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Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods

Professor Jacob S. Ziegel, University of Toronto
July 1981

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Article 29

(1) A contract may be modified or terminated by the mere agreement of the parties.

(2) A contract in writing which contains a provision requiring any modification or termination by agreement to be in writing may not be otherwise modified or terminated by agreement. 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.

COMMENT

1. At common law an agreement modifying the terms of an agreement is not binding unless supported by consideration. There are exceptions of varying importance to this rule [e.g., modifications under seal, statutory provisions such as those in the Mercantile Law Amendment Act, R.S.O. 1970, c. 272, s. 16, and, above all, the doctrine of equitable estoppel] - some statutory in origin, others developed by the courts themselves - but the principle itself still applies. The requirement of consideration creates particular difficulties in the so called "duty" cases, i.e., where the seller waives payment of part of the price, or the buyer agrees to pay more than the contractual price [see e.g., Gilbert Steel Ltd. v. University Construction Ltd. (1973) 3 O.R. 286, aff'd 67 D.L.R. (3d) 606 (C.A.)] in consideration of the other party performing his obligations.

2. The common law rule has been widely criticized and it has been abolished in UCC 2-209(1). The OLRC Sales Report also recommends its reversal. Art. 29(1) is not therefore nearly as radical as may appear at first sight and should arouse no concerns.

3. Presumably art. 29(1) is subject to a requirement of good faith on the strength of either art. 7(1) or art. 7(2). Though not expressly required under UCC 2-209(1), the official comment assumes its existence [UCC 2-209, Comment 2] and arguably good faith may be required at common law even in those cases where consideration exists. [cf. "The Atlantic Baron" (1978) 3 All E.R. 1170].

4. The first sentence of art. 29(2) corresponds to UCC 2-209(2), although the Code provision is more circumscribed. A clause requiring modifications to the written contract to be in writing is valid at common law but its effectiveness must be judged in the light of the doctrine of equitable estoppel.

5. The second sentence of art. 29(2) introduces an important, and very necessary, qualification to the rule in the first sentence. A similar qualification is recognized at common law [cf. Hartley v. Hymans (1920) 3 K.B. 475; Chas. Richard Ltd. v. Oppenheim (1950) 1 K.B. 616 (C.A.)] and in UCC 2-209(4). No doubt there may be arguments about the "extent" to which the other party has relied "on that conduct" in a particular case, but this difficulty seems to me unavoidable.

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Pace Law School Institute of International Commercial Law - Last updated April 23, 1999
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