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Reproduced with permission of 6 EDI Law Review (1999) 21-46

Electronic commerce and the UN Convention on Contracts for the International Sale of Goods (CISG) 1980

Siegfried Eiselen [1]

1. Introduction
2. Applicability of the CISG
3. Validity of communications

3.1 Electronic communications in trade
3.2 Provisions of the CISG
      - Pre-contractual communications
      - Post-contractual communications
3.3 Time and place of communication
4. Formalities
4.1 What constitutes writing and signature
4.2 When are formalities required?
5. Interchange agreement, freedom of contract and usage
6. Conclusion

Key words: CISG, EDI, electronic communication, formalities, formation of contract, international sale

Abstract: The advent of modern communication techniques provides a challenge to the traditional rules of contract law. The provisions of the UN Convention for the International Sale of Goods 1980 (CISG) are analyzed against the backdrop of the usage of these methods of communications like EDI. The different approaches to the time and place of contracting as well as the formalities required are discussed and applied in this context. It is shown that the CISG forms a coherent body of contract law, well suited to deal adequately with the modern communications techniques.

1. Introduction

In the eighteen years since text of the United Nations Convention on Contracts for the International Sale of Goods, Vienna 1980 was agreed to, the face of business communications has changed radically by the introduction of newer technologies and applications such as fax, electronic data interchange (EDI) and the internet.[2] It is clear from the wording of article 13 that these applications were not available at the time as it only refers to telegram and telex.[3] One of the criticisms of the CISG was that as a statutory piece of legislation it largely petrified the law and that it would be unable to change or be changed as needed and would therefore soon become more of a hindrance than a help. The challenges posed by these new communications applications in international commercial relations offer an excellent opportunity to assay whether that prognosis was accurate or not.

The article will analyse the contract formation issues covered by the CISG in the context of the use of these newer technologies and applications to establish whether any specific problems arise that need to be addressed by parties who use these applications in international trade. The following issues will receive attention: [page 21]

a) applicability of the CISG as background for the rest of the discussion;

b) the requirements stipulated for communications to be valid and effective;

c) formalities such as writing and signature;

d) the role of the interchange agreement.

2. Applicability of the CISG

The scope of the applicability of the CISG is determined by article 1 (what is included), article 2 (what is excluded) and article 6 (right of the parties to exclude the Convention).[4] The CISG is applicable to all sales contracts [5] where the parties to the contract have their place of business in different States and where firstly the States are party to the Convention, or secondly, where the normal private international law rules lead to the application of the law of a Contracting State, or thirdly, where the parties choose the CISG as the applicable law directly or indirectly.[6]

Thus, if G, who has his place of business in Germany (Contracting State) orders goods from A, who has his place of business in Australia (Contracting State), then the CISG will apply to their agreement unless they expressly exclude the application of the Convention as both countries are Contracting States.[7]

Similarly, if S who has place of business in South Africa (non-Contracting State) orders goods from A, who has his place of business in Austria (Contracting State), then the CISG will apply to their agreement if the normal private international law rules makes the Austrian law applicable as the CISG is regarded as part of the Austrian domestic law

One must however be careful in the second type of situation because in terms of the CISG a number of countries have made reservations to the effect that the CISG will not apply where one of the parties has its place of business in a non-Contracting State.[8] Therefore, if S with its business place in South Africa (non-Contracting State) concludes a sales agreement with U, who has his place of business in Utah in the United States (Contracting State), then the CISG will not apply even if the normal private international law rules refer to the law of the United States because the United States has made use of the right of reservation in terms of article 95.[9]

Thirdly if S with its business place in South Africa (non-Contracting State) concludes a sales agreement with G, who has his place of business in Germany (Contracting State), and the parties agrees to a choice of law clause in their agreement choosing German law, then the CISG will also apply as part of the German domestic law.[10] In this case one can say that the CISG has been chosen indirectly because often parties will not even be aware that the CISG will apply. A direct choice, in contrast will contain a specific reference to the applicability of the Convention.[page 22]

In the international commercial relations, parties must therefore establish whether the CISG will be applicable or not in order to comply with the requirements and the rights and duties stipulated in the Convention. Although parties can include or exclude the applicability of the Convention in their standard contracts, this will not always be effective because a party may not be able to enforce its standard terms, or the standard clause may be held to be invalid in terms of legislation such as the German Allgemeine Geschäftsbedingungengesetz of 1976 or the English Unfair Contract Terms Act 1977.[11]

3. Validity of communications

3.1 Electronic communications in trade

Normally EDI is fairly narrowly defined as "the electronic interchange of machine processable structured data, which has been formatted according to agreed standards and which can be transmitted directly between different computer systems with the aid of telecommunication interfaces".[12] Electronic commerce on the other hand is a wider all inclusive term which may be used to describe EDI, internet communications, e-mail and even fax. For the purpose of this article electronic commerce is used in this wide sense. Where reference is made to electronic commerce, unless a specific application is mentioned, it will also include EDI, e-mail, fax and telex, but exclude telephone.[13]

Electronic communications occupies a functional position somewhere between the traditional letter and telephone communications. In all of these cases there is no face-to-face communication or negotiation between the parties, but some of the applications are more direct than others. The telephone is the next best thing to face to face negotiations as the communication takes place directly in time between the parties without any real time lag. Any uncertainties, ambiguities or even breaks in communication are immediately evident and can be cleared up immediately by the parties.[14] This is not the case where there is a break in place and time between the communications of the different parties. In electronic communications there is this gap in time and space, but the gap in time is much smaller than is the case with traditional post and the participation of third parties such as service providers is much less apparent than is the case with either post or telegram.

The analysis of offer and acceptance which forms part of the structure of the CISG [15] is often difficult to make in complicated negotiations where there is a great deal of communication between the parties as is often the case in international trade.[16] This is further complicated by the introduction of methods of communication such as EDI which requires a more flexible approach than the strict offer-acceptance dichotomy. It seems however that with the provisions contained in the Convention, there is enough flexibility to evade [page 23] the constraints of forcing communications into either the offer or acceptance mould.[17]

The question as to when communications will become valid and binding in the case of parties who are not in touch directly, has been solved in a number of different ways. Each of these approaches in essence determines which of the parties carries the risk of a communication being lost, destroyed or damaged in the transition process.[18] Unless determined by agreement between the parties themselves [19] there are four main theories which may be applied:[20]

(a) the information theory which determines that a communication only becomes effective once the recipient takes notice of the content of the communication. This theory is usually applied to direct forms of communication such as telephone and may often also be the default position in cases of uncertainty;[21]

(b) the reception theory which determines that a communication only becomes effective once the recipient has actually physically received the communication or it has at least been made available to it, even though it has not yet taken notice of the content. In terms of this so-called "Zugangstheorie", the deciding moment is dependent upon the communication being available to the recipient in the sense that it has been placed at its disposal in a place in which it would expect to receive communications in the normal course of business and in a manner which is comprehensible to it. It is usually used in regard to indirect forms of communication such as telegram and telex and has its origin in civil law systems.[22]

(c) the postal or dispatch theory in terms of which the communication is effective once it has been posted or sent by the sender. This is usually applied to cases of indirect communications and has its origins in the Common Law where it was introduced to handle the issue of revocability of offers.[23]

(d) the formulation theory in terms of which the communication becomes effective the moment that the responder begins to formulate its communication. This theory is usually only used in conjunction with the postal theory to prevent a party from retracting an offer or communication once the other party has started to respond to that communication.[24]

Although these theories or principles were developed first and foremost to deal with the risks of communications in the contract negotiations phase, they are generally applied today to all forms of communications between contractual parties.

When dealing with communications in electronic trade, a strong case can be made out for the use of one of the variants of the reception theory rather [page 24] than the information or dispatch theory in the absence of any provision by the parties.[25] If EDI for instance, is being applied, it is quite easy to determine when a party had access to a message, or when it had received it.[26] On the other hand it may be very difficult to determine when it actually became informed of the existence or content of the message in a subjective sense. Very often an electronic order will be acknowledged by the supplier's system and executed by its plant without any person with executive powers actually taking notice of the communication. In these circumstances it is unrealistic to apply the information theory. This theory also provides opportunities for the recipient to play ducks and drakes with its opponent and it encumbers the sender with an almost impossible burden of proof.

