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GUIDE TO CISG ARTICLE 18

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 16 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 16 [draft counterpart of CISG article 18].

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 except for a clarification to its first paragraph, article 16 of the 1978 Draft and CISG article 18 are substantively identical.


Text of Secretariat Commentary on Article 16
[draft counterpart of CISG article 18]   [Acceptance; time of effect of acceptance]

PRIOR UNIFORM LAW

ULF, articles 2(2), 6 and 8.

COMMENTARY

1. Article 16 [draft counterpart of CISG article 18] sets out the conduct of the offeree which constitutes acceptance and the moment at which an acceptance is effective.

Acts constituting acceptance, paragraph (1)

2. Most acceptances are in the form of a statement by the offeree indicating assent to an offer. However, article 16(1) [draft counterpart of CISG article 18(1)] recognizes that other conduct by the offeree indicating assent to the offer may also constitute an acceptance. [CISG article 16(1) also states, "silence or inactivity does not in itself amount to acceptance. The words "or inactivity" are an addition to article 14 of the 1978 Draft.]

[Schlechtriem states "The words or inactivity which were added to paragraph (1) were intended to indicate that totally passive behavior is to be treated the same as silence" (Uniform Sales Law - the UN Convention on Contracts For the International Sale of Goods (Manzsche Verlag: Vienna 1986), p. 54). The Summary Records of Committee Meetings of the Vienna Conference report the following colloquy on this amendment. "Mr. FELTHAM (United Kingdom), introducing his delegation's amendment [said that] to insert the words 'or inactivity' after the word 'silence' did not affect the basic meaning . . . Mr. KRISPIS (Greece) [said that] The word 'inactivity' was . . . a useful addition since acceptance might result from certain acts on the part of the offeree . . . Mr. ROGNLEIN (Norway) said he could not see the need for the proposed addition. The meaning of the words proposed was not clear to him. Were words which were put verbally or in writing considered activity or inactivity? What about a statement of acceptance? It was regarded as inactivity, it would not, under the amended section, amount to acceptance . . . Mr. DATE-BAH (Ghana) thought that addition of the words "or inactivity' might be useful in situations where, for example, the offeree had not been silent, but had failed to follow up his earlier expression of interest. . . The amendment was adopted by 16 votes to 15." (OFFICIAL RECORDS, P. 280]

3. In the scheme used in this Convention, any conduct indicating assent to an offer is an acceptance. However, subject to the special case governed by article 16(3) [draft counterpart of CISG article 18(3)], article 16(2) [draft counterpart of CISG article 18(2)] provides that the acceptance is effective only at the moment the indication of assent reaches the offeror.

4. Article 16(1) [draft counterpart of CISG article 18(1)] also makes it clear that silence [or inactivity] in itself does not amount to acceptance. However, if the silence [or inactivity] is coupled with other factors which give sufficient assurance that the silence [or inactivity] of the offeree is an indication of assent, the silence [or inactivity] can constitute acceptance. In particular, silence [or inactivity] can constitute an acceptance if the parties have previously so agreed. Such an agreement may be explicit or it may be established by an interpretation of the intent of the parties as a result of the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties as provided by the rules of interpretation in article 7 [draft counterpart of CISG article 8].

Example 16A: For the past 10 years Buyer regularly ordered goods that were to be shipped throughout the period of six to nine months following each order. After the first few orders Seller never acknowledged the orders but always shipped the goods as ordered. On the occasion in question Seller neither shipped the goods nor notified Buyer that he would not do so. Buyer would be able to sue for breach of contract on the basis that a practice had been established between the parties that Seller did not need to acknowledge the order and, in such a case, the silence of Seller constituted acceptance of the offer.

Example 16B: One of the terms in a concession agreement was that Seller was required to respond to any orders placed by Buyer within 14 days of receipt. If he did not respond within 14 days, the order would be deemed to have been accepted by Seller. On 1 July Seller received an order for 100 units from Buyer. On 25 July Seller notified Buyer that he could not fill the order. In this case a contract was concluded on 15 July for the sale of 100 units.

[The following is an example of a situation in which there was no established pattern or usuage and no acceptance. "On June 1 Seller sent Buyer an offer to sell a specified type and quantity of goods at a stated price, and added: 'This is such an attractive offer that I shall assume that you accept unless I hear from you by June 15.' Buyer did not reply. Seller shipped the goods on June 16." John O. Honnold, "Uniform Law for International Sales under the 1980 United Nations Convention" [Honnold Text], 2d ed, Kluwer Law International (1991), p. 219.]

