Reproduced with permission from 8 Journal of Law and Commerce (1988) 11-51
John E. Murray, Jr. [*]
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What Is an"Acceptance" Under CISG?
A. The General Principle Under CISG
CISG requires an "indication" of "assent" to an offer if the offer is said to have been accepted. The "indication" may occur through "[a] statement made by or other conduct of the offeree." An American lawyer is well aware of the "assent" requirement and would find comfort in the allowance of a manifestation of assent through the offeree's words or conduct. He would also find what appears to be a familiar caveat in this definition of assent: "Silence or inactivity does not in itself amount to acceptance." As in other formation Articles of CISG, however, what first appears to be virtually identical may, upon closer scrutiny, become different.
B. The Time When Acceptance Becomes Effective -- Changes in the "Dispatch" or "Mailbox" Rule
American lawyers are wed to the "mailbox" or "dispatch" rule of acceptance, i.e., absent an express requirement in the offer that the acceptance is not effective until it is received, the acceptance is effective upon dispatch if it is properly sent through an impliedly authorized ("reasonable") medium of acceptance. The risk of transmission is on the offeror for two reasons: (1) the risk must be allocated to one of the parties and the choice is not clear, and (2) the risk is allocated to the offeror since he, as master of the offer, could have controlled the risk of transmission in his offer but chose not to do so. An old argument in favor of the dispatch rule suggests that the rule avoids incessant notification. Thus, under a rule requiring the acceptance to be received by the offeror, the offeree would not know whether his acceptance was received until he is notified by the offeror to that effect. Having sent such a notice, the offeror would have to be notified by the offeree that he received notice of receipt of acceptance by the offeror. The offeror would then have to notify the offeree that he received . . . and so on, ad nauseam. Notwithstanding these arguments in favor of the dispatch rule, CISG adheres to the civil law tradition in requiring an acceptance to "reach" the offeree within the time fixed in the offer or, if no time is stated in the offer, within a reasonable time.
The major problem created by this approach is the change in the risk of transmission or delay in the acceptance. The offeree must now be concerned that his acceptance reaches the offeror and that it arrives within the time required by the offer. Thus, the careful offeree will ascertain that fact by pursuing a duplicative manifestation of acceptance within the time required by the offer or using an initial medium of acceptance that will provide evidence of the offeror's receipt of the acceptance. It should not be forgotten that CISG does not require written evidence of the contract. An oral acceptance or oral duplication of a written acceptance, however, may be difficult to prove.
At first blush, the requirement that the acceptance reach the offeree may suggest another major problem. Assume an acceptance is mailed but has not reached the offeror who decides to revoke the offer, i.e., before the acceptance is received, but after it was dispatched. Earlier we referred to the general principle that offers are revocable under CISG. The same Article setting forth that general principle, however, solves what otherwise would be a major problem for the offeree, in this situation: ''[A]n offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance."While this provision solves the problem for the offeree, it creates a problem for the offeror. The dispatch of an acceptance is still not effective as an acceptance, but it does have the operative effect of making an otherwise revocable offer irrevocable. The structure becomes even more curious when another CISG provision is considered: "An acceptance may be withdrawn if the withdrawal reaches the offeror before or at the same time as the acceptance would have become effective."
This provision is viewed as a companion to Article 15(2) which permits even an irrevocable offer to be withdrawn by the offeror if the withdrawal reaches the offeree before or at the same time as the offer. While each of the three provisions, i.e., Articles 15(2), 16(1) and 22, individually suggest defensible and even desirable purposes, their combined effect can be harmful to the offeror. Thus, assume an offer is received by the offeree who sends his acceptance in time for it to reach the offeree within the time established in the offer. The Article 15(2) power of withdrawal is extinguished when the offer was received absent a simultaneous withdrawal. The offeror maintains the Article 16(1) power of revocation only until the offeree has dispatched his acceptance. At that point, the offeree has an irrevocable power of acceptance which he may withdraw under Article 22 until the acceptance reaches the offeree at which point it becomes operative as an acceptance. Assume the acceptance was dispatched on June 1, that it will not arrive until June 5, and that June 5 is within the time prescribed in the offer. From the moment the acceptance is dispatched until the moment it reaches the offeror, the offeree may unilaterally withdraw from the deal while the offeror, whose offer became irrevocable upon the dispatch of the acceptance, may not withdraw. As a practical matter, the offeree's withdrawal of his acceptance could be accomplished by telephone. Thus, the combined effect of these CISG provisions is to permit the offeree to speculate at the expense of the offeror. The Second Restatement of Contracts wars against this possibility even where the acceptance arrives in a timely fashion because such speculation is a manifestation of bad faith. While CISG expressly sets forth a standard of "good faith in international trade" as one of its purposes, its procrustean rules, perhaps unwittingly, promote the possibility of such speculation by the offeree in this situation. Curiously, Professor Honnold does not address the problem in his book, and Professor Farnsworth provides a brief treatment in which he characterizes the situation as "a minor problem." His characterization is disconcerting.