In most circumstances it is fairer to both parties to apply an objective test, namely the reception theory rather than the subjective information theory when dealing with indirect forms of communication. Whether EDI, fax, telex or e-mail, it is fairly easy to determine objectively when a party actually received a message or had access to it.[27] The choice between strict reception, where actual reception is required, and the "Zugangstheorie", which only requires access, will vary from situation to situation. As a general rule it may be argued that the "Zugangstheorie" is probably the fairer solution for most situations if it is made subject to the condition that the message must be readable or processable by the recipient. It has the advantage of being objective and it provides the least opportunity for either party to unfairly manipulate the time of the dispatch or reception of the message. Practically speaking this will entail the following:

(a) in the case of a fax or telex, the offer, acceptance, order or notice will be legally effective once it has been received by the recipient's fax machine in a processable form;

(b) in the case of an EDI message, the offer, acceptance, order or notice will be legally effective once it has been received by the third party network operator and placed in the recipient's electronic mailbox, when store and retrieve communication is used, or where it has been received by the recipient's computer system;

(c) in the case of an e-mail, the offer, acceptance, order or notice will be legally effective once it has been deposited in the recipient's electronic post box.

In situations where communications are conducted between parties inter absentes, the receipt and postal theories are competing theories with different justifications for the use of the one or the other. The main consideration in the application of these theories is the distribution of the risk of the communication being delayed, destroyed lost or changed during the transmission process. Whereas the usual [page 25] point of departure in the law of contract is the information theory, the point of departure in communications inter absentes is handled differently in common law and civil law countries. In common law countries the dispatch or mailbox rule is used to account for difficulties in regard to the revocation of the offer. In civil law countries the receipt principle is normally used as offers are normally not revocable. However when judging the consistency of the solutions followed by the CISG different considerations need to be applied. The use of either principle should be based on the principle of fairness between the parties considering the risks involved in the transmission of the communication. In this consideration the following factors may play a role:

(a) The first consideration that needs to be taken into account is whether the message is an initiating communication or a responsive communication. An initiating communication is a message that is sent by one party to another where there have been no preceding dealings between them, or even if there had been prior dealings, where a new relationship is to be formed. There is therefore no reason for the other party to expect a communication. Responsive communications on the other hand are either messages sent in response to a prior message by the other party as in the case of an acceptance or where a communication is sent in response to an act by the other party such as sending a notice of default where the other party is in mora or has performed inadequately. If there is a concurrent relationship in terms of which the message is sent the message can either be initiating, for instance an order within a just-in-time arrangement or responsive in the case of notice of default.

In the case of initiating communications it is only fair that the party that commences the communication bear the risk of the chosen method of communication.[28] Therefore if the parties have had no dealings and a party wants to send an offer or notice to the other party, the reception theory should apply. It is in the hands of the initiating party to ensure that an effective channel of communication is used. When the message is of a responsive nature fairness still dictates that the communication only become valid and binding once it has been received by the recipient unless there are other factors which militate against this. For instance, where a message is sent to establish certain rights after breach of contract, the risk of the communication should be transferred to the culpable party rather than the innocent party and therefore the dispatch rather than the reception theory should apply.

(b) Secondly, it must be asked whether there has been a course of dealing between the parties from which a usage or practice between the parties may be implied if they have not regulated the matter in an Interchange Agreement.[29] If such a course of dealing can be established from which [page 26] the relevant deductions may be made, then it should take precedence over any of the theories. Similarly if an Interchange Agreement specifically prescribes the methods of communications and when they will become valid, that should be heeded.[30]

(c) Thirdly, it must be asked whether either party is at fault, resulting in the need for the communication by the innocent party. In such cases it may be fair to displace the risk of the communication to the culpable party.

(d) Are there particular risks involved in the transmission of the communication? If the means of communication is particularly hazardous, then fairness requires that the reasonableness of the use of that method of communication be weighed according to the advantages and disadvantages of using it. The fact that one of the parties stipulated the manner of acceptance as peremptory may then play a decisive role.

(e) The consequences for either party in the event of a failed transmission must be considered. It may be fairer that the party who bears the least risk, bear the risk of the method of communication.

(f) A further important factor is the level of control that a party has over its communication and its success or failure. If the party is in a position to monitor the success of a communication with relative ease and little cost, then fairness may dictate that this party should bear the risk.

(g) Lastly, generally accepted practices in the specific trade should also be considered in determining the approach that best serves the interests of the parties and fairness in general.

Who should bear the risk of failed communications should therefore be decided after the relative position of each of the parties in regard to the communication has been considered. In the usage of modern communications techniques the success rate of communications is very high and receipt of the messages moves ever closer to the time of dispatch so that the exact time when a message becomes effective has become less and less relevant in regard to the start of time periods. Although it is quite certain that messages will be duly and properly delivered with these applications, now and again there are glitches which may have serious effects for the parties.

Taking all of these considerations into account one must conclude that in accordance with the position in most legal systems, the point of departure in regard to the determination of the time and place that a communication will become effective, that the receipt or Zugangstheorie offers the fairest and most realistic point of departure in the absence of any special circumstances. It should be used also in those circumstances where the mailbox rule has traditionally been used as the reason for that rule all but falls away with modern communications techniques. However, where there are special circumstances then departures from the general rule should be allowed. In terms of the [page 27] considerations listed above, it seems that there are only two instances where a deviation from the general rule should apply, namely where the parties have specifically agreed to that deviation or where the receiver of a communication is the culpable party necessitating the communication.

3.2 Provisions of the CISG

The CISG contains a number of provisions which deal with the validity and timing of communications. Part II of the Convention deals with the formation of the contract, in other words, with offer and acceptance and the communications exchanged in that context (pre-contractual communications).[31] Part III deals with the situation where the contract is already in existence and there is a contractual relationship (post-contractual communications).[32] Communications during this period pertain to the rights and duties of the parties, performance, breach of contract and the exercise of contractual remedies.

It is important to determine when and sometimes also where communications become effective. The point in time when they become valid and effective may determine other time periods which may commence. For instance an offer may stipulate that performance must be made within fourteen days of the conclusion of the contract, or in terms notice of article 39 notice of lack of conformity of goods must be given within a reasonable time of the discovery of such a lack of conformity.[33] Sometimes a few days may not be important in the calculation of periods, in other instances a few hours may be decisive. It is therefore important to be able to determine exactly when a communication takes effect.[34] It may also be important therefore to determine where the communication becomes effective as it may be decisive in terms of determining the applicable legal system, for instance in regard to formalities.

The Convention uses the terms reach and received in regard to the sender and send, give, made and dispatch in regard to the sender for the acts involved in exchanging communications between the parties. The term reach is defined in Article 24 for the purposes of Part II, but received, send and dispatch are not defined and must be interpreted according to the usual rules of interpretation used for the Convention. Most commentators accord the same meaning to reach and receive namely the meaning defined in article 24. It seems that nothing must be read into the difference in terminology used here.[35]

3.2.1 Pre-contractual communications

Article 24 which deals with the pre-contractual situation reads as follows:[36]

"For the purposes of this Part [II] of the Convention, an offer, declaration of acceptance or any other indication of intention 'reaches' the addressee [page 28] when it is made orally to him or delivered by any other means to him personally, to his place of business or mailing address or, if he does not have a place of business or mailing address, to his habitual residence."

