1. The CHAIRMAN invited the Committee to consider article 18 [became CISG article 20 ] and the amendments thereto submitted by the United Kingdom (A/CONF.97/C.1/L.62) and by Egypt (A/CONF.97/C.1/L.93). The Bulgarian amendment (A/CONF.97/C.1/L.94) had been withdrawn.
2. Mr. FELTHAM (United Kingdom), introducing his delegation's amendment (A/CONF.97/C.1/L.62), drew attention to the explanation contained in the United Kingdom comments (A/CONF.97/8/Add.3, p.14). The proposed addition would make it clear that it was open to the offeror to specify that the period for acceptance should begin to run from a point in time different from those mentioned in paragraph 1. The offeror might, for example, state that the offer was open for six days from the date of receipt of the letter, rather than from the date shown on the letter or on the envelope.
3. Mr. HERBER (Federal Republic of Germany) considered the proposed insertion unnecessary. If the proposed words were introduced in article 18(1) [became CISG article 20(1) ], doubts might arise regarding the interpretation of such provisions as article 17(3) [became CISG article 19(3) ], which had been adopted without any such qualification but in respect of which the position was exactly the same. It was always understood that the offeror could specify a different period of time.
4. Mr. SEVÓN (Finland) said there was no doubt that the result desired by the United Kingdom representative could be arrived at with the text as it stood. It would only create confusion if the proposed words were added in article 18(1) [became CISG article 20(1) ].
5. The CHAIRMAN asked the United Kingdom representative whether he would be prepared to withdraw his amendment on the understanding that the summary record of the meeting would show that the delegations opposing the amendment did so simply because they were convinced that the desired provision was already contained in the draft as it stood.
6. Mr. FELTHAM (United Kingdom) said that he withdrew his amendment (A/CONF.97/C.1/L.62) on that understanding.
7. Mr. SHAFIK (Egypt), introducing his delegation's amendment (A/CONF.97/C.1/L.93), explained that the proposal was intended to deal with the problem which would arise if a short period of time for acceptance were specified and the period happened to coincide with a very long holiday.
8. The CHAIRMAN suggested that the proposal might proceed from a possible misunderstanding of the provisions of article 18(2) [became CISG article 20(2) ].
9. Mr. KRISPIS (Greece) stated that if the Bulgarian delegation had not withdrawn its amendment to article 18 [became CISG article 20 ] (A/CONF.97/C.1/L.94), the Greek delegation would have wholeheartedly supported it.
10. The CHAIRMAN said that in the absence of further comments, he would consider that article 18 [became CISG article 20 ] was adopted.
11. It was so agreed.
12. Article 19 [became CISG article 21 ] was adopted.
13. Article 20 [became CISG article 22 ] was adopted.
(A/CONF.97/C.1/L.70, L.78, L.89)
14. The CHAIRMAN invited the Committee to consider article 21 [became CISG article 23 ] and the amendments thereto. If there were no objection, he would take it that the Committee agreed to refer the first part of the Belgian amendment (A/CONF.97/C.1/L.89) which related to a drafting point, to the Drafting Committee.
15. It was so agreed.
16. The CHAIRMAN drew attention to the Italian amendment (A/CONF.97/C.1/L.70). In the absence of further support for the proposal in the Committee he would take it that the Committee agreed to reject the amendment.
17. It was so agreed.
18. Mr. KOPAC (Czechoslovakia), introducing his delegation's amendment, explained that the written form was important not only where the competent national legislation required it but also where the parties themselves insisted on it because they wanted to have clear proof of the conclusion of the contract and of its contents.
19. The problem which had arisen was whether the wish of one of the parties to have the contract in written form was sufficient to deprive the transaction of its validity if the other party did not comply with that requirement. It was advisable to have a clear-cut rule on the matter and his delegation's amendment accordingly specified that where the offer itself required to be accepted in writing, the acceptance was valid only if the written form was observed.
20. In reply to a question by the CHAIRMAN, Mr. KOPAC (Czechoslovakia) said that the point dealt with in his amendment was not, in his opinion, already covered by the provisions of article 11 [became CISG article 12 ].
