Excerpt from John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed. (1999), page 158. Reproduced with permission of the publisher, Kluwer Law International, The Hague.
§138 The special and narrow role of Article 15 may be illustrated by the following example:
Example 15A. On June 1 Seller mailed to Buyer a letter offering to sell Buyer specified goods at a stated price. The offer also stated: "This offer is binding and irrevocable until July 1". A letter from Seller to Buyer takes a week for delivery. On June 6, before Buyer received Seller’s June 1 letter, Seller phoned Buyer and said, "Disregard the letter that I mailed to you on June 1. I have decided to withdraw the offer contained in the letter." On receipt of Seller’s letter Buyer replied "I accept your June 1 offer."
The question whether the above parties are bound by contract is answered by the following provision.
"(1) An offer becomes effective when it reaches the offeree.
"(2) An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer."
In the above example, on June 6, the offer had not yet reached the offeree, and therefore was not yet "effective." The statement that the offer could not be revoked until July 1 would have become binding (Art. 16(2), infra at §139) when it reached the offeree. But the offer never became "effective" because of the withdrawal that reached the offeree in advance of the offer.
The reason supporting Article 15 is that the enforcement of contracts is designed to protect expectations; none arose in this case before the offeror withdrew the offer. Article 18(2), infra at §157, provides a parallel rule with respect to an acceptance: the offeree may withdraw the acceptance if the withdrawal "reaches the offeror before or at the same time as the acceptance would have become effective" (Art. 22).[page 158]
FOOTNOTES: Chapter on Article 15
1. Art. 15 is, in substance, the same as Art. 13 of the 1978 Draft Convention. Cf. ULF 5(1).
2. As we shall see in connection with Arts. 16 and 18(2), if the offer had not been irrevocable, Seller could have "revoked" the offer by a communication that reached the Buyer after it received the offer but before acceptance.