Moment at which acceptance by declaration is effective, paragraph (2)

5. Article 16(2) [draft counterpart of CISG article 18(2)] provides that an acceptance is effective only at the moment a notice of that acceptance reaches the offeror. Therefore, no matter what is the form of the acceptance under article 16(1) [draft counterpart of CISG article 18(1)], a notice of that acceptance must in some manner reach the offeror in order to bring about the legal consequences associated with the acceptance of an offer.

6. There are two exceptions to this rule. The first exception is mentioned in . . . article 16(3) [draft counterpart of CISG article 18(3)]. Under article 16(3) [draft counterpart of CISG article 18(3)] in certain limited circumstances, it is possible for an offer to be accepted by the performance of an act without the necessity of a notice. The other exception follows from the general rule in article 5 [draft counterpart of CISG article 6] that the parties may, subject to article 11 [draft counterpart of CISG article 12], derogate from or vary the effect if any provision of this Convention. In particular, if they have agreed that the silence [or inactivity] of the offeree will constitute acceptance of the offer, they have by implication also agreed that no notice of that acceptance is required [see footnote 1]

7. It is not necessary that the indication of assent required by article 16(2) [draft counterpart of CISG article 18(2)] be sent by the offeree. A third party, such as a carrier or a bank, may be authorized to give to the offeror the notice of the conduct which constitutes acceptance. It is also not necessary for the notice to state expressly that it is notice of acceptance, so long as it is clear from the circumstances surrounding the notice that the conduct of the offeree was such as to manifest his intention to accept.

8. Article 16(2) [draft counterpart of CISG article 18(2)] adopts the receipt theory of acceptance. The indication of assent is effective when it reaches the offeror, not when it is dispatched as is the rule in some legal systems.

9. Article 16(2) [draft counterpart of CISG article 18(2)] states the traditional rule that an acceptance is effective only if it reaches the offeror within the time fixed or, if no such time was fixed, within a reasonable time. However, article 19 [draft counterpart of CISG article 21] provides that an acceptance which arrives late is, or may be, considered to have reached the offeror in due time. Nevertheless, the sender-offeree still bears the risk of non-arrival of the acceptance.

[Farnsworth states "[T]he Convention departs from the common law by applying a receipt test ... under Article 18(2): An acceptance of an offer becomes effective at the moment the indication of assent reaches the offeror. This provision poses a minor problem when coupled with the dispatch rule applicable to the revocability of an offer (Article l6(1)). Suppose that an offeree who has received an offer by mail, mails an acceptance which takes three days to reach the offeror. During those three days the offeror is powerless to revoke the offer, but the offeree can, by telephoning the offeror, withdraw his acceptance. During those three days the revocable offer has become, in a sense, an irrevocable one. ... [T]he Convention ,also departs from the common law rule [on risk of loss of an acceptance or delay in its transmission]. This is the result of Article 18(2) ... and of Article 23, which provides: 'A contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention.' Thus if an acceptance is lost in the mail, there is no contract under the Convention while there would be a contract under the common law. Under the Convention it behooves the offeree to inquire if he receives no response to his acceptance. Under the common law, it behooves the offeror to inquire if he receives no response to his offer." E. Allan Farnsworth, in Galston & Smit ed., "International Sales: The United Nations Convention on Contracts for the International Sale of Goods" [Parker School Text], Matthew Bender (1984), pp. 3-13/14.]

[Winship also points out: "Under the common law the result will differ depending on whether or not the offer was revocable. If the offer was revocable [offeree's] acceptance was effective when mailed and [offeree] cannot withdraw it (Rest. 2d Sections 63(a), 66). If, on the other hand, the offer is irrevocable the acceptance is not effective until it reaches the offeror and [offeree}, therefore, can withdraw it by at notice which overtakes the earlier letter (Rest. 2d Section 63(b)." Peter Winship, "Formation of International Sales of Contracts Under the 1980 Vienna Convention", 17 Int'l Law. 11 (1983).]

Acceptance of an offer by an act, paragraph (3)

10. Article 16(3) [draft counterpart of CISG article 18(3)] governs the limited but important situation in which the offer, the practices which the parties have established between themselves or usage permit the offeree to indicate assent by performing an act without notice to the offeror. In such a case the acceptance is effective at the moment the act is performed.

11. An offer might indicate that the offeree could accept by performing an act by the use of such a phrase as "Ship immediately" or "Procure for me without delay . . .".

[Cf. Farnsworth who states "It seems questionable whether such language, without more, invites the offeree to assent 'without notice." E. Allan Farnworth, in Bianca-Bonell Commentary, Giuffrè (1987), p. 173.]