C. Acceptance by Conduct
Under the UCC and Second Restatement of Contracts, it is clear that the typical offer may be accepted in any reasonable manner. Absent a clear expression to the contrary in the offer, the offeree may accept by promising the required performance or by performance. Though CISG requires assent to be "indicated" to the offeror by "[a] statement . . . or other conduct of the offeree . . .," a subsection of this Article appears to permit the offeree to accept by performance "without notice to the offeror" if the offer expressly or impliedly permits such an acceptance. These directives suggest a general principle of communication of assent by the offeree, i.e., a requirement that acceptance be promissory either in language or conduct with the additional requirement that such communicated assent must "reach the offeror." The only exception appears to be an offer that expressly permits or, through trade usage or prior course of dealing, impliedly permits the offeree to "indicate assent by performing an act." In that situation, "the acceptance is effective at the moment the act is performed, provided that the act is performed within the period of time laid down in the preceding paragraph [within the time required by the offer]." If such an acceptance "if effective at the moment the act is performed" rather than "at the moment the indication of assent reaches the offeror," which is the general requirement for acceptance, it certainly appears to be a clear exception to that general requirement. Professor Honnold's analysis of this CISG article, however, suggests considerable doubt as to whether it constitutes a genuine exception.
Honnold creates a hypothetical offer stating, "Please rush shipment of the following goods: (description of the goods)." The seller ships and the next day dictates a letter to the buyer informing him the goods have been shipped. Before mailing the letter, the buyer attempts to withdraw the offer and seller informs buyer that the goods have been shipped. The seller's notice of shipment is mailed and received by the purchaser twelve days before the goods are delivered. Professor Honnold concludes that a contract was formed. He leaves for further analysis the question of whether the notice of shipment was necessary "to perfect the acceptance" which he characterizes as "a difficult question." His subsequent analysis is confusing. There, he suggests a different hypothetical where the buyer simply requests the seller to ship certain goods, i.e., there is no indication of the necessity of quick shipment in the offer by language such as "rush" or otherwise. The seller ships the requested goods the day after receiving the offer and does not notify the buyer of shipment. The buyer becomes aware of the shipment about two weeks later when the goods arrive and the carrier notifies the buyer of such arrival. Professor Honnold suggests that the Article 18(2) requirement that the indication of assent must reach the offeror within the time prescribed in the offer controls. This conclusion is anything but remarkable if the offer is construed to be the normal offer under CISG rather than an offer permitting acceptance by performance under 18(3). Honnold seems to adhere to this interpretation by insisting on the application of 18(2) as he cautions, "Acceptance by act is authorized by Article 18(3) only 'by virtue of the offer or as a result of practices which the parties have established between themselves or by usage.' " Later in the analysis, however, he suggests his interpretation of the Article 18(3) language where the offeree "may indicate assent by performing an act . . . without notice to the offeror."
His interpretation is troubling:
The analysis is troubling because it is unclear. Does Professor Honnold suggest that Article 18(3) which proclaims performance to be the acceptance when that Article applies is still controlled by 18(2) which generally requires that the communication of acceptance must reach the offeror within the time prescribed in the offer? If so, does the acceptance occur upon performance of the act or not until it is communicated to the offeror? To suggest that there is no acceptance until it is communicated to the offeror is diametrically opposed to the language in 18(3), i.e., "the acceptance is effective at the moment the act is performed." This cannot be Honnold's view. His earlier statement wondering whether "a timely communication [is] necessary to perfect the acceptance" suggests that he does not regard communication of acceptance as the acceptance since an acceptance under 18(3) has already occurred through performance (shipment). Unfortunately, he fails to characterize this necessary communication of acceptance. Under the UCC and the Second Restatement of Contracts, such a communication of acceptance is clearly a condition to the duty of the former offeror. Thus, once shipment (performance) has occurred, a contract would be formed. If the goods arrive within the time fixed in the offer or within a reasonable time in the absence of a fixed time, notice of acceptance would be superfluous. If, however, the goods would not arrive within that time, notice becomes a necessary condition to the duty of the buyer which duty arose as soon as the contract was formed, i.e., upon shipment by the seller. The parallel is clear in the UCC and the Second Restatement.[l02] Professor Honnold apparently reads such a condition into Article 18(3). It would have been particularly helpful if he had provided a clear statement of this analysis.
