Published by Manz, Vienna: 1986. Reproduced with their permission.

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V. Formation of the Contract

A. Basic Principles and General Provisions

The rules for the formation of the contract [147a] which were already successfully incorporated into the 1978 Draft Convention were retained at the Vienna Conference. In comparison to the Hague Conventions, the combination of the rules on formation of the contract with those concerning the contents of the contract into one body of law is, without doubt, to be regarded as an improvement, particularly since the integration helps to avoid parallel rules [148] and solves the problem, in matters of interpretation and gap-filling,[149] of determining to what extent one law refers to the other. On the other hand, at the request of the Scandinavian countries, Parts II and III were written so that they may function independently, and states have the option to adopt, or bind themselves to adopt, the Convention either without Part II or without Part III (Article 92).

In its outlines, the 1980 Convention follows ULF, the Hague Uniform Law on the Formation of Contracts for the International Sale of Goods.[149a] It uses two consecutive constitutive manifestations of assent - offer and acceptance - as building blocks for the formation of the contract. The premise is that these manifestation of assent can be identified in the long process of negotiations in which the parties approach each other, step by step, until they have reached an agreement.

There has been no lack of criticism of this traditional concept of contract formation and its retention in the Uniform Law for International Sales.[150] The main criticism is that reliance on the external process of establishing a consensus cannot adequately cover situations where there is no doubt about the parties' agreement, even though the agreement did not result from an identifiable offer followed by a concurring acceptance.[151] However, in the majority of contracts [page 48] involving international transactions, it should be possible to identify an offer and an acceptance, particularly since it is possible to "cure" uncertainties or incongruities in the parties' oral expression by taking into account their conduct and its objective meaning (see Article 8(1) and (2) and, for the acceptance, Article 18(1)). In questions of external consensus, preference should, in any case, be given to the gap-filling rules in Article 7 rather than to an all too hasty retreat to domestic law and its rules on mistake, since the issues obviously belong within the sphere regulated by the Convention. The Convention also provides conclusive standards as far as the consensus that constitutes a contract is concerned. Articles 14 and following are not merely "fragmentary" regulations to be supplemented by applicable domestic laws that recognize other forms of consensus.[152]

By using the acceptance to determine the moment when a contract is formed (Article 23), the Convention has increased its importance in the process of contract formation. But, as in ULF, which deliberately does not fix the time when a contract is formed,[153] it may be assumed that the parties can agree to prolong the formation of the contract even after the moment fixed in Article 23, for example, by a condition precedent. In my opinion, for those provisions which make the determination of the moment of the contract's perfection legally relevant, the choice between the time set forth in Article 23 or a later time must be made by evaluating the respective provision and its legal purpose, the meaning of a condition precedent, and the circumstances of the postponement.[154]

As in the Hague Convention, the "offer" and the "acceptance" as well as the withdrawal of such declarations and the rejection of an offer are only effective if they reach the other party.[155] Article 24, like ULF Article 12(1) and the German Civil Code, provides that a "materialized" expression of intent has reached the addressee when it reaches his sphere of control - or, in more concrete terms, when it is delivered to him. Delivery should occur preferably in person, alternatively to the place of business or mailing address,[156] and finally to the habitual residence. Even though the Convention, unlike ULF Article 12(2), does not specify that the declaration must have been "intelligible" for the delivery to be effective, the requirement presumably applies to the Convention as well.[157] [page 49]

For oral declarations, however, the theory of cognizance should apply under Article 24, i.e., the declaration must have been perceived by the addressee. Whether or not an intent expressed orally or in writing to an intermediary may constitute effective delivery depends on that person's authority, a question which is determined by domestic law.[158] [page 50]

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FOOTNOTES

* The author of this book participated at the Conference as a member of the delegation from the Federal Republic of Germany. The views expressed here are personal to the author and do not necessarily represent the position of the F.R.G. or its delegation.

147a. See generally Farnsworth, Formation §§ 3-3, 3-4 (for the histocial development).

148. E.g., with respect to the sphere of application and usages.

149. Examples with regard to the Hague Conventions were the applicability of ULIS Article 17 to ULF and the question of whether notices under ULIS are effective only upon receipt.

149a. See also Dilger at 190 et seq.

150. See Huber at 445; Dölle (Schlechtriem) ULF Article 4 § 2 (for ULF).

151. Examples include the negotiations, discussed above, in which an agreement is eventually reached, but where it is not possible to determine afterwards at what point both parties legally agreed to be bound and the cases where offer and acceptance cross in the mail. See Eörsi in Lausanner Kolloquium at 44. cf. also Dölle (Schlechtriem) ULF Article 6 §§ 18-22 (concerning the Hague Conventions). One has also to consider the contract which is performed even though, because of the lack of coincident declarations of intent, it was never effectively formed. See UCC § 2-207(3).

152. This conclusively eliminates the option of saving a contract by recourse to domestic [law] where its formation does not conform to an explicit general principle of the Convention. For example, agreement evidenced by the parties' conduct but which leaves the price term open does not form a contract under CISG. In that case, the existence of a clear general principle demonstrates that there is no gap in the Convention which might be filled by a domestic law. But see Huber at 447.

153. See von Caemmerere, 29 RabelsZ 136 et seq. (1965).

154. Accord Honnold, Commentary § 178. Examples of provisions for which the time of contract formation is important are: Articles 33(c), 35(2)(b), 35(3), 42(1), 42(2), 57(2), 68 sentences 1 and 3, 71(1), 73(3), and 74 sentence 2.

155. See Articles 15(1) (offer), 15(2) (withdrawal of the offer), 16(1) (rejection of the offer), 18(2) sentence 1 (acceptance), 22 (withdrawal of the acceptance).

156. "Mailing address" means the place where mail is received, such as a mail box, but not an address that has been changed - such as by a move - and not yet corrected.

157. The means of communication which must be "appropriate in the circumstances" must also be intelligible, but Article 27 concerns only the declarations under Part III that are effective upon dispatch.

158. Cf. Secretariat's Commentary at 72 § 6.

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