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GUIDE TO CISG ARTICLE 17

Secretariat Commentary (closest counterpart to an Official Commentary)


Guide to the use of this commentary

The Secretariat Commentary is on the 1978 Draft of the CISG, not the Official Text, which re-numbered most of the articles of the 1978 Draft. The Secretariat Commentary on article 15 of the 1978 Draft is quoted below with the article references contained in this commentary conformed to the numerical sequence of the Official Text, e.g., article 15 [draft counterpart of CISG article 17].

To the extent it is relevant to the Official Text, the Secretariat Commentary on the 1978 Draft is perhaps the most authoritative source one can cite. It is the closest counterpart to an Official Commentary on the CISG. A match-up of this article of the 1978 Draft with the version adopted for the Official Text is necessary to document the relevancy of the Secretariat Commentary on this article. See the match-up for this article for a validation of citations to this Secretariat Commentary. This match-up indicates that article 15 of the 1978 Draft and CISG article 17 are identical.


Text of Secretariat Commentary on article 15 of the 1978 Draft
[draft counterpart of CISG article 17]   [Termination of an offer by rejection]

PRIOR UNIFORM LAW

None.

COMMENTARY

1. Once the offeror has received a rejection of an offer, he should be free to contract with someone else without concern that the offeree will change his mind and attempt to accept the offer which he had previously rejected. Most, if not all, legal systems accept this solution in respect of revocable offers. Many legal systems also accept it in respect of irrevocable offers, but some legal systems hold that an irrevocable offer is not terminated by a rejection. Article 15 [draft counterpart of CISG article 17] accepts the solution in respect of both revocable and irrevocable offers and provides that an offer, even if it is irrevocable, is terminated when a rejection reaches the offeror.

[Due to the definition of "reaches" (Article 24), Enderlein & Maskow point out that if the offeree accepts the offer, for instance by telex, before his letter containing a rejection has reached the offeror, a contract is made. ..." Fritz Enderlein & Dietrich Maskow, "International Sales Law", Oceana (1992), p. 91.]

2. An offer may be rejected either expressly or by implication. In particular, article 17(1) [draft counterpart of CISG article 19(1)] provides that "a reply to an offer which purports to be an acceptance containing [but contains] additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer." A tribunal may find that a given communication from the offeree to the offeror which contained inquiries about possible changes in the terms or which proposed different terms did not purport to be an acceptance and, therefore, that it did not fall under article 17(1) [draft counterpart of CISG article 19(1)] [see footnote 1]. Nevertheless, if the communication was found to contain additions, limitations or other modifications to the offer, the offer would be rejected and the offeree could no longer accept it.

3. Of course, the rejection of an offer by a reply which contains additions, limitations or other modifications of the offer does not make it impossible to conclude a contract. The reply would constitute a counter-offer which the original offeror might accept. If the additions, limitations or other modifications did not materially alter the terms of the offer, article 17(2) [draft counterpart of CISG article 19(2)] provides that the reply would constitute an acceptance and the terms of the contract are the terms of the offer with the modifications contained in the acceptance. If the offeror rejected the proposed additions, limitations or other modifications, the parties could agree to contract on the terms of the original offer.

4. Therefore, in the context of a reply to an offer which constitutes an explicit or implicit rejection, the significance of article 15 [draft counterpart of CISG article 17] is that the original offer terminates and any eventual contract must be concluded on the basis of a new offer and acceptance (OFFICIAL RECORDS, pp. 22-23).


FOOTNOTES

1. See paragraph 4 of the commentary to article 17 [draft counterpart of CISG article 19].

[The Legal Analysis accompanying the President's transmittal of the Convention to the United States Senate states: "Under Article 17, an offeree may not accept an offer which he has rejected. The same rule is applied in the United States. See Restatement Second of Contracts, Section 38." Galston & Smit, "International Sales: The United Nations Convention on Contracts for the International Sale of Goods", Matthew Bender (1984) [Parker School Text], App. 1-13).]

[Winship, on the other hand, citing Restatement 2d, Sections 25,37, states that "the common law. . . provides that a rejection does not terminate an irrevocable offer." "An acceptance that arrives after the letter of rejection will, therefore, be effective if the offer is irrevocable. On this ... point the common law differs from the CISG because (Article 17) provides explicitly that even an irrevocable offer is terminated when notice of rejection reaches an offeror. ..." Peter Winship, "Formation of International Sales Contracts Under the 1980 Vienna Convention," 17 Int'l Law.10 (1983).]

[Honnold, however, states: "The approach of Article 17 is widely supported in civil law systems, and probably in most common-law jurisdictions. ... Decisions in the United States have held that one who has purchased an option for a specified term does not destroy the 'option' by a rejection. However, most of these cases involve situations, like the rental of premises with an option to purchase, where substantial value has been given for the option and forfeiture or substantial loss would result from termination of the option. There is ground for skepticism that courts would extend this approach to an offer to sell or buy goods which becomes irrevocable merely on the basis of a statement that the offer is 'firm.' ... In contrast to these doubts, Article 17 is clear." John O. Honnold, "Uniform Law for International Sales under the 1980 United Nations Convention", 2d ed., Kluwer Law International (1991), p. 216.]


Pace Law School Institute of International Commercial Law - Last updated August 29, 2006
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