From this formulation it is clear that the Convention does not directly make provision for electronic communications and it will depend on the rules of interpretation whether this gap can be filled. Where there is a gap in the Convention, it must be decided whether the situation falls inside the expected field covered by the Convention, in which case there is a gap which must be filled through interpretational methods, or if it falls outside that field in which case there is no gap.[37] In such a case the situation is resolved by reference to the applicable legal system (private international law rules).[38] In the case of a gap, article 7 provides guidelines for the interpretation of the Convention.[39]

Article 7(1) stipulates that in the interpretation of the Convention its international character must be heeded as well as the observance of good faith in international trade. Where an issue is not directly dealt with, but falls within the sphere of application of the Convention, then such a gap must be filled according to the general principles underlying the Convention (article 7(2)).[40] Only if these general principles provide no solution, must the issue be referred to the legal system applicable according to the rules of private international law.[41] In the case of interpretational techniques it is generally recognised that analogical interpretation is allowed to fill gaps in the Convention.[42]

It is clear that in the case of electronic communications there is only reference to telex and none of the other forms of communication with the result that the existence of a gap can be assumed. The content matter not dealt with clearly falls within the scope of the Convention because it deals with other forms of communication and there is no indication that the Convention intended to exclude any specific kind of communication. This assumption is further bolstered by the fact that the methods of communication under discussion were largely non-existent at the time of the acceptance of the Convention.[43]

The CISG determines that in face-to-face negotiations or by telephone the communication must be heard by the recipient.[44] In other cases it must be delivered to it personally or to a physical address.[45] By way of analogical interpretation one may conclude that, similar to the post and telex which has been specifically mentioned, in the case of electronic communications dispatch to a valid address where the recipient would expect to receive messages should suffice to meet the requirements of the Convention.[46] The principle underlying article 24 and aiding its interpretation, is the principle that any communications must either be received by the recipient personally (in the case of direct forms of communication) or must be effectively placed at its disposal at a place where it usually receives such communications or where it should expect to find communications in the normal course of business.[47] Therefore a message sent [page 29] to the e-mail address or the fax number or the VANS [48] address supplied by the recipient should meet the requirements for validity posed by the CISG.

Article 15 stipulates that an offer becomes effective when it reaches the offeree. This clearly is an application of the "Zugangstheorie".[49] Although this is an initiating communication, the use of the Zugangstheorie is acceptable because the risk that the offeree does not take notice of the offer cannot in most cases not be used to the detriment of the offeree. Failure to respond will not lead to a binding contract even if the offer requires such a response. Article 18(1) clearly states that failure to respond does not amount to an acceptance.[50] The only situation where the Zugangstheorie may be detrimental to the offeree is where it is the holder of a right of first refusal and the offer is made effectively without it coming to its notice. The time limit set for acceptance or rejection may then prescribe without the offeree ever being aware of the right to exercise its right of first refusal.

When dealing with EDI, the principle in article 24 means that the EDI-message must have been delivered either to the recipient's VANS mailbox when a store and forward system is used, or to its computer system itself. Whether somebody has read it or not is irrelevant, it must simply be available in a readable or processable form. Likewise, in the case of e-mail the message must have been properly delivered to the recipient's e-mail address. Where a fax is sent the Zugangstheorie requires that the recipient's fax machine must have received the faxed properly, whether it has been printed out or not. It is submitted that the Zugangstheorie provides a fair solution to the distribution of risk in the case of electronic communications.

The commencement of periods for the acceptance of offers where indirect forms of communications are used is dealt with in article 20. It states:[51]

Article 20(1). "A period of time for acceptance fixed by the offeror in a telegram or a letter begins to run from the moment the telegram is handed in for dispatch or from the date shown on the letter or, if no such date is shown, from the date shown on the envelope. A period of time for acceptance fixed by the offeror by telephone, telex or other means of instantaneous communication, begins to run from the moment that the offer reaches the offeree."

The Convention in this case makes use of two different approaches. When a letter or telegram is used the dispatch theory is used, but where other "instantaneous communications" are used, then the Zugangstheorie is applied.[52] The fact that a telex is regarded as a form of instantaneous communication provides a valuable clue for the handling of e-mail, EDI and fax. It is submitted that these forms of communication are also instantaneous in character like the telex and that in filling this gap in the Convention, the Zugangstheorie should [page 30] likewise be applied to them. Any period of time for the acceptance of an offer will thus run from the time that the e-mail was placed in the recipient's electronic post box, or that the EDI message was stored by the VANS in the recipient's post box, or that the fax was received by the recipient's fax machine.[53]

When dealing with the acceptance by indirect communication applications, the CISG also applies the Zugangsprinzip. The acceptance therefore becomes effective and a valid contract springs to life the moment that the acceptance reaches the offeror.[54] If the offeror prescribed a specific method of acceptance as peremptory, then the offeree must use that method of acceptance. If another method of acceptance is used it will be valid unless the offeror objects against that method of acceptance within a reasonable period of time according to article 19(2).[55]

Finally, the theory used is also important to establish the place where a contract was concluded (the lex loci contractus).[56] Although the CISG attempted to unify international sales law, it has not fully achieved that object. One of the issues not covered is the question of formalities.[57] In terms of the rules of private international law of many countries, the formal validity of a contract is determined by the lex loci contractus although more and more countries use a facultative approach to questions of formal validity.[58] According to the Rome Convention on the Contracts (Applicable Law) 1980,[59] a contract will be formally valid if it meets the requirements of the place where the contract was concluded or where either party has its usual residence or place of business. Despite this fact the place where the contract is concluded or deemed to be concluded may still be crucial for the validity of the contract. The CISG does not contain a specific clause dealing with determination of the place of contracting.[60] In terms of the theories applied above:

(a) with contracts concluded inter praesentes or by telephone, the information theory applies and the contract therefore is concluded where the recipient is informed of the acceptance;

(b) when the reception or Zugangstheorie is used the contract is concluded where the communication reaches or is received by the recipient. This may prove problematic where EDI and e-mail are concerned. As discussed above, the communication reaches the recipient when it is placed at his disposal. However, the place where it is placed at its disposal may be highly coincidental. If for instance an Egyptian company uses a VANS situated in the Netherlands and receives its messages on a store and forward basis, the message will have reached it in the Netherlands. Similar circumstances prevail with e-mail.[61] It is submitted that in these cases the strict reception theory should be applied to determine where the contract is concluded, namely the place where the recipient actually received or physically accessed the acceptance.[62] [page 31]

(c) when the postal or dispatch theory is used the contract is concluded in the place where the dispatch was made. Therefore if a letter is posted, a telegram dispatched, or an e-mail, fax or EDI message sent, the place from where it is sent will be the locus contractus and that legal system may be relevant to the formalities required.[63]

3.2.2 Post contractual communications

Article 27 deals with communications which are sent after the contract has already been concluded and where there is an existing contractual relationship.[64] It reads as follows:

"Unless otherwise expressly provided in this Part [III] of the Convention, if any notice, request or other communication is given or made by a party in accordance with this Part and by means appropriate in the circumstances, a delay or error in the transmission of the communication or its failure to arrive does not deprive that party of the right to rely on the communication."

From this article it is clear that there are two kinds of situations which may arise when relevant communications may or must be made. Firstly, as a general rule, it will suffice for a message to be validly made, that the sender sends the message by appropriate means.[65] "Sends" then carries its normal meaning, namely putting the letter in the post or dispatching a telex. Similarly it ought to mean dispatching the e-mail to the correct e-mail address or the EDI message to the relevant VANS or trading partner. Once the sender has done everything that is under its control to launch the message on its way in such a manner that it will normally reach the recipient, the act of sending is complete and the requirements of article 27 have been met.[66]

The term "appropriate means" is not defined in the Convention and must therefore be interpreted according to the principles explained above. It is clear that if the parties have agreed to specific communications applications, that it will be appropriate if a message is sent accordingly. If the contract stipulates that notices must be given by fax, then a fax that was properly dispatched will be valid and effective. If it provides a number of different choices, it is open to the sender to choose an appropriate application according to the situation.[67] Obviously, if the contract provides for post as well as other methods, it would be inappropriate to mail a notice if it is urgent. Ordinary commercial sense will dictate that telephone, fax, telex or e-mail be used in these instances. Therefore, if an appropriate medium is chosen, the communication will be valid and effective when properly dispatched at the time it was dispatched. Thus the dispatch principle is used as the general rule in article 27.[68] If an inappropriate medium has been chosen, the communication will still be [page 32] effective if it comes to the attention of the recipient. It is also submitted that the reception theory rather than the information theory should apply, because the Convention consistently utilises the reception theory in all cases of indirect communications.[69] Thus the general principle applicable to indirect communications is that the recipient must be put in a position to inform himself of the communication in the normal course of business, but that it is not required that he actually be informed.