21. Mr. KRISPIS (Greece) supported that view. If the offeror simply asked the offeree to reply in writing, article 17(2) [became CISG article 19(2) ] would apply and the issue would be whether the requirement of a reply in writing constituted a material condition or not. Article 5 [became CISG article 6 ] referred only to a contract already concluded, and not to an offer as such. A second possibility was that the offeror might invite the offeree to reply in writing, making it clear that otherwise the reply would not be effective. In that case, the reply, if not in written form, would not amount to an acceptance as defined in article 16 [became CISG article 18 ].
22. In the circumstances, he believed that the solution embodied in the Czechoslovak amendment (A/CONF.97/C.1/L.78) was correct but considered the amendment as such superfluous because the solution would be arrived at under the existing provisions of the draft.
23. Mr. SEVÓN (Finland) agreed that the amendment was unnecessary.
24. The CHAIRMAN said that in the absence of further comments, he would consider that the Committee agreed not to adopt the amendment.
25. It was so agreed.
26. Mr. DABIN (Belgium), introducing his delegation's amendment (A/CONF.97/C.1/L.89) said that it was intended to deal with a practical problem not covered by the existing provisions of the draft. It happened that the parties to a contract reached agreement without paying due attention to the problem of authorizations or licences that might be required from a third party, in the case in question a public authority. The question that then arose was whether the absence of a licence or a permit suspended the formation of the contract itself or merely its performance. The answer in that regard depended on the type of authorizations involved. The proposed amendment made the formation of the contract conditional in principle on the granting of the licence or permit.
27. Mr. FOKKEMA (Netherlands) took the view that the agreement between the parties was sufficient to form the contract but that the absence of a permit or licence would have the effects specified in the internal law of the country concerned. The matter should in his opinion be left to be regulated by the competent national law.
28. Mr. KIM (Republic of Korea) said that he could not accept the solution proposed in the Belgian amendment. In that connection, he drew attention to article 65 of the draft [became CISG article 79 ] which exempted from all liability a party failing to perform contractual obligations owing to an impediment beyond his control.
29. Mr. SZÁSZ (Hungary) remarked that there were cases in which one of the parties might take the risk of trying to obtain the necessary authorizations or permits. If he failed to do so, he would be liable for breach of contract. He could not accept the view that a contract was not concluded if an application for a necessary licence was unsuccessful. It would be more correct to say that the contract was not effective or that it could not be performed. For those reasons, he did not favour the Belgian amendment.
30. Mr. BENNETT (Australia) agreed. He noted that it would be virtually impossible to apply the rule embodied in the Belgian amendment in the case of a long-term contract for the supply of goods in several shipments spread over a period of time where separate licences were required for the export of each consignment. If a licence was refused for a particular consignment, the Belgian amendment would require the whole contract to be treated as void.
31. Mr. FRANCHINI-NETTO (Brazil) supported the Belgian amendment, which dealt with the very real problem generated by the requirement of a licence or a permit from a public authority.
32. Mr. POPESCU (Romania) considered that in such cases the contract was not effective until any required licence was obtained.
33. Mr. MEDVEDEV (USSR) said that he found the provisions of the Belgian amendment somewhat unclear. In cases in which an authorization from a public authority was required, specific provisions would be included in the contract. The question was not one that could be properly solved by means of a general provision of the kind proposed by the Belgian representative.
34. Mr. DABIN (Belgium), replying to the observations just made, said that in a case where there was formation of a contract, in spite of the fact that there was no authorization, and it could not therefore be performed, the legal position of the parties remained unclear. Moreover, article 65 [became CISG article 79 ] only applied where the contract was already concluded.
35. The CHAIRMAN noted that the majority appeared not to favour the Belgian amendment. If there were no further comments, he would take it that the Committee agreed to reject it.
36. It was so agreed.
37. Mr. SHORE (Canada), introducing his delegation's amendment to article 21 [became CISG article 23 ] (A/CONF.97/C.1/L.112) said that the new provision was considered necessary by commercial circles in his country. The rule embodied in the proposed new paragraph gave expression to what was the customary rule of trade in his country.
