statement must express assent to the offer. The mere acknowledgment of receipt of the offer is thus not sufficient, neither is an expression of interest in it (Farnsworth/BB, 166).

The offeror may prescribe the form of the answer, e.g. by telex. This is of importance when it comes to interpreting the time limit for acceptance (c. note 8).

[2] [other conduct of offeree indicating assent]

The offeree may also express his assent through conduct implying an intent, e.g. dispatch the urgently needed replacement parts or open a letter of credit in the amount of the price. The act which is to express assent to an offer has to refer clearly to the offer. It also suffices that the offeree commences manufacture of the goods (s. Farnsworth/BB, 166) or performs the purchases required (O.R., 24). As to these examples, one fails to see why the offeree should not inform the offeror of his decision to accept the offer. After all, for both parties clarification is needed as regards the conclusion of the contract (Sono/Dubrovnik, 124). Only such conduct can, in our view, be judged to be an acceptance which becomes directly effective towards the other party.

If pursuant to Article 96 a reservation were made concerning the written form, assent through conduct implying an intent would be excluded (c. note 12). [page 92]

[3] [silence or inactivity in itself]

There need not be a reaction to goods that were not ordered. Silence does not mean acceptance in this case. However, the offeree may have an obligation to preserve the goods (c. Article 85; Schlechtriem, 40).

The offeror cannot force the offeree to react in writing, for instance: "Consider your silence as assent." Conversely, the offeree may, if he wants to enter into a contract, keep silent and consider the contract as concluded (Famsworth/BB, 172).

Silence could express acceptance if usages and practices that exist between the parties (Article 9) called for expressly rejecting an offer. In the case of longstanding business relations, silence for reason of good faith (c. Article 7) may mean acceptance (Sono/Dubrovnik, 124). Through an inquiry or an invitation to submit an offer it may be communicated that one's own silence should be interpreted as acceptance (examples are given by Honnold, 182). The parties may also agree that for future contracts silence would amount to acceptance, e.g. in the case of continuous orders (Farnsworth/BB, 167). It is not clear, however, at which moment the contract is concluded in the event of agreed silence (Farnsworth/BB, 172), probably not when the offer is received but rather after a reasonable time. Silence in answer to a commercial letter of confirmation has taken on particular significance in the rather extensive (so Rehbinder/Freiburg, 167) jurisdiction of the Federal Republic of Germany. According to that state of affairs, a contract can be made through silence in answer to a letter of confirmation even if negotiations were not successful. While at the Hague Conference commercial letters of confirmation were considered as established practice, the Vienna Conference was against such treatment. Also in this regard the question will be decided in practical terms of whether or not the parties are familiar with this practice. (In its ruling A 9/78 of February 5, 1981 the Court of Arbitration to the Polish Chamber of Foreign, Trade judged silence in answer to a letter of confirmation to be assent because this was established practice. See Z Orzecznictwa Kolegium Arbitrow Przy Polskiej Izbie Handlu Zagranicznego. Przeglad Wybranych Orzeczein za lata 1979-1983, Warsaw 1987, p. 53 fol).

If the parties were not familiar with this practice, the letter of confirmation could be regarded as a counter-offer (c. Article 19; Rehbinder/Freiburg, 170).

According to Farnsworth (BB, 172) it is not clear whether the reservation under Article 96 would affect a written agreement between the parties on future silence since Article 96 does not mention general agreements between the parties but only provisions of the Convention which should not apply. From the sense of that reservation, [page 93] however, it becomes clear that not only oral contracts are to be excluded but even more so those concluded by silence.

[4] [time of effect of the acceptance]

Before an acceptance becomes effective, it can be withdrawn (Article 22). The time of effect of the acceptance and the date of the conclusion of the contract are identical (Article 23). This does not mean, however, that the contract itself is already effective, for its becoming effective may require approval by the State or other authorities. The contract may also become effective retroactively; in that case it will become effective upon approval (Schlechtriem, 45). Yet, pursuant to Article 4, questions relating to validity are excluded from the scope of the Convention.

[5] [indication of assent]

This may be done through a statement of acceptance or conduct implying an intent (c. note 2). Compare also with note 12.

[6] [effect of dispatch of acceptance]

Even before it is received, the acceptance has a certain effect: its dispatch already excludes revoking an offer (c. Article 16).

The contract is made not when there is an intention to accept it or when the acceptance is dispatched, but only when it reaches the offeree (as to the moment of "reaching" compare Article 24). The risk of transmission is borne by the offeree. Should the acceptance be lost, there would be no contract. If there is a postal delay, the offeror has to react (c. Article 21, paragraph 2).

According to Farnsworth (BB, 172) it would be fairer if the dispatch of the acceptance were considered as decisive and the burden of the risk of transmission were placed on the offeror. The offeror, in the case of no reply to the offer, would likely be more concerned with the destiny of the contract than the offeree who would not know that his acceptance was lost.

An act to be regarded as acceptance, however, becomes effective immediately and not only when the offeror is informed accordingly (c. note 17).

