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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 29 [Modification or abrogation of contract by agreement]

[TEXT OF THE UNIFORM LAW]

(1) A contract may be modified or terminated by the mere agreement of the parties [1].

(2) A contract in writing which contains a provision requiring any modification or termination by agreement to be in writing [2] may not be otherwise modified or terminated by agreement [3]. However, a party may be precluded by his conduct [4] from asserting such a provision [5] to the extent that the other party has relied on that conduct [6].

[WORDS AND PHRASES, CONCEPTS

1. contract may be modified or terminated by mere agreement
2. contract in writing with provision requiring that any modification etc. also be in writing
3. requirement that contract may not be otherwise modified etc by agreement
4. party may be precluded by his conduct
5. may be precluded by his conduct from asserting such a provision
6. to the extent that the other party has relied on that conduct ]

[COMMENTARY]

[1] [contract may be modified or terminated by mere agreement]

      [1.1] This rule is, under many laws, a natural rule in itself and would also follow from the CISG system. Modifications or terminations of a contract include instances where one party gains unilateral advantages (e.g. price increase without modification of the volume of the delivery and vice versa). Their effectiveness can, however, be prevented under common law by not granting consideration. This rule was thus considered as necessary in order to preclude such an interpretation. Article 4, subpara. (a) does, therefore, not apply so that the contrary national law cannot apply either.

      [1.2] It is not expressly said in which way the agreement on modification or abrogation is made. We believe that the provisions of Part II on the formation of a contract should be applied here, provided that the States concerned have adopted also that Part. This also includes that the offer for modification or abrogation meets the requirements of Article 14, paragraph 1; hence it has to be recognizable as a proposal referring to the conclusion of a contract. This is generally not the case when modifications of the terms of contract appear without prior notice in declarations and documents which the parties send each other in the process of realizing the contract (the Secretariat's Commentary, O.R., 28, which does not emphasize this requirement is insofar at least misleading). [page 123]

      [1.3] When a reservation is; made pursuant to Article 96, freedom of form under Article 12 does not apply to the modification or abrogation of the contract. The form to use is to be deduced from the applicable national law (Art. 12, note 2.2).

[2] [contract in writing with provision requiring that any modification etc. also be in writing]

This means that the agreement has to be in writing and must, therefore, be an express agreement. As became obvious in discussing an Italian suggestion (O.R., 101, 105 fol), a requirement of the written form is also decisive when it is contained in agreed general terms of business.

[3] [requirement that contract may not be otherwise modified etc. by agreement]

      [3.1] This can actually be inferred from the primary role which the CISG attributes to the agreements between the parties (Art. 6). Nevertheless, the provision is not superfluous irrespective of its role as an introduction to the following restriction, because some domestic laws allow that written form clauses are cancelled orally (Huber, 435 for the FRG; Hillman, 451 for the USA where they can hardly be enforced through the courts even though the UCC had wanted to give them effect) or that this is possible already in the case of doubt (Loewe, 50 for Austria). Insofar national law is superseded.

      [3.2] On various occasions the parties agree even further-reaching form requirements, for instance that modifications of the contract have to be marked as supplements and numbered continuously. Because of the priority of party agreements and/or, as Honnold (230) believes, a forteriori, a breach of such clauses will have to be attributed the same importance as a written form clause as such.

[4] [party may be precluded by his conduct]

The majority of commentators (e.g. Secretariat's Commentary, O.R., 28; Honnold, 231; Date-Bah/BB, 243; Hillman, 459) obviously proceed on the assumption that such conduct is meant from which an agreement on modification or abrogation can be inferred, hence, a relevant oral offer or such arrangement. This presupposes, in our view, that persons who have shown such conduct had an authorization to modify and/or terminate the contract. We hold above all that the conduct has to be measured against a relatively demanding yardstick if the general rule contained in the first sentence is not to be ineffective. Thus apart from an oral arrangement, further activities should be required which on the part of the other party would have caused the impression that the agreement lacking form were of a binding nature, e.g. reference to their substance in correspondence and/or further negotiations, performance and/or acceptance without contradiction according to the content of the modified agreement. An established practice of exchanging oral modifications may also have developed between the parties after the conclusion of the contract (Art. 9, paragraph 1). [page 124]

[5] [may be precluded by his conduct from asserting such a provision]

      [5.1] Here, too, reference is made to a specific manifestation of the prohibition of the venire contra factum proprium. This rule is directed against the misuse of agreed requirements as to form. It is to prevent the strict application of the principle pursuant to paragraph 1 from infringing upon the necessary adaptation of the contract.

      [5.2] Sentence 2 is not invoked within the scope of application of Article 12 when the agreement of the written form only serves to reaffirm a written form requirement which is prescribed by the applicable material law determined by way of a reservation. It has to be deduced, in this case from national law, which are the possible limitations on the consequences of a lack of form. If, however, a national law, which does not prescribe any form, is applied to a contract as a consequence of a reservation, the form requirement may be substantiated only by the agreement, thus meeting a requirement of the CISG. Here it should be considered to invoke Article 29, paragraph 2, sentence 2.

[6] [to the extent that the other party has relied on that conduct]

      [6.1] Hence, it matters here to what extent the other party showed a conduct in accordance with the agreement that was lacking in form. His conduct may become manifest in an oral statement, but then it should be complemented, in our view, by further activities, like an organization of the future economic activities that would be in line with the modification or termination. In this context, it does not matter solely whether a party has already started performance, but it has to be taken into account which preparations he has made for it. Mere conduct implying an intent will be considered as sufficient, however, even it is not manifest vis-a-vis the other party (Date-Bah/BB, 243). In both these cases it has to be taken into consideration whether such conduct was reasonable (analogy to Art. 16, paragraph 2, subpara. (b)), which on its part depends on the first party.

      [6.2] The solution given to a number of examples discussed in publications is not convincing to us. Instead of entering into polemics we mention here an example where the party, which asserts a claim, cannot rely on the written form clause. Buyer and seller, in spite of the existence of such a written form clause, orally agree to postpone the three months' date of delivery. The seller delivers accordingly, and the buyer accepts delivery and pays for it. Later, as differences of opinion emerge because of other things, the buyer refers to the written form clause, declares the modification of the date of delivery void and asserts a claim for liquidated damages in the context of late delivery. The buyer through his statement, acceptance and payment has displayed such a conduct as to bring about a modification. The seller, by way of a statement and the respective delivery, [page 125] has relied on it. The claim for liquidated damages is thus not justified.

      [6.3] We believe that the parties can exclude sentence 2, whereas Hillmann (462), who is opposed to written form clauses, prefers the opposite interpretation. However, the exclusion cannot be achieved merely by a simple clause because it is under sentence 2 that such a clause is to be interpreted; rather sentence 2 must expressly be excluded. This will be possible in practical terms and provable only by way of express exclusion. [page 126]

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Pace Law School Institute of International Commercial Law - Last updated August 9, 2002
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