38. Mr. KRISPIS (Greece) suggested that it might be better to say that the contract was "considered as concluded" irrespective of whether the moment of its conclusion was determined or not.
39. Mr. SHORE (Canada) said that he would have no difficulty in accepting that subamendment.
40. Mr. STALEV (Bulgaria) said that all delegations would agree that a contract was concluded by the consent of the two parties concerned even if the time of its conclusion could not be established. The amendment under discussion was therefore superfluous.
41. Mr. SAMI (Iraq) pointed out that it was impossible to tell when the obligations of buyer and seller began to run if the moment of conclusion of a contract was not determined. He failed to see how a contract could be said to exist under those circumstances.
42. Mr. DATE-BAH (Ghana) said that the text of the draft Convention did not deal with the question whether the contract was validly formed but rather attempted to identify the point when the contract was formed. He felt the amendment was superfluous.
43. The CHAIRMAN said that in view of the limited support for the Canadian amendment he would, if there was no objection, consider it rejected.
44. It was so agreed.
45. Article 21 [became CISG article 23 ] was adopted.
46. Article 22 [became CISG article 24 ] was adopted.
Report of ad hoc working group on paragraph 1 (A/CONF.97/C.1/L. 103)
47. Mr. FELTHAM (United Kingdom), speaking on behalf of the ad hoc working group composed of Austria, Egypt, Finland, Norway, Republic of Korea, Singapore and the United Kingdom, reminded the Committee that it had been set up following the rejection of a proposal to delete the second sentence of paragraph 1. At the same time, a number of delegations had made suggestions designed to provide a more flexible sentence (A/CONF.97/C.1/SR.8). The working group was submitting two proposals in document A/CONF.97/C.1/L.103. The first proposal commended itself most, but as an alternative the Austrian proposal was also submitted for consideration. The intention of the working group's first proposal was to provide a flexible formula on the definition of what constituted a sufficiently definite proposal to be deemed an offer under the Convention. It avoided the impossible task of putting all the factors involved in the formation of contracts into a single sentence. It referred to the matters most generally mentioned by delegations as being the most important factors, namely, the goods, the quantity and the price, which a court should consider in the event of a dispute subsequently arising about the binding nature of a contract. The Austrian proposal met the desire for a less rigid formula in another way by giving examples of what should appear in a definite proposal but making no exhaustive definition.
48. Mr. DABIN (Belgium) wondered whether the working group's proposal was admissible. He thought that the rejection by the Committee of the proposal to delete the original second sentence had in effect been a decision to maintain it. He noted that the delegation of France, which had been particularly concerned to retain the existing text had not been a member of the working group. There did not appear to be much difference between the two proposals submitted by the group: they both contained a series of examples.
49. The CHAIRMAN said that after discussions lasting over 10 years, the UNCITRAL plenary had eventually adopted article 51 [became CISG article 55 ] which set out the criteria for determining the price subsequent to the conclusion of a valid contract, before it had adopted part II of the draft Convention, dealing with formation of the contract. Thus, a contradiction was apparent between the statement in article 12 [became CISG article 14 ], paragraph 1, that a fixed price was an essential factor in a definite proposal and the provision in paragraph 51 [became CISG article 55 ] of rules for fixing a price. For that reason some delegations had wanted to delete the second sentence of article 12 [became CISG article 14 ]. The present proposal was to convert it into a sentence giving examples rather than laying down rules, so that it could be maintained.
50. Miss VILUS (Yugoslavia) said that the working group's proposal was a good one and she supported it. If it was adopted, it would go far to solve the problem about the relationship between articles 12 [became CISG article 14 ] and 51 [became CISG article 55 ] which had been raised by the Asian-African Legal Consultative Committee (A/CONF.97/8/Add.5). A less rigidly worded article 12 [became CISG article 14 ] would not be in contradiction with article 51 [became CISG article 55 ]. Furthermore, parties to a contract could make it dependent on other factors of importance to them. However, she would also support the proposal to delete the reference to quantity, which had been made by the Greek representative at the Committee's eighth meeting.