If the offeror becomes aware of the act, e.g. because he is informed by the carrier or a bank that the goods or the money have arrived, no additional statement of acceptance will be required and the loss of such statement will have no negative effects (Farnsworth/BB, 168).

[7] [acceptance must be received within the fixed period of time]

The statement of acceptance must be received within the fixed period of time; otherwise the acceptance will not become effective. There are, however, exceptions to this rule (c. Article 21). [page 94]

[8] [fixing the period of time]

The period of time for acceptance may be fixed according to the calendar or in another way (e.g. within four weeks). (As to the calculation of the time compare Article 20, paragraph 2 and the beginning of that period compare Article 20, paragraph 1).

[9] [if no time fixed, within a reasonable time]

What is reasonable always depends on the circumstances of each case. The offeree may, in any case, claim some time for reflexion which shall be the longer the more complex or complicated the contract offered is. In the case of perishable goods, where immediate delivery is taken for granted, such reasonable time would, for instance, be shorter than in the case of machinery. Account has to be taken also of the way in which the offeror transmits the offer. A simple letter calls for a longer time for reflexion than a telegram. Apart from the category and scope of the transaction, a reasonable time may be influenced by the practice that exists between the parties. Government regulations, which may require an examination as to whether the business transaction might be approved, have to be taken into consideration.

If the offeror is not sure whether the acceptance reached him within a reasonable time, he may give another confirmation. Such confirmation is, under Article 21, paragraph 1, considered as making a late acceptance effective. Farnsworth (BB, 173) is in contradiction to that view and believes that such a confirmation is the actual acceptance if no acceptance was received within a reasonable time.

[10] [oral offers]

The fact that oral offers have to be accepted immediately corresponds with the rules in many legal systems.

[11] [oral negotiations]

Also in oral negotiations it is up to the offeror to grant the offeree time for reflexion either at his own initiative or at the request of the latter. A period for examination (possible need to get information etc.) may be the outcome of negotiations. One has to expect from the offeree, however, that he will draw the attention of the offeror to unusual circumstances.

[12] [para. 18(3) an exception to para. 18(2)]

Paragraph 3 constitutes an exception to paragraph 2. Pursuant to paragraph 2 the offeror is informed of the acceptance within the time limit; however under paragraph 3 he is not, for conduct implying an intent would be sufficient already. The offeror who, after that time limit has expired, immediately concludes a contract with a third party, may thus end up in a difficult situation. [page 95]

According to paragraph 3 a more unfavourable situation arises for the offeror compared to the provision in paragraph 2. Therefore, a conduct implying an intent is somewhat restricted. While paragraph 2 includes any such conduct, paragraph 3 limits a conduct implying an intent to such acts which the offeree undertakes on the basis of the offer, of existing usages or practices. The offeror himself may thus have suggested the conduct implying an intent. A specific action can, for instance, be stipulated in the offer ("Request immediate dispatch!"; c. Schlechtriem, 40).

According to Sono (Dubrovnik, 122), such an offer is only thinkable in the form of an order by the buyer. A seller may also pronounce an invitation in his offer to immediately open up a letter of credit.

[13] [usages and practices]

Actually, usages and practices do always apply so that their mentioning here is superfluous. If this is done anyway, then it is done to preclude any doubts.

[14] [examples of conduct implying intent]

The two examples are, of course, the main forms of conduct implying an intent. For that reason a limitation to the supply of the goods and the payment of the price had been suggested in drafting the CISG (c. also note 2).

[15] [assent by performing an act relating to ]

The formulation, "... an act ... relating to ", expresses that it is sufficient to give an instruction to the carrier or the bank without actually having dispatched the goods or transferred the price (O.R., 24). Bydlinski (Doralt, 73) even believes that the instruction to an employee is enough. In our view, only those acts which go beyond the sphere of the offeree are relevant.

[16] [notice of performance of act]

Since an acceptance is effective at the moment when the contract is made, even if the offeror knows nothing about it yet, an unsatisfactory situation may result, when, e.g., the goods are dispatched by ship and the ship is under way for a longer period of time. We, therefore, regard a solution in which the offeror has to be notified of the act within the period of time for acceptance as more favourable.

Depending on the circumstances of each specific case, from the general principles (Article 7) an obligation for the offeree to inform the offeror may be deduced. Rehbinder (Freiburg, 161) considers this as a supplementary obligation whose breach would entail liability for compensation. Honnold (186 fol) also includes the conditions under paragraph 2 and makes the need for the offeree to give notice dependent on whether or not, for instance, the goods are subject to constantly changing prices. In his view, the offeror also has to learn about the acceptance within a reasonable time. [page 96]

[17] [acceptance is effective at the moment the act is performed, provided that ]

Hence, the contract is concluded at that time. (This is put into doubt, however, by Rehbinder/Freiburg, 161.) Thus the possibility to withdraw or revoke the offer becomes inapplicable (c. note 4), and such prompt effect precludes a future' revocation of the offer (Farnsworth/BB, 174). [page 97]

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Pace Law School Institute of International Commercial Law - Last updated August 7, 2002
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