12. The act by which the offeree can accept in such a case is that act authorized by the offer, established practice or usage. In most cases it would be by the shipment of the goods or the payment of the price but it could be by any other act, such as the commencement of production, packing the goods, opening of a letter of credit or, as in the second illustration in paragraph 11 above, the procurement of the goods for the offeror (OFFICIAL RECORDS, pp. 23-24).


FOOTNOTES

1. No specific rule is given as to when acceptance by silence [or inactivity] is effective. See, however, example 16B in which it is concluded that the acceptance was effective at the expiration of the relevant period of time. In at least one legal system the effect of silence is related back to the time when the offer is received by the offeree. Swiss Code of Obligations, art. 10, subs. 2.[draft counterpart of CISG article 19].

[The Article 18(3) provisions on timely assent without notice are limited to situations in which "by virtue of the offer or as a result of practices which the parties have established between themselves or of usage" such assent may be indicated by performing an act. Sono would also require that the act be decisive. He states: "Dispatch and payment are clear examples of decisive steps taken by the offeree. ... However, the Convention [also] refers to an act such as 'one relating to the dispatch.' Thus the question arises whether commencement of the preparation to perform, e.g., by assembling parts for equipment ordered without notice to the offeror would be sufficient? Should room for speculation be permitted to the offeree? In this connection, it may be noted that 'an assent by performing an act' without notice to the offeror, if it can be regarded as an acceptance, will become effective at the moment the act is performed, and no more room for withdrawal of the acceptance which is otherwise ordinarily possible is 'anticipated. ... It may also be noted that, since assent by an act requires no notice to the offeror, the only means for the offeror to become aware of the acceptance is through the act of the offeree. These factors seem to dictate that, in order for an act to sufficiently constitute 'an assent by performing an act,' the act must be such a decisive step that little room will be left for its retraction due to the very nature of the act. ..." Kazuaki Sono in Sarcevic & Volken ed., "The Vienna Sales Convention: History and Perspective" [Dubrovnik Lectures], Oceana (1996), p. 122.]

[Honnold would require that the act be communicated. He states: "Is this view contradicted by the statement in paragraph (3) that the offeree 'may indicate assent by performing an act ... without notice to the offeror?' 'Without notice' must mean that if an act (arrival of goods), or a communication that the act has been performed, gives the offeror the information he needs within the time he needs it, the offeree has made a contract without a separate communication that he promises to ship and thereby 'assents' to the offer of a contract. Article 18(3) thus preserves the substance of the Convention's theme that acceptance calls for communication. What the Convention does is to relax the form of the communication sufficiently to permit the offeree safely to take prompt action in response to an offeror's request." Honnold Text, p. 187; see also 2d ed., pp. 224-226.*]

* Cf Kelso who regards this as a strained interpretation. Clark J. Kelso, "The United Nations Convention on Contracts for the International Sale of. Goods: Contract Formation and the Battle of Forms", 21 Colum. J. Transnat'l L 541-542 (1983). And Leete states that "there is no requirement of notice under the CISG and one cannot presume that notice will be given in all cases." Burt A. Leete, "Contract Formation Under the United Nations Convention on Contracts for.the International Sale of Goods and the UCC: Pitfalls for the Unwary", 6 Temple Int'l & Comp. L.J. 208 (1992). Enderlein & Maskow, however, are in accord with Honnold. They state: "Since an acceptance is effective at the moment when the contract is made, even if the offeror knows nothing. about it yet, an unsatisfactory situation may result, when, e.g. the goods are dispatched by ship.and the ship is under way for a longer period of time. We, therefore, regard a situation in which the offeror has to be notified of the act within the period of time for acceptance as more favourable. Depending on the circumstances of each specific case, from the general principles (Article 7) an obligation for the offeree to inform the offeror may be deduced. Rehbinder (["Einheitliches Kaufrecht und nationales Obligationenrecht. Referate und Diskussionen der Fachtagung Einheitliches Kaufrecht", Freiburg im Breisgau am 16.1 und 17.2.1987 (Baden-Baden 1987), p. 161]) ,considers this a supplementary obligation whose breach would entail liability "for compensation. Honnold ... also includes the conditions under paragraph 2 and makes the need for the offeree to give notice dependent on whether or not, for instance, the goods are subject to constantly changing prices. In his view, the offeror also has to learn about the acceptance within a reasonable time." Fritz Enderlein & Dietrich Maskow,
"International Sales Law", Oceana (1992), p. 96. Ziegel has somewhat similar views. He states; "If the offeree is entitled to accept by performance must he give notice of his election to the offeror where the offeror is not otherwise likely to learn promptly of the election? UCC 2-206(1)(b) says yes, and presumably the same conclusion would be reached under the good faith provisions of Article 7." Jacob Ziegel, "Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods" (July 1981), p. 62.