51. Mr. MEDVEDEV (Union of Soviet Socialist Republics) said that his delegation wished to maintain its proposal (A/CONF.97/C.1/L.37) pending the outcome of the present discussion. The proposal favoured by the working group (A/CONF.97/C.1/L.103, paragraph 1) would not differ in its effect from the United Kingdom proposal to delete the second sentence of paragraph I (A/CONF.97/C.1/L.36). Furthermore, the wording did not make it clear whether it was necessary to indicate both quantity and price or whether one of those two would suffice. If the latter was the case, his delegation would have difficulty in supporting the proposal.
52. Mr. KRISPIS (Greece) said he agreed with those who considered that the meaning of the decision taken by the Committee at its eighth meeting had been to retain the reference of price and goods in paragraph 1. He personally favoured the deletion of the reference to quantity. The working group's proposal was tantamount to deleting the second sentence since all the elements mentioned in it were merely indicative and a proposal might be deemed sufficiently definite without referring to any of them. On the matter of price, there appeared to be a vicious circle: if the requirement as to price was very vague, then there was no contradiction with article 51 [became CISG article 55 ]; at the same time, however, it should apparently be sufficiently definite to suffice for the formation of contract. He preferred the Austrian proposal (A/CONF.97/C.1/L.103, paragraph 2).
53. Mr. GHESTIN (France) agreed that the effect of the working group's proposal would be virtually the same as deletion of the second sentence since it prescribed the mention of neither quantity nor price, which the Committee had voted to retain. It was particularly undesirable in long-term contracts, for example, for the supply of raw materials, to leave the determination of price to the courts or to one of the parties. In practice, price under those circumstances was always fixed by the stronger party. The maximum of flexibility which his delegation could support was that price should be readily determinable, if not necessarily determined.
54. Mr. ANDRUSCHIN (Byelorussian Soviet Socialist Republic) endorsed the views expressed by the Soviet representative. His delegation could support the Austrian proposal (A/CONF.97/C.1/L.103, paragraph 2) provided that the words "or implicitly" were deleted. Their inclusion would merely lead to disputes.
55. Mr. FOKKEMA (Netherlands) supported the working group's proposal which avoided the drawback in the original wording that an offer might be precise with regard to goods, quantity and price and still be too imprecise on other points to be regarded as sufficiently definite. Under some circumstances, parties might prefer to leave the determination of price to the courts but they should still retain the right to be linked by contract. He preferred the working group's proposal to the Austrian proposal because it did not use the phrase "expressly or implicitly". However, he would point out that the English and French versions of the Austrian proposal were not identical; of the two the French text was the better.
56. Mr. BECK-FRIIS (Sweden) supported the working group's proposal which made it clear that the factors mentioned in the original text of paragraph 1 were examples of factors needed to enable the offeree to decide whether or not to accept the offer.
57. Mr. VISCHER (Switzerland) thought the original text of paragraph 1 was satisfactory. There must be either an implicit or explicit mention of price to make a proposal sufficiently definite. The Committee should consider the question of the possible contradiction between articles 12 [became CISG article 14 ] and 51 [became CISG article 55 ].
58. Mr. SEVÓN (Finland) said that in the case of a freighter stranded in the Pacific with engine trouble, insistence on the determination of price before there was a valid contract for the supply of a spare part could lead to serious difficulties either for the offeror or the offeree. Price should not be made an essential element in the formation of contract: in practice, thousands of contracts were concluded without price being mentioned. His delegation could accept either of the proposals put forward by the working group.
59. Mr. STALEV (Bulgaria) said that the original text had a long history and it would be difficult to achieve a better formulation which was generally acceptable. He therefore would support it as it stood. It must however be interpreted in conjunction with article 51 [became CISG article 55 ] and if that were done, there would be no danger of situations arising such as that mentioned by the Finnish representative.