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Go to entire text of Murray commentary
* University Distinguished Service Professor of Law, University of Pittsburgh, School of Law.
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77. See CISG, supra note 7, art. 18(1).
80. Restatement (Second) of Contracts § 63(a) (1981). An acceptance under an option contract must be received to be effective according to § 63(b).
81. See CISG, supra note 7, art. 18(2). As to "oral offers," Article 18(2) requires such offers to be accepted immediately unless the circumstances indicate otherwise. This is a rule of construction in conformity with common law notions. See, e.g., Textron Inc. v. Froelich, 223 Pa. Super. 506, 302 A.2d 426 (1973).
82. See CISG, supra note 7, art. 16(1) (emphasis added).
83. Id., art. 22.
84. See supra note 69 and accompanying text. Professor Honnold suggests that Articles 22 and 15 are merely specific applications of the general principle that a party may withdraw or modify a communication by an overtaking communication. See Honnold, supra note 22, at 204.
85. In illustration 8 of § 41 of the Second Restatement, A sends B an offer by mail to sell at a fixed price corporate stock not listed on an exchange. B waits for two days after receiving the offer and then, after learning of a sharp rise in the price bid over-the-counter, sends a telegraphic acceptance. The illustration concludes that the acceptance may be too late even though it arrives before a prompt acceptance by mail would have arrived. Comment f to this section explains, "If the offeree makes use for speculative purposes of time allowed for communication, there may be a lack of good faith, and an acceptance may not be timely even though it arrives within the time contemplated by the offeror."
86. See CISG, supra note 7, art. 7.
87. See Farnsworth, supra note 26, § 3.03, at 3-13.
88. See U.C.C. § 2-206(1)(a) (1978); Restatement (Second) of Contracts § 32 (1981).
89. Starting to perform in response to the typical (indifferent) offer will not simply make the offer irrevocable under § 45 of the Second Restatement of Contracts. It will operate as a promise to complete performance. Ergo, under the antiquated usage, such a contract would be "bilateral." The new § 45 applies only to those rare offers that can be accepted only by performance. The beginning of performance with respect to those offers does not form a contract; rather, it has the effect of an option contract under § 45 of the Second Restatement so as to make the offer irrevocable for a reasonable time to permit the offeree to complete the performance forming, again under the antiquated usage which is no longer used in the Second Restatement, a "unilateral" contract.
90. See CISG, supra note 7, art. 18(1).
91. Id., art. 18(3).
92. Id., art. 18(2).
93. Id., art. 18(3).
96. Id., art. 18(2).
97. It should be recalled that a promissory acceptance, though not effective until it reaches the offeror under Article 18(2), operates to make the offer irrevocable once the acceptance is dispatched under Article 16(1).
98. Honnold, supra note 22, at 185. In a footnote, Professor Honnold suggests a curious construction of U.C.C. § 2-206(1)(b) which permits "an order or other offer to buy goods for prompt or current shipment [to be] construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or nonconforming goods. . . ." He suggests that, "[t]his rule on how the offer 'shall be construed' provides less leeway for construction of the offer than Art. 18(3), but reaches the same result as the Convention in cases like [the hypothetical]." Section 2-206(1)(b), however, is a species of the general principle that precedes it in U.C.C. § 2-206(1)(a): "[A]n offer to make a contract shall be construed as inviting acceptance in any manner . . . reasonable in the circumstances" (emphasis supplied). See also Restatement (Second) of Contracts, § § 30(2), 32 (1981). Thus, the general rule of the U.C.C. with respect to contract formation permits the typical offer to be accepted either by promising or by performing, i.e., the acceptance would be effective upon performance by the offeree if that is the manner of acceptance chosen by the offeree. As Professor Honnold, himself, emphasizes, the general rule of CISG is "communication of assent." Honnold, supra note 22, at 181. Under the U.C.C., a promissory manifestation of assent would be required only if the offeror "unambiguously" required it (U.C.C. § 2-206(1)). See Murray, supra note 1.
99. Honnold, supra note 22, at 186.
100. Id. at 187 (emphasis in original).
101. Id. at 185.
102. See U.C.C. § 2-206(2) (1978); Restatement (Second) of Contracts § 54 (1981). See also Murray, supra note 1.
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