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

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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Contract Modifications Under CISG

One of the changes in the common law of contracts effected by the Uniform Commercial Code was a change in the pre-existing duty rule that allows good faith modifications to be enforceable without consideration.[166] Article 29(1) of CISG permits the parties to modify or terminate their contract by a "mere agreement."[167] There is nothing remarkable about such a pronouncement in CISG, however, since there is no requirement of consideration or other validation device in CISG. The apparent intention of CISG delegates in framing this provision was to adopt the Civil Law rather than the common law perspective.[168] With respect to contracts for the sale of goods, however, the UCC had already removed the requirement of consideration which CISG sought to avoid. The Uniform Commercial Code section concerning contract modification proceeds to deal with oral modifications that do not satisfy the basic requirement of the statute of frauds,[169] as well as oral modifications that violate a clause which the parties have inserted in the writing evidencing their original contract which precludes any modification that is not, itself, evidenced by a writing (a no oral modification clause).[170] There has been considerable controversy concerning these and related provisions of the UCC.[171] Since CISG has no statute of frauds requirement,[172] it can deal with these problems in a much less complicated fashion. Article 29(2) seeks to make enforceable clauses requiring any modification or termination to be in writing. If, however, the parties have violated their own clause (their "private statute of frauds") through an oral modification, and one of the parties has relied on that modification, the other party may not assert the lack of a written modification to defeat the contract as modified. The language of Article 29(2) supporting this analysis is, however, flawed by the term, "conduct."

If the parties' original contract contained a provision precluding oral modifications but they orally agree to modify the contract notwithstanding that provision,[173] a relying party in such a situation needs no "conduct" upon which to rely. Rather, he relies on the oral modification itself. Thus, to arrive at the analysis suggested above, it is necessary to regard the making of the oral modification by the other party as "conduct." While this has been done[174] and clearly appears to be the purpose of the delegates,[175] it remains an awkward term. Notwithstanding this flaw, the CISG contract modification concept and the removal of the no oral modification barrier through reliance on an oral modification is quite familiar to American lawyers.

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FOOTNOTES

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

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166. U.C.C. 2-209(1) (1978).

167. Article 29(1) says: "A contract may be modified or terminated by the mere agreement of the parties." See CISG, supra note 7, art. 29(1).

168. See Official Records, supra note 31, at 28. The civil law had permitted a modification if there was sufficient cause regardless of the lack of consideration.

169. U.C.C. 2-209(3) (1978).

170. U.C.C. 2-209(2) (1978).

171. Subsections (4) and (5) of U.C.C. 2-209 deal with the concept of waiver and withdrawal of waiver with respect to modifications that do not satisfy the requirements of subsection (2) or (3), i.e., oral modifications. For a recent analysis of these problems under 2-209, see Murray, The Modification Mystery: Section 2-209 of the Uniform Commercial Code, 32 Vill. L. Rev. 1 (1987).

172. Article 11 says: " A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses." Article 12, however, emphasizes the power of a Contracting State whose legislation requires contracts of sale to be evidenced by writings to utilize Article 96 which permits that State, at any time, to make a declaration that any provision of CISG that permits contrast, modifications, terminations or any other event to be operative without a writing does not apply where any party has his place of business in that Contracting State. See CISG, supra note 7, art. 11.

173. Article 29(2) states: "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." Id., art. 29(2).

174. See Honnold, supra note 22, at 231.

175. See Official Records, supra note 31, at 28 which contains "Example 27A" where the reliance is upon an oral modification which the example apparently regards as "conduct" of the other party.

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