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Published in J. Herbots editor / R. Blanpain general editor, International Encyclopaedia of Laws - Contracts, Suppl. 29 (December 2000) 1-192. Reproduced with permission of the publisher Kluwer Law International, The Hague.

[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).]

excerpt from

The 1980 United Nations Convention on Contracts
for the International Sale of Goods

Joseph Lookofsky

Article 55
Contract With 'Open' Price Term

240. As previously emphasized in connection with the contract formation rules in CISG Part II, the Convention requires that a proposal be 'definite' if it is to be considered an 'offer' (capable of acceptance). Under Article 14, a proposal is sufficiently definite, inter alia, if it 'expressly or implicitly fixes or makes provision for determining the ... price.'[1]

Article 14 must now be reconsidered in connection with Article 55, which provides:

'Where a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price, the parties are considered, in the absence of any indication to the contrary, to have impliedly made reference to the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned.'

Article 55 provides a gap-filling reference to the price 'generally charged' in cases '[w]here a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price.'[2] [page 129]

The relationship between this provision and Article 14 has been the subject of some controversy. Although some commentators have read Article 14 as carrying the implication that a contract which does not fix or determine the price is invalid, others have read Article 55 as negating any such implication.[3] Clearly, Article 55 has relevance for the Scandinavian Contracting States who have all declared themselves 'not bound' by Article 14;[4] some have even argued (though not persuasively) that Article 55 is only significant in cases where one of the parties resides in a Scandinavian State.[5]

Although it hardly seems possible to declare all open-price term contracts valid by virtue of Article 55, it seems equally inappropriate to declare every open price term contract invalid on the basis of Article 14. Rather, as previously suggested, the court concerned should try to discern the true intention of the parties in each individual case (via Article 8):[6] if it appears that they intended to be bound without a price clause, then the parties' intention should be permitted to prevail.[7] And since the parties' open-price-term contract would then be held valid, the gap should be filled by the (Article 55) price 'generally charged.'

1. See supra No. 102.
2. Emphasis added.
3. See, e.g. Farnsworth, E.A., 'Formation of Contract,' in International Sales (Galston and Smit ed., New York 1984) at pp. 3-8 [available at <http://www.cisg.law.pace.edu/cisg/biblio/farnsworth1.html>].
4. Regarding the Article 92 declaration, see infra No. 328 (noting the possible applicability of CISG Part II in Scandinavian States by virtue of Article 1(1)(b)).
5. According to the Secretariat Commentary to the 1978 Draft, Article 51 of the Draft (a rule which is somewhat differently worded, but generally corresponds to Article 55 of the Convention) has effect only if one of the parties has his place of business in a Contracting State which has ratified or accepted Part III but not Part II and if that State accepts open-price contracts as valid: see para. 2 of the Commentary to Article 51 of the Draft; but see supra No. 102 with note 5. Compare Murray, J., 'An Essay on the Formation of Contracts and Related Matters Under the United Nations Convention on Contracts for the International Sale of Goods,' Vol. 8 Journal of Law and Commerce 11, 13-17 [available at <http://www.cisg.law.pace.edu/cisg/biblio/murray.html>].
6. See supra No. 81 et seq.
7. See supra No. 102.
[page 130]

Pace Law School Institute of International Commercial Law - Last updated April 5, 2005