2008 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods
Digest of Article 23 case law [reproduced with permission of UNCITRAL] [*]
A contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention.
1. Article 23 provides that a contract is concluded when an acceptance of an offer becomes effective. Except as provided in article 18(3), an acceptance is effective at the moment it reaches the offeror in accordance with article 18(2). The exception in article 18(3) provides that an acceptance is effective at the moment the offeree performs an act if, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree is authorized to indicate its acceptance of the offer by an act without notice to the offeror.
[See also the overview comments UNCITRAL has prepared to introduce all of the Formation provisions of the CISG (articles 14 through 24). They discuss the following subjects: Permitted Reservations by Contracting States, Exclusivity of Part II, Validity of Contract, Formal Requirements, Incorporating Standard Terms, and Commercial Letters of Confirmation.]
Interpretation and the time of conclusion of a contract
2. A contract is concluded when the communications between and actions of the parties, as provided in article 18 and as interpreted in accordance with article 8, establish that there has been an effective acceptance of an offer. One decision concluded that an offer that conditioned the contract on the approval of the parties respective Governments, when properly interpreted, did not postpone conclusion of the contract under the Convention. Another decision found that a supplier and a potential subcontractor had agreed to condition the conclusion of the sales contract on the future award of a sub-contract by the main contractor.
3. Once a contract is concluded, subsequent communications may be construed as proposals to modify the contract. Several courts subject these proposals to the Convention's rules on offer and acceptance.
Place of conclusion of a contract
4. Article 23 does not address where a contract is concluded. One court deduced from article 23 that the contract was concluded at the place of business where the acceptance reached the offeror.
* This presentation of the UNCITRAL Digest is a slightly modified version of the original UNCITRAL text at <http://www.UNCITRAL.org/pdf/english/clout/CISG_second_edition.pdf>. The following modifications were made by the Institute of International Commercial Law of the Pace University School of Law:
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1. [MEXICO Compromex Arbitration Award 29 April 1996 (Canned Fruit case)] (contract concluded when acceptance reached buyer-offeror); [GERMANY Oberlandesgericht München 8 March 1995 (Copper and nickel electrolyte case)] (although Part II not applicable because of art. 92 declaration, court finds contract concluded by intention of the parties); [FRANCE Cour d'appel, Paris 22 April 1992 (Electronic components case)] (contract concluded when acceptance reached offeror); [GERMANY Landgericht Hamburg 26 September 1990 (Textiles case)] (exchange of communications, interpreted in accordance with art. 8, established parties intent to conclude contract) (see full text of the decision).
2. [HUNGARY Fovarosi Birosag (Metropolitan Court), Budapest, 10 January 1992 (Airplane engines case)] reversed on other grounds, [HUNGARY Legfelsobb Birosag 25 September 1992 (Airplane engines)] (see full text of the decision).
3. [ICC International Court of Arbitration, Award 7844 of 1994 (Radio equipment case)].
4. [SPAIN Tribunal Supremo 28 January 2000 (Jute case)] (proposal to modify price not accepted); [SWITZERLAND Handelsgericht des Kantons Zürich 10 July 1996 (Plastic chips case)] (proposal to modify price not accepted by silence, citing art. 18(1)); [FRANCE Cour d'appel Paris 13 December 1995 (Packaging for biscuits case)] (confirmation letter sent after contract concluded not accepted).
5. [AUSTRALIA Federal Court of Adelaide 28 April 1995 (Roder v. Rosedown) (Tent hall structures case)] (German law applied because acceptance reached offeror at its place of business in Germany) (see full text of the decision).