[For more current case annotated texts by this author, see Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed. (2003) and Lookofsky, Understanding the CISG in the USA, 2d ed. (2004).]
118. The offeror is the master of the offer. Article 19 of the CISG serves to link this golden CISG rule both to the 'mirror-image' concept of acceptance and to the much-discussed commercial phenomenon known as the 'battle of forms'. Article 19(1) provides as follows:
B. Non-Matching Reply is Rejection and Counter-Offer
119. Article 19(1) conforms with traditional theory: because contractual obligations arise out of expressions of mutual agreement, an acceptance must 'match' the offer. So the CISG starting point is that a reply purporting to be an acceptance which does not reflect the terms of the offer constitutes - not an acceptance, but - a rejection and counter-offer.
C. Independent Communication Not Rejection
120. Not every non-conforming reply will 'purport to be an acceptance' of the offer in question. Sometimes, for example, a reply which makes inquiries or suggests the possibility of additional terms is intended to explore the willingness of the offeror to bargain (accept terms more favourable to the offeree), while leaving open the possibility that the offeree may later accept the offeror's original terms. If such an 'independent communication' is a reasonable interpretation of the offeree's intent, it will not constitute a rejection coupled with a counter offer.
D. Limited Exception to Mirror-Image Rule
121. Although paragraph (1) of Article 19 provides that a reply purporting to be an acceptance which does not reflect the terms of the offer constitutes a rejection and counter-offer, Article 19, paragraph (2) carves out an exception to the general 'mirror-image' rule:
Application of the exception created by paragraph (2) of Article 19 is likely to arise within the context of a so-called 'battle of forms'.
E. The Battle of Forms
122. An international contract of sale is not always the product of a formal negotiation. In many typical cases, the parties communicate by exchanging brief (e.g telex or telefax) communications, and these are often coupled with a subsequent exchange (though not necessarily a 'battle') of standard forms of agreement. In these and similar cases, the offeree's reply will very likely signal some sort of 'purported' acceptance, but not all the standard terms contained in the acceptance (e.g. seller's invoice) are likely to match those contained in the offer (e.g. buyer's purchase order). Should the non-conforming reply be treated as an acceptance? [page 72]
2. Materiality Test
123. In order to help resolve cases like those just described, CISG Article 19 sets forth a seemingly limited exception to the traditional mirror-image rule and regulates the exception by a materiality test. The effect of this exception (which itself works as a gap-filling (default) rule, presumably reflecting the will of most contracting parties) is that the existence of immaterial inconsistencies do not block the deal: that is, a purported acceptance which contains additional or different terms which do not materially alter the terms of the offer constitutes a true acceptance, and the terms of the contract become the terms of the offer with the modifications contained in the acceptance. Only if the offeror, without undue delay, objects to the (immaterial) discrepancy will the offeree's reply be deemed a rejection.[l]
3. Materiality Defined
124. CISG Article 19 is not the first sales statute which attempts to provide a sensible solution to the non-conforming acceptance (and the battle of forms). Judged by its wording, and when compared to some bolder domestic formulations, Article 19 might seem to represent a limited and conservative exception to the general mirror-image rule.[l] In particular, as regards materiality, paragraph (3) of Article 19 provides the following definition:
Although paragraph (3) sets forth a non-exhaustive ('among other things') list of provisions deemed material in the Article 19 sense, the broad-ranging list of specifically listed items have made it difficult for some commentators to even 'imagine variations that would not be material'.
Then again, first impressions can prove deceptive upon closer analysis. For one thing, some prominent German scholars treat Article 19(3) as merely establishing a rebuttable presumption of materiality, and German case law has already shown that, e.g. a clause requiring 'notice-of-defects' within 30 days after the date of the invoice may be non-material under Article 19(2), notwithstanding the fact that the buyer's failure to notify within the stated time period effectively insulates the seller from all liability claims based on non-conforming goods. [page 73]
An important related point is that it is not possible to understand Article 19 in isolation from other Convention provisions. For example a reply containing an additional term (as opposed to a modification) which conforms to international trade usage will not constitute a 'material addition' even if it deals with a topic listed in paragraph (3).
4. Cases Not Resolved By Article 19
125. Finally, it should be emphasized that Article 19 does not provide machinery capable of solving all problems likely to arise within the context of a 'battle-of forms'. One typical sales situation which has frequently challenged national courts concerns cases where the forms exchanged do not entirely match (e.g., the seller's form limits liability for breach, while the buyer's form provides for the opposite result), but where the parties nonetheless proceed to perform their main obligations (to deliver and pay) without regard to the contractual discrepancy and its potential consequences. In such cases, some sort of CISG 'contract by conduct' must be said to exist, but the terms of that contract may later become the subject of some dispute. One possible solution (perhaps in formal accordance with Article 19) would be to give preference to the standard terms of the party who got in the battle's 'last shot'; in other cases, a more fair solution would be to let the conflicting terms cancel each other out and then look to the substantive solution supplied by the CISG gap-filling rule. Standing alone, Article 19 is not likely to provide a clear-cut and clearly equitable solution, at least not in every case.