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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 19 [Additions or modifications to the offer]

[TEXT OF THE UNIFORM LAW]

(1) A reply to an offer which purports [2] to be an acceptance but contains additions, limitations, or other modifications [1] is a rejection [3] of the offer and constitutes a counter-offer [4].

(2) However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially [5] alter the terms of the offer constitutes an acceptance, unless the offeror, without undue delay, objects orally to the discrepancy or dispatches [6] a notice to that effect. If he does not so object, the terms of the contract are the terms of the offer [7] with the modifications contained in the acceptance.

(3) Additional or different terms [10] relating [9], among other things, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially [8].

[WORDS AND PHRASES, CONCEPTS

1. reply containing modifications: material vs. immaterial
2. inquiries or other remarks concerning the offer
3. acceptance including [material] modification is a rejection of the offer
4. acceptance including [material] modification constitutes a counter-offer
5. additions or modifications will not be a rejection if they do not materially alter the terms of the offer
6. offeror can insist on no modifications
7. right to object to otherwise immaterial discrepancies
8. list of modifications considered material: refutable assumptions
9. other caveats associated with this list of material modifications
10. battle of the forms: rejection of relevant rule by UNCITRAL working group; preferred solutions

[COMMENTARY

[1] [reply containing modifications: material vs. immaterial]

The CISG considers modifications, including additions and restrictions, as detrimental to the conclusion of a contract. This principle is, however, not made absolute. The main question is whether the modifications are material or immaterial (c. note 5).

There is a large gap here between theory and practice. In practice, most of the acceptances would actually be counter-offers, since it would suffice for the parties to 'have differing jurisdictional clauses in their business conditions; and the buyer and the seller regularly exchange their offers and acceptances on printed forms or together with their different business conditions. According to Honnold (188) businessmen do not read the backsides of those forms in their normal business relations because business would otherwise "come to a halt". Nevertheless, contracts are being fulfilled. [page 97]

Since an acceptance including modifications constitutes a counter-offer and the fulfillment of the contract is conduct implying an intent, the conditions of the acceptance apply. These consequences are rejected in many instances. If a seller answers to an order by mailing his business conditions, which contain limited liability or an exemption therefrom, Hyland (Freiburg, 338 fol, giving rather impractical recommendations), for instance, wants the acceptance of the counter-offer by the buyer through an act implying an intent to be valid only if the seller has made a serious attempt to explain the different terms to the buyer.

Eörsi (Lausanne, 50) makes a distinction between whether the modifications are intentional or unintentional, the latter probably not being material in his view.

[2] [inquiries or other remarks concerning the offer]

Not every answer to an offer is to be qualified as an acceptance. Inquiries or other remarks concerning the offer should not be promptly classified as a rejection. An answer to an offer can be rejected only when it has been accepted, i.e. the offeree wants it to be an acceptance.

Mere inquiries are neither acceptances nor rejections (Sono/Dubrovnik, 124). To save a contract, modifications are sometimes interpreted by the courts as being "mere suggestions" which the offeror might accept or reject. The acceptance is then divided into acceptance of the offer and a further offer to modify the contract (Farnsworth/BB, 178).

There is a dispute on whether a commercial letter of confirmation constitutes an acceptance (see Huber, 449 fol; Schlechtriem, 44; Rehbinder/Freiburg, 170).

[3] [acceptance including [material] modification is a rejection of the offer]

An acceptance including the modifications does not bring about a contract, but is regarded as a rejection of the offer and, therefore, terminates the offer (c. Article 17).

[4] [acceptance including [material] modification constitutes a counter-offer]

While an acceptance including the modifications terminates the original offer, that same acceptance remains an independent act and takes on the character of a counter-offer. Now the provisions of Article 14 fol are applied to this counter-offer. To lead to the conclusion of a contract, this new offer needs to be unreservedly accepted. Such acceptance may be expressed through conduct implying an intent, (within the periods of time fixed under Article 18). [page 98]

The counter-offer accepted through conduct implying an intent favours the party who, in the "battle of the forms" fires the last shot, i. e. sends the last printed confirmation. Farnsworth (BB, 179) believes this typically to be the seller when he sends his answer to the buyer's order. We doubt whether such a general statement can be made at all. In the case of technical goods the typical situation should rather be that the buyer calls for an offer and then, on his part, declares his acceptance.

[5] [additions or modifications will not be a rejection if they do not materially alter the terms of the offer]

Not every acceptance is limited to a simple "yes" as an answer to the offer. Often the terms of the offer are repeated in the offeree's own words. In so doing, modifications may be expressed verbally which are not based on differing intentions.

However, even actual additions or modifications will not be considered if they do not materially alter the terms of the offer. What is considered as material depends on the circumstances of each case. What is unimportant to one party may be important to the other, and vice versa (Sono/Dubrovnik, 126). The question will have to be asked, in particular, whether the modifications will cause the offeror additional efforts or difficulties or increase his risks. "Neutral" modifications will in general be regarded as immaterial. According to Rehbinder (Freiburg, 164), however, everything is material which is "not to the obvious advantage" of the offeror. Immaterial modifications could be, for instance, that a certain packaging of the goods was prescribed, but a more suitable packaging could be used to avoid additional costs or that global delivery dates are specified (Bydlinski/Doralt, 72).

