Excerpt from John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed. (1999), pages 143-146 Reproduced with permission of the publisher, Kluwer Law International, The Hague.
§131 A. Relation Between Part II and Other Parts of the Convention
Part II of the Convention, Formation of the Contract, is subject to the rules of Part I (Arts. 1–13) on the scope and interpretation of the Convention, but is independent of Part III (Arts. 25–88) which deals with the obligations of the parties to the contract. Article 92 (Part IV) permits a Contracting State to declare that it will not be bound either by Part II or by Part III. This reflects aspects of the Convention’s history that were described in the Overview (Ch. 1, supra at §4)—the completion in 1964 of two Conventions, one on Formation (ULF) and one on Sales (ULIS), and UNCITRAL’s decision to prepare a single Convention, subject to an option to adhere to only Part II on Formation or Part III on Sales.
At the conclusion of Article 11, supra, attention was drawn to the declaration, under Article 92, by Scandinavian States, not to be bound by Part II on Formation of Contract. Under this declaration these States are "not to be considered as Contracting States" with respect to matters governed by Part II. Formation of the Contract. These States also made a declaration under Article 94 which applies to "Two or more Contracting States which have the same or closely related rules on matters governed by this Convention". This declaration was applied when both parties have their places of business in Denmark, Finland, Sweden, Iceland or Norway.
The text of Article 94 made it clear that the reservation applied only to transactions among these "parties"; contracts with other States would be governed by the Convention.[page 143]
For example: ARB. ICC (Paris), 7585/1992 (1992): A contract between an Italian seller and a buyer in Finland was governed by CISG. UNILEX D.1992-32. For a fuller discussion, see Bonell & Ligouri, ULR (1997), pp. 588-590 and n. 90.
§132 B. Structure of Part II
The first four articles (14–17) deal with the offer—the minimum criteria for an offer (Art. 14), and the withdrawal (Art. 15), revocation (Art. 16) or termination (Art. 17) of an offer. The next five articles (18–22) deal with acceptance—"acceptances" that do not match the offer (Art. 19), the period allowed for acceptance (Arts. 20 and 21), and withdrawal of an acceptance (Art. 22). The two final articles (Arts. 23 and 24) relate to the time when a contract is concluded.
As the above summary indicates, most of the provisions of Part II are concerned with "offer" and "acceptance," an emphasis more consistent with traditional patterns of contract formation than with current practices in international trade. Nonetheless, rules on offer and acceptance are still needed when the only relevant facts are two communications—one that may (or may not) be an "offer" and one that may (or may not) be an "acceptance". In this setting different rules are needed for each communication: An "offer" may be made at any time but the time for "acceptance" is limited (Arts. 18–21); "offers" in some circumstances may be revoked or expire but an effective "acceptance" closes a contract (Arts. 16, 18(2)).
However, serious problems arise if one assumes that contracts can be made only if they fit this two-step formula. For example, a typical export sale may be instituted by an exchange of letters (including a pro-forma invoice), none of which may be an "offer" or "acceptance". Thereafter, correspondence will discuss descriptions and prices of the goods, the expected dates and methods of shipment and the methods of payment—normally by the buyer’s arrangement for the issuance of a letter of credit and its confirmation by a bank near the seller; a contract may not be closed before the letter of credit is confirmed and in some cases only when the seller ships the goods and presents the necessary documents [page 144] (invoice, bill of lading, insurance policy and draft) to the confirming bank. In short, in many transactions it is difficult or impossible to isolate an "offer" and "acceptance".
The Convention does not compel the stretching or amputation of a living understanding to fit the Procrustean bed of "offer" and "acceptance". Under Article 18(3) a contract may be concluded "by performing an act, such as one relating to the dispatch of the goods or payment of the price...", §§163–164, infra. In addition, Article 8(3) gives effect to "understanding" that is derived from "all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties." In short, the Convention accommodates both the simple exchange of two communications and also the development of a contract when it is impossible to isolate an "offer" and "acceptance".
This flexibility is becoming increasingly important with the development and expanding use of programmed systems for making commercial arrangements by "Electronic Data Interchange (EDI)". To help commerce cope with these problems, UNCITRAL established a Working Group on Electronic Data Exchange. On June 2, 1996, UNCITRAL adopted the Model Law on Electronic Commerce, and a Guide to enactment of the Model Law (A/51/17). The Commission also authorized work on related issues, including digital signatures and means to certify such signatures.
Systems for the rapid exchange of pre-programmed electronic signals arranging for the purchase of goods place strain on traditional concepts [page 145] of "offer" and "acceptance". Some of the implications of these current developments are noted infra: see §162 note 7 (Article 18 and error or delay in transmitting an "acceptance"); §170.4 (Article 19 and the "Battle of the Forms")
Contract Formation: Regional Perspectives: Logan T.N., P.R. China and Formation (CISG), 5 China L. Rep. (Chicago) 53-74 (1988); Reiley, E.H. & Hu Run Fu, Chinese Contract Law and CISG, 25-94 (1989); Ng’ong’ola. C., CISG: South African Legal Environment; Formation of Contract, (London) 4 African J. Int. & Comp. L. 835-853 (1992).[page 146]
FOOTNOTES: Introduction to Part II
1. On the interpretation of references to "the contract" in Art. 1 in the setting of Part II of the Convention, see the Commentary to Art. 1, supra at §48, note 16. As of 1990, the Scandinavian States have ratified the Convention subject to an Article 92 declaration not to be bound by Part II on Formation of the Contract. See [Table of Contracting States].
2. See §339.2 infra and the Prototype Export Transaction in J. Honnold, Sales & Sales Financing 310–339 (5th ed. 1984).
3. Schlechtriem (1986) 48 and references at notes 150–151; Eörsi, Lausanne Colloquium 43–44, Cf. 1 Schlesinger, Formation 1585.
4. Article 8 is placed in Part I of the Convention and subsequently applies to Part II on Formation as well as to Part III.
5. In UNCITRAL’s 1978 review of the Working Group Draft Convention on Formation an amendment was proposed to articulate the principle stated above. Some objected that in some domestic systems a contract "cannot be formed without the existence of an offer or an acceptance"; others stated that no amendment was needed since the principle "was self-evident". Sponsors then withdrew the proposal "because of the extreme difficulty of formulating an acceptable text" (paras. 103–104). IX YB 38–39, Docy. Hist. 372–373. In this writer’s view the substance of the proposal had been implicit in Articles 8(3) and 18(3) mentioned above.
Article 23, infra, on the time of completion of the contract, rounds out provisions that address problems that arise from claims that an acceptance is too late (e.g., Art. 18(2)), and does not suggest that a contract cannot exist if it is impossible to determine "the moment" when it was made.