But at the Vienna Conference, an effort was made to specifically add UCC 2-206(b) language to the text of Article 18. And this effort did not succeed. "Mr. FARNSWORTH (United States of America) introducing his delegation's amendment

["Revise paragraph (3) ... to read as follows: 'However, if by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods or payment of the price, 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 paragraph (2) of this article. An offeror who is not notified within a reasonable time may treat the offer as having lapsed before acceptance''']

explained that it was intended to make clear that, while an offeree might indicate assent by an act, notice must be given of that act, or the offer did not stand. A substantial change introduced in his amendment as compared to the original text was to make it a condition of the continued existence of the contract that notice should be given within a reasonable time.

"Mr. WAGNER (German Democratic Republic) said that the provisions of ... paragraph 3, as they stood, involved a risk that a contract might be deemed to have been concluded without the knowledge of the offeror. He was not, however, altogether satisfied with the wording of the United States amendment ... which did not make the intended meaning clear enough. The amendment should stress that the notification must relate to the acts which had the effect, of bringing the contract into being. Mr. FELTHAM (United Kingdom) observed that it was essential to preserve the important principle enshrined in ... paragraph 2 that, if an offeror made an offer that could be accepted b'y.1neans of an act without notice, there could still be a contract even if paragraph 3 of the same article were to be amended in the manner proposed by the United States delegation. Mr. SZÁSZ (Hungary) said that he had considerable difficulty in conceiving of a practice or usage whereby a mere act was enough to form a contract without any notice being given to the offeror. Normally the act involved would be directed towards, the other party and the act in itself would serve as a notice. As he saw it, the United States amendment appeared to be intended to cover the case where the act in question, was directed at a third party. He also had serious misgivings regarding the effects of the provision contained in the last sentence of the text proposed by the United States for ... paragraph 3. Mr. KHOO (Singapore) whole heartedly associated himself with the remarks of the United Kingdom and Hungarian representatives. He felt the United States amendment entirely inappropriate in the context of paragraph 3 of the article, which dealt with a situation in which a certain usage existed among the parties whereby a contract could be concluded by the performance of an act. It was too late to attempt to go back on the main provision of that paragraph as the United States amendment appeared to do.

"Mr. SEVÓN (Finland) had misgivings regarding two aspects of the United States amendment. The first was the effect of the expression 'within a reasonable time', which was used in the last sentence and presumably referred to the reasonable time for sending notice. The previous sentence, however, referred to the act being performed 'within the period of time laid down in paragraph 2' which paragraph itself used the expression 'within a reasonable time'" He feared that difficulties of interpretation would arise from the combination of those two provisions. The second point was that it seemed to him difficult to compel the offeror to send a notice when - under the terms of paragraph 3 - it was the established practice among the parties not to require any such notice. Mr. KRISPIS (Greece) said that he supported the United States amendment but shared some of the views of the United Kingdom and Hungarian representatives. Mr. GOLDSTAJN (Yugoslavia) favoured retaining paragraph 3 in its existing form, which corresponded to the practice in his country. He felt that the acceptance of the United States amendment was likely to lead to difficulties and complications. Mr. DATE-BAH (Ghana) associated himself with the remarks of the United Kingdom and other delegations. As he read it, paragraph 3 was based on a presumed waiver of the need to notify. Mr. FARNSWORTH (United States of America) emphasized that his amendment to paragraph 3 was not intended to restrict the effect of the provision as it stood. Mr. SAMSON (Canada) said that, for the reasons given by the representatives of Hungary and the United Kingdom, he was opposed to the United States amendment in the form in which it had been submitted. It would render the acceptance rule embodied in paragraph 3 somewhat ambiguous and much more uncertain of application. Mr. MATHANJUKI (Kenya) said that it would be extremely difficult for him to support the United States amendment because under its terms an offeror could find that he had no contract at a moment when he had already performed it. Mr. BENNETT (Australia) considered that paragraph 3 constituted an exception to the rule embodied in paragraph 2. He could not support the United States amendment which would detract from the whole purpose of paragraph 3.

"Mr. FARNSWORTH (United States) said that, in view of the scant support for his amendment ... his delegation withdrew it" (OFFICIAL RECORDS, pp. 280-281).


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