[6] [offeror can insist on no modifications]

The offeror might, however, insist on an unreserved acceptance of his offer and reject any modification, no matter how immaterial it may be. He should, therefore, carefully read the acceptance. Nevertheless, he must declare his rejection promptly. To do so, it suffices for him to dispatch a relevant communication. The risk of the loss of or a delay in transmitting the communication is borne by the offeree.

[7] [right to object to otherwise immaterial discrepancies]

In the absence of an immediate objection by the offeror, a contract is created, the terms of which are drawn from the offer and the modifications made in the acceptance.

Basically, even an immaterial discrepancy constitutes a counter-offer, since the offeror retains the right to reject it. If he does not do so, he practically accepts the offer by silence. Rehbinder (Freiburg, 164) believes that in this connection a rule is missing concerning the moment the contract is concluded and wants to apply here the provisions of Article 21, paragraph 1 analogously. In our view such an [page 99] analogy is superfluous for it can be seen clearly from Article 18 when a contract becomes effective, i.e. at the moment the unchallenged acceptance reaches the offeror.

[8] [list of modifications considered material: refutable assumptions]

Material modifications of the offer raised through acceptance are obstacles to the conclusion of a contract. This rule is supposed to protect the offeror. Farnsworth (BB, 178) therefore rightly raises the question of what happens if the modifications are such that they are to the advantage of the offeror. If changes in the price, the quality etc. were advantageous to the offeror, while other terms remained the same, they should not be in the way of a contract (Bydlinski/Doralt, 72).

Paragraph 3, in listing those terms whose modification should always be considered as materially altering the terms of the offer, strongly limits the possibility, as contained in paragraph 2, to favourably interpret the offer and acceptance so as to come to the conclusion of a contract. If certain changes are considered as material, then this is only an assumption which can be disproved, among other things, by invoking usages (Schlechtriem, 43). Rehbinder (Freiburg, 165) also advocates a refutable assumption, but claims at the same time that the irrefutability of an assumption ensues from genesis. Actually, at the Vienna Conference a relevant half sentence was deleted in the draft at the request of Bulgaria, which referred to whether or not the offeree, because of the offer or the particular circumstances of a specific case, had reason to assume that his modifications were acceptable to the offeror. There is no doubt that commercial practice does not consider any alteration of the offer relating to the abovementioned factors as being an obstacle to the conclusion of a contract. Frequently, the offeror will commence with the realization of the contract in line with the terms of the acceptance, which will have to be regarded as an acceptance of the counter-offer through conduct implying an intent when acceptance, including the modifications, has led to the termination of the original offer.

[9] [other caveats associated with this list of material modifications]

What is unsatisfactory with regard to this solution is that only the object and not the degree of discrepancy should be taken into account. Though rather extensive, that listing is not even complete. Other material alterations could include prior negotiations which have no influence on a written contract, or oral alterations of the written contract which are not permitted. It is doubtful whether a force majeure clause which does not relate to the extent of liability but the liability itself, or a choice-of-law clause which does not relate to the settlement of disputes as such but rather to the rules for such settlement (e.g. the standard rules of the ECE or UNCITRAL) are considered as pertaining to the examples mentioned (Famsworth/BB, 183). [page 100] A restrictive interpretation should try here to save some of the intentions of paragraph 2.

[10] [battle of the forms: rejection of relevant rule by UNCITRAL working group; preferred solutions]

Discrepancies between the offer and acceptance are, in particular, the result of the transmission of contradictory general business conditions, which is a problem that was solved under domestic law, e.g. in paragraph 33 of the ICCA. The inclusion of a relevant rule into the CISG was rejected both in the working group of UNCITRAL (proposal by the former GDR) and at the Vienna Conference (proposal by Belgium) (O.R., 289).

Under the rules of the CISG the party which is the last to transmit terms or to invoke them has the advantage (Schlechtriem, 44). Honnold (195) does not prefer the latest transmitted terms, but rather the concurring terms. He admits nevertheless that one always has to assume that a counter-offer is accepted by conduct implying an intent if the terms are contradictory, but the contract is fulfilled. According to Kramer (Doralt, 95) contradictory terms are a dissent and raise problems of validity, which pursuant to Article 4, are not covered by the CISG. In our view, however, a solution on the basis of Article 19 is preferable. It is recommendable for the offeror to always react to an acceptance irrespective of whether he wants the contract or not. If he wants the contract and says "yes", then this is either a superfluous confirmation, because the acceptance contained only immaterial alterations, or a necessary acceptance of the counter-offer if the alterations were material. If he does not want the contract and says "no", then this is either a superfluous clarification, because the acceptance contained material alterations, or a necessary step because there were only non-material alterations (Farnsworth/BB, 184). [page 101]

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