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2008 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods

Digest of Article 29 case law [reproduced with permission of UNCITRAL] [*]

[Text of article
Overview: meaning and purpose of the provision
Modification or termination by mere agreement
Form agreements
Abuse of "no oral modification" clause]

Article 29

(1) A contract may be modified or terminated by the mere agreement of the parties.
(2) A contract in writing which contains a provision requiring any modification or termination by agreement to be in writing may not be otherwise modified or terminated by agreement. However, a party may be precluded by his conduct from asserting such a provision to the extent that the other party has relied on that conduct.

OVERVIEW: Meaning and purpose of the provision

1. Article 29 addresses modification (which includes an addition to) [1] and termination of an already concluded contract by agreement of the parties. According to article 29 (1), the mere consent of the parties is sufficient to effect such a modification or termination. If, however, the parties have agreed in writing that a modification or termination of their contract must be done in writing, paragraph 2 provides that the contract cannot be otherwise modified or terminated -- although a party's conduct may preclude it from asserting such a provision to the extent that the other party has relied on that conduct.

2. Article 29(1) is intended to abolish the common law doctrine of "consideration" as a requirement for modification or termination of contracts governed by the Convention.[2]

Modification or termination by mere agreement

3. In order to modify a contract provision or terminate their contract, the parties must reach agreement. The existence of such an agreement is determined on the basis of the provisions in Part II (articles 14-24) of the Convention.[3] Article 29 provides that a contract can be modified or terminated by the mere agreement of the parties. In line with article 18(1), it has been stated that silence of one party in response to a proposal by the other to modify a contract does not in itself constitute acceptance of such proposal;[4] it has also been stated, however, that there was agreement to terminate a contract where a buyer refused to pay due to alleged non-conformities in the goods, the seller subsequently offered to market the goods itself, and the buyer failed to reply to the offer.[5] One court stated that, although article 29 provides that a contract can be modified purely by agreement of the parties, modification of the purchase price did not result merely from the general mood of a meeting.[6] The acceptance without comment of a bill of exchange as payment has, however, been regarded as implied consent to postponement of the date for payment until the maturity of the bill.[7]

4. Interpretation of the parties' agreement to modify or terminate a contract is governed by the Conventions rules on construction -- in particular article 8.

5. The agreement of both parties is all that is required in order to modify or terminate their contract.[8] No form requirements need be met [9] unless the reservation concerning form applies (arts. 11, 12, 96) [10] or the parties have agreed otherwise. According to one decision, when a State's article 96 reservation comes into play, modifications agreed upon only orally are invalid.[11] In all other cases it follows from article 11, which evidences a general principle of informality in the Convention, that the parties are free to modify or terminate their contract in any form, whether in writing, orally, or in any other form. Even an implied termination of the contract has been held possible;[12] it has also been held that a written contract may be orally changed.[13]

Form agreements

6. According to article 29(2), if a written contract contains a provision requiring modification or termination of the contract to be in writing (a "no oral modification"-clause or "written modification"-clause), then the parties cannot modify or terminate the contract in a different manner.[14] An oral amendment is ineffective in such a case unless the second sentence of article 29(2) were to apply.[15]

7. A so-called merger clause, according to which all prior negotiations have been merged into the contract document, has been treated like a "no oral modification" clause, so that no evidence of oral agreements prior to the written contract could be adduced in order to modify or terminate that contract.[16]

Abuse of no oral modification clause

8. Article 29(2)(2) provides that a party may be precluded by its conduct from invoking a no oral modification clause "to the extent that the other party has relied on that conduct." It has been stated that the provision is an expression of the general good faith principle that governs the Convention (art. 7(1)).[17]


NOTES

* 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:

   -    To enhance access to contents by computer search engines, we present in html rather than pdf;
 
   -    To facilitate direct focus on aspects of the Digests of most immediate interest, we inserted linked tables of contents at the outset of most presentations;
 
   -    To support UNCITRAL's recommendation to read more on the cases reported in the Digests, we provide mouse-click access to (i) CLOUT abstracts published by UNCITRAL (and to UNILEX case abstracts and other case abstracts); and also (ii) to full-text English translations of cases with links to original texts of cases, where available, in [bracketed citations] that we have added to UNCITRAL's footnotes; and
 
   -    To enable researchers to themselves keep the case citations provided in the Digests constantly current, we have created a series of tandem documents, UNCITRAL Digest Cases + Added Cases. The new cases and other cases that are cited in these updates are coded in accordance with UNCITRAL's Thesaurus.

In addition, this presentation introduces each section of the UNCITRAL Digest with a Google search button. This is to help you access doctrine (relevant material from the over 1,200 commentaries, monographs and books on the CISG and related subjects that we present on this database) as well as the texts of the cases that UNCITRAL cites in its Digests and that we present in our updates to UNCITRAL's Digests.

1. See [UNITED STATES Federal District Court, Southern District of New York, 22 September 1994 (Graves v. Chilewich)] (see full text of the decision).

2. See Secretariat Commentary to (then) article 27(overcoming the common law rule that consideration is required) Commentary on the draft Convention on Contracts for the International Sale of Goods, A/CONF.97/5, reproduced in United Nations Conference on Contracts for the International Sale of Goods: Official Records, at p. 28, paras. 2-3.

3. [GERMANY Oberlandesgericht Köln 22 February 1994 (Rare hard wood case)]; to the same effect see [FRANCE Cour d'appel, Grenoble 29 March 1995 (Corn case)], and [SWITZERLAND Obergericht des Kantons Basel-Landschaft 5 October 1999 (Summer cloth collection case)].

4. [GERMANY Oberlandesgericht Köln 22 February 1994 (Rare hard wood case)]; [SWITZERLAND Obergericht des Kantons Basel-Landschaft 5 October 1999 (Summer cloth collection case)].

5. [GERMANY Oberlandesgericht Köln 22 February 1994 (Rare hard wood case)].

6. [FRANCE Cour d'appel, Grenoble 29 March 1995 (Corn case)].

7. [GERMANY Landgericht Hamburg 26 September 1990 (Textiles case)] (see full text of the decision).

8. [AUSTRIA Oberster Gerichtshof 6 February 1996 (Propane case)].

9. [UNITED STATES Federal District Court, Southern District of New York, 6 April 1998 (Claudia v. Olivieri Footwear)] (see full text of the decision); [AUSTRIA Oberster Gerichtshof 29 June 1999 (Dividing wall panels case)].

10. For a similar case see [BELGIUM Rechtbank van Koophandel, Hasselt 2 May 1995 (Frozen raspberries case)].

11. [RUSSIA Information Letter No. 29 of the High Arbitration Court of the Russian Federation 16 February 1998 (Onions case)].

12. [AUSTRIA Oberster Gerichtshof 29 June 1999 (Dividing wall panels case)].

13. [AUSTRIA Oberster Gerichtshof 6 February 1996 (Propane case)] (see full text of the decision).

14. [ICC Court of Arbitration, Award 9117 March 1998 (Goods case)].

15. [UNITED STATES Federal District Court, Southern District of New York, 22 September 1994 (Graves v. Chilewich)].

16. [ICC Court of Arbitration, Award 9117 March 1998 (Goods case)].

17. [AUSTRIA Arbitration-Internationales Schiedsgericht der Bundeskammer der gewerblichen WirtschaftWien, 15 June 1994 (SCH-4318) (Rolled metal sheets case)].


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