60. Mr. OLIVENCIA RUIZ (Spain) said that both the proposals submitted by the working group weakened the tenor of the original text in order to bring it into line with article 51 [became CISG article 55 ]. A number of speakers had mentioned that article and he proposed that it would be better to defer further discussion of article 12 [became CISG article 14 ] and consider it in conjunction with article 51 [became CISG article 55 ].
61. Mr. FELTHAM (United Kingdom of Great Britain and Northern Ireland) said he wished to stress that the aim of the two proposals submitted by the working group was to make the Convention more flexible; in neither case had an exhaustive definition been attempted. With regard to price, he presumed that the courts would take article 51 [became CISG article 55 ] into account in determining whether the terms on the subject of price were such as to make it possible to conclude a valid contract by acceptance.
62. Mr. MANTILLA-MOLINA (Mexico) preferred the original draft of the second sentence. The reference in the working group's proposal to "matters such as goods . . ." seemed to beg the question. The Austrian proposal was more precise and made it clear that goods, quantity and price were the necessary factors. There was a lack of co-ordination between articles 12 [became CISG article 14 ] and 51 [became CISG article 55 ] and the former should be taken up again when article 51 [became CISG article 55 ] was under consideration or, as the Spanish representative had proposed, they should be discussed jointly.
63. Mr. BONELL (Italy) endorsed the proposal that the final decision on article 12 [became CISG article 14 ] should be postponed until the Committee had considered article 51 [became CISG article 55 ].
64. Mr. MATHANJUKI (Kenya) said he favoured the original draft. With reluctance, he could support the Austrian proposal which expressed much the same idea as the original but which did not go far enough. Certain elements were necessary to make an offer sufficiently definite, in particular the goods and the manner in which the price was to be fixed. He had no strong views with regard to the mention of quantity.
65. Mr. MICHIDA (Japan) said that although he appreciated the efforts of the ad hoc working group in putting forward the joint proposal, he continued to prefer the original text. The second sentence of article 12(1) [became CISG article 14(1) ] could be seen either as a definition of the conditions under which a proposal was understood to constitute an offer, or simply as an example of such conditions. As he understood it, the joint proposal tended towards the second line of interpretation. However, he would prefer the stronger formulation of the original text.
66. Mr. DATE-BAH (Ghana) said that the object of article 12 [became CISG article 14 ] was entirely different from that of article 51 [became CISG article 55 ], and that point should be clarified. Article 12 [became CISG article 14 ] dealt with formation of the contract, and because some representatives had been concerned at the possibility of contracts being formed without any indication of price -- either explicit or implicit -- the existing text drafted provided that a contract could not be formed unless there was such an indication. Article 51 [became CISG article 55 ], on the other hand, covered the situation, peculiar to certain countries, where contracts could be validly formed even if there were no agreement on price. His delegation had always held the view that contracts could be formed only when a price could be determined, either explicitly or implicitly. He preferred the original text, which made that point clear or, failing that, the Austrian proposal. The joint proposal seemed to open up the possibility that a contract could be formed without any agreement as to price.
67. Mr. BECK-FRIIS (Sweden) said that according to the commentary, the second sentence of article 12(1) [became CISG article 14(1) ] was not intended to provide an example but to lay down a requirement. For that reason his delegation had voted for the deletion of the sentence and now supported the more flexible version proposed by the working group. The existing text of the sentence, and the statement in the commentary, would make it difficult for Sweden to ratify the formation part of the Convention.
68. Mr. FARNSWORTH (United States of America) agreed with the Swedish representative that the compromise text was an improvement. He could also accept the Austrian proposal, but stressed that the matter should be dealt with at once, and not put off until article 51 [became CISG article 55 ] was considered. The two questions were entirely separate. Since it was still contemplated that there might be two separate parts to the Convention, which would be separately adopted, it was all the more important to find a solution to article 12 [became CISG article 14 ] regardless of what was agreed on article 51 [became CISG article 55 ].
69. The CHAIRMAN said that as a majority of the Committee appeared not to favour the joint proposal in paragraph (1) of A/CONF.97/C.1/L.103, and the Austrian proposal in paragraph (2), he would, if there was no objection, consider the proposal rejected.
70. It was so agreed.
71. The CHAIRMAN invited comments on the Soviet proposal (A/CONF.97/C.1/L.37) to amend the second sentence of article 12(1) [became CISG article 14(1) ].
72. Mr. MEDVEDEV (Union of Soviet Socialist Republics) said that in order to simplify matters, he would be willing to limit his proposal to the deletion of the words "or implicitly" in the second sentence of the paragraph.
73. The CHAIRMAN said that as there appeared to be a majority against the proposal he would, if there was no objection, consider it rejected.
74. It was so agreed.
75. The CHAIRMAN said that as there appeared to be a majority against the Yugoslav proposal to delete the word "quantity" in the second sentence of article 12(1) [became CISG article 14(1) ], he would, if there was no objection, consider it rejected.
76. It was so agreed.
77. The CHAIRMAN drew attention to the proposal by the German Democratic Republic (A/CONF.97/C.1/L.95) for a new article to be added to part II.
78. Mr. PLUNKETT (Ireland) asked whether the proposal envisaged that compensation would be payable even if no contract had been concluded, or if a contract had been concluded, whether it should be payable for something other than breach of contract.
79. Mr. MASKOW (German Democratic Republic) replied that it was the essence of his proposal that compensation for expenses could be claimed even if there were no contract.
80. Mr. BONELL (Italy) strongly supported the proposal. His delegation had already submitted a proposal along similar lines. The existing text of the Convention did not take sufficiently into account cases where no contract was concluded but the parties had engaged in detailed negotiations at the precontractual stage. Such cases needed regulation because of the risk that one of the parties might abuse its position and act in such a way as to damage the interests of the other party. He thought the drafting of the proposal could be improved, notably by the deletion of the phrase "in the course of the preliminary negotiations", and also by the inclusion of a phrase to cover the situation in which the party had not necessarily had expenses, but had suffered damage. He suggested that an ad hoc working group be set up to produce an agreed text.
81. Mr. SCHLECHTRIEM (Federal Republic of Germany) sympathized with the object of the proposal but considered it much too far-reaching. Such a general clause might change some of the solutions of the draft, e.g., the provisions dealing with the obligations of the parties or with the revocability of the offer. It would touch on the problem of form requirements and would also affect matters outside the scope of the Convention such as the avoidance of the contract for errors, or the authority of agents.
82. Mr. BENNETT (Australia) said that he had great difficulty with the proposal. It referred to a failure in duty to take reasonable care, a notion that was not found anywhere else in the Convention. It was not clear what was the standard of reasonable care that was envisaged. The problem was an important one and not merely one of drafting.
83. Mr. KRISPIS (Greece) said he was inclined to support that view. He wondered whether there was any connection between the concept of reasonable care and the concept of good faith in general.
84. Mr. DABIN (Belgium) supported the proposal of the German Democratic Republic which should serve to resolve some difficult issues, e.g., the confidential nature of technological information, raised by the conclusion of international contracts where preliminary negotiations were lengthy. He admitted that the draft Convention before them did not in fact cover the pre-contractual phase other than the most standard of its aspects, the making of a specific offer and its corresponding acceptance. Although the proposal raised some difficult issues, they might be resolved by discussion in a working group.
85. Mr. DATE-BAH (Ghana) could not accept the proposal, which he saw as a further attempt to import the concept of good faith into the Convention, a concept which had caused great difficulty to the common law countries. It had been agreed as a compromise to introduce that concept into article 6 [became CISG article 7 ], but it was not appropriate in the present context.
86. The CHAIRMAN said that as there appeared to be a majority against the proposal by the German Democratic Republic (A/CONF.97/C.1/L.95), he would, if there was no objection, consider it rejected.
87. It was so agreed.
88. The CHAIRMAN suggested that the Spanish representative's proposal to revise the Spanish text in order to bring it into conformity with the text in other languages should be forwarded to the Drafting Committee.
89. It was so agreed.