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Reproduced with permission from 8 Journal of Law and Commerce (1988) 11-51

excerpt from

An Essay on the Formation of Contracts and Related Matters under the United Nations Convention on Contracts for the International Sale of Goods

John E. Murray, Jr. [*]

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Time When Offers Become Effective -- Duration of Offers

CISG states that an offer becomes effective when it reaches the offeree.[42] An offer, like other operative indications of intention, reaches the offeree when it is delivered to his place of business or mailing address.[43] American lawyers may be troubled to discover the CISG possibility that one can be an offeree before he knows of the offer, i.e., if the offer is effective when it is delivered to the offeree's office or other mailing address, CISG promotes the notion that the offeree has a power of acceptance even before he reads the offer or otherwise comes to know of it. American contract law precludes an operative acceptance without knowledge of the offer.[44] If an offer is made by A to B while A has no knowledge of B's identical offer to A, crossing offers do not constitute a contract.[45] This problem may appear principally in classrooms discussing differences between CISG and the UCC or common law of contracts. CISG, however, manifests more pragmatic problems.

Assume an offer is dispatched on June I which provides that the offeree has twenty days in which to accept. The common law interpretation of that offer would permit twenty days from the time the offer is received on the sensible footing that the offeree cannot know of the offer and cannot, therefore, become an offeree, until he receives the offer.[46] This sensible notion is rejected under CISG which would interpret the statement in the offer as commencing the twenty day period from the moment a telegram is handed to the telegraph company for dispatch or, in the case of a letter, from the date of the letter, or, where no date is shown on the letter, from the date on the envelope.[47] The difference between the common law and CISG may be viewed simply as one of interpretation, i.e., there are two plausible interpretations and either is supportable. Yet, the CISG interpretation does not maintain internal consistency. Remember that CISG insists that an offer is "effective" when it reaches the offeree.[48] If the offer is not effective until it reaches the offeree, why should the time stated in the offer begin to run upon dispatch or the time on the letter or envelope? This rule of interpretation changes under CISG with respect to instantaneous communication such as telephone, telex or the like, i.e., acceptance fixed by the offeror begins to run from the moment the offer reaches the offeree under the time for Article 20(1).

Even with respect to written, non-instantaneous communications, it has been suggested that the CISG rule commencing the twenty days from dispatch or the date of the letter or envelope would be overcome by a statement in the offer that the twenty days commences when the offer reaches the offeree since the offeror can "fix" the time for acceptance.[49] CISG apparently recognizes the common law view that the offeror is master of the offer and does, therefore, permit the offeror to fix the time for acceptance.[50] Yet, it does so with respect to the time the acceptance must reach the offeror since, as will be seen in some detail later in this article, the general rule under CISG is that the acceptance must be received to be effective, i.e., the common law "dispatch" or "mailbox" ("post box") rule is rejected by CISG. Thus, even if the offer were to state unequivocally that the twenty days for acceptance begins to run from the offeree's receipt of the offer, the acceptance would have to reach the offeror "within the time he has fixed." [51] The offeree, therefore, would have to make an acceptance decision and mail the acceptance in time to reach the offeror within twenty days from the date the offeree received an offer expressly stating that the offer begins to run from the date of receipt. Thus, even with respect to that offer, the offeree would have to deduct the required time for the acceptance to reach the offeror from the twenty days. If the letter offer did not expressly state that the twenty days begins to run from the offeree's receipt (thereby activating the rule of interpretation that the time begins before its receipt), the offeree must, first, deduct the time from the date of the letter or date on the envelope from the twenty days. From that result, he must then deduct the mailing time for acceptance. Those deductions may force an offeree into an acceptance decision within ten or fewer days from the time he receives the offer expressly stating the time for acceptance to be twenty days.