Secondly, article 27 states that the dispatch theory will not apply where the Convention expressly provides otherwise. In certain instances such as article 48(4) it is required that the recipient must receive the communication. As indicated above, receive is generally accepted as meaning reached.[70]

The right to give notice or the obligation to give notice to the other party according to the provisions of the CISG arises in the following general circumstances :

(a) Notice as a condition for the exercise of certain rights following breach of contract.[71] Article 26 for instance stipulates that a contract can only be avoided [72] if a notice is sent to the recipient.[73] Similarly the buyer loses the right to rely on the non-conformity of the goods if notice is not given to the seller within a reasonable time (article 39).[74] Dispatch by appropriate means is sufficient in these cases where we are dealing with communications after a breach of contract by one of the parties. In such a case it is only fair that the defaulting party should carry the risk of the communication.

(b) The creation or preservation of certain rights by a non-defaulting party.[75] Article 79 requires notice to be given in cases where impediments beyond the control of the debtor prevents it from performing. In this case the sender is not relieved of liability for damages, unless the messages reached the other party.[76] This is a fair placement of the risk, because the defaulting party knows that it will not perform, whereas the other party may be unaware of such circumstances and it is in its interests to ensure that the other party is actually notified.

In terms of article 71 a party is entitled to suspend performance if it becomes apparent that the other party is unlikely to perform in certain circumstances.[77] The right to suspend is acquired by giving proper notice and not by the action of the other party.[78] This is a very drastic remedy that was highly controversial during the negotiations on the CISG.[79] It is therefore quite strange that in this instance the dispatch theory is applied and not the reception theory as in the following case. There is no question of breach of contract yet, simply a strong indication or suspicion that it will probably happen.[80] In this case fairness inter partes requires that one should place the risk of the communication on the sender rather than the recipient and apply the Zugangstheorie.[81] [page 33]

(c) The creation or preservation of certain rights by a defaulting party.[82] In terms of article 48(2) and (3) a defaulting party may declare its intention to cure its failure to perform properly within a certain time if the non-defaulting party consents to such request. Failure to respond to such a request affords the defaulting party the right to cure its performance during the additional period of time. Because this is an extraordinary right afforded to a defaulting party and because the inaction of the non-defaulting party may cause detriment to the latter, it is fair that the risk of this communication is placed on the sender. Article 48(4) accordingly stipulates the reception theory.

(d) The performance of a duty.[83] In terms of articles 32(1) and 67 there is a duty on the seller to give notice that certain goods are not clearly identified to the contract but that they have been consigned to the buyer.[84] Unless such notice is sent (in terms of the general requirement of article 27) then the risk of the goods will remain with the seller. In this case the CISG opts for the dispatch theory.[85] In this instance one may also question the fairness of applying the dispatch rather than the Zugangstheorie.[86] The actual identification of the goods is an act to be performed by the seller and only it knows when it will be done or has been done.[87] The passing of the risk is a very important moment in the life of the sales contract because it may have drastic consequences for one of the parties if the goods should be damaged or destroyed. It is therefore important that the party bearing the risk should be placed in a position to know when the risk is transferred in order to take preventive steps like effecting insurance cover. It is therefore submitted that the Zugangstheorie should be used in these circumstances.

3.3 Time and place of communications

When a communication becomes effective and valid usually depends on the approach or theory used by the courts or legal system concerned. Thus if the expedition theory is used, the communication will be come valid, and any time periods will commence when the communication is sent, posted or dispatched.[88] If the Zugangstheorie is applicable the relevant moment will be when the communication becomes available to the recipient.[89] In the case of e-mail that will be as soon as the message is deposited in the recipient's mailbox and he is able to retrieve it; or in the case of EDI as soon as the VANS has either passed the message on or deposited it in the recipient's mailbox for retrieval whichever is earlier.

Article 20 is the relevant provision in the CISG.[90] It determines that:

Article 20(1). "A period of time for acceptance fixed by the offeror in a telegram or a letter begins to run from the moment the telegram is handed in for [page 34] dispatch or from the date shown on the letter or, if no such date is shown, from the date shown on the envelope. A period of time for acceptance fixed by the offeror by telephone, telex or other means of instantaneous communication, begins to run from the moment that the offer reaches the offeree."

In article 20 telegram is coupled with letters as non-instantaneous methods of communication, whereas telex is coupled with telephone and other possible methods of instantaneous communication. That the latter term does not refer to e-mail, EDI or fax is clear from the fact that these applications were not in existence or were not yet widely used at the time that the CISG text was drafted. These applications can however easily be equated with telex as virtually instantaneous methods of communication. Thus a time period fixed in an offer made by e-mail, EDI or fax ought to begin to run as soon as the communication becomes available to (reaches) the recipient in terms of article 20.

4. Formalities

4.1 What constitutes writing and signature

Where contracts are concerned, there are usually three different types of formalities that may be required namely writing, signature and some kind of third party authentication or involvement such as notarial execution. In the context of international sales contracts for movables only the first two requirements are relevant.[91] These formalities are required for two purposes, namely legal certainty (writing) and authentication (signature) and may be required either by statute or by the parties themselves. Many written contracts contain a standard clause which states that no amendments to the contract will be valid or binding unless reduced to writing and signed by both parties,[92] which makes the use of those formalities mandatory. It may also cause grave difficulties in regard to the use of especially e-mail and EDI because it may be difficult or impossible to comply with the signature requirement.[93]

Whether e-mail, fax and EDI messages which are not printed out constitute writing especially in the context of statutory formality requirements is differently handled in different jurisdictions.[94] In many jurisdictions an electronic message in whatever form is also regarded as writing, provided that it is readable in some form for a human being, even if it is only on the screen. In the United States this progressive and realistic attitude seems to prevail.[95] In some jurisdictions however, there is doubt about this issue.[96]

In South African law for instance, a statutory requirement of writing is not fulfilled if the "document" is only in electronic form.[97] A fax must be printed out before it will constitute writing. Once it has been printed out it is regarded [page 35] as a document, usually a copy of the original that was faxed. If it is required that both parties must sign the document, it is sufficient if the sender signs the original, faxes it and the recipient then signs the copy printed out. The two documents together then form the original contract.[98]

In terms of article 13 of the CISG telegrams and telexes are included under the term "writing".[99] In both of these forms of communications one deals with applications where the recipient receives a print-out of the message. It is therefore available in a physical format and not purely electronic format. As electronic communications such as e-mail and EDI were unknown at the time, it must be established whether they can be included in the expanded definition of article 13. It is submitted that article 13 contains a gap, i.e. fails to address a situation which is clearly covered by the Convention and that gap-filling interpretation is necessary in this case.[100] Although telex is still widely in use today, telegram has become a totally outdated concept in modern business life where fax, e-mail and EDI provide much more effective means of communication. When interpreting this article, the principle of freedom of formalities and freedom of contract suggests that an inclusive interpretation is in order. This means that article [13] must be read to include all electronic forms of communication as well. Thus a fax, an e-mail or an EDI message should be regarded as writing where writing is required.[101] However, because the CISG in terms of [articles] 12 and 96 allows countries to exclude [article] 11 which stipulates freedom of form, and to substitute their national law in regard to writing, whether electronic communications will be valid as writing is dependent on the law of the country in question and not on the interpretation of the CISG.[102]

Authentication by signature is a bigger problem. In most jurisdictions it seems that the requirement of signature is only met if a physical signature is affixed to a paper document.[103] So-called electronic signatures do not suffice unless specific provision for electronic authentication has been made. The fact that there are applications available today which make electronic signatures more secure for purposes of authentication than hand-written signatures have not yet found favour with most legislators where formalities are concerned. The CISG does not require signature in any case and no country is entitled to make an exception as articles 12 and 96 only apply to the formality of writing. Therefore the requirement of an electronic signature will only be relevant where the parties themselves have required authentication by signature. As this requirement often appears in standard terms and conditions it may prove problematic in such circumstances.

4.2 When are formalities required?

The point of departure of the CISG in regard to formalities is that no formalities are required.[104] International sales contracts can therefore be concluded in any [page 36] manner seen fit by the parties, including any of the newer communications applications.[105] However, where parties are using other forms of communication, they must be wary of their own standard terms which often contain clauses subjecting them to these formalities.[106] In these cases it must either be agreed between the parties that electronic communications will be regarded as writing and that the alternative prescribed authentication procedures will be recognized as "signatures". This can easily be done in the standard contracts or in the Interchange Agreement between the parties.[107]

The position of formalities in the CISG has however been complicated by the exception included in Article 12 which reads as follows:

Article 12. "Any provision of Article 11, Article 29 or Part II of this Convention that allows a contract of sale or its modification or termination by agreement or any offer, acceptance or other indication of intention to be made in any form other than in writing does not apply where any party has his place of business in a Contracting State which has made a declaration under Article 96 of this Convention. The parties may not derogate from or vary the effect of this article."[108]

This effectively means that certain countries may still require writing as a formality, but not signature.[109] Countries that have made use of this exclusion and where writing may still be required for international sales contracts are Argentina; Belarus; Chile; China; Estonia; Hungary, Lithuania, the Russian Federation, and the Ukraine. If the writing requirement however is interpreted widely as suggested above, then there will be no implications for the use of these modern applications in the conclusion, modification and termination of international sales contracts. If the suggested wide interpretation is not followed, then the implication will be that international sales contracts cannot be concluded by these means and that other forms of writing need to be employed.

5. Interchange agreement, freedom of contract and usage

It has become customary for parties to use Interchange Agreements when engaging in EDI. These agreements deal with the standardised communications process taking place between the parties and determine who carries the risk and liability for failed communications. Normally the interchange agreement will not contain any terms dealing with the substantive trade issues in the relationship between the parties. As such, interchange agreements will deal with some of the subjects discussed above.[110]

In terms of the CISG the parties are entitled to establish the trade relationship in whatever manner they deem fit and the only parts of the Convention that [page 37] may not be changed by the parties are those articles in regard to formalities which are mandatory.[111] The CISG therefore maintains a policy of freedom of contract where any agreement between the parties themselves will take precedence. The only other limitation on this freedom of the parties, is the issue of legality which will be determined by the applicable legal system. Although some terms in an interchange agreement may fall foul of legislation on standard terms, the likelihood of this happening is small. The standard interchange agreements in use around the world today are usually based on standard contracts which are nationally or internationally accepted and recommended.

Furthermore the use of the interchange agreement may also be seen as a usage or practice which has been established between the parties and which is binding upon them in terms of Article 9 of the CISG.

Article 9(1). "The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves."

There is therefore nothing in the CISG that opposes the use of interchange agreements, on the contrary, it seems that such an agreement or practice is supported by the provisions and principles of the CISG. Interchange agreements can therefore be used to seamlessly fit in with the CISG or to replace the provisions of the Convention where they are inappropriate.

6. Conclusion

The fear that the CISG would become an unchanging and static monument of legal unification that would be unable to deal with changing circumstances in a fast changing world, has as yet not been realised. The electronic revolution that has taken place in the last part of the twentieth century, the new forms of communication brought with it and new ways of doing business as a result of it, provide an excellent field to test the hardiness and flexibility of the CISG. This article clearly shows that the Convention and its underlying principles are sufficiently robust and flexible to deal with these changes and challenges posed by the new forms of communication and that virtually no change need to be made to the Convention. The areas where the approach or solution followed in the CISG has been shown to be problematic, stem not from the use of more modern forms of communication, but rather are structural or conceptual deficiencies that existed from the outset and are applicable to all forms of communication. The analysis clearly shows that the CISG is a coherent and logical body of law able to survive and grow in the modern world.


1. Potchefstroom University for CHE, Potchefstroom, South Africa. The research for this article was made possible by a grant from the Max Planck Institut für ausländisches und internationales Privatrecht, Hamburg which is hereby gratefully acknowledged. A word of thanks is also extended to the staff of the institute for their friendly and efficient assistance.

The following texts are referred to extensively in shortened form in the rest of the article: Bassenge et al (eds) Palandt Bürgerliches Gesetzbuch 57 ed (1998 München); Bernstein H & Lookofsky J Understanding the CISG in Europe (1997 The Hague); Bianca CM & Bonell MJ Commentary on the International Sales Law - The 1980 Vienna Sales Convention (1987 Milan Giuffrè); Burghard 'Das Wirksamwerden empfangsbedürftiger Willenserklärungen im Zeitalter moderner Telekommunikation' 1995 AcP 74-136; Calamari JM & Perillo JM The Law of Contracts 3rd ed (1987 St Paul); Christie The Law of Contract in South Africa 3rd ed (1996 Durban); Clarkson CMV & Hill J Joffey on Conflict of Laws (1997 London); Collins L Dicey & Morris on the Conflict of Laws Vol 2 12 ed (1993 London); Eiselen 'Elektroniese Dataverwisseling (EDV) en die Bewysreg' 1992 Tydskrif vir Hedendagse Romeins-Hollandse Reg 204-219; Eiselen S 'The Electronic Data Interchange Agreement' 1995 SA Merc LJ 1-18; Enderlein F, Maskow D & Strohbach Internationales Kaufrecht (1991 Berlin); Fritzemeyer W & Heun SE 'Rechtsfragen des EDI' 1992 CR 129-133; Harter G 'EDI - Begin einer neue Aera für Geschäftsbeziehungen' 1991 CR 430434; Heinrich G 'UNCITRAL und EDI Einheitsrecht' 1994 CR 118-128; Honnold JO Uniform Law for the International Sales under the 1980 United Nations Convention 2nd ed (1991 Deventer); John 'Grundsätzliches zum Wirksamwerden empfangsbedürftiger Willenserkläxungen 1984 AcP 385-412; Kegel G Internationales Privatrecht 7th ed (1995 München); Lord RA Williston A Treatise on the Law of Contracts Vol 2 4th ed (1991 Rochester); Ludwig KS Der Vertragschluss nach UN-Kaufrecht im Spannungsverhältnis von Common Law und Civil Law (1994 Franfurt Diss); Magnus U 'Wiener UN-Kaufrecht (CISG)' in Honsell H (ed) von Staudingers Kommentar zum Bürgerlichen Gesetzbuch mit Einfürungsgesetz und Nebengesetze 13th ed (1994 Berlin); Mertens P (ed) (1997 London); Murray J 'An essay on the formation of contracts and related matters under the United Nations Convention on Contracts for the International Sale of Goods' 1988 J of L & Comm 11-51; North PM & Fawcett JJ Cheshire & North Private International Law 11th ed (1987 London) & 12th ed (1991) - the earlier edition as well as the latest edition were used to ascertain the common law position prior to the introduction of the Rome Convention on the Laws Applicable to Contracts and the position afterwards; Perillo JM (ed) Corbin on Contracts Volume I RevEd (1993 St Paul); Schlechtriem P (ed) Commentary on the UN Convention on the International Sale of Goods (1998 Oxford) - the references to paragraphs and margin numbers are applicable to both sources. Schlechtriem P Internationales UN-Kaufrecht (1996 Tübingen); Stern E Erklärungen in UNCITRAL-Kaufrecht (1990 Vienna); Van der Merwe S (ed) Contract - General Principles (1993 Cape Town); Walden 1 EDI-Austaschvereinbarungen 1994 CR 1-13; Wolf M (ed) Soergel Kommentar zum BGB Band I 12th ed (1987 Stuttgart); Wright B The Law of Electronic Commerce (Looseleaf Updated July 1996 Boston).

2. Honnold Uniform Law Rn 132.1; Electronic Messaging Services Task Force under chairmanship of Baum M 'The commercial use of electronic data interchange - A report and model trading partner agreement' 1647 ff (Task Force Report); Eiselen 1995 SA Merc LJ 1-2; Wright Electronic Commerce Preface xxxi-xxxiii.

3. vCaemmerer/Schlechtriem/Schlechtriem a13 Rn 2.

4. Honnold Uniform Law Rn 37; Bernstein & Lookofsky 9-20; Schlechtriem UN-Kaufrecht Rn 9-20.

5. Although the term 'sale' is not defined in the text, its meaning can be deduced from the provisions of the convention. It is clear that it is aimed at transactions where goods (tangible corporeal objects) are to be delivered and ownership to be transferred (Art 30) in exchange for the payment of money (Art 53). It also includes contracts for the manufacturing of goods where the raw material is provided by the seller. If the raw material is provided by the buyer it is regarded as a service contract and therefore excluded. See also Art 3. See generally Honnold Uniform Law Rn 56; Schlechtriem UN-Kaufrecht Rn 24-32; vCaemmerer/Schlechtriem/Herber Art 1 Rn 1; Staudinger/Magnus Art 1 Rn 13 ff

6. Art 1(1). See Staudinger/Magnus Art 1 Rn 93 ff, Art 6 Rn 62; vCaemmerer/Schlechtriem/Herber Art 1 Rn 7-11, Art 6 Rn 31; Schlechtriem UN-Kaufrecht Rn 9-19; Bernstein & Lookofsky 9-13; Honnold Uniform Law Rn 40-45. Whether the parties can choose the CISG as applicable law if neither party has its place of business in a Contracting State is open to some doubt, but most commentators believe that such a choice will be honoured. See Staudinger/Magnus Art 6 Rn 64; vCaemmerer/Schlechtriem/Herber Art 6 Rn 31; Honnold Uniform Law Rn 83; cf Bianca/Bonell/Bonell Art 6 3.5.2. Even clearer is that where the dispute is to be resolved by arbitration that such a choice will be effective as arbitrators even apply the CISG and the related UNIDROIT principles regardless of the choice of the parties.

7. Art 1(1) read with Art 6. Bianca/Bonell/Jayme Art 1 2.5; vCaemmerer/Schlechtriem/Herber Art 1 Rn 25-32.

8. Bianca/Bonell/Evans Art 95 2.1-2.5; vCaemmerer/Schlechtriem/Herber Art 1 Rn 38.

9. Countries that have made a reservation in terms of article 95 are Canada (only British Columbia); China; Czech Republic; Singapore; Slovak Republic; and the USA. See Bonell MJ (ed) UNILEX - International Case Law and Bibliography on the United Nations Convention on Contracts for the International Sale of Goods (Loose-leaf updated July 1997 Irvington on Hudson) B.1 1-2; Schlechtriem UN-Kaufrecht Rn 18; Honnold Uniform Law Rn 46.1; Bernstein & Lookofsky 11-13; vCaemmerer/Schlechtriem/Herber Art 1 Rn 43-45; Art 95 Rn 1-5.

10. If parties want the domestic sales law to apply, they must exclude the Convention expressly Mere reference to the contracting states domestic law is not sufficient. See Schlechtriem UN-Kaufrecht Rn 20; Staudinger/Magnus Art 1 Rn 93-94; Bernstein & Lookofsky 12-13; Bianca/Bonell/Jayme Art 1 2.5.

11. These are but two examples of such statutory measures which are applied in many legal systems, not only in Europe. See generally Schlechtriem UN-Kaufrecht Rn 21; vCaemmerer/Schlechtriem/Schlechtriem Vor Artt 14-24 Rn 1, 9.

12. Eiselen 1992 THRHR 208; Van Esch & Prins 2; Wright Electronic Commerce 1.1.4; Burghard 1995 AcP 76 fn 18.

13. For a valuable an up to date discussion of the various technologies see Wright Electronic Commerce Ch 2.

14. Wright Electronic Commerce 2.1-2.8, 5.1-5.6; Soergel/Wolf 130 Rn 3; Williston 6.34; Restatement (Second) of Contract 64-65; Entores Ltd v Miles Far East Corp [1955] 2 All ER 327.[page 40]

15. See Chapter II aa 14-24. See vCaemmerer/Schlechtriem/Schlechtriem Vor Artt 14-24 Rn 1 ff; Bernstein & Lookofsky 33 ff.

16. Honnold Uniform Law Rn 132.1.

17. Honnold Uniform Law Rn 132.1.

18. Burghard 1995 AcP 79; Soergel/Hefermehl 130 Rn 2; John 1984 AcP 388-389; Wright Electronic Commerce 5.3.

19. In the case of an offer the offeror may of course one-sidedly determine what form of communications must or may be used to effect an acceptance. Any agreement between the parties will of course take precedence over these principles. See vCaemmerer/Schlechtriem/Schlechtriem Art 18 Rn 5.

20. Corbin 3.23-3.24; Van der Merwe Contract 43, 51-56; Christie Contract 75-77; Staudinger/Magnus Art 24 Rn 1; vCaemmerer/Schlechtriem/Leser Art 26 Rn 11; German Bürgerliches Gesetzbuch 130; Cape Explosives Works Ltd v SA Oil & Fat Industries Ltd (1) 1921 CPD 244; Amcoal Collieries Ltd v Truter 1990 1 SA 1(A) 4; Münchner Kommentar/Förschler 130(1) Rn 3-4.

21. Burghard 1995 AcP 75-76; Münchner Kommentar/Förschler 130 Rn 18; Staudinger/Magnus Art 24 Rn 1; Van der Merwe Contract 43; Amcoal Collieries Ltd v Truter 1990 1 SA 1(A) 4.

22. Van der Merwe Contract 51; Christie Contract 76; vCaemmerer/Schlechtriem/Schlechtriem Art 18 Rn 13; Bianca/Bonell/Farnsworth Art 18 2.4-2.5; Honnold Uniform Law Rn 162; Staudinger/Magnus Art 24 Rn 1; Calamari & Perillo Contracts 2.22; Williston 6.34, 6.41; Uniform Commercial Code 1-201; Restatement (Second) of Contract 68; EntoresLtd v Miles Far East Corp [1955] 2 All ER 327.

23. This theory is applicalbe both in English and American law subject to the condition that the post or similar medium of communication was prescribed or auhtorised specifically or impliedly by the offeror and that acceptance was properly dispatched. In some instances the emphasis has moved from the authorisation of the form of communication to the question of reasonableness - see Williston 6.35. Generally see Bernstein & Lookofsky 37-40; Stern Erklärungen Rn 48-59; Task Force Report 1674; vCaemmerer/Schlechtriem/Schlechtriem Art 27 Rn 1; Bianca/Bonell/Dateh-Bah Art 27 2.1 ff; Honnold Uniform Law Rn 162;. On the foundation of the post box rule in English law see Adams v Lindsell [KB 1818] 106 ER 250; Corbin 3.24; Williston 6.32; Cape Explosives Works Ltd v SA Oil & Fat Industries Ltd (1) 1921 CPD 244; and Stern Erklärungen Rn 53. For a criticism of this approach in modern commercial law see Williston 6.32

24. See Cape Explosives Works Ltd v SA Oil & Fat Industries Ltd (1) 1921 CPD 244 where this approach is rejected for practical reasons. See also Christie Contract 76; Staudinger/Magnus Art 24 Rn 1.

25. Heinrich 1994 CR 121; Fritzemeyer & Heun 1992 CR 129. There are conflicting approaches to this issue in the English and American law. In English law this view is accepted and used (see Entores Ltd v Miles Far East Corp [1955] 2 All ER 493) whereas in the United States the mailbox rule is also used in regard to electronic message transfers such as telex, fax and even telephone (see United States v Bushwick Mills Inc (1947 CA2 NY) 165 F2d 198; Metropolitan Air Service v Penberthy Aircraft & Leasing Co (1986 SD NY) 648 F Supp 1153; Lipschutz v Gordon Jewelry Corp (1974 SD Tex) 373 F Supp 375; Ward Manufacturing Co v Miley (1955 2nd Dist) 131 Cal 2d 603. Williston 6.34 expresses doubt as to whether this should still be the case in modern law but goes on to state that the mailbox rule is firmly entrenched in the American law.

26. Wright Electronic Commerce 5.5 and 6.4.

27. Wright Electronic Commerce 5.5 and 6.4.[page 41]

28. See Williston 6.35 for the reasons usually advanced for the application of the mailbox rule.

29. On Interchange Agreements generally see Eiselen 1995 SA Merc LJ 1-18; Van Esch RE & Prins C Recht en EDI (1993 Deventer); Perrit HH & Baum MS Electronic Contracting, Publishing and EDI Law (1991 New York) 6 ff; Wright Electronic Commerce Appendix H; Ritter JB & Boss AH Electronic Data Interchange Agreements (1993 Paris)

30. See for instance Sections 2 and 3 of the South African Model Interchange Agreement (published as by the South African Bureau of Standards.

31. Stern Erklärungen Rn 14; vCaemmerer/Schlechtriem/Schlechtriem Vor Art Art 14-24.

32. Stern Erklärungen Rn 14; vCaemmerer/Schlechtriem/Schlechtriem Vor Art Art 14-24.

33. Honnold Uniform Law Rn 255-260; Schlechtriem UN-Kaufrecht Rn 149-150, 158-159.

34. Schlechtriem UN-Kaufrecht Rn 154.

35. Staudinger/Magnus Art 24 Rn 8-10; vCaemmerer/Schlechtriem/Stoll Art 79 Rn 58-59; Stern Erklärungen Rn 301; Bianca/Bonell/Farnsworth Art 24 3.1; vCaemmerer/Schlechtriem/Schlechtriem Art 24 Rn 2; Honnold Uniform Law Rn 179.

36. Although Art 24 deals only with Part II (offer and acceptance) it is also applicable to other declarations of intent. See Enderlein, Maskow & Strohbach Kaufrecht Art 48 Rn 16; Staudinger/Magnus Art 24 Rn 1. He specifically states that in the convention the point of departure is the Zugangstheorie and that it ought therefore to apply in all cases of doubt.

37. Staudinger/Magnus Art 7 Rn 9, 38; vCaemmerer/Schlechtriem/Herber Art 7 Rn 8-9, 27-42.

38. Art 7(2). See Honnold Uniform Law Rn 96-98; Staudinger/Magnus Art 7 Rn 1-2, 38-39; vCaemmerer/Schlechtriem/Herber Art 7 Rn 28

39. Honnold Uniform Law Rn 96; Bernstein & Lookofsky 23-27; vCaemmerer/Schlechtriem/Herber Art 7 Rn 27 ff.

40. Magnus U 'General Principles of UN-Sales Law' 1997 Intl Trade & Bus L Annual 33-56; Diedrich F 'Lückenfüllung im Internationalem Einheitsrecht' 1995 RIW 353-364; Ferrari F 'General Principles and International Uniform Commercial Law Conventions: A Study of the 1980 Vienna Sales Convention and the 1988 Unidroit Conventions' 1997 Uniform LR 451-473; Kramer EA 'Uniforme Interpretation von Einheitsprivatrecht - mit Besonderer Berücksichtigung von Art 7 UNKR' 1996 Jur Bl 137-151.

41. Bernstein & Lookofsky 15-16; vCaemmerer/Schlechtriem/Herber Art 7 Rn 31; Honnold Uniform Law Rn 102.

42. Honnold Uniform Law Rn 60.4, 245.1; Bernstein & Lookofsky 25.

43. Honnold Uniform Law Rn 132.1.

44. Art 24. vCaemmerer/Schlechtriem/Schlechtriem Art 24 Rn 6-7. Whether communications made by leaving a message on a telephone answering machine must be considered an oral communication or not, is controversial - vCaemmerer/Schlechtriem/Schlechtriem Art 24 Rn 4. Schlechtriem regards it as oral, but argues correctly that the Zugangstheorie should be applied - Art 24 Rn 8. See also Staudinger/Magnus Art 24 Rn 14; Soergel/Lüderitz 24 Rn 3; John 1984 AcP 395 ff.

45. Honnold Uniform Law Rn 179; vCaemmerer/Schlechtriem/Schlechtriem Art 24 Rn 9.

46. vCaemmerer/Schlechtriem/Schlechtriem 12-13; Bianca/Bonell/Farnsworth Art 24 b2.4.

47. Honnold Uniform Law Rn 179; Bianca/Bonell/Farnsworth Art 24 2.4; Staudinger/Magnus Art 24 Rn 15; vCaemmerer/Schlechtriem/Schlechtriem Art 24 Rn 13.

48. VANS is the usual acronym to indicate third party service providers, who usually add some value to the transmission process - therefore Value Added Network Service. The [page 42] service providers will usually serve as an interface to translate structured messages from one software application into another and to store and forward messages. They also provide security and storage facilities when required. See generally Fritzemeyer & Heun 1992 CR 130; Eiselen 1992 THRHR 208-210.

49. Bernstein & Lookofsky 37; Honnold Uniform Law Rn 138; Bianca/Bonell/Farnsworth Art 24 2.4; Staudinger/Magnus Art 24 Rn 15.

50. Honnold Uniform Law Rn 160.1; Bianca/Bonell/Farnsworth Art 18 2.3; Staudinger/Magnus Art 18 Rn 12-13.

51. Art 20(2) deals with the situation where the last day of a period falls on a non-business day. It stipulates:

"(2) Official holidays or non-business days occurring during the period for acceptance are included in calculating the period. However, if a notice of acceptance cannot be delivered at the address of the offeror on the last day of the period because that day falls on an official holiday or a non-business day at the place of business of the offeror, the period is extended until the first business day which follows."

52. Staudinger/Magnus Art 20 Rn 8.10; vCaemmerer/Schlechtriem/Schlechtriem Art 20 Rn 4-5; Art 18 Rn 13.

53. vCaemmerer/Schlechtriem/Schlechtriem Art 18 Rn 13; Staudinger/Magnus Art 20 Rn 10. The use of a VANS in this case should not be seen as a Zwischenschaltung any more than the transmission of a telex or fax by third party such as a telecommunications service provider. From the user's point of view, transmission takes place virtually instantaneously and these communications applications should therefore be handled in the same manner.

54. vCaemmerer/Schlechtriem/Schlechtriem Art 18 Rn 11-13; Staudinger/Magnus Art 18 Rn 3 ff; Bernstein & Lookofsky 40-41; Stern Erklärungen Rn 60, 84, 119-120; Honnold Uniform Law Rn 161-162; .

55. vCaemmerer/Schlechtriem/Schlechtriem Art 18 Rn 5.

56. Reithmann & Martiny Rn 208; Forsyth 286-292.

57. See section 4 below. See also Reithmann & Martiny Rn 208; .

58. See for instance in South Africa, Forsyth 296-298; and Ex Parte Spinazze 1985 3 SA 650 (A) 665B-C. Also the postion in England before the Rome Convention was introduced: North & Fawcett Private International Law 11th ed 479; Dicey & Morris 1255-1256; Moloney Conflicts 153; Restatement (Second) of Conflicts of Laws 188(2) and 199.

59. Art 9(2). See North & Fawcett Private International Law 12 th ed 509; Kegel IPR 463; Reithmann & Martiny Rn 208; Clarkson Conflicts 191. See also Forsyth 296-298; Ex parte Spinazze 1985 3 SA 650 (A) 665.

60. Staudinger/Magnus Art 96 Rn 7; Bianca/Bonell/Rajski Art 96 2.2; vCaemmerer/Schlechtriem/Schlechtriem Art 12 Rn 2; vCaemmerer/Schlechtriem/Herber Art 96 Rn 4.

61. There are a number of internet service providers or even companies contractually unrelated to a company which provides e-mail services on the internet. The author for instance has a an e-mail post-box situated in the USA although he is mostly resident in the RSA and has virtually no other connection with the USA. According to the Zugangstheorie a contract concluded via e-a-mail will be concluded in the USA.

62. It may be prudent for parties engaging in e-e-mail and EDI contracts to determine in the agreement itself when and where the contract is concluded as well as the applicable legal system to provide certainty and to exclude any unwanted results.

63. Reithmann & Martiny Rn 208.

64. vCaemmerer/Schlechtriem/Schlechtriem Art 27 Rn 2-4; Staudinger/Magnus Art 24 Rn 2, 27 Rn 1-3; Honnold Uniform Law Rn 189; Stern Erklärungen Rn n 408 ff.[page 43]

65. Schlechtriem UN-Kaufrecht Rn 109-110; vCaemmerer/Schlechtriem/Schlechtriem Art 27 Rn 2, 7-9; Staudinger/Magnus Art 27 Rn 1-3, 7.

66. Staudinger/Magnus Art 27 Rn 7; vCaemmerer/Schlechtriem/Schlechtriem Art 27 Rn 2; Staudinger/Magnus Art 27 Rn 7; Honnold Uniform Law Rn 190.

67. vCaemmerer/Schlechtriem/Schlechtriem Art 27 Rn 7.

68. Schlechtriem UN-Kaufrecht Rn 110; Bianca/Bonell/Dateh-Bah Art 27 2.4; Staudinger/Magnus Art 27 Rn 17; vCaemmerer/Schlechtriem/Schlechtriem Art 27 Rn 1.

69. Staudinger/Magnus Art 18 Rn 4, Art 24 Rn 9; Bianca/Bonell/Farnsworth Art 24 3.1; vCaemmerer/Schlechtriem/Schlechtriem Art 24 Rn 2, Art 27 Rn 5; Enderlein, Maskow & Strohbach Kaufrecht Art 24 Rn 1; Honnold Uniform Law Rn 179.

70. Stern Erklärungen Rn 408 ff; Honnold Uniform Law Rn 189-190; Bianca/Bonell/Dateh-Bah Art 27 Rn 1-5; vCaemmerer/Schlechtriem/Huber Art 48 Rn 35; Staudinger/Magnus Art 27 Rn 8.

71. Stern Erklärungen Rn 178, 180, 188. See also Artt 39(1) and (2) - lack of conformity of goods; Artt 42 & 43(1) - goods encumbered by third party rights; Art 72(2) - anticipatory breach; and Artt 88(1) & (2) - right to sell goods as part of the duty to preserve.

72. Avoidance is one of the more unusual terms used in the CISG. It is the right to end or cancel the contract after a fundamental breach has taken place.

73. Schlechtriem UN-Kaufrecht Rn 108; vCaemmerer/Schlechtriem/Leser Art 26 Rn 11-12; Staudinger/Magnus Art 26 Rn 8.

74. Bernstein & Lookofsky 62-64; Schlechtriem UN-Kaufrecht Rn 153-155; vCaemmerer/Schlechtriem/Schwenzer Art 39 1 ff, 18; Honnold Uniform Law Rn 255 ff.

75. Art 71(3) - suspension of performance; Art 79(4) - force majeure. See also Schlechtriem UN-Kaufrecht Rn 296.

76. Schlechtriem UN-Kaufrecht Rn 296; vCaemmerer/Schlechtriem/Stoll Art 79 Rn 58-59; Stern Erklärungen Rn 301.

77. Schlechtriem UN-Kaufrecht Rn 265; vCaemmerer/Schlechtriem/Stoll Art 71 Rn 20; Stern Erklärungen Rn 337.

78. In terms of Art 71 there are two types of circumstances which entitles a party to issue such a notice: firstly if there appears to be a serious deficiency in the debtor's ability to perform or its creditworthiness, and secondly, in its conduct in preparing to perform. Although the requirements for the exercise of this right are quite stringent and the creditor has a difficult onus to acquit, the fact remains that there has been no breach of contract by the debtor. See vCaemmerer/Schlechtriem/Leser Art 71 Rn 21 ff; Bianca/Bonell/Bennet Art 71 2 -3; Bernstein & Lookofsky 116-117. vCaemmerer/Schlechtriem/Leser Art 71 Rn 2-3; Schlechtriem UN-Kaufrecht Rn 84 ff; Bianca/Bonell/Bennet Art 71 1. Artt 48(2) and (3) - see vCaemmerer/Schlechtriem/Huber Art 48 Rn 1-3, 35. Generally see vCaemmerer/Schlechtriem/Leser Art 71 Rn 21 ff; Bianca/Bonell/Bennet Art 71 2 -3; Bernstein & Lookofsky 116-117.

79. vCaemmerer/Schlechtriem/Leser Art 71 Rn 2-3; Schlechtriem UN-Kaufrecht Rn 84 ff; Bianca/Bonell/Bennet Art 71 1.

80. Art 71 Rn 21 ff; Bianca/Bonell/Bennet Art 71 8; Bernstein & Lookofsky 116-117.

81. Stern Erklärungen Rn 337 seems to support this view as she sets higher requirements for the 'appropriateness' of the means of communication used.

82. Art 48(2) and (3).

83. Artt 32(1) & (3) with 67 - see vCaemmerer/Schlechtriem/Huber Art 32 Rn 1.

84. Stern Erklärungen Rn 148, 150.

85. Stern Erklärungen Rn 151.

86. Cf Stern Erklärungen Rn 151 who finds its application fair and consistent.[page 44]

87. See Bianca/Bonell/Dateh-Bah Art 27 2.6 on the reasoning behind the use of the Zugangsprinzip.

88. Schlechtriem UN-Kaufrecht Rn 109; vCaemmerer/Schlechtriem/Schlechtriem Art 27 Rn 13; Williston 6.32; Corbin 3.24; Uniform Commercial Code 1-201; Restatement (Second) of Contract 64-65; Adams v Lindsell [KB 1818] 106 ER 250; United States v Bushwick Mills Inc (1947 CA2 NY) 165 F2d 198; Metropolitan Air Service v Penberthy Aircraft & Leasing Co (1986 SD NY) 648 F Supp 1153; Lipschutz v Gordon Jewelry Corp (1974 SD Tex) 373 F Supp 375; Ward Manufacturing Co v Miley (1955 2nd Dist) 131 Cal 2d 603.

89. Stern Erklärungen Rn 126; Burghard 1995 AcP 83-84; Soergel/Hefermehl 130 Rn 8; Soergel/Wolf 145 Rn 27, 31; Palandt/Heinrichs 130 Rn 5, Einf 145 Rn 4; John 1984 AcP 412.

90. Murray 1988 J of L & Comm 20-23; Bernstein & Lookofsky 45-46.

91. To the best of the author's knowledge, notarial execution or some like authentication is not required by any legal system in regard to the sales contract itself. It is however possible that such formalities may be proscribed for the transfer of certain goods or rights. International transactionstend to be more informal although the parties themselves may often prescribe formalities. See Dicey & Morris 1255; Wright Electronic Commerce 16.1.

92. Van der Merwe Contract 117-119.

93. See Wright Electronic Commerce 16.3.2; Fritzemeyer & Heun 1992 CR 131; Eiselen 1995 SA Merc LJ 10-11;Heinrich 1994 CR 120; .

94. Honnold Uniform Law Rn 189-190.

95. Baum & Perrit Electronic Contracting 337-341.

96. See Wright Electronic Commerce 16.3.2; Fritzemeyer & Heun 1992 CR 131; Eiselen 1995 SA Merc LJ 10-11;Heinrich 1994 CR 120.

97. Eiselen 1992 THRHR 214-217.

98. Christie Contract 125; Van der Merwe Contract 119; Craib v Crisp 1984 3 SA 594 (T); Johnston v Leal 1980 3 SA 927 (A).

99. Honnold Uniform Law Rn 180.

100. Bernstein & Lookofsky 24.

101. Honnold Uniform Law Rn 130; Bernstein & Lookofsky 24.

102. Schlechtriem UN-Kaufrecht Rn 68.

103. Once again it seems that it is only in the United States that a more open and commercially effective approach has been taken. See Wright Electronic Commerce 16.4-16.5; Baum 2.16.

104. Bernstein & Lookofsky 30-31; Stern Erklärungen Rn 143; Schlechtriem UN-Kaufrecht Rn 64.

105. Article 11: "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."

106. Honnold Uniform Law Rn 184-185; Schlechtriem UN-Kaufrecht Rn 66.

107. The effect of non-variation clauses has however been largely emasculated by the provisions of Art 29 which provides that if an oral variation has been made in a contract where the parties have stipulated formalities, then the variation will be valid an binding to the extent that one of the parties relied on such a modification. It reads:

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."

See Honnold Uniform Law Rn 204; Stern Erklärungen Rn 145-147.[page 45]

108.     Article 96

"A Contracting State whose legislation requires contracts of sale to be concluded in or evidenced by writing may at any time make a declaration in accordance with Article 12 that any provision of Article 11, Article 29, or Part II of this Convention, that allows a contract of sale or its modification or termination by agreement or any offer, acceptance, or other indication of intention to be made in any form other than in writing, does not apply where any party has his place of business in that State."

See Honnold Uniform Law Rn 129.

109. Bernstein & Lookofsky 30-31; Honnold Uniform Law Rn 129; Stern Erklärungen Rn 144.

110. On the use of framework agreements generally see Honnold Uniform Law Rn 56.2. Such agreements are in themselves not a sales agreement, but its terms may become incorporated into the eventual contract by reference or usage between the parties.

111. Staudinger/Magnus Art 6 Rn 62; Bianca/Bonell/Bonell Art 6 3.5.1; vCaemmerer/Schlechtriem/Schlechtriem Art 6 Rn 31; Honnold Uniform Law Rn 84.[page 46]

Pace Law School Institute of International Commercial Law - Last updated February 28, 2001
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