Cite as Eörsi, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 132-144. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.
1. History of the provision
2. Meaning and purpose of the provision
3. Problems concerning the provision
(1) A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price.
(2) A proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make offers, unless the contrary is clearly indicated by the person making the proposal.
1. History of the provision.
1.1. - Article 14 deals with the definition of an offer for concluding a contract. Its antecedents are to be found in Article 3 of the 1958 Draft (see 1964 Hague Conference Records, II, 421) and in ArtiCle 4 of ULFC which read:
2. This communication may be interpreted by reference to and supplemented by the preliminary negotiations, any practices which the parties have established between themselves, usage and any applicable legal rules for contracts of sale.
At the 1964 Hague Conference the Committee on Formation discussed the article (see 1964 Hague Conference Records, I, 201-206). The main issue discussed was the problem of public offers. An overwhelming majority favoured its deletion; nonetheless, a proposal to the effect that public offers should be [page 132] excluded only when addressed to particular persons was supported by a large majority when put to a vote. One delegation suggested that a public offer should constitute merely an invitation for an offer. The latter proposal was not adopted but was later taken up by UNCITRAL and became Article 14(2) of the present Convention. Later a Working Group was established and its report was adopted by the Commitee on Formation. Public offers were not mentioned at all in this second discussion (see 1964 Hague Conference Records, I, 220-222).
1.2. - Article 14 of this Convention is the first of four successive articles on offers. The article has a positive and a negative paragraph. The former defines the offer, and the latter excludes public offers from the scope of proposals for concluding a contract.
Under Article 14(1) an offer must meet two main requirements. It should be sufficiently definite, and it should indicate the intention of the offeror to be bound in case of acceptance. In the UNCITRAL Working Group the Secretariat prepared a very elaborate text which was considered to be an alternative to Article 4 of ULFC (see Yearbook, VIII (1977), 77-78). The first paragraph of this proposed text continued to contain the two requirements mentioned above as did the revised text of the Drafting Group (see Yearbook, VIII (1977), 78-79). The first paragraph of the Secretariat's proposal was identical (except for the bracketed words «or to the public» later deleted) to that of the present Article 14(1). However, it was felt that the expression «sufficiently definite» would mean an offer which «expressly or implicitly indicates at least the kind and quantity of the goods and that a price is to be paid». The final version omitted «at least the kind and quantity of», and replaced «indicates» by «fixes or makes provision for determining the quantity and the price». On the other hand, it was suggested that determination of the price fell within the scope of sale of goods rather than within formation (see Yearbook, IX (1978), 134). In fact, as shown at a later stage, the provision on price in Article 14 creates considerable difficulties with respect to Article 55 (see Commentary on Article 55, infra, § 2.2.2.). Paragraph (4) of the Secretariat's proposal considered an offer to be sufficiently definite despite the lack of a stated price, and offered a rule under [page 133] which the price nevertheless became ascertainable. This proposal was, however, first put into square brackets by the Working Group (see Yearbook, VIII (1977), 79; Yearbook, IX (1978), 89) to indicate the opposition of some representatives to offers which do not indicate a price or make provision for its determination. The proposal was later shifted to Article 55, with considerably different wording. Paragraph (5) of this proposal considered an offer to be sufficiently definