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Article 14. Criteria for an Offer

TEXT OF ARTICLE 14

(1) A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price.

(2) A proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make offers, unless the contrary is clearly indicated by the person making the proposal.


OUTLINE OF ISSUES

Reproduced with permission of UNCITRAL

14A Basic criterion - intention to be bound in case of acceptance

14A1 Definiteness of key conditions

14A11 Indication of goods

14A12 Determination of quantity and price (see art. 55)

14B Proposal to one or more specific persons:

14B1 Public offers: invitation to make offer, unless clear intent to be bound

[For conflicting views on enforceability of open-price contracts, see article 55]


DESCRIPTORS

Offers


CASE ANNOTATIONS: UNCITRAL DIGEST CASES PLUS ADDED CASES

UNCITRAL has identified relevant cases in Digests containing case annotations for each article of the CISG. UNCITRAL cites 34 cases in its Digest of Art. 14 case law:

Austria        4           Hungary      2           Russian Federation        2
Belgium        1           ICC      1           Switzerland   5
France   3 Netherlands      1 United States        3
Germany      12       TOTAL:   34

Presented below is a composite list of Art. 14 cases reporting UNCITRAL Digest cases and other Art. 14 cases. All cases are listed in chronological sequence, commencing with the most recent. Asterisks identify the UNCITRAL Digest cases, commencing with the 10 May 2002 citation reported below. Cases are coded to the UNCITRAL Thesaurus.

English texts and full-text English translations of cases are provided as indicated. In most instances researchers can also access UNCITRAL abstracts and link to Unilex abstracts and full-text original-language case texts sourced from Internet websites and other data, including commentaries by scholars to the extent available.

There are scholars who believe that there are circumstances in which the UNIDROIT Principles of International Commercial Contracts may be used to interpret or supplement this Article of the CISG. See match-up of this Article with counterpart provisions of the Principles and commentary on this subject. To the extent this reasoning fits, cases on the counterpart provisions of the UNIDROIT Principles may be relevant. To the extent available, such cases may be found on the Unilex website.
 

Germany 24 July 2009 Oberlandesgericht [Appellate Court] Celle

Netherlands 21 January 2009 Rechtsbank [District Court] Utrecht ([bedrijf A] GmbH v. Quote Foodproducts B.V.)

Germany 14 January 2009 Oberlandesgericht [Appellate Court] München
 

Netherlands 5 November 2008 Rechtsbank [District Court] Arnhem (Baufix Holz- und Bauetechnik GmbH v. Eurovite Nederland)

Slovak Republic 28 October 2008 Supreme Court (Wafers case) [translation available]

Germany 27 August 2008 Oberlandesgericht [Appellate Court] Thüringer [Jena] (Laser system case)

Germany 12 June 2008 Landgericht [District Court] Landshut (Metalic slabs case) 14A [translation available]

United States 9 May 2008 U.S. District Court [Delaware] (Solae, LLC v. Hershey Canada, Inc.) 14A
 

Germany 20 December 2007 Oberlandesgericht [Appellate Court] Oldenburg (Industrial tools case) 14A [translation available]

Austria 18 December 2007 Oberlandesgericht [Appellate Court] Innsbruck (Steel bars case) [translation available]

Italy 21 November 2007 Tribunale [District Court] Rovereto (Takap B.V. v. Europlay S.r.l.)

United States 28 September 2007 Federal District Court [Michigan] (Easom Automation Systems, Inc. v. Thyssenkrupp Fabco. Corp.) 14A

Switzerland 19 June 2007 Handelsgericht [Commercial Court] Aargau (Railway rails case) [translation available]

Germany 11 June 2007 Oberlandesgericht [Appellate Court] Dresden (Airbag parts case) [translation available]

Netherlands 29 May 2007 Gerechtshof [Appellate Court] 's-Hertogenbosch [translation available]

Slovak Republic 22 May 2007 Regional Court Kosice (Plastic bottles case) [translation available]

Switzerland 27 April 2007 Tribunal cantonal [Appellate Court] Valais (Oven case) [translation available]

United States 31 January 2007 Federal District Court [Minnesota] (Travelers Property Casualty Company of America v. Saint-Gobain Technical Fabrics Canada Limited)
 

Germany 10 November 2006 Oberlandesgericht [Appellate Court] Dresden (Meat case) 14A [translation available]

Germany 19 October 2006 Oberlandesgericht [Appellate Court] München (Auto case) 14A12 [translation available]

Italy 24 August 2006 Tribunale [District Court] di Rovereto (Euroflash Impression S.a.s. v. Arconvert S.p.A.)

Slovak Republic 26 May 2006 Supreme Court (Wafers case) [translation available]

Switzerland 23 May 2006 Tribunal cantonal [Higher Cantonal Court] Valais (Suits case) [translation available]

Germany 28 April 2006 Landgericht [District Court] Dresden (Meat case)

Russia 13 April 2006 Arbitration Award 105/2005 14A [translation available]

Russia 7 March 2006 Arbitration Award 37/2005 [translation in process]

Slovak Republic 27 February 2006 District Court Nitra (L.-K S.r.l. v. N. S.r.l.) [translation available]

Poland 27 January 2006 Supreme Court (Metallurgical sand case) [translation available]
 

Switzerland 22 December 2005 Handelsgericht [Commercial Court] Zürich (Retail fashion clothes case) [translation available]

China 9 November 2005 CIETAC Arbitration Award [CISG/2005/04] (DVD machines case) 14A [translation available]

Canada 28 October 2005 Superior Court of Justice, Ontario (Chateau des Charmes Ltd v. Sabaté USA Inc. et al.)

Slovak Republic 20 October 2005 Supreme Court (Polyethelene case) 14A [translation available]

Canada 6 October 2005 Canadian International Trade Tribunal (Cherry Stix Ltd. v. President of the Canada Borders Service Agency)

China 15 September 2005 CIETAC Arbitration Award [CISG 2005/15] (Wool and Wooltop case) 14A [translation available]

Austria 31 August 2005 Oberster Gerichtshof [Supreme Court] (Tantalum case) [translation available]

Austria 8 August 2005 Oberlandesgericht [Appellate Court] Linz (Spacers for insulation glass case) [translation available]

Germany 3 August 2005 Landgericht [District Court] Neubrandenburg (Pitted sour cherries case) 14A1 [translation available]

China 13 June 2005 CIETAC Arbitration Award [CISG 2005/12] (Industrial general equipment case) 14A [translation available]

Germany 13 April 2005 Landgericht [District Court] Bamberg (Furnishings case) 14A [translation available]

Switzerland 5 April 2005 Bundesgericht [Supreme Court] 14A [translation available]

Austria 23 March 2005 Oberlandesgericht [Appellate Court] Linz (Conveyor band case) [translation available]

United States 19 March 2005 Federal District Court [New York] (Genpharm Inc. v. Pliva-Lachena A.S.) 14A12

Netherlands 10 February 2005 Netherland Arbitration Institute (interim award) 14A [English text]

Spain 31 January 2005 Audiencia Provincial [Appellate Court] Cuenca (Live calves case) [translation available]

Belgium 25 January 2005 Rechtbank van Koophandel [District Court] Tongeren (Scaforn International BV & Orion Metal BVBA v. Exma CPI SA) [translation available]
 

Austria 14 December 2004 Oberster Gerichtshof [Supreme Court] 14A [translation available]

Switzerland 2 December 2004 Kantonsgericht [District Court] Zug (Dextrose case) 14A [translation available]

Belgium 8 November 2004 Hof van Beroep [Appellate Court] Gent 14A [translation available]

Switzerland 3 November 2004 Tribunal Cantonal [Appellate Court] [translation available]

Switzerland 11 October 2004 Kantonsgericht [Canton Court] Freiburg 14A1 [translation available]

Germany 6 October 2004 Oberlandesgericht [Appellate Court] Frankfurt

Germany 27 July 2004 Landgericht [District Court] Kiel (Fat for frying case) [translation available]

Germany 20 July 2004 Oberlandesgericht [Appellate Court] Karlsruhe (Shoes case) [translation available]

Switzerland 29 April 2004 Handelsgericht [Commercial Court] St. Gallen [translation available]

Germany 21 April 2004 Oberlandesgericht [Appellate Court] Düsseldorf [15 U 88/03] [translation available]

Russia 9 April 2004 Arbitration Award 129/2003 14A1 [translation available]

Slovak Republic 29 March 2004 Regional Court Zilina (Polyethelene case) 14A [translation available]

United States 29 March 2004 U.S. District Court [Pennsylvania] (Amco Ukrservice v. American Meter Company)

Germany 30 January 2004 Oberlandesgericht [Appellate Court] Düsseldorf [translation available]

Germany 8 January 2004 Landgericht [District Court] Trier [translation available]
 

Austria 17 December 2003 Oberster Gerichtshof [Supreme Court] 14A [translation available]

Switzerland 11 December 2003 Kantonsgericht [District Court] Zug [detailed abstract available]

China 17 September 2003 CIETAC Arbitration Award [CISG 2003/14] (Australia cotton case) [translation available]

France 10 September 2003 Cour d’appel [Appellate Court] Paris 14A1 [translation available]

Switzerland 19 August 2003 Tribunal Cantonal [Appellate Court] Valais [translation available]

Switzerland 4 August 2003 Bundesgericht [Federal Supreme Court] 14A [translation available]

Germany 25 July 2003 Oberlandesgericht [Appellate Court] Düsseldorf [translation available]

China 7 July 2003 CIETAC Arbitration Award [CISG 2003/18] (Stroller and diaper case) [translation available]

United States 5 May 2003 U.S. Circuit Court of Appeals [9th Cir.] (Chateau des Charmes Wines v. Sabate USA) 14A
 

United States 13 December 2002 California Court of Appeal (Regency Wines, Inc. v. Champagne Montaudon)

Switzerland 11 November 2002 Cour de Justice [Appellate Court] Genève (Iron concretes and steel bars case) [translation available]

Switzerland 13 September 2002 Cour de Justice [Appellate Court] Genève [translation available]

United States 21 August 2002 U.S. District Court [Southern Dist. NY (Geneva Pharmaceuticals Tech. Corp. v. Barr Labs. Inc.) 14A1

* United States 10 May 2002 U.S. District Court [Southern Dist. NY] (Geneva Pharmaceuticals Tech Corp. v. Barr Labs. Inc.) 14A1

Germany 11 April 2002 Amtsgericht [Lower Court] Viechtach [translation available]

Switzerland 11 April 2002 Tribunal Cantonal [Appellate Court] Vaud

Austria 7 March 2002 Oberlandesgericht [Appellate Court] Graz 14A [translation available]

Austria 14 January 2002 Oberster Gerichtshof [Supreme Court] [translation available]
 

Germany 21 December 2001 Landgericht [District Court] Hamburg (Natural stones case) 14A [translation available]

Germany 12 November 2001 Oberlandesgericht [Appellate Court] Hamm (Memory module case) 14A [translation available]

Germany 31 October 2001 Bundesgerichtshof [Federal Supreme Court] 14A1 [translation available]

Belgium 10 July 2001 Rechtbank van Koophandel [Commercial Court] Oudenaarde (Textiles case) 14A [translation available]

Germany 15 February 2001 Oberlandesgericht [Appellate Court] Düsseldorf
 

* Germany 30 August 2000 Oberlandesgericht [Appellate Court] Frankfurt 14B [translation available]

Austria 15 June 2000 Oberlandesgericht [Appellate Court] Graz 14B [translation available]

* Germany 9 May 2000 Landgericht [District Court] Darmstadt [translation available]

* Belgium 13 April 2000 Rechtbank van Koophandel [District Court]

Germany 13 April 2000 Amtsgericht [Lower Court] Duisburg [translation available]

Austria 9 March 2000 Oberster Gerichtshof [Supreme Court] 14A ; 14A1 [translation available]

* Germany 28 February 2000 Oberlandesgericht [Appellate Court] Stuttgart [translation available]

ICC 2000 International Court of Arbitration, Case 10329 14A [English text]
 

* United States 7 December 1999 Federal District Court [Illinois] (Magellan International v. Salzgitter Handel) 14A

Germany 3 December 1999 Oberlandesgericht [Appellate Court] München [translation available]

Germany 28 October 1999 Oberlandesgericht [Appellate Court] Braunschweig [translation available]

Germany 27 April 1999 Oberlandesgericht [Appellate Court] Naumburg [translation available]

Germany 19 March 1999 Landgericht [District Court] Zwickau

Austria 24 February 1999 Oberlandesgericht [Appellate Court] Graz (Military weapons case) [translation added]
 

China 25 December 1998 CIETAC Arbitration Award [CISG/1998/11] (Pig iron case) 14A12 [translation available]

Switzerland 30 November 1998 Handelsgericht [Commercial Court] Zürich [translation available]

Germany 15 November 1998 Landgericht [District Court] Karlsruhe 14A1 [translation available]

Germany 2 September 1998 Oberlandesgericht [Appellate Court] Celle [translation available]

Austria 18 June 1998 Landesgericht [District Court] Wels

Germany 24 March 1998 Landgericht [District Court] Berlin (Knitwear case) [translation available]

Japan 19 March 1998 Tokyo Chiho Saibansho [District Court]
 

* Netherlands 7 November 1997 Hoge Raad [Supreme Court] 14A

* Switzerland 26 September 1997 Handelsgericht [Commercial Court] Aargau (Cutlery case) 14A1 [translation available]

Germany 31 July 1997 Landgericht [District Court] Göttingen

* Germany 4 July 1997 Oberlandesgericht [Appellate Court] Hamburg 14A1 [translation available]

* Switzerland 3 July 1997 Bezirksgericht [District Court] St. Gallen [translation available]

Germany 25 June 1997 Oberlandesgericht [Appellate Court] Karlsruhe [translation available]

* United States 21 July 1997 Federal District Court [New York] (Helen Kaminski v. Marketing Australian Products)

China 4 July 1997 CIETAC Arbitration Award [CISG/1997/19] (Gear processing machine case) [translation available]

* Austria 18 June 1997 Oberster Gerichtshof [Supreme Court] 14A [translation available]

Hungary 17 June 1997 Fovárosi Bíróság [Metropolitan Court]

China 23 April 1997 CIETAC Arbitration Award [CISG/1997/08] (Automobile case) 14A [translation available]

Germany 17 April 1997 Landgericht [District Court] Frankenthal

Switzerland 11 April 1997 Bezirksgericht [District Court] Unterrheintal

* Austria 20 March 1997 Oberster Gerichtshof [Supreme Court] (Mono ammonium phosphate case) 14A1 [translation available]

* Switzerland 20 February 1997 Bezirksgericht [District Court] Saane [translation available]

ICC January 1997 International Court of Arbitration, Case 8786 [English text]
 

Germany 23 June 1996 Amtsgericht [Lower Court] München [translation available]

Austria 11 June 1996 Handelsgericht [Commercial Court] Wien (Vienna)

* Germany 15 March 1996 Oberlandesgericht [Appellate Court] Frankfurt [Benetton II]

* Germany 28 February 1996 Landgericht [District Court] Oldenburg (Egg case) [translation available]

* Austria 6 February 1996 Oberster Gerichtshof [Supreme Court] 14A12 [translation available]
 

* Switzerland 19 December 1995 Obergericht [Appellate Court] Thurgau (Cloth case) 14A [translation available]

* Switzerland 5 December 1995 Handelsgericht [Commercial Court] St. Gallen (Computer hardware devices case) 14A [translation available]

Austria 5 October 1995 Oberlandesgericht [Appellate Court] Linz

Germany 27 July 1995 Oberlandesgericht [Appellate Court] Rostock [translation available]

* Germany 23 May 1995 Oberlandesgericht [Appellate Court] Frankfurt [translation available]

* Germany 12 May 1995 Amtsgericht [Lower Court] Alsfeld

* France 26 April 1995 Cour d’appel [Appellate Court] Grenoble (Alain Veyron v. Ambrosio) [translation available]

* Germany 31 March 1995 Oberlandesgericht [Appellate Court] Frankfurt [translation available]

* Germany 8 March 1995 Oberlandesgericht [Appellate Court] München [translation available]

* Russia 3 March 1995 Arbitration award 304/1993[translation available]

* Russia 3 March 1995 Arbitration award 309/1993 14A12

* Germany 8 February 1995 Landgericht [District Court] München [translation available]

* France 4 January 1995 Cour de Cassation [Supreme Court] 14A12 [translation available]

* ICC 1995 International Court of Arbitration, Case 8324 14A12 [translation available]
 

* Austria 10 November 1994 Oberster Gerichtshof [Supreme Court] 14A1 [translation available]

Austria 8 November 1994 Landesgericht [District Court] Wels

Germany 2 August 1994 Landgericht [District Court] München

Germany 14 June 1994 Amtsgericht [Lower Court] Nordhorn

* Germany 4 March 1994 Oberlandesgericht [Appellate Court] Frankfurt 14A12 [translation available]
 

Germany 1 December 1993 Landgericht [District Court] Hanover

Germany 1 December 1993 Landgericht [District Court] Memmingen

Austria 4 March 1993 Landesgericht [District Court] Graz 14A1
 

Germany 22 December 1992 Landgericht [District Court] Giessen

* Hungary 25 September 1992 Legfelsobb Bíróság [Supreme Court] 14A11 ; 14A12 [translation available]

* France 22 April 1992 Cour d'appel [Appellate Court] Paris 14A12

* Hungary 24 March 1992 Fovárosi Bíróság [Metropolitan Court] 14A

Hungary 10 January 1992 Fovárosi Bíróság [Metropolitan Court] 14A11 ; 14A12 [translation available]
 

Germany 2 September 1991 Oberlandesgericht [Appellate Court] Celle
 

* Germany 26 September 1990 Landgericht [District Court] Hamburg


UNCITRAL CASE DIGEST

The UNCITRAL Digest of case law on the United
Nations Convention on the International Sale of Goods
[*]

A/CN.9/SER.C/DIGEST/CISG/14 [8 June 2004]
Reproduced with the permission of UNCITRAL

[Part II. Formation of the Contract
-    Permitted reservations by Contracting States
-    Exclusivity of Part II
-    Validity of contract: formal requirements
-    Incorporating standard terms
-    Commercial letters of confirmation
-    Interpretation of statements or conduct

Text of Article 14
Digest of Article 14 case law
-    Addressees of proposal
-    Indication of intent to be bound by acceptance
-    Definiteness of proposal
-    Indication of the goods
-    Fixing or determining the quantity
-    Fixing or determining the price
-    Relevance of price formula in article 55]

PART  II. FORMATION OF THE CONTRACT

1. Part II of the Sales Convention sets out rules for the formation of an international sales contract. Under these rules, a contract is concluded when an acceptance of an offer becomes effective. CISG art. 23. The first four articles of Part II (arts. 14-17) deal with the offer, while the following five articles (arts. 18-22) deal with the acceptance. The final two articles (arts. 23-24) address the time when a contract is concluded and when a communication "reaches" the addressee, respectively. One court has described these provisions as embodying "a liberal approach to contract formation and interpretation, and a strong preference for enforcing obligations and representations customarily relied upon by others in the industry".[1]

2. A number of decisions have applied the offer-acceptance paradigm of Part II to proposals to modify a sales contract (art. 29)[2] or to proposals to terminate the contract [3] Several decisions have distinguished between the conclusion of the sales contract and an agreement to arbitrate disputes arising under that contract.[4]

Permitted reservations by Contracting States

3. A Contracting State may declare that it is not bound by Part II of the Sales Convention. CISG art. 92. Denmark, Finland, Iceland, Norway and Sweden have made this declaration. A majority of decisions apply the forum's rules of private international law to determine whether the parties have concluded a contract. The relevant national law may be either domestic contract law (which will be the case if the applicable national law is that of a declaring State)[5] or the Convention (which will be the case if the applicable national law is that of a Contracting State).[6] Several decisions do not go through a private international law analysis. One decision expressly rejects a private international law analysis and instead applies the principles underlying Part II of the Convention.[7] Several decisions apply Part II, without analysis, to a contract between a party with a place of business in a Contracting State that has made a declaration and one that has a place of business in a Contracting State that has not done so.[8] In the absence of a dispute about whether a contract had been concluded, one court declined to analyze the effect of article 92.[9]

4. Two or more Contracting States that have the same or closely-related legal rules on the formation of a sales contract may declare that the Convention is not to apply to the formation of sales contracts where the parties have their places of business in these States. CISG art. 94(1). A Contracting State may also make such a declaration if it has the same or closely-related legal rules as those of a non-Contracting State. CISG art. 94(2). Such a non-Contracting State may, when it becomes a Contracting State, declare that the Convention shall continue to be inapplicable to the formation of sales contracts with persons in the earlier-declaring Contracting State. CISG art. 94(3). Denmark, Finland, Norway and Sweden made declarations with respect to each other and also with Iceland. When Iceland became a Contracting State it declared that it would continue this arrangement.

Exclusivity of Part II

5. Part II sets out rules for the conclusion of a contract. Part II does not state that compliance with its provisions is the exclusive way to conclude an enforceable contract governed by the Sales Convention. Article 55 in Part III of the Convention recognizes that a contract may be validly concluded even though it does not expressly or implicitly fix or make provision for determining the price. Several cases have examined the relation of article 55 to the requirement in article 14 that a proposal to conclude a contract must expressly or implicitly fix or make provision for determining the price. See Commentary on articles 14 and 55.

6. The parties' conduct may establish that they intended a mutually-binding arrangement even if Part II does not govern. One court, recognizing that Finland had made an article 92 declaration, nevertheless applied the principles underlying the Convention rather than national contract law and found that the conduct of a Finnish seller and a German buyer evidenced an enforceable contract.[10]

7. Several decisions have recognized that one party's promise may be enforced under the applicable national law doctrine of promissory estoppel. One court found that a supplier would be bound by its promise to supply raw materials when in reliance on this promise the promisee sought and received administrative approval to manufacture generic drugs.[11] Another court considered a similar claim but concluded that the party seeking to enforce a promise had not established its case.[12]

Validity of contract; formal requirements

8. Part II governs the formation of the contract of sale but, except as otherwise expressly provided by the Convention, is not concerned with the validity of the contract or any of its provisions or of any usage. CISG art. 4(a). Consequently, domestic law applicable by virtue of the rules of private international law will govern issues of validity. See also Commentary on article 4.

9. The Convention expressly provides that a contract of sale need not be concluded in writing and is not subject to any other requirement as to form. CISG art. 11. A Contracting State may declare that this rule does not apply where any party has his place of business in that State. CISG arts. 12, 96. See also Commentary on articles 11 and 12.

10. Part II is silent on the need for "consideration" or a "causa". One case found, applying domestic law under article 4(a) of the Convention, that a buyer seeking to enforce a contract had alleged sufficient facts to support a finding that there was "consideration" for an alleged contract.[13]

Incorporating standard terms

11. The Convention does not include special rules addressing the legal issues raised by the use of standard contract terms prepared in advance for general and repeated use.[14] Some Contracting States have adopted special legal rules on the enforceability of standard terms.[15] Notwithstanding these special rules, a majority of courts apply the provisions of Part II of the Convention and its rules of interpretation in article 8 to determine whether the parties have agreed to incorporate standard terms into their contract.[16] Several of these decisions expressly conclude that the Convention displaces recourse to national law on the issue of whether the parties have agreed to incorporate standard terms into their contract.[17] Nevertheless, several courts have applied the special national legal rules to determine the enforceability of standard terms in contracts otherwise governed by the Convention,[18] while several others have noted that the standard terms would be enforceable under either national law or the Convention.[19] Several decisions recognize, however, that the Convention does not govern the substantive validity of a particular standard term—a matter left to applicable national law by virtue of article 4(a).[20]

12. Several decisions rely on the Convention's rules on interpretation to require the user of standard terms to send a copy of the terms to the other party or otherwise make them reasonably available.[21] One decision expressly rejects the proposal that a party has an obligation to search out standard terms referred to by the other party on the grounds that to do so would contradict the principle of good faith in international trade and the parties' general obligations to cooperate and to share information.[22] Another decision relies on article 24 to conclude that standard terms do not "reach"  the addressee unless in a language agreed to by the parties, used by the parties in their prior dealings, or customary in the trade.[23] Several other decisions give no effect to standard terms when they are not translated into the language of the other party.[24] Another decision refers to the "general principle" that ambiguities in the standard terms are to be interpreted against the party relying upon them.[25]

Commercial letters of confirmation

13. In a few Contracting States there is a recognized usage of trade that gives effect to a letter of confirmation sent by a merchant to another merchant notwithstanding the recipient's silence. The commercial letter of confirmation may conclude the contract or, if the contract had already been concluded, establish the terms of the contract in the absence of intentional misstatement by the sender or prompt objection to its terms. Courts have disagreed about the effect to be given to these usages when the transaction is governed by the Convention. Several decisions have refused to give effect to a local trade usage that would give effect to the letter of confirmation because the usage was not international.[26] However, one court found, without analysis of the scope of the trade usage, that the recipient was bound,[27] and another court gave effect, under both paragraphs (1) and (2) of article 9, to the usage when the seller and buyer each had its place of business in a jurisdiction that recognized such a usage.[28] Another court applied the formation provisions to find that the recipient of the letter of confirmation had accepted its terms by accepting the goods.[29] Yet another court concluded that the Convention was silent on the effect of a confirmation letter that incorporated standard terms and therefore the court applied domestic law to determine whether the standard terms were applicable.[30] Even if a letter of confirmation is not given full effect it may be relevant for the evaluation of evidence of the parties' intent.[31]

Interpretation of statements or conduct

14. person may make a proposal for concluding a contract or may accept such a proposal by a statement or by conduct. CISG arts. 14(1), 18(1). Numerous cases apply the rules of article 8 to the interpretation of a party's statements or other conduct before the conclusion of a contract.[32]

15. Several courts have had to identify the party proposing to conclude a contract governed by the Convention. They have usually done so by interpreting the statements or conduct of the parties in accordance with article 8 of the Convention.[33] The issue may also arise when an agent acts for a principal.[34] Whether a person is entitled to bring a legal action to enforce contractual obligations is a distinct issue.[35]

ARTICLE 14

      (1) A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price.

      (2) ThA proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make offers, unless the contrary is clearly indicated by the person making the proposal.

DIGEST OF ARTICLE 14 CASE LAW

1. Article 14 sets out the conditions on which a proposal to conclude a contract is an offer that, if accepted by the addressee, will lead to the conclusion of a contract under the Convention. This article has been applied to determine whether a statement or other conduct rejecting an offer (see art. 19(1)) constitutes a counter-offer.[36] The principles set out in this article — the person making the proposal must intend to be bound; a proposal must be sufficiently definite — have been applied, together with those in other articles of Part II, notwithstanding that Part II was not applicable by virtue of a declaration under article 92.[37] For discussion of whether Part II of the Convention provides the exclusive way to conclude a contract governed by the Convention, see the Introduction to Part II.

2. The identity of the person making a proposal or of the person to which the proposal is made may be uncertain. Decisions have applied article 14 and the rules of interpretation in article 8 to this issue.[38]

Addressees of proposal

3. The first sentence of paragraph (1) provides that proposals are to be addressed to one or more specific persons. Under the applicable law of agency, the maker of an offer addressed to an agent may be bound by the acceptance of the principal.[39] One decision states that article 14 (1) rather than the law of agency governs the issue of identifying whether a manufacturer or its distributor is party to the contract.[40]

4. Paragraph (2) provides for proposals other than ones addressed to one or more specific persons. There are no reported decisions applying paragraph (2).

Indication of intent to be bound by acceptance

5. The first sentence of paragraph (1) provides that a proposal to conclude a contract must indicate the intention of the proponent to be bound if the addressee accepts the proposal. The intent may be shown by interpretation of a statement or act in accordance with paragraphs (1) or (2) of article 8.[41] By virtue of paragraph (3) of article 8, this intent may be established by all the relevant circumstances, including statements or other conduct during negotiations and the conduct of the parties after conclusion of the contract[42] A buyer was found to have indicated its intent to be bound when it sent the seller an "order" that stated that "we order" and "immediate delivery".[43] A communication in the English language sent by a French seller to a German buyer was interpreted by the court as expressing the seller's intent to be bound.[44] Where both parties had signed an order indicating a computer programme and its price, the buyer was unable to establish that the order merely indicated an intention to indicate details of a contract to be concluded at a later time rather than an intention to conclude the contract by the order.[45] Another buyer's order specifying two sets of cutlery and the time for delivery was likewise interpreted as indicating the intent to be bound in case of acceptance notwithstanding buyer's argument that it had merely proposed to conclude future purchases.[46]

Definiteness of proposal

6. To be deemed an offer, a proposal to conclude a contract not only must indicate an intent to be bound by an acceptance but also must be sufficiently definite.[47] The second sentence of paragraph (1) provides that a proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price. Practices established between the parties may supply the details of quality, quantity and price left unspecified in a proposal to conclude a contract.[48] Decisions have applied the rules of interpretation in article 8 to determine whether a communication or act is sufficiently definite. One court has concluded that, if the intent to be bound by an acceptance is established, a proposal is sufficiently definite notwithstanding the failure to specify the price.[49]

7. Article 14 does not require that the proposal include all the terms of the proposed contract.[50] If, for example, the parties have not agreed on the place of delivery [51] or the mode of transportation [52] the Convention may fill the gap.

Indication of the goods

8. To be sufficiently definite under the second sentence of paragraph (1) a proposal must indicate the goods. There is no express requirement that the proposal indicate the quality of the goods. One court found that a proposal to buy "chinchilla pelts of middle or better quality" was sufficiently definite because a reasonable person in the same circumstances as the recipient of the proposal could perceive the description to be sufficiently definite.[53] Another court assumed that an offer to purchase monoammoniumphosphate with the specification "P 205 52% +/- 1%, min 51%" was a sufficiently definite indication of the quality of the goods ordered.[54] If, however, the parties are unable to agree on the quality of the goods ordered there is no contract.[55]

Fixing or determining the quantity

9. To be sufficiently definite under the second sentence of paragraph (1) a proposal must expressly or implicitly fix or make provision for determining the quantity. A proposal was found to be sufficiently definite in the following cases: a proposal that refers only to "700 to 800 tons" of natural gas because usage in the natural gas trade so provides;[56] "a greater number of Chinchilla furs" because the buyer accepted the furs tendered without objection;[57] "three truck loads of eggs" because the other party reasonably understood or ought to have understood that the trucks should be filled to their full capacity;[58] "20 truck loads of tinned tomato concentrate" because the parties understood the meaning of these terms and their understanding was consistent with the understanding of the trade;[59] "10,000 tons +/- 5%".[60] A court has found that a buyer's proposal which specified no specific quantity was sufficiently definite because under an alleged customary usage the proposal would be construed as an offer to purchase the buyer's needs from the offeree.[61] Another court found that the seller's delivery of 2,700 pairs of shoes in response to the buyer's order of 3,400 pairs was a counter-offer accepted by the buyer when it took delivery and the contract was therefore concluded for only 2,700 pairs.[62]

10. A distribution agreement specifying terms on which the parties would do business and obliging the buyer to order a specified amount was found not sufficiently definite because it did not state a specific quantity.[63]

Fixing or determining the price

11. To be sufficiently definite under the second sentence of paragraph (1) a proposal must expressly or implicitly fix or make provision for determining not only the quantity but also the price. A proposal was found to be sufficiently definite in the following cases: a proposal to sell pelts of varying quality "at a price between 35 and 65 German Marks for furs of medium and superior quality" because the price could be calculated by multiplying the quantity of each quality by the relevant price;[64] the price for similar goods in a previous contract between the parties supplied the price for a transaction in which there was no specific agreement on price because the parties had established a course of dealing;[65] a proposal that the prices are to be adjusted to reflect market prices;[66] agreement on a provisional price to be followed by the definitive price after the buyer resold the goods to exclusive final buyer because such an arrangement is regularly observed in the trade.[67]

12. The following proposals were found to be insufficiently definite: a proposal that incorporated several alternatives but did not indicate a proposed price for some elements of the alternative proposals;[68] an agreement that the parties would agree on the price of additional goods ten days before the new year.[69]

13. One court has concluded that if the intent to be bound by an acceptance is established a proposal is sufficiently definite notwithstanding the failure to specify the price.[70]

Relevance of price formula in article 55

14. Article 14 states that a proposal to conclude a contract issufficiently definite if it "fixes or makes provision for determining" the price. Article 55 provides a price formula. The price supplied by article 55 is "the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned."

15. Most decisions have declined to apply article 55.[71] Several have concluded that article 55 was not applicable because the parties had expressly or implicitly fixed or made provision for determining the price, thereby satisfying the definiteness requirement set out in article 14(1).[72] One tribunal found that where the parties had agreed to fix the price at a later time but had not done so, the proposal was not sufficiently definite under article 14(1) and that article 55 was not applicable because of the parties' agreement to fix the price at a later time.[73] In another case where the proposal to conclude a contract failed to fix the price, the court declined to apply article 55 to fix the price because there was no market price for the airplane engines that the parties were negotiating about.[74] Another court also found that, to the extent the price formula of article 55 might be applicable, the parties had derogated from that formula by their agreement.[75]

16. One court has looked to article 55 when it enforced the parties' agreement notwithstanding that they had not fixed the price in their original negotiations. In that case, the court stated that the price set out in a corrected invoice issued by the seller at the request of the buyer and to which the buyer did not object was to be interpreted as the price charged under comparable circumstances in the trade concerned as provided in the article 55 formula.[76]


FOOTNOTES

* The present text was prepared using the full text of the decisions cited in the Case Law on UNCITRAL Texts (CLOUT) abstracts and other citations listed in the footnotes. The abstracts are intended to serve only as summaries of the underlying decisions and may not reflect all the points made in the digest. Readers are advised to consult the full texts of the listed court and arbitral decisions rather than relying solely on the CLOUT abstracts.

[Citations to cisgw3 case presentations have been substituted [in brackets] for the case citations provided in the UNCITRAL Digest. This substitution has been made to facilitate online access to CLOUT abstracts, original texts of court and arbitral decisions, and full text English translations of these texts (available in most but not all cases). For citations UNCITRAL had used, go to <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.]

1. [UNITED STATES Geneva Pharmaceuticals Tech. Corp. v. Barr Labs. Inc. Federal District Court [New York] 10 May 2002, available online at <http://cisgw3.law.pace.edu/cases/020510u1.html>].

2. CLOUT case No. 251 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 30 November 1998, available online at <http://cisgw3.law.pace.edu/cases/981130s1.html>] (see full text of the decision); CLOUT case No. 347 [GERMANY Oberlandesgericht [Court] Dresden 9 July 1998, available online at <http://cisgw3.law.pace.edu/cases/980709g1.html>]; CLOUT case No. 193 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 10 July 1996, available online at <http://cisgw3.law.pace.edu/cases/960710s1.html>]; CLOUT case No. 133 [GERMANY Oberlandesgericht [Appellate Court] München 8 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950208g1.html>] (see full text of the decision); CLOUT case No. 203 [FRANCE Cour d'appel [Appellate Court] Paris 13 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951213f1.html>].

3. CLOUT case No. 120 [GERMANY Oberlandesgericht [Appellate Court] Köln 22 February 1994, available online at <http://cisgw3.law.pace.edu/cases/940222g1.html>]; [CHINA CIETAC Arbitration Award award No. 75 of 1 April 1993; available at <http://cisgw3.law.pace.edu/cases/930401c1.html>].

4. [SPAIN Tribunal Supremo [Supreme Court] 26 May 1998, available online at <http://cisgw3.law.pace.edu/cases/980526s4.html>] (conclusion of sales contract established but not agreement to arbitrate); [SPAIN Tribunal Supremo [Supreme Court] 17 February 1998, available online at <http://cisgw3.law.pace.edu/cases/980217s4.html>] (conclusion of sales contract established under Sales Convention but agreement to arbitrate not established under 1958 New York Convention).

5. [FINLAND [Appellate Court] Turku Hovioikeus 12 April 2002, available online at <http://cisgw3.law.pace.edu/cases/020412f5.html>]; (transaction between Finnish seller and German buyer; Finnish law applicable); CLOUT case No. 143 [HUNGARY Fovárosi Biróság [Metropolitan Court] Budapest 21 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960521h1.html>] (transaction between Swedish seller and Hungarian buyer; Swedish law applicable); CLOUT case No. 228 [GERMANY Oberlandesgericht [Appellate Court] Rostock 27 July 1995, available online at <http://cisgw3.law.pace.edu/cases/950727g1.html>] (transaction between Danish seller and German buyers; Danish law applicable). See also CLOUT case No. 419 [UNITED STATES Mitchell Aircraft Spares v. European Aircraft Service Federal District Court [Illinois] 27 October 1998, available online at <http://cisgw3.law.pace.edu/cases/981027u1.html>] (transaction between Swedish seller and US buyer; although US state law would apply to contract formation, the issue before the court was whether domestic parol evidence rule excluded testimony and art. 8(3) -- in Part I -- preempted that rule).

6. CLOUT case No. 309 [DENMARK Østre Landsret [Eastern Appellate Court] 23 April 1998, available online at <http://cisgw3.law.pace.edu/cases/980423d1.html>] (transaction between Danish seller and French buyer; French law applicable); CLOUT case No. 301 [ICC Court of Arbitration, case No. 7585 of 1992, available online at <http://cisgw3.law.pace.edu/cases/927585i1.html>] (transaction between Italian seller and Finnish buyer; Italian law applicable).

7. CLOUT case No. 134 [GERMANY Oberlandesgericht [Appellate Court] München 8 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950308g1.html>] (contract between Finnish seller and German buyer).

8. CLOUT case No. 362 [GERMANY Oberlandesgericht [Appellate Court] Naumburg 27 April 1999, available online at <http://cisgw3.law.pace.edu/cases/990427g1.html>] (contract between Danish seller and German buyer) (see full text of the decision); [CHINA Skandinaviska v. Hunan Co. [Chansha Intermediate People's Court] 18 September 1995, available online at <http://cisgw3.law.pace.edu/cases/950918c1.html>] (negotiations between Chinese seller and Swedish buyer); CLOUT case No. 121 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 4 March 1994, available online at <http://cisgw3.law.pace.edu/cases/940304g1.html>] (negotiations between German seller and Swedish buyer).

9. CLOUT case No. 201 [SWITZERLAND Richteramt [District Court] Laufen Berne 7 May 1993, available online at <http://cisgw3.law.pace.edu/cases/930507s1.html>] (contract between Finnish seller and German buyer) (see full text of the decision). See also [DENMARK Højesteret [Supreme Court] 15 February 2001, available online at <http://cisgw3.law.pace.edu/cases/010215d1.html>] (transaction between Italian seller and Danish buyer; issue of whether court had jurisdiction resolved by reference to art. 31).

10. CLOUT case No. 134 [GERMANY Oberlandesgericht [Appellate Court] München 8 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950308g1.html>].

11. [UNITED STATES Geneva Pharmaceuticals Tech. Corp. v. Barr Labs. Inc. Federal District Court [New York] 21 August 2002, available online at <http://cisgw3.law.pace.edu/cases/020821u1.html>] (accepting that claim stated an enforceable cause of action for promissory estoppel when it alleged breach of "(1) a clear and definite promise, (2) the promise is made with the expectation that the promisee will rely on it, (3) the promisee in fact reasonably relied on the promise, and (4) the promisee suffered a definite and substantial detriment as a result of the reliance").

12. CLOUT case No. 173 [HUNGARY Fovárosi Biróság [Metropolitan Court] Budapest 17 June 1997, available online at <http://cisgw3.law.pace.edu/cases/970617h1.html>] (considering and rejecting a claim that there had been a breach of promise that would be enforceable if the promise reasonably induced the other party to change its position in reliance on the promise).

13. [UNITED STATES Geneva Pharmaceuticals Tech. Corp. v. Barr Labs. Inc. Federal District Court [New York] 10 May 2002, available online at <http://cisgw3.law.pace.edu/cases/020510u1.html>] (quoting definition of consideration as "bargained-for exchange of promises or performance").

14. For a definition of "standard terms" see art. 2.19(2) of the UNIDROIT Principles of International Commercial Contracts (1994).

15. See, e.g., the German Gesetz zur Regelung des Rechts der Allgemeinen Geschäftsbedingungen (AGBG) [Unfair Contract Terms Act].

16. [GERMANY Bundesgerichtshof [Federal Supreme Court] 31 October 2001, available online at <http://cisgw3.law.pace.edu/cases/011031g1.html>] ; CLOUT case No. 362 [GERMANY Oberlandesgericht [Appellate Court] Naumburg 27 April 1999, available online at <http://cisgw3.law.pace.edu/cases/990427g1.html>] (standard terms in purported acceptance); [NETHERLANDS Arrondissementsrechtbank [District Court] 's-Hertogenbosch 2 October 1998, available online at <http://cisgw3.law.pace.edu/cases/981002n1.html>] (in ongoing relationship buyer not bound by seller's amended general conditions because seller failed to inform buyer of amendment); CLOUT case No. 222 [UNITED STATES MCC-Marble Ceramic Center v. Ceramica Nuova D'Agostino Federal Appellate Court [11th Circuit] 29 June 1998, available online at <http://cisgw3.law.pace.edu/cases/980629u1.html>] (standard terms on back of seller's form not enforceable if both parties know buyer did not intend to incorporate them in contract) (see full text of the decision); CLOUT case No. 272 [GERMANY Oberlandesgericht [Appellate Court] Zweibrücken 31 March 1998, available online at <http://cisgw3.law.pace.edu/cases/980331g1.html>] (applying art. 8 to determine whether standard terms incorporated in contract); CLOUT case No. 232 [GERMANY Oberlandesgericht [Appellate Cour] München 11 March 1998, available online at <http://cisgw3.law.pace.edu/cases/980311g1.html>] (buyer, by performing contract, accepted seller's standard terms that modified buyer's offer) (see full text of the decision); CLOUT case No. 345 [GERMANY Landgericht [District Court] Heilbronn 15 September 1997, available online at <http://cisgw3.law.pace.edu/cases/970915g1.html>]; CLOUT case No. 176 [AUSTRIA Oberster Gerichtshof [Supreme Court] 6 February 1996, available online at <http://cisgw3.law.pace.edu/cases/960206a3.html>] (buyer did not agree to 'framework agreement' drafted by seller to govern subsequent sales); CLOUT case No. 203 [FRANCE Cour d'appel [Appellate Court] Paris 13 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951213f1.html>] (standard term on back of form not binding on recipient); [BELGIUM Tribunal Commercial [District Court] Nivelles 19 September 1995, available online at <http://cisgw3.law.pace.edu/cases/950919b1.html>] (buyer should have been aware that seller's offers incorporated standard terms); [ARGENTINA Cámara Nacional de los Apelaciones en lo Comercial [Appellate Court] 14 October 1993, available online at <http://cisgw3.law.pace.edu/cases/931014a1.html>] (standard terms on back of "pro forma" invoice accepted by other party when recipient objected to one part of invoice but not to standard terms). See also [BELGIUM Rechtbank [District Court] Hasselt 18 October 1995, available online at <http://cisgw3.law.pace.edu/cases/951018b1.html>] (seller's standard terms in invoice sent with goods a unilateral act to which buyer had not consented). For analysis of the effect of conflicting terms when each party uses standard terms (the so-called "battle of the forms"), see the Commentary to article 19.

17. [GERMANY Bundesgerichtshof [Federal Supreme Court] 31 October 2001, available online at <http://cisgw3.law.pace.edu/cases/011031g1.html>]; CLOUT case No. 345 [GERMANY Landgericht [District Court] Heilbronn 15 September 1997, available online at <http://cisgw3.law.pace.edu/cases/970915g1.html>].

18. CLOUT case No. 318 [GERMANY Oberlandesgericht [Appellate Court] Celle 2 September 1998, available online at <http://cisgw3.law.pace.edu/cases/980902g1.html>] (applying German law as the law applicable by virtue of the forum's rules of private international law) (see full text of the decision); [GERMANY Landgericht [District Court ] Duisburg 17 April 1996, available online at <http://cisgw3.law.pace.edu/cases/960417g1.html>] (applying Italian law as the law applicable by virtue of the forum's private international law rules); [GERMANY Landgericht [District Court] München 29 May 1995, available online at <http://cisgw3.law.pace.edu/cases/950529g1.html>] (applying German law as the law applicable by virtue of the forum's rules of private international law); [BELGIUM Rechtbank [District Court] Hasselt 24 January 1995, available online at <http://cisgw3.law.pace.edu/cases/950124b1.html>] (applying German law as the law applicable by virtue of the forum's private international law rules).

19. CLOUT case No. 361 [GERMANY Oberlandesgericht [Appellate Court] Braunschweig 28 October 1999, available online at <http://cisgw3.law.pace.edu/cases/991028g1.html>] (standard terms enforceable under both applicable domestic law and the Convention) (see full text of the decision); [NETHERLANDS Gerechtshof [Appellate Court] 's-Hertogenbosch 24 April 1996, available online at <http://cisgw3.law.pace.edu/cases/960424n1.html>] (standard terms enforceable under both applicable domestic law and the Convention).

20. [AUSTRIA Oberster Gerichtshof [Supreme Court] 7 September 2000, available online at <http://cisgw3.law.pace.edu/cases/000907a3.html>] (validity of standard terms determined by national law subject to condition that any derogation from Convention's fundamental principles ineffective even if valid under applicable national law); CLOUT case No. 272 [GERMANY Oberlandesgericht [Appellate Court] Zweibrücken 31 March 1998, available online at <http://cisgw3.law.pace.edu/cases/980331g1.html>] (national law, rather than Convention, determines validity of exemption clause in standard terms); CLOUT case No. 345 [GERMANY Landgericht [District Court] Heilbronn 15 September 1997, available online at <http://cisgw3.law.pace.edu/cases/970915g1.html>] (national law governs validity of standard term limiting liability); [GERMANY Amtsgericht [Lower Court] Nordhorn 14 June 1994, available online at <http://cisgw3.law.pace.edu/cases/940614g1.html>] (standard terms on back of form incorporated in contract but validity of terms to be determined under domestic law). See also CLOUT case No. 230 [GERMANY Oberlandesgericht [Court] Karlsruhe 25 June 1997, available online at <http://cisgw3.law.pace.edu/cases/970625g1.html>] (citing both art. 4 and art. 14 ff., court leaves open issue of whether standard terms were enforceable).

21. [GERMANY Bundesgerichtshof [Federal Supreme Court] 31 October 2001, available online at <http://cisgw3.law.pace.edu/cases/011031g1.html>]; [NETHERLANDS Gerechtshof [Appellate Court] Arnhem 27 April 1999, available online at <http://cisgw3.law.pace.edu/cases/990427n1.html>] (deposit of standard terms in Dutch court did not bind non-Dutch party but standard terms printed in Dutch on back of invoice are binding); [NETHERLANDS Arrondissementsrechtbank [District Court] 's-Hertogenbosch 2 October 1998, available online at <http://cisgw3.law.pace.edu/cases/981002n1.html>] (if numerous prior sales between parties have been subject to the general conditions of one party and that party amends those general conditions, that party must inform the other party of the changes).

22. Neue Juristische Wochenschrift [GERMANY Bundesgerichtshof [Federal Supreme Court] 31 October 2001, available online at <http://cisgw3.law.pace.edu/cases/011031g1.html>].

23. CLOUT case No. 132 [GERMANY Oberlandesgericht [Appellate Court ] Hamm 8 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950208g3.html>] (discussion of "language risk" in light of art. 8).

24. CLOUT case No. 345 [GERMANY Landgericht [District Court] Heilbronn 15 September 1997, available online at <http://cisgw3.law.pace.edu/cases/970915g1.html>] (in transaction between German seller and Italian buyer seller's standard terms in German language not incorporated in contract and validity of those in Italian language determined by German law as the as the law applicable by virtue of the forum's private international law rules); [GERMANY Amtsgericht [Lower Court] Kehl 6 October 1995, available online at <http://cisgw3.law.pace.edu/cases/951006g1.html>] (standard terms in German language only sent by a German buyer to an Italian seller).

25. CLOUT case No. 165 [GERMANY Oberlandesgericht [Appellate Court] Oldenburg 1 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950201g1.html>] (see full text of the decision).

26. CLOUT case No. 347 [GERMANY Oberlandesgericht [Appellate Court] Dresden 9 July 1998, available online at <http://cisgw3.law.pace.edu/cases/980709g1.html>]; CLOUT case No. 276 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 5 July 1995, available online at <http://cisgw3.law.pace.edu/cases/950705g1.html>]. See also [GERMANY Landgericht [District Court] Duisburg 17 April 1996, available online at <http://cisgw3.law.pace.edu/cases/960417g1.html>] (doubts existence of international usage recognizing incorporation of standard terms into contract by letter of confirmation); Opinion of Advocate General Tesauro, EC Reports, 1997, I-911 ff. (adopting by analogy article 9 (2)'s standard for an 'international usage').

27. [GERMANY Oberlandesgericht [Court] Saarbrücken 14 February 2001, available online at <http://cisgw3.law.pace.edu/cases/010214g1.html>].

28. CLOUT case No. 95 [SWITZERLAND Zivilgericht [Civil Court] Basel 21 December 1992, available online at <http://cisgw3.law.pace.edu/cases/921221s1.html>].

29.  CLOUT case No. 292 [GERMANY Oberlandesgericht [Court] Saarbrücken 13 January 1993, available online at <http://cisgw3.law.pace.edu/cases/930113g1.html>] (citing art. 18(1)) (see full text of the decision).

30.  [NETHERLANDS Arrondissemenetsrechttbank [District Court] Zutphen 29 May 1997,available online at <http://cisgw3.law.pace.edu/cases/970529n1.html>]. See also [BELGIUM Rechtbank [District Court ] Hasselt 24 January 1995, available online at <http://cisgw3.law.pace.edu/cases/950124b1.html>] (German law applicable to issue of whether standard terms referred to in letter of confirmation are effective).

31. CLOUT case No. 276 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 5 July 1995, available online at <http://cisgw3.law.pace.edu/cases/950705g1.html>].

32. See, e.g., CLOUT case No. 417 [UNITED STATES Magellan International v. Salzgitter Handel Federal District Court [Illinois] 7 December 1999, available online at <http://cisgw3.law.pace.edu/cases/991207u1.html>] (art. 8) (see full text of the decision); CLOUT case No. 306 [AUSTRIA Oberster Gerichtshof [Supreme Court] 11 March 1999, available online at <http://cisgw3.law.pace.edu/cases/990311a3.html>] (citing art. 8 (1)); CLOUT case No. 413 [UNITED STATES Calzaturificio Claudia v. Olivieri Footwear Federal District Court [New York] 6 April 1998, available online at <http://cisgw3.law.pace.edu/cases/980406u1.html>] (art. 8(3)) (see full text of the decision); [NETHERLANDS Hoge Raad [Supreme Court] 7 November 1997, available online at <http://cisgw3.law.pace.edu/cases/971107n1.html>] (arts. 8(1), (2)); CLOUT case No. 189 [AUSTRIA Oberster Gerichtshof [Supreme Court] 20 March 1997, available online at <http://cisgw3.law.pace.edu/cases/970320a3.html>] (art. 8 (2)); [GERMANY Landgericht [District Court] Oldenburg 28 February 1996, available online at <http://cisgw3.law.pace.edu/cases/960228g1.html>] (art. 8(2)); CLOUT case No. 334 [SWITZERLAND Obergericht [Court] Thurgau 19 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951219s1.html>] (Art. 8 (1), (2) & (3)); CLOUT case No. 308 [AUSTRALIA Roder v. Rosedown [ Federal Court] Adelaide 28 April 1995, available online at <http://cisgw3.law.pace.edu/cases/950428a2.html>] (Arts. 8 (1), (2)) (see full text of the decision); CLOUT case No. 106 [AUSTRIA Oberster Gerichtshof [Supreme Court] 10 November 1994, available online at <http://cisgw3.law.pace.edu/cases/941110a3.html>] (art. 8 (2), (3)); CLOUT case No. 23 [UNITED STATES Filanto v. Chilewich Federal District Court [New York] 14 April 1992, available online at <http://cisgw3.law.pace.edu/cases/920414u1.html>] (art. 8 (3)); CLOUT case No. 227 [GERMANY Oberlandesgericht [Appellate Court] Hamm 22 September 1992, available online at <http://cisgw3.law.pace.edu/cases/920922g1.html>] (Art. 8 (2)).

33. [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 30 August 2000, available online at <http://cisgw3.law.pace.edu/cases/000830g1.html>] (citing art. 8, court states that invoice intended by sender to be offer on its behalf rather than on behalf of its parent company with whom recipient had been dealing did not bind the recipient who was unaware of this intent and it was not established that a reasonable person in position of recipient would so understand the communication); [GERMANY Oberlandesgericht [Appellate Court ] Stuttgart 28 February 2000, available online at <http://cisgw3.law.pace.edu/cases/000228g1.html>] (citing art. 8 (1) & (3), court states that negotiations and subsequent conduct of the parties indicated that buyer intended to conclude the contract with foreign company rather than local company with some same Board members); [NETHERLANDS Hoge Raad [Supreme Court] 7 November 1997, available online at <http://cisgw3.law.pace.edu/cases/971107n1.html>] (citing arts. 8 (1) & (2)), court concludes no contract had been concluded when a person, intending to make an offer, made a payment to a seller who did not know and could not have been aware that the payor was making a payment on its own behalf rather than on behalf of a buyer with whom the seller had ongoing business relations and reasonable person in same circumstances would not so understand communication). See also [MEXICO Compromex Arbitration award 29 April 1996, available online at <http://cisgw3.law.pace.edu/cases/960429m1.html>] (without express reference to art. 8, commission refers to surrounding circumstances to identify seller); CLOUT case No. 330 [SWITZERLAND Handelsgericht [Commercial Court] St. Gallen 5 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951205s1.html>] (citing art. 14 (1), court concludes that buyer's unsigned fax to seller clearly indicated an intent to purchase the equipment and that seller thought buyer rather than sister company was buyer); CLOUT case No. 276 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 5 July 1995, available online at <http://cisgw3.law.pace.edu/cases/950705g1.html>] (circumstances establish defendant and not unnamed third person was party to contract) (see full text of the decision); [GERMANY Landgericht [District Court] Memmingen 1 December 1993, available online at <http://cisgw3.law.pace.edu/cases/931201g2.html>] (citing art. 11, court applies forum's rule on proof as to which company seller had contracted with); CLOUT case No. 95 [SWITZERLAND Zivilgericht [Civil Court] Basel 21 December 1992, available online at <http://cisgw3.law.pace.edu/cases/921221s1.html>] (defendant bound even if she was subject to control of another firm) (see full text of the decision).

34. CLOUT case No. 239 [AUSTRIA Oberster Gerichtshof [Supreme Court] 18 June 1997, available online at <http://cisgw3.law.pace.edu/cases/970618a3.html>] (remand to determine whether purported buyer was an agent); CLOUT case No. 416 [UNITED STATES KSTP-FM v. Specialized Communications State District Court [Minnesota] 9 March 1999, available online at <http://cisgw3.law.pace.edu/cases/990309u1.html>] (finding from documents and circumstances that defendant was a seller rather than an agent); CLOUT case No. 334 [SWITZERLAND Obergericht [Court] Thurgau 19 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951219s1.html>] (citing art. 8, court concludes manufacturer rather than its distributor was party to contract); CLOUT case No. 5 [GERMANY Landgericht [District Court ] Hamburg 26 September 1990, available online at <http://cisgw3.law.pace.edu/cases/900926g1.html>] (citing art. 8 (1), court states that seller did not know and could not have been aware of buyer's intent to refer to "AMG GmbH" when buyer referred to "AMG Import Export", a non-existent company; agent bound under applicable law of agency).

35. See, e.g., CLOUT case No. 345 [GERMANY Landgericht [District Court] Heilbronn 15 September 1997, available online at <http://cisgw3.law.pace.edu/cases/970915g1.html>] (lessee, to whom the buyer/lessor assigned its rights as buyer, avoided contract); CLOUT case No. 334 [SWITZERLAND Obergericht [Court] Thurgau 19 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951219s1.html>] (although manufacturer rather than its distributor was original party to contract, distributor could enforce the contract because manufacturer had assigned its claim for breach to distributor); CLOUT case No. 132 [GERMANY Oberlandesgericht [Appellate Court ] Hamm 8 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950208g3.html>] (assignee enforces seller's claim).

36. CLOUT case No. 121 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 4 March 1994, available online at <http://cisgw3.law.pace.edu/cases/940304g1.html>] (a buyer's purported acceptance that included both screws for which the seller had stated the price and additional screws for which the seller had not stated the price was a counter-proposal that was not sufficiently definite because the price of the latter screws were not fixed or determinable). See also CLOUT case No. 189 [AUSTRIA Oberster Gerichtshof [Supreme Court] 20 March 1997, available online at <http://cisgw3.law.pace.edu/cases/970320a3.html>] (stating that a counter-offer must satisfy the conditions of article 14).

37. CLOUT case No. 134 [GERMANY Oberlandesgericht [Appellate Court] München 8 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950308g1.html>] (applying the general principles of Part II rather than the national law applicable by virtue of private international law to transaction between Finnish seller and German buyer).

38. [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 30 August 2000, available online at <http://cisgw3.law.pace.edu/cases/000830g1.html>]; [GERMANY Oberlandesgericht [Appellate Court ] Stuttgart 28 February 2000, available online at <http://cisgw3.law.pace.edu/cases/000228g1.html>]; [NETHERLANDS Hoge Raad [Supreme Court] 7 November 1997, available online at <http://cisgw3.law.pace.edu/cases/971107n1.html>]; CLOUT case No. 334 [SWITZERLAND Obergericht [Court] Thurgau 19 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951219s1.html>]; CLOUT case No. 330 [SWITZERLAND Handelsgericht [Commercial Court] St. Gallen 5 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951205s1.html>]; CLOUT case No. 5 [GERMANY Landgericht [District Court ] Hamburg 26 September 1990, available online at <http://cisgw3.law.pace.edu/cases/900926g1.html>]. See Commentary in introduction to Part II.

39. CLOUT case No. 239 [AUSTRIA Oberster Gerichtshof [Supreme Court] 18 June 1997, available online at <http://cisgw3.law.pace.edu/cases/970618a3.html>] (if offeror knew that addressee was acting as agent, then offeror should expect proposal to be transmitted to the principal; if offeror did not know or was unaware that addressee was an agent, the offeror was not bound by principal's acceptance; case remanded to determine whether the addressee was agent and whether offeror knew of this).

40. CLOUT case No. 334 [SWITZERLAND Obergericht [Court] Thurgau 19 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951219s1.html>] (interpreting the statements and acts of the parties in accordance with art. 8, manufacturer rather than its dealer was party to contract; manufacturer had, however, assigned its claim for breach to dealer).

41. CLOUT case No. 215 [SWITZERLAND Bezirksgericht [District Court] St. Gallen 3 July 1997, available online at <http://cisgw3.law.pace.edu/cases/970703s1.html>] (see full text of the decision).

42. CLOUT case No. 215 [SWITZERLAND Bezirksgericht [District Court] St. Gallen 3 July 1997, available online at <http://cisgw3.law.pace.edu/cases/970703s1.html>] (stressing the parties' conduct subsequent to conclusion of the contract).

43. CLOUT case No. 330 [SWITZERLAND Handelsgericht [Commercial Court] St. Gallen 5 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951205s1.html>] (see full text of the decision).

44. [GERMANY Oberlandesgericht [Appellate Court] Hamburg 4 July 1997, available online at <http://cisgw3.law.pace.edu/cases/970704g1.html>] ("We can only proposed you"; "First truck could be delivered").

45. CLOUT case No. 131 [GERMANY Landgericht [District Court] München 8 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950208g4.html>].

46. CLOUT case No. 217 [SWITZERLAND Handelsgreicht [Commercial Court] Aargau 26 September 1997, available online at <http://cisgw3.law.pace.edu/cases/970926s1.html>].

47. CLOUT case No. 417 [UNITED STATES Magellan International v. Salzgitter Handel Federal District Court [Illinois] 7 December 1999, available online at <http://cisgw3.law.pace.edu/cases/991207u1.html>] (conditions satisfied).

48. CLOUT case No. 52 [HUNGARY Fovárosi Biróság [Metropolitan Court] Budapest 24 March 1992, available online at <http://cisgw3.law.pace.edu/cases/920324h1.html>] (citing art. 9(1), court concludes that prior sales transactions between the parties supply unstated details in telephone order).

49. CLOUT case No. 330 [SWITZERLAND Handelsgericht [Commercial Court] St. Gallen 5 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951205s1.html>] (fax "ordering" software devices sufficiently definite notwithstanding failure to mention price).

50. See also CLOUT case No. 131 [GERMANY Landgericht [District Court] München 8 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950208g4.html>] (contract for purchase of software enforceable even if parties intended further agreement with respect to use of software).

51. CLOUT case No. 360 [GERMANY Amtsgericht [Lower Court] Duisburg 13 April 2000, available online at <http://cisgw3.law.pace.edu/cases/000413g1.html>] (art. 31(a) applies when buyer unable to establish parties agreed on different place).

52. CLOUT case No. 261 [SWITZERLAND Berzirksgericht [District Court ] Sanne 20 February 1997, available online at <http://cisgw3.law.pace.edu/cases/970220s1.html>] (seller authorized to arrange transportation under art. 32(2) when buyer unable to establish parties agreed on transport by truck).

53. CLOUT case No. 106 [AUSTRIA Oberster Gerichtshof [Supreme Court] 10 November 1994, available online at <http://cisgw3.law.pace.edu/cases/941110a3.html>].

54. CLOUT case No. 189 [AUSTRIA Oberster Gerichtshof [Supreme Court] 20 March 1997, available online at <http://cisgw3.law.pace.edu/cases/970320a3.html>] (remanding to lower court, however, to determine whether an apparently contradictory response was sufficiently definite).

55. CLOUT case No. 135 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 31 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950331g1.html>] (no agreement on quality of test tubes).

56. CLOUT case No. 176 [AUSTRIA Oberster Gerichtshof [Supreme Court] 6 February 1996, available online at <http://cisgw3.law.pace.edu/cases/960206a3.html>]  (see full text of the decision).

57. CLOUT case No. 106 [AUSTRIA Oberster Gerichtshof [Supreme Court] 10 November 1994, available online at <http://cisgw3.law.pace.edu/cases/941110a3.html>] (citing art. 8(2), (3)) (see full text of the decision).

58. [GERMANY Landgericht [District Court] Oldenburg 28 February 1996, available online at <http://cisgw3.law.pace.edu/cases/960228g1.html>] (citing art. 8(2)).

59. [GERMANY Oberlandesgericht [Appellate Court] Hamburg 4 July 1997, available online at <http://cisgw3.law.pace.edu/cases/970704g1.html>].

60. CLOUT case No. 189 [AUSTRIA Oberster Gerichtshof [Supreme Court] 20 March 1997, available online at <http://cisgw3.law.pace.edu/cases/970320a3.html>] (remanding to lower court to determine whether other elements of acceptance were sufficiently definite).

61. [UNITED STATES Geneva Pharmaceuticals Tech. Corp. v. Barr Labs. Inc. Federal District Court [New York] 10 May 2002, available online at <http://cisgw3.law.pace.edu/cases/020510u1.html>].

62. CLOUT case No. 291 [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 23 May 1995, available online at <http://cisgw3.law.pace.edu/cases/950523g1.html>].

63. CLOUT case No. 187 [UNITED STATES Helen Kaminski v. Marketing Australian Products Federal District Court [New York] 21 July 1997, available online at <http://cisgw3.law.pace.edu/cases/970721u1.html>] (see full text of the decision).

64. CLOUT case No. 106 [AUSTRIA Oberster Gerichtshof [Supreme Court] 10 November 1994, available online at <http://cisgw3.law.pace.edu/cases/941110a3.html>].

65. CLOUT case No. 52 [HUNGARY Fovárosi Biróság [Metropolitan Court] Budapest 24 March 1992, available online at <http://cisgw3.law.pace.edu/cases/920324h1.html>] (citing art. 9(1)).

66. CLOUT case No. 155 [FRANCE Cour de Cassation [Supreme Court] 4 January 1995, available online at <http://cisgw3.law.pace.edu/cases/950104f1.html>] affirming, CLOUT case No. 158 [FRANCE Cour d'appel [Appellate Court] Paris 22 April 1992, available online at <http://cisgw3.law.pace.edu/cases/920422f1.html>] ("à revoir en function de la baisse du marché").

67. [ICC Court of Arbitration case No. 8324 of 1995, available online at <http://cisgw3.law.pace.edu/cases/958324i1.html>].

68. CLOUT case No. 53 [HUNGARY Legfelsóbb Biróság [Supreme Court] 25 September 1992, available online at <http://cisgw3.law.pace.edu/cases/920925h1.html>] (see full text of the decision).

69. CLOUT case No. 139 [RUSSIA Arbitration Award case No. 309/1993 of 3 March 1995; available at <http://cisgw3.law.pace.edu/cases/950303r1.html>]; [RUSSIA Arbitration Award case No. 304/1993 of 3 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950303r1.html>] (citing art. 8).

70. CLOUT case No. 330 [SWITZERLAND Handelsgericht [Commercial Court] St. Gallen 5 December 1995, available online at <http://cisgw3.law.pace.edu/cases/951205s1.html>] (fax "ordering" software devices sufficiently definite notwithstanding failure to mention price).

71. [GERMANY Oberlandesgericht [Appellate Court] Frankfurt 15 March 1996, available online at <http://cisgw3.law.pace.edu/cases/960315g1.html>] (no citation to articles 14 or 55); CLOUT case No. 410 [GERMANY Landgericht [Lower Court ] Alsfeld 12 May 1995, available online at <http://cisgw3.law.pace.edu/cases/950512g1.html>] (court indicates that buyer did not allege circumstances from which a lower price could be established in accordance with article 55) (see full text of the decision).

72. CLOUT case No. 343 [GERMANY Landgericht [District Court] Darmstadt 9 May 2000, available online at <http://cisgw3.law.pace.edu/cases/000509g1.html>] (parties' agreement as to price enforceable even if price different from that of the market); CLOUT case No. 106 [AUSTRIA Oberster Gerichtshof [Supreme Court] 10 November 1994, available online at <http://cisgw3.law.pace.edu/cases/941110a3.html>] (transaction between a German seller and an Austrian buyer; parties had fixed the price in the contract concluded by offer and acceptance and therefore reversed an intermediate court's application of article 55).

73. CLOUT case No. 139 [RUSSIA Arbitration Award case No. 309/1993 of 3 March 1995; available at <http://cisgw3.law.pace.edu/cases/950303r1.html>] (transaction between a Ukrainian seller and an Austrian buyer; buyer may have separate claim for failure of the seller to propose a price during the designated time).

74. CLOUT case No. 53 [HUNGARY Legfelsóbb Biróság [Supreme Court] 25 September 1992, available online at <http://cisgw3.law.pace.edu/cases/920925h1.html>] (transaction between a US seller and a Hungarian buyer).

75. CLOUT case No. 151 [FRANCE Cour d'appel [Appellate Court] Grenoble 26 April 1995, available online at <http://cisgw3.law.pace.edu/cases/950426f1.html>] (buyer had accepted invoices with higher than market prices).

76. CLOUT case No. 215 [SWITZERLAND Bezirksgericht [District Court] St. Gallen 3 July 1997, available online at <http://cisgw3.law.pace.edu/cases/970703s1.html>] (transaction between a Dutch seller and Swiss buyer; buyer's subsequent conduct interpreted as establishing buyer's intent to conclude a contract).


ANNOTATED COMPARATIVES
-  UNIDROIT Principles

-  PECL comparative

Commentary on the manner in which the UNIDROIT Principles
may be used to interpret or supplement CISG Article 14

Jorge Oviedo Albán [*]
January 2005

  1. Introduction
  2. Definition of Offer
  3. Requirements
    3.1.   Sufficiently definite
    3.2.   Intention to be bound in case of acceptance
    3.3.   Communication to the offeree
  4. Invitation to make Offers
  5. Conclusions

1. Introduction

In Part II of the CISG, entitled Formation of the Contract, the Convention provides the rules on contract formation, making reference to the model of offer and acceptance, CISG Arts. 14 to 24. In the UNIDROIT Principles of International Commercial Contracts, the counterpart provisions on formation, also adopting the model of offer and acceptance, are located in Chapter 2, UP Arts. 2.1. to 2.22.

In both instruments the offer is defined and the relevant requirements are listed, which will be analyzed in these remarks. In the Convention, the definition of and the requirements of an offer are contemplated in Art. 14. In the UNIDROIT Principles, it is Art. 2.2 that provides the definition of an offer.[1]

2. Definition of Offer

Article 14(1) of the CISG commences:

"A proposal for concluding a contract [...] constitutes an offer [...]"

Similarly, Article 2.2 of the UNIDROIT Principles provides a definition of offer, commencing:

"A proposal for concluding a contract constitutes an offer [...]"

The concept of "offer" is common in the two instruments, in the sense that both instruments conceive it as the invitation by one of the parties to conclude a contract, accompanied by other requirements to which we will refer in this comparative analysis[2].

The following difference between the counterpart provisions must, however, be noted: the regime of contract formation under the UNIDROIT Principles can be applicable to any type of commercial contract, whereas the Convention's regime is, in principle, limited to the formation of contracts of international sale of goods, i.e., only contracts to which the Convention is directly applicable[3].

The international doctrine on contract formation has provided various analyses of what constitutes an "offer", the characteristic element of which, as several authors highlight, is the declared will of the offeror to be bound, in case of acceptance, to a contract[4].

3. Requirements

Both the Convention and the UNIDROIT Principles provide the following requirements for an invitation to conclude a contract to produce a legal effect:

     3.1. Sufficiently definite

The CISG regulates the matter in the following way in Art. 14 [emphasis added below]:

"(1) A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price."

Art. 14(1) provides two indispensable requirements for an offer to be sufficiently definite: that the proposal (i) indicates or describes the goods, and (ii) expressly or implicitly fixes or makes provision for determining the quantity and the price of the goods.

The first thing to be noted in that provision is that Art. 14 CISG does not expressly require that the offeror identify precisely the goods that are to be the object of the contract; it will be enough to merely indicate the nature and the characteristics that would allow the offeree to identify the goods which are of interest to the offeror, as well as the quantity of the goods, or parameters of an objective order to determine the quantity.

In determining the qualities and characteristic of the goods, except for any expressed stipulation by the parties, important relevant matters to bear in mind are the concept of reasonableness, the intention of the contracting parties and good faith - which are provided in the content of Arts. 7(1), 8(1) and 8(2) of the Convention.

It is, furthermore, equally important to consider that as it is the obligation of the seller to deliver "goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract".[5] Those specified elements (i.e., the quantity, quality, description and appropriate packaging of the goods) would perhaps have to be indicated in the proposal made to the offeree, in order for him to indicate effectively his assent to the offer.

The quantity of the goods, based on the inference drawn from the related provision in Art. 35 CISG, should be fixed in the proposal or, at least, the parties must have agreed on the manner of determining the quantity according to objective parameters - that is a matter that has to be resolved in the same sense in the offer. However, and in view of the prescription contained in Art. 14 CISG, it would be advisable to include in the offer a certain quantity of the goods or to fix maxima, or minima, of quantity in order to ensure the observance of the aforementioned requirement.[6] There are several relevant factors that may end up determining the quantity of the goods, present as much in the offer as at the moment of conclusion of the contract, following any practice established previously between the parties, or according to the approaches of good faith and reasonableness.[7]

It must be noted, however, that Art. 55 CISG, dealing with "open-price" terms,[8] provides a regime different to that in Art. 14 CISG regarding the determination of the price of the goods. Pursuant to Art. 55 CISG, parties to validly concluded contracts are considered, in the absence of any contrary indication, to have impliedly agreed on the price generally paid under comparable circumstances in the trade concerned.[9]

The apparent contradiction[10] between those two provisions of the Convention can be traced back to the different drafting solutions debated in the sessions held by UNCITRAL, and which reflect the different solutions given to that matter in different national juridical classifications.[11]

Scholarly opinion is divided on the manner in which the two provisions interact with one another;[12] some commentators analyze the application of CISG Art. 14 in an isolated way,[13] while others prefer the application of CISG Art. 55.[14]

The different approaches in the available doctrine are also reflected in the relevant international case law. As an example of the divergent approaches, mention may be made of the decision of the Hungarian Supreme Court in the case of Pratt & Whitney vs. Malev Hungarian Airlines[15] as well as the subsequent scholarly critiques of that decision.[16]

Following the criticism of that decision in the commentary offered by PERALES, it is clear that the court did not consider the interplay between Art. 14 and Art. 55 of the Convention. In that critique, it is furthermore noted that that there is a further important element to consider, that is the use of the rules of interpretation of the conduct of the parties (CISG Art. 8) according to which, even in a case where the price has not been determined in the offer and there is no market price for the particular goods, it might still be possible to deduce the price of the goods based on all the relevant circumstances of the case and, thus, to conclude that a price has been implied into the agreement of the parties.[17]

Support for that proffered approach can be found in the case law, where tribunals have dealt with the matter of determination of the price according to objective parameters agreed by the parties previously or tacitly, as well as in situations where the parties have not agreed the price but have concluded contracts with "open-price" terms. Such an interpretive approach would provide much desired uniformity on the issue under examination.[18]

It is also worthwhile to examine the treatment afforded by the counterpart provisions of the UNIDROIT Principles to this issue. The UNIDROIT Principles, in Art. 2.2, stipulate as relevant requirements that the proposal should be sufficiently definite and indicate the intention of the offeror to be bound in case of acceptance by the offeree.[19]

The Principles require that the parties understand one another in terms of the precision of the offer which should indicate with sufficient clarity the elements incorporated into the contract. That would be achieved in spite of some elements not being precisely determined in the proposal but are at least determinable by means of the practices established by the parties or by reference to internationally accepted usages[20]; in that way the Principles provide for filling gaps in some of its other related provisions.

Thus, under the UNIDROIT Principles, the essential elements of an offer might be uncertain, without that uncertainty resulting into fatal inexactness of the offer, because the vital element is the intention of the parties to be bound by the offer and it subsequent acceptance.[21]

Furthermore, contract formation under the Principles is regulated with stipulations about terms that have been left open deliberately. In that sense, Art. 2.14 of the Principles expressly provides:

"(1) If the parties intend to conclude a contract, the fact that they intentionally leave a term to be agreed upon in further negotiations or to be determined by a third person does not prevent a contract from coming into existence."

"(2) The existence of the contract is not affected by the fact that subsequently

(a) the parties reach no agreement on the term; or
(b) the third person does not determine the term, provided that there is an alternative means of rendering the term definite that is reasonable in the circumstances, having regard to the intention of the parties."

Under that regime of the Principles, the parties may decide to leave undetermined some contractual matters that are essential elements of the contract, provided there is an agreement between the parties on the manner in which those matters will be determined subsequently. That approach can be adopted if the parties themselves resolve the pending matters at a later stage (i.e., subsequent to the conclusion of the contract), or this function is assigned to a third party -- this function and, in any event, the existence of the contract are not affected even if the parties themselves subsequently do not reach agreement on the terms left open or the third party does not determine them, so long as there exists another way of determining the open terms in a reasonable fashion according to the circumstances of the case and the intention of the parties.

Therefore, according to the Principles, the absence of final determination of certain essential element of the contract would not prevent formation of the contract or undermine its existence, because what determines the existence or non-existence of the contract is the question of the intention of the parties to conclude the contract.

     3.2. Intention to be bound in case of acceptance

The available doctrine distinguishes between the offer, in a strict sense, and a preliminary invitation to conclude a contract, holding that in the first case the offeror has the intention to be bound in case his proposal is accepted by the offeree, while such intention does not exist in an invitation to consider entering into a contract.

In practice it can be very difficult to determine the exact moment when the offeror is bound, having crossed the dividing line between preliminary invitation to the other party (to consider entering into a contract) and the actual offer made to the offeree.

The Convention expressly specifies in CISG Art. 14(1), first sentence, that

"[a] proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance" [emphasis added].

It is clear that under the Convention an offer must include, in principle, the intention on the part of the offeror to be bound in the event of acceptance of his proposal.

The UNIDROIT Principles in Art. 2.2 include the same requirement and in similar wording to that found in the counterpart provision in the Convention.[22]

It is submitted that in the context of the Convention as well as the UNIDROIT Principles, the intention to be bound need not be specifically declared immediately or in the document that contains the proposal. It will be enough that in an unequivocal way such an intention is deduced, having regard to the type of the contract (see 3.3, infra) or the circumstances that surround the offer.[23]

Equally, the existence of the requisite intention to be bound by the proposal in case of its acceptance by the offeree will depend on the interpretation of the parties' statements or conduct,[24] based on the content of some positive dispositions expressed in the Convention -- such as: the observance of good faith in interpretation,[25] the subjective intent of the party making the statement or engaging in conduct (if the other party knew or could not have been unaware what was that intent),[26] or, if the former is not applicable, the understanding of a reasonable person of the same kind as the offeree would have had in the same circumstances, including the negotiations between the parties, any established practices, usages and any subsequent conduct of the parties (i.e., objective standard) to determine that intent.[27] Further relevant factors are the content of any previous conduct or practices established previously between the parties in negotiations as well as any trade usages applicable to contracts of the type involved in the particular trade concerned.[28]

     3.3. Communication to the offeree

In order for the statements or conduct of the party to lead towards the production of the desired legal effects, it is required that the relevant intent transcend the party's internal domain, that it is externalized and manifested.

It should be noted that it is not in all cases that the manifested conduct imposes a binding force upon the actor when it transcends his internal domain. In some cases, the law (domestic law) or the parties, might require that the manifestation of intent is channeled through some established means that comprise a general formality. Without it, there might not be a legal effect, unless what the parties want is that the relevant conduct or the contract that might have already been concluded is evidenced in writing. In other cases, it might be required that the manifestation of relevant intent reaches the offeree, either by being properly dispatched to him, or even that the offeree has indeed taken cognizance of the content of the communication. Such requirements might be found in regimes used in different domestic jurisdictions to establish the specific moment when the offer becomes binding and capable of leading to conclusion of a contract based on the conduct or statement communicated to the offeree. Such approaches are not, however, generally favored in most jurisdictions and the international doctrine.

The conclusion of a sales contract by electronic means, if the Convention is applicable to the contract,[29] will be held to the norms of offer and acceptance contained in CISG Arts. 18(2) and 15(1), when the sale is international, as the provisions of the Convention regarding formation have sufficient scope of application to regulate such transactions. For example, CISG Art. 13 arguably provides a suitable extension of the term "writing" to include messages of data in general, and not only to telegram or the telex. It is submitted that the textual reference in that provision is not limiting or restrictive, but rather on the contrary, by analogy, it can be understood as including electronic means.[30]

Under the regime of the Convention, like the UNIDROIT Principles, the offer becomes effective from the moment that it reaches the offeree,[31] adopting the "system of the reception".[32]

Art. 2.3(1) and Art. 1.9 of the UNIDROIT Principles may be read together. The latter provides:

"(1) Where notice is required it may be given by any means appropriate to the circumstances.
(2) A notice is effective when it reaches the person to whom it is given.
(3) For the purpose of paragraph (2) a notice "reaches" a person when given to that person orally or delivered at that person's place of business or mailing address.
(4) For the purpose of this article 'notice' includes a declaration, demand, request or any other communication of intention."[33]

Equally, in the Convention, CISG Art. 24 provides:

"For the purposes of this Part of the Convention, an offer, declaration of acceptance or any other indication of intention "reaches" the addressee when it is made orally to him or delivered by any other means to him personally, to his place of business or mailing address or, if he does not have a place of business or mailing address, to his habitual residence."

Thus, it is submitted that counterpart provisions in the Convention and in the Principles correspond to one another[34] by establishing that the offer reaches the offeree:

a) when it is communicated to him orally (i.e., system of knowledge or information); or
b) if the offer is in writing,[35] when it is delivered to him in his place of business or postal address, or if he has no place of business to his habitual residence[36] (i.e., receipt theory).[37]

This principle of receipt may, however, be modified by means of an expressed pact of the parties that can adopt any other system, for example, that of the expedition[38].

4. Invitation to make offers

On a literal interpretation of CISG Art. 14, which states that "[a] proposal other than one addressed to one or more specific persons is [...]" [emphasis added], it is arguable that the Convention's provisions do not apply to offers made to the public, unless the contrary is clearly indicated by the person making the proposal.

The UNIDROIT Principles make no reference to offers made to the public - that might be used to make an even stronger argument that a similar approach also fits the Convention, unless the offeror indicates the opposite.[39]

5. Conclusions

The counterpart provisions of the Convention and the UNIDROIT Principles define the offer in similar terms, of a proposal made by one party to another to conclude a contract.

Both instruments refer to the same essential requirements for such a proposal to constitute an offer, i.e. a) the proposal is sufficiently definite; b) the offeror indicates the intention to be bound in case of acceptance; and c) the proposal is communicated to the offeree.

The basic requirement of sufficient definition of the proposal can give rise to misunderstandings and divergent interpretations of the Convention's provisions. It is submitted that, based on the preceding comparative analysis, which found substantial similarities in the policy, structure and wording of the counterpart provisions, the UNIDROIT Principles may be of assistance in understanding and applying the Convention's requirement that a proposal be "sufficiently definite" in order to constitute an "offer" under the CISG.


FOOTNOTES

* Lawyer (J.D.), Javeriana University (Bogotá D.C. - Colombia). Specialist in Commercial Law Javeriana University. Professor of Contracts and Commercial Law at La Sabana University (Bogotá D.C. - Colombia). He has been Lecturer in Colombian and other international universities. Author of publications on International Commercial Law in Argentina, Spain, Colombia, Peru, Mexico, and United States.

1. Art. 2.14 of the UNIDROIT Principles deals with contracts with "open terms"; in the Convention, it is Art. 55 CISG that deals with open-price contracts.

2. For a comparative analysis of CISG Art. 14 and the counterpart provisions of another Restatement of Contract law, see CVETKOVIK, P., "Remarks on the manner in which the PECL may be used to interpret or supplement CISG Art. 14", available online at <http://cisgw3.law.pace.edu/cisg/text/peclcomp14.html#er>.

3. CISG Arts. 1 to 6.

4. See FARNSWORTH, E.A., Contracts, Aspen Law & Business, New Cork, 1999, pp. 112-132; LEVY, D.A., "Contract formation under the UNIDROIT Principles of International Commercial Contracts: UCC, Restatement, and CISG", 30 Uniform Commercial Code Law Journal (1998) 249-332, at 277; PERALES VISCASILLAS, M. del P., La formación del Contrato de Compraventa Internacional de Mercaderías, Tirant Lo Blanch, Valencia, 1996, p 69.

5. Art. 35 CISG.

6. FOLSOM, R.H., GORDON, M.W., SPANOGLE, J.A., International Business Transactions, Second Ed., West Group, St. Paul, Minn., United States, 2001, p. 30.

7. VÁZQUEZ LAPINETTE, T., Compraventa Internacional de Mercaderías. Una Visión Jurisprudencial, Aranzadi Editorial, Elcano (Navarra), 2000, p. 114.

"Reasonableness" is an important concept in the Convention; "reasonableness" is specifically mentioned in numerous provisions of the CISG and it is regarded a general principle of the CISG, see KRITZER, A.H., "Overview Comments on Reasonableness - A General Principle of the CISG", available online at <http://cisgw3.law.pace.edu/cisg/text/reason.html#overv>.

See also Art. 7(1) and (2) of the CISG, which contains the in-built interpretation mechanism of the Convention, with references to the concept of good faith; see also relevant scholarly writing on the proper interpretation of Art. 7 CISG, presentation available online at <http://cisgw3.law.pace.edu/cisg/text/e-text-07.html>.

8. Some jurisdictions do not allow "open-price" terms; see Colombian Civil Code Arts. 1591 and 592; Chilean Civil Code Arts. 1808 and 1809. Some other jurisdictions allow "open-price" terms; see BGB §315 and §453; Italian Civil Code Art. 1474; and UCC §2-305.

9. Art. 55 CISG:

"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."

10. See ENDERLEIN F. and MASKOW D., International Sales Law, Oceana Publications (1992) 85, Article 14 "Offer", Comment 10, also available online at <http://cisgw3.law.pace.edu/cisg/biblio/enderlein-art14.html>, where the authors state:

"While the price belongs here to the minimum content of an offer, Article 55 concedes that a contract may also be validly concluded if the price has not been fixed expressly or implicitly and nothing has been agreed that would make provision for its determination. Thus there is a contradiction between Articles 14 and 55, which has been duly reflected in various sources [...]. Article 55 presupposes the existence of a valid contract which pursuant to Article 14 simply cannot exist. It seems to us that the price problem has been over-emphasized in the discussion because Article 14, in the extreme, permits that nothing be said about the price but that the possibility of determining it is implied [references omitted].>

See also KHOO W.L.H. in BIANCA-BONELL, Commentary on the International Sales Law, Guiffrè: Milan (1987), p. 46:

"Article 55 deals with cases in which a contract has apparently been concluded but without any agreement on provision as to price. In these instances, Article 55 makes it clear that its provision takes effect subject to the contract having been validly concluded by the criteria of the applicable domestic law". The pre-Vienna Diplomatic Conference legislative history of the CISG is in accord. See UNCITRAL Yearbook VIII, A/CN.9/SER.A/1977, at pp. 48-49, paras. 323-330, 336-340; see also HONNOLD J., Uniform Law for International Sales under the 1980 United Nations Convention, 2d ed. (1991), p. 201.

11. PERALES VISCASILLAS, (1996), op. cit., p. 318; HONNOLD, J. Derecho uniforme sobre compraventas internacionales (Convención de las Naciones Unidas de 1980), Madrid, Editorial Revista de Derecho Privado, Editoriales de Derecho Reunidas S.A., 1987, p. 189.

12. See Transcript of a Workshop on the Sales Convention, where leading CISG scholars discuss inter alia Contract Formation using a hypothetical case involving the interplay between Arts. 14(1) and 55 CISG, 18 Journal of Law & Commerce (1999) 191-258, excerpt also available online at <http://cisgw3.law.pace.edu/cisg/biblio/workshop-14,55,18.html>.

13. PERALES VISCASILLAS, (1996), op. cit., p. 336.

14. HONNOLD, op. cit., nº 137, pp. 187-188. DÍEZ PICAZO, "Comentario al artículo 14", in La Compraventa Internacional de Mercaderías. Comentario de La Convención de Viena. DÍEZ PICAZO and PONCE DE LEÓN, L., Civitas, Madrid, 1998, p. 168. FERNÁNDEZ DE LA GÁNDARA, L., CALVO CARAVACA, A.L., "El Contrato de Compraventa Internacional de Mercancías", in Contratos Internacionales, CALVO CARAVACA, A.L. and FERNÁNDEZ DE LA GÁNDARA, LUIS. (Directors), Tecnos, Madrid, 1997, p. 220.

15. Hungary 25 September 1992 Supreme Court (Pratt & Whitney v. Malev), English translation at 13 Journal of Law and Commerce 31-47 (1993); case presentation also available online at <http://cisgw3.law.pace.edu/cases/920925h1.html>. Case law on UNCITRAL texts (CLOUT) abstract no. 53. At issue was whether a valid contract was concluded for the supply of jet engines. The Hungarian Supreme Court held that no valid contract had been concluded because the alleged offer and acceptance were vague and did not satisfy the requirements of CISG Art. 14(1). The reasoning of the Hungarian Supreme Court was based inter alia on the following grounds:

     -      the description, quantity and price of goods are all essential elements of an offer [CISG Art. 14(1)];
     -      CISG Art. 55 cannot be used to determine the price term of an offer for goods which have no market price.

16. The reasoning of the decision of the Hungarian Supreme Court has been much criticized; a selection of relevant commentaries is available at <http://cisgw3.law.pace.edu/cases/920925h1.html#cabc>.

17. PERALES VISCASILLAS, (1996), op. cit., p. 368.

18. See the following case law:

     -      HUNGARY 24 March 1992 Fovárosi Biróság [Metropolitan Court] (Adamfi Video v. Alkotók Studiósa Kisszövetkezet), CLOUT abstract no. 52, case presentation and commentary available online at <http://cisgw3.law.pace.edu/cases/920324h1.html>;
     -      GERMANY 8 March 1995 Oberlandesgericht [Appellate Court] München, CLOUT abstract no. 134, case presentation available at <http://cisgw3.law.pace.edu/cases/950308g1.html>;
     -      RUSSIA 3 March 1995 Arbitration proceeding 304/1993, case presentation and English translation available at <http://cisgw3.law.pace.edu/cases/950303r2.html>;
     -      SWITZERLAND 3 July 1997 Bezirksgericht [District Court] St. Gallen, CLOUT abstract no. 215, case presentation available at <http://cisgw3.law.pace.edu/cases/970703s1.html>.

See also the following commentaries:

GABUARDI, C.A., "Open Price Terms in the CISG, the UCC and Mexican Commercial Law", available online at <http://cisgw3.law.pace.edu/cisg/biblio/gabuardi.html>; AMATO, P., "U.N. Convention on Contracts for the International Sale of Goods -- The Open Price Term and Uniform Application: An Early Interpretation by the Hungarian Courts", 13 Journal of Law and Commerce (1993) 1-29; also available online at <http://cisgw3.law.pace.edu/cisg/biblio/amato.html>.

19. UP Art. 2.2. - Definition of Offer:

"A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offer or to be bound in case of acceptance".

20. See Official Comments on Art. 2.2 of the UNIDROIT Principles, available at <http://cisgw3.law.pace.edu/cisg/principles/uni14.html#official>. Comment 1, Definiteness of an offer:

"[...]. Even essential terms, such as the precise description of the goods or the services to be delivered or rendered, the price to be paid for them, the time or place of performance, etc., may be left undetermined in the offer without necessarily rendering it insufficiently definite: all depends on whether or not the offeror by making the offer, and the offeree by accepting it, intends to enter into a binding agreement, and whether or not the missing terms can be determined by interpreting the language of the agreement in accordance with Arts. 4.1 et seq., or supplied in accordance with Arts. 4.8 or 5.2. Indefiniteness may moreover be overcome by reference to practices established between the parties or to usages (see Art. 1.8), as well as by reference to specific provisions to be found elsewhere in the Principles (e.g. Arts. 5.6 (Determination of quality of performance), 5.7 (Price determination), 6.1.1 (Time of performance), 6.1.6 (Place of performance), and 6.1.10 (Currency not expressed))"

21. See Official Comment on Art. 2.2. UNIDROIT Principles, op. cit, where the following illustrative example on point is provided:

"A has for a number of years annually renewed a contract with B for technical assistance for A's computers. A opens a second office with the same type of computers and asks B to provide assistance also for the new computers. B accepts and, despite the fact that A's offer does not specify all the terms of the agreement, a contract has been concluded since the missing terms can be taken from the previous contracts as constituting a practice established between the parties."

22. See Art. 2.2 UNIDROIT Principles: "A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance."

23. DÍEZ PICAZO L., (Director), La Compraventa internacional de Mercaderías. Comentario de la Convención de Viena, pp. 165-166. PERALES VISCASILLAS, M. del P., El Contrato de Compraventa Internacional de Mercancías (2001), available online at <http://cisgw3.law.pace.edu/cisg/biblio/perales1-14.html>; PERALES VISCASILLAS, La Formación del Contrato en la Compraventa Internacional de Mercaderías (1996), p. 270.

24. VÁZQUEZ LAPINETTE, op. cit., p. 111.

25. CISG Art. 7(1).

26. CISG Art. 8(1) provides:

"For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was."

27. CISG Art. 8(3) provides:

"In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to 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."

28. CISG Art. 9.

29. ILLESCAS ORTIZ, R., Derecho de la Contratación Electrónica. Civitas, Madrid, 2001, p. 257.

30. See SCHROETER, U., "Editorial Remarks on Art. 13 CISG - PECL comparative provisions", available online at <http://cisgw3.law.pace.edu/cisg/text/peclcomp13.html>.

31. The counterpart provisions in CISG Art. 15(1) and UP Art. 2.3(1) contain identical wording: "An offer becomes effective when it reaches the offeree."

32. DÍEZ PICAZO Y PONCE DE LEÓN, L. La compraventa internacional de mercaderías. Comentario de la Convención de Viena, pp. 171-172. The system of the reception requires that the offer is received by the addressee when it reaches its destination. It does not matter under that system that the offer arrives but rather that the possibility exists that it is received by the offeree.

33. See Official Comments on Art. 1.9 of the UNIDROIT Principles, available online at <http://cisgw3.law.pace.edu/cisg/principles/uni24.html#official>.

Comment 2 reads:

"With respect to all kinds of notices the Principles adopt the so-called 'receipt' principle, i.e. they are not effective unless and until they reach the person to whom they are given."

Comment 4 explains:

"It is important in relation to the receipt principle to determine precisely when the communications in question 'reach' the addressee. In an attempt to define the concept, para. (3) of this article draws a distinction between oral and other communications. The former 'reach' the addressee if they are made personally to it or to another person authorized by it to receive them. The latter 'reach' the addressee as soon as they are delivered either to the addressee personally or to its place of business or mailing address. The particular communication in question need not come into the hands of the addressee. It is sufficient that it be handed over to an employee of the addressee authorized to accept it, or that it be placed in the addressee's mailbox, or received by the addressee's fax, telex or computer."

34. See also FELEMEGAS, J., "Comparison between provisions of the CISG (Article 24) and the counterpart provisions of the UNIDROIT Principles (Art. 1.9)", available online at <http://cisgw3.law.pace.edu/cisg/principles/uni24.html#ed>.

35. Art. 1.10 of the UNIDROIT Principles provides that "writing" means any mode of communication that preserves a record of the information contained therein and is capable of being reproduced in tangible form." See also Official Comment on Art. 1.10 of the UNIDROIT Principles, available online at <http://cisgw3.law.pace.edu/cisg/principles/uni13.html#official>. Comment 4:

"The Principles define this formal requirement in functional terms. Thus, a writing includes not only a telegram and a telex, but also any other mode of communication that preserves a record and can be reproduced in tangible form. This formal requirement should be compared with the more flexible form of a 'notice'."

36. GARRO, A., "La Convención de las Naciones Unidas sobre los Contratos de Compraventa Internacional de Mercaderías: su Incorporación al Orden Jurídico Argentino", La Ley, p. 6. FERRARI, F., La Compraventa International. Aplicabilidad y aplicaciones de la Convención de Viena de 1980. Tirant Lo Blanch. Valencia, 1999, p. 66.

37. See the Official Commentary on Art. 1.9 UNIDROIT Principles, Comment 4, supra note 33.

38. See Official UNIDROIT Commentary, op. cit., Comment 3:

"Dispatch principle to be expressly stipulated. The parties are of course always free expressly to stipulate the application of the dispatch principle. This may be appropriate in particular with respect to the notice a party has to give in order to preserve its rights in cases of the other party's actual or anticipated non-performance when it would not be fair to place the risk of loss, mistake or delay in the transmission of the message on the former. This is all the more true if the difficulties which may arise at international level in proving effective receipt of a notice are borne in mind."

39. Pursuant to the principle of party autonomy embedded in Art. 6 CISG: "The parties may [...] derogate from or vary the effect of any of its provisions" [emphasis added].


PECL COMPARATIVE

Remarks on the manner in which the PECL
may be used to interpret or supplement Article 14 CISG

Predrag Cvetkovic [*]
January 2002

Both the CISG (art. 14(1)) and the PECL (art. 2:101) recognize the traditional "offer-acceptance" model of contracting. The PECL also has a provision (art. 2:211) on contracts not concluded through the traditional offer and acceptance mode.

Offer-acceptance, the only model explicitly addressed in the CISG, is the principal model in most legal systems of the world. However, it seems to be universally agreed that rules on the traditional model of offer-acceptance can be applied by way of analogy to other models, insofar as this is reasonable and with appropriate adaptations. The Comments on art. 2:211 PECL may, in this respect, be relevant to the proper interpretation of the CISG.[1]

1. Animus contrahendi

The offeror expresses with his proposal the intention to give an option to the offeree: with the acceptance, the offeree can conclude the contract according to the terms of the offer. This intention has its Latin name: animus contrahendi. Both the CISG and the PECL demand animus contrahendi in an offer: the offer should show the offeror's "intention to be bound" in the case of acceptance (CISG art. 14(1)); an offer must be "intended to result in a contract if the other party accepts it" (PECL art. 2:201(1)(a)).[2]

2. The "sufficient definition" of an offer

An offer is not only the manifestation of the offeror's intention to conclude the contract: as a project of a possible future contractual relationship, the offer must contain all of the elements necessary for the successful conclusion of a valid contract. The completeness of an offer with regard to the contract itself (i.e., considering its terms) should be established ex ante: the necessary elements of proposal are those needed for validity of the future contract. More precisely, only an offer containing all of the requisite ingredients -- thus making it suitable for acceptance -- can lead to the successful formation of a contract. It is not necessary that these fundamental elements be regulated in the contract in a rigid and thorough way; there is a sufficient grade of determination if such elements are definable, e.g., if a contract provides the criteria for such a determination.

The type of a contract determines the requisite elements of the offer. The terms of the contract (using the criteria of their necessity for the formation of the contract) can be divided into three main groups: (i) essentialia negotii (terms without which the contract would have no sense); (ii) naturalia negotii (terms which regulate the parties' obligations logically stemming from the contract itself); and (iii) accidentalia negotii (terms which are not common for the type of contract in question, but which could be the subject of its terms).

The offer must determine the essentialia negotii (the fundamental terms of the contract). The content of other elements of the contract can be derived from the parties' statements and behavior,[3] or determined by a court, arbitrator or third person.

The relevant provisions in the PECL and the CISG demand the "sufficient definition" of a proposal for it to constitute an "offer" for the purposes of formation of the contract. While the PECL establishes this condition only in one laconic sentence (see art. 2:201(1)(a)), the CISG in art. 14(1) is more thorough in defining the key conditions for a sale of goods contract. This difference in treatment is due to the different scope of application of the two instruments. The CISG is the uniform code for the international [commercial] sale of goods with its scope limited to international sales contracts, in the sense of art. 1 CISG, which defines the CISG's concept of internationality, and art. 2(a) CISG, which excludes consumer sales. The PECL, on the other hand, is designed to "be applied as general rules of contract law in the European Communities."[4] The redactors of the PECL sought to create a frame applicable not only to international commercial contracts for the sale of goods, but to all contract transactions -- contracts for services as well as goods and domestic as well as international contracts, including contracts with consumers.

      2.1. In national codes, the fundamental elements (essentialia negotii) of a sales contract, and, in accordance with that, of the offer for concluding such contracts, are the goods, the quantity, and the price. As the subject of a sales contract, the goods are specified or determined by kind, quantity and quality.

According to art. 14(1) CISG, the quantity of the goods can be determined expressly or implicitly.[5] The quality of goods is not expressly regulated by the formation provisions of the CISG. However, art. 35 CISG can be used for the determination of the goods' quality, when it is not determined by the contract itself.[6] As the CISG does not mention the determination of the goods' quality as an element necessary for an offer to be deemed "sufficiently definite", the best solution is for the parties to regulate themselves the importance of fulfilling the obligation concerning the quality of the goods. If one party insists on a certain quality, and the offer does not express a clear agreement, there is no valid contract, since there is no valid offer and acceptance.[7]

The PECL has a provision on "average quality" that is more specific than the CISG and that would appear to be consistent with the intent of the CISG legislators. The PECL demands that, "if the contract does not specify the quality, a party must tender performance of at least average quality" (art. 6:108). As the definition of average quality is not incorporated in the PECL, it leaves open the question of how courts and arbitrators will determine the average quality of performance or goods.[8]

      2.2. When the content of the contract is in question, there is a disagreement as to the CISG requirements on specification of [ability to determine] the price in the offer.

The CISG rules on price determination are in contradiction. Firstly, art.14(1) CISG states that a determined price is a necessary part of an offer.[9] However, art. 55 CISG provides that if the contract does not expressly or impliedly make provision for the price, "the buyer must pay the price generally charged by the seller at the time of the conclusion of the contract."[10] By prescribing the criteria for the determination of a price that is not defined by the contract, it is presumed that a contract could be valid[11] without a determined price, either by the contract itself or in the offer for its conclusion.

The further requirement of a fixed or determinable price in art. 14(1) CISG was the subject of intensive debate both in the UNCITRAL deliberations and at the Vienna Diplomatic Conference.[12] Proposals to eliminate the requirement of a fixed or determinable price failed as a result of the opposition by the Soviet Union, a number of developing countries, France and other States.[13]

The contradiction between CISG articles 14(1) and 55 is evinced in the different approaches adopted in the literature. Professor Honnold's view is: the meaning of art. 55 CISG is that "a contract may be 'validly concluded' even though it does not expressly or impliedly fix or make provisions for determining the price."[14] On the other hand, Professor Farnsworth is of the opinion that the requirement in art. 14(1) CISG must be met, so that the offer must contain the price.[15]

This academic debate concerns whether article 14(1) CISG should be read alone, or in conjunction with article 55.[16] Some scholars[17] hold that the most justified approach regarding the open-price term is that:

The ultimate criteria for deciding whether a price is the necessary part of an offer or not must be determined by using the rules of the interpretation of the parties' statements.[18] If, even without the price term, the parties consider an offer sufficiently determined and, on the basis of such offer, conclude a sales contract, then there is no reason for the courts and arbitrators not to accept the contractors' will.

Gabuardi has contributed to the substance of the debate by providing an insightful review of the legislative history and doctrine on arts. 14(1) and 55 plus the available CISG case law on open-price terms, concluding that:

"[W]hile being silent about the discussion within the academic community, the courts have approached the issue of open-price terms in sales contracts acknowledging that articles 14 and 55 of CISG deal with different issues; that is, article 14 deals with the issue of open-price terms at the time of the formation of the contract, while article 55 deals with open-price terms once the parties have already entered into a sales contract."[19]

Should the problem of the open-price term appear in regards to a sale contract governed by the PECL as lex contractus, it could be solved by a PECL provision which takes care of the situation in which the price for goods or services in international is not determined in the contract. By way of contrast with the CISG, when the price for goods or services is not determined by the contract, the PECL presumes that "a reasonable price" is in effect.[20] In commercial practice, the price can be determined as the prevailing price, or as the average price, or in other similar ways.[21] In this sense, the rule of art. 6:107 PECL becomes quite important. According to this rule, if the price (or any other contractual terms) is to be determined by reference to a non-existed, ceased or non-accessible factor, the nearest equivalent factor shall be substituted.[22] The provisions of the PECL on "reasonable price" where the price cannot be determined by the contract do not appear relevant to the proper interpretation of the CISG.