Professor Honnold acquiesces in the foregoing analysis with no discomfort since he regards the CISG Article commencing the running of the twenty days in the offer before its receipt by the offeree (absent an express statement to the contrary by the offeror) as "merely a guide to interpreting the offeror's statements."[52] He then, however, suggests the following hypothetical: The letter offer states, "You will have five days to consider this offer." He further assumes that the mails between the parties normally take four or five days for delivery. He concludes, "It would be inconsistent with the expressed intention of the offer to start the five-day period on June 1 [the date on the letter or envelope]."[53]

In light of his express assumption that the mailing time is four or five days for the offer to reach the offeree, Professor Honnold is presumably suggesting that it would be absurd to interpret the offer as commencing five days from the date of the offer since that period would have expired at or shortly after receipt of the offer. Thus, the guide to interpretation in Article 20(1) would be overcome. It is interesting that Professor Honnold does not simply interpret the language of his hypothetical offer, "You will have five days to consider this offer" as commencing five days from the time of the offeree's receipt, regardless of the time required for the offer to reach the offeree. If Article 20(1) is a mere guide to interpretation, it would seem that the language of the offer should be sufficient to overcome that guide. Professor Honnold, however, appears to suggest the contrary with respect to that language, and predicates the overriding of the interpretation guide on the period required for the mail to reach the offeree. It is even more interesting to consider the time the offeree has "to consider" the offer from the time of receipt. Again, the acceptance must reach the offeree within the time fixed in the offer to be effective.[54] Thus, assuming the five days begins to run from the time of receipt, with the mail requiring four to five days to be received, the offeree would have to mail the acceptance immediately upon receipt of the offer to ascertain compliance with the required time of acceptance. Such an offeree could, of course, use a more rapid or even instantaneous medium of acceptance. If, however, Professor Honnold's analysis is designed to suggest a sensible interpretation of the time for acceptance under the circumstances of the offer, an even more sensible approach would permit the offeree to dispatch (mail) the acceptance within five days after receipt of the offer. There is, however, no readily apparent basis in CISG for this sensible result since it would suggest the application of the common law "post box" or dispatch rule which, again, has been rejected by CISG. The only possible interpretation under CISG that might permit this analysis is to interpret the offer as derogating from the rule that the acceptance must be received within the time fixed in the offer and to permit, instead, the offeree to manifest acceptance by dispatch within five days from receipt. Article 6 of CISG expressly permits the parties to exclude, derogate from or vary the effect of any provision with CISG.[55] Moreover, the legislative history of CISG indicates that UNCITRAL refused to require any such exclusion, derogation or variance from CISG terms to be expressed by the parties though it also rejected the inclusion of a term permitting "implied" exclusion of CISG terms by the parties.[56] Thus, if an offer could be interpreted to exclude the normal requirement that an acceptance reach the offeree under CISG, the dispatch rule could apply to the offeree's acceptance. In light of the express rejection of the common law dispatch rule by CISG delegates and the refusal to incorporate a term in Article 6 that clearly permits implied exclusion, however, derogation or variance from CISG terms, such an interpretation is more than questionable.

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FOOTNOTES

* University Distinguished Service Professor of Law, University of Pittsburgh, School of Law.

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42. See CISG, supra note 7, art. 15(1).

43. Id., art. 24. This definition applies to other "indications of intention" besides acceptances.

44. One of the better known cases so holding is Glover v. Jewish War Veterans of United States, Post No. 58, 68 A,2d 233 (D.C. 1949). See also Restatement (Second) of Contracts 23 (1981) setting forth the requirement that each party manifest assent with reference to the manifestation of the other. Comment c to this section precludes acceptance of unknown offers of reward.

45. See Restatement (Second) of Contracts 23 comment d (1981).

46. The classic case is Caldwell v. Cline, 109 W. Va. 553, 156 S.E. 55 (1930). See also Falconer v. Mazess, 403 Pa. 165, 168 A.2d 558 (1961).

47. See CISG, supra note 7, art. 20(1).

48. Id., art. 15(1).

49. See Honnold, supra note 22, at 197.

50. See CISG, supra note 7, art. 18(2).

51. Id.

52. Honnold, supra note 22, at 197.

53. Id. at 198.

54. See CISG, supra note 7, art. 18(2).

55. CISG Art. 6 reads: "The parties may exclude the application of this Convention or, subject to Article 12, derogate from or vary the effect of any of its provisions." Id., art 6. Article 12 relates to Article 11 which states that a contract need not be concluded or evidenced by a writing and need not meet any prescribed form. Article 96, however, permits a Contracting State to make a declaration that any provision of Article 11, Article 29 (modifications need not be evidenced by a writing though no oral modification clauses will be respected) or Part II (Articles 14-24) that permits a contract of sale, offer, acceptance, modification or termination, to be effective without a writing does not apply where any party has a place of business in that Contracting State.

56. See Honnold, supra note 22, at 106.

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Pace Law School Institute of International Commercial Law - Last updated August 16, 1999
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