The PECL also deals with the possibility that the right to determine the price is given to a third party.[23] If the third party will not or cannot determine the price, "the parties are presumed to have empowered the court to appoint another person to determine it."[24]

In addition, the PECL regulates the situation in which the determination of the price (or any other contractual term) is left to one of the contract parties. When this is the case, and the determination is "grossly unreasonable, then notwithstanding any provision to the contrary, a reasonable price or other term shall be substituted."[25]

      2.3. Non-fundamental elements of an offer are elements whose determination is not necessary for the validity of the offer and, consequently, for a contract to be concluded on the basis of such an offer. Those elements can be turned into fundamental elements if the parties express their will to have them so regarded. In the CISG, it can be concluded from art. 14(1), that the fundamental elements of an offer are the price, the quantity, and the goods. A contrario, other elements are non-fundamental,[26] but can be turned into fundamental elements, if that is what the parties want. The redactors of the PECL explicitly sanction this possibility. According to art. 2:103(2) PECL (sufficient agreement), "if one of the parties refuses to conclude a contract unless the parties have agreed on some specific matter, there is no contract unless agreement on that matter has been reached."[27] However, if parties did not determine the content of the contract's non-fundamental elements, this content should be evaluated according to the rules for the interpretation of parties' intention,[28] or according to art. 6:102 PECL (implied obligation).[29]

3. The determination of offer ad personam

Besides animus contrahendi and the element of "sufficient definition," an additional condition for a proposal to be considered an offer is the determination of the person for whom the offer is intended (determination of offer ad personam).

The importance of this is especially relevant to offers made using price lists, catalogues, public advertisement or other similar methods. Some national laws explicitly provide that such proposals are not offers.[30] The PECL, on the other hand, prescribes that an offer "may be made to one or more specific person or to the public."[31] Moreover, even "a proposal to supply goods or services at stated prices made by a professional supplier in a public advertisement or catalogue, or by a display of goods, is presumed to be an offer to sell or supply at the price until the stock of goods, or the supplier's capacity to supply the service, is exhausted."[32]

This provision of the PECL is not relevant to the proper interpretation of the CISG because, conversely, the general rule in the CISG seems not to regard such proposals extended to the public as offers. The CISG deems such a proposal as only an "invitation ad offerendum;" CISG article 14(2) states that a proposal addressed to other than one or more specific persons is to be "considered merely as an invitation to make offers, unless the contrary is clearly indicated by the person making the proposal."

This difference between the PECL and the CISG could be explained again by the different scope of application of the PECL and the CISG. The CISG was brought to life with the intention to be applied only to commercial sales. On the other hand, the PECL is designed to be applied as general rules of contract law in the European Communities;[33] there is no restriction for PECL application only to commercial contracts.[34] The rule in the PECL, which allows a public advertisement, a catalogue, etc. to be presumed as an offer, is the logical consequence of this PECL scope of application. The PECL rule protects the interest of consumers, who are in most cases the persons to whom such advertisements or similar proposals are intended, an area outside the realm of the CISG.


FOOTNOTES

* Predrag N. Cvetkovic, Faculty of Law, Department for Trade Law, University of Nis, Serbia, received his LL.B and LL.M. from the University of Nis [Dissertation title: Formation of Contracts for the International Sale of Goods]. His Ph.D. dissertation (in process) is on International Protection of Foreign Investments].

A match-up of CISG Article 14 with the following provisions of the Principles of European Contract Law is available: PECL Articles 2:201 [Offer], 2:101 [Conditions for the conclusion of a contract], 2:211 [Contracts not concluded through offer and acceptance]; also with PECL 2:102 [Intention], 2:103 [Sufficient agreement], 2:104 [Terms not individually negotiated]. <http://cisgw3.law.pace.edu/cisg/text/peclcomp14.html>. The match-up contains:

-   Comments on these PECL provisions authored by the European Commission describing and illustrating the manner in which these provisions are to be applied; and
-   Notes that compare these PECL provisions with continental and common law domestic rules, doctrine and jurisprudence.

1. Art. 2:211 PECL explicitly extends its formation provisions to contractual situations that do not fit the traditional offer-acceptance model. The Comments to this provision of the PECL <http://www.cisg.law.pace.edu/cisg/text/peclcomp14.html#2211> cite as examples of situations covered by an analogical application of the rules found in PECL provisions on offer and acceptance:

(a) the situation in which it is not easy to tell where in the negotiation process the parties reach an agreement which amounts to a binding contract of sale (see the elements required by article 2:201 PECL, which are sometimes hard to establish);

(b) the situation in which a certain type of contract is made by conduct alone (e.g., car park tickets, etc. [the explanation for this listing of a typical contract transaction with a consumer is that the PECL, which is applicable to consumer as well as commercial contract transactions, has a broader scope than the CISG]).

2. This presumption is also found in art. 2.2 of the UNIDROIT Contract Principles [UCP].

In addition, PECL article 2:102 deals with the determination of the parties' intention to be legally bound. Whether a party in fact has such intention is immaterial if the other party has reason to infer from the first party's statement or other conduct that the first party intends to be bound.

3. See art. 8 CISG and its PECL counterparts, arts. 2:101, 5:101 and related PECL provisions <http://www.cisg.law.pace.edu/cisg/text/peclcomp8.html>.

4. See art. 1:101(1) PECL. Cf. the UNIDROIT Contract Principles whose scope is broader than that of the CISG, but not as broad as the scope of the PECL. The UNIDROIT Principles "set forth general rules for [all] international commercial contracts" (see the Preamble of UCP, para. 1): the UNIDROIT Principles thus apply to international commercial contracts for the sale of goods as well as other international commercial contracts.

5. In a contract of sale for which the PECL is the governing law, the quantity can also be determined not only expressly, but implicitly as well. This conclusion can be derived from art. 6:102 of the PECL, which provides criteria that establish "implied obligations."

6. See art. 35(2) CISG. Through this article, the criteria for the determination of the conformity of goods in the sale contract are established.

7. In accord, see Oberlandsgericht [Appellate Court] Frankfurt am Main [Germany] 31 March 1995 (25 U 185/94, <http://cisgw3.law.pace.edu/cases/950331g1.html>). The buyer alleged that, through the course of negotiation, the parties agreed on test tubes of "Duran" quality. The seller delivered tubes of "Fiolax" quality. The buyer refused to pay the price. The Court ruled that there was no valid contract, since the acceptance of the seller's offer was missing as the seller and the buyer had not reached an agreement on quality. Hence, there was no valid offer and acceptance; consequently, no validly concluded contract.

8. Art 5.6 UCP (which deals with the determination of a quality of performance which is neither fixed nor determinable by the contract) introduces the criteria of reasonable quality of performance, besides "average quality." The PECL has defined the term "reasonableness" (art. 1:302). The reason why this criterion was not incorporated in the PECL as the supplemental remedy for determination of the quality of performance could not be seen, unless this is to be regarded as an implicit element of the PECL.

9. "… A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provisions for determining … the price."

10. "Where a contract has been validly concluded but does not expressly or implicitly fix or make provisions 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." (art. 55 CISG).

11. CISG art. 55 commences: "Where a contract has been validly concluded" (emphasis added). Khoo calls attention to the meaning of this reference to validity. He states: "Article 55 … deals with cases in which a contract has apparently been concluded but without any agreement on provision as to price. In these instances, Article 55 makes it clear that its provision takes effect subject to the contract having been validly concluded by the criteria of the applicable domestic law …" Warren L.H. Khoo, in: Bianca-Bonell Commentary on the International Sales Law, Guiffrè: Milan (1987), p. 46. The pre-Vienna Diplomatic Conference legislative history of the CISG is in accord. See UNCITRAL Yearbook VIII, A/CN.9/SER.A/1977. pp. 48-49, paras. 323-330, 336-340; see also Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 2d ed. (1991), p. 201.

12. For a clear account of relevant recorded details in these drafting debates, go to:

(i) <http://www.cisg.law.pace.edu/cisg/firstcommittee/Meeting8.html>. Here one can access the summary records of the 8th meeting of the First Committee (Monday, 17 March 1980) on CISG arts. 14 and 55 [A/CONF.97/C.1/L.29, L.36, L.37, L.38, L.46, L.55 and L.69]. One will find in this record some very interesting comments and drafting alliances formed between countries irrespective of the level of industrial/economic development. Note especially the position of France, whose representative (Mr. GHESTIN) said that it was "important to retain the sentence as the essential terms of a sale were quality, quantity and price, the main difficulty being the question of the price. The issue was one of balance and fairness. It should be borne in mind that contracts frequently covered raw materials that were to be delivered over a period of years at prices that were difficult to fix (e.g., petroleum products)."

(ii) <http://www.cisg.law.pace.edu/cisg/firstcommittee/Meeting11.html>. Here one can access the Summary Records of the 11th Meeting of the First Committee (Tuesday, 18 March 1980) on CISG arts. 14 and 55. Report of ad hoc working group on paragraph 1 (A/CONF.97/C.1/L. 103). A report on the significance of the deliberations on article 14 CISG based on notes taken at the Conference and published shortly thereafter was prepared by Prof. Schlechtriem, and is available on-line at <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem-14.html>.

13. See Jacob S. Ziegel, "Article 14" in Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods, July 1981: "The Francophone countries and delegates from a substantial number of developing states felt that art. 12(1) [became 14(1) CISG] was doctrinally sound and necessary to prevent buyers being confronted by sellers with unreasonable prices after the goods had been delivered;" available at <http://www.cisg.law.pace.edu/cisg/text/ziegel14.html>.

"Socialist countries objected to the conclusion of contracts with open-price terms, because the parties are expected to conform their contracts to a predetermined macroeconomic governmental plan. This view makes sense in a planned economy, in which contracts with open-price terms are a nullity from the perspective of the superintending state planning agency. Also, in some civil law systems, contracts of sale with open-price terms are viewed with hostility, particularly when the unilateral fixing of the price works to the disadvantage of the weaker party;" Helen Elizabeth Hartnell, "Rousing the Sleeping Dog: The Validity Exception to the Convention on Contracts for the International Sale Of Goods", 18 Yale Journal of International Law 1, 66 (1993) <http://www.cisg.law.pace.edu/cisg/biblio/hartnell.html>. See also Alejandro M. Garro, "Reconciliation of Legal Traditions in the U.N. Convention on Contracts for the International Sale of Goods", 23 International Lawyer 443, 463 (1989) <http://www.cisg.law.pace.edu/cisg/biblio/garro1.html>.

14. John O. Honnold, Uniform Law for International Sale under the 1980 United Nations Convention, 1982, p. 163. Honnold states: "[T]he added provision, that in such case the parties are considered 'to have impliedly made reference' to the prices generally charged, precludes argument that failure to state the price produces a fatal gap in the contract that contravenes the provisions on definiteness in article 14."

15. E. Allan Farnsworth, Formation of Contract, 1984, § 3.04, at. 3-8. By his opinion, art. 55 in Part III of the CISG (which deals with the obligations of the parties according to an existing contract) was designed for use only where a Contracting State made a declaration under art. 92(1) CISG that it will not be bound by Part II of the Convention, and, more precisely, by art. 14 placed in Part II of the CISG.

16. "The Honnold position is that the provisions may be read together, while the Farnsworth position is that they cannot." Paul Amato, U.N. Convention on Contracts for the International Sale of Goods -- the Open Price Term and Uniform Application: an Early Interpretation by the Hungarian Courts, 13 Journal of Law & Commerce 1, 10 (1993) <http://www.cisg.law.pace.edu/cisg/biblio/amato.html>. See also Carlos A. Gabuardi, "Open Price Terms in the CISG, the UCC and Mexican Commercial Law", available at <http://www.cisg.law.pace.edu/cisg/biblio/gabuardi.html>. The author provides an excellent comparative review of the issue of open-price terms. On point, Gabuardi agrees with Honnold that articles 14 and 55 regulate different issues and are not contradictory. "I think that article 14 only establishes a rule for those cases in which the parties exchange 'offer' and 'acceptance' without making an express commitment to be bound even if the price has not been fixed, while article 55 establishes a rule for those cases in which the parties enter into an agreement in which they commit themselves to be bound by it, even though the price has not been fixed." Idem.

17. Amato supra note 16, at pp. 1-27; J.E. Murray, Jr., An Essay on the Formation on Contracts and Related Matters under the United Nations Convention on Contracts for the International Sale of Goods, 8 Journal of Law & Commerce, (1988), pp. 11-51 <http://www.cisg.law.pace.edu/cisg/biblio/murray.html>.

18. Those rules are contained in CISG art. 8, PECL arts. 1:302 and 5:101 and in UCP art. 4.1, art. 4.2. and art. 4.3.

19. Gabuardi supra, at note 16.

20. See art. 6:104 PECL.

21. Some national codes also use terms such as the "prevailing price", for example, UCC § 2-724, Italian Codice Civile art. 1474(2), Yugoslav Code of Obligation (art. 465(2) (3).

22. It is necessary to remember that art. 55 CISG prescribes that, subject to a validly concluded contract that does not expressly or implicitly fixed price or 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."

23. It should be emphasized that regulation of this question is quite justified and welcome with regard to the practical needs in commercial relations in which the parties can agree that the determination of the price is to be entrusted to commercial agents, trade chambers, stock exchanges, etc.

24. See art. 6:106(1) PECL. The rule adopted in the PECL trails the "in favorem contractus" principle, which is in accord with the needs and nature of international commercial exchange of goods, money and services. The UCP also follows this approach in its art. 5.7(3), which presumes the validity of a "reasonable price" in the event the third party did not determine the price.

25. See art. 6:105 PECL. Art. 57(2) UCP is to the same effect. In practice, a contract clause that authorizes one party to determine the price is, in most cases, the consequence of a huge economic power inequality between the parties. National codes that allow only one party to be empowered to determine the price often restrict this discretion with the principle of good faith (see, for example, § 2-305(2) UCC). In that way, arbitrary or fraudulent use of this right is prevented. A similar interpretation is also valid for art. 6:105 PECL.

26. Form, measurement and other features of the goods are examples of elements of offers and their acceptances that the CISG does not appear to regard as fundamental. See art. 65 CISG.

27. See also art. 2.13 UCP.

28. See note 22 supra and accompanying text. By way of comparison, it should be mentioned that the UCP has a particular rule for "supplying an omitted term", e.g., for the situation in which the parties did not agree with respect to a term which is important for a determination of their rights and duties.

29. According to art. 6:102 PECL, along with express terms, a contract may contain implied terms based on the intention of the parties, the nature and purpose of the contract, and good faith and fair dealing. In a wider sense, the content of non-fundamental elements can be derived from this rule. See also arts. 5.1 and 5.2 of the UCP.

Note that under PECL arts. 2:101 and 2:103, a contract is only concluded if the parties have agreed on its express terms. This rule must also apply when a party invokes standard terms or other not individually negotiated terms as part of the contract; see the effect of PECL art. 2.104.

30. See, for example, art. 7(2) of the Swiss Code of Obligation.

31. See art. 2:201(2) PECL.

32. See art. 2:201(3) (offer) PECL.

33. See art. 1:101(1) PECL.

34. By way of contrast, the UCP is strictly intended to be applied to international commercial contracts (see Purpose of the UNIDROIT Principles, par. 1.)


Pace Law School Institute of International Commercial Law - Last updated September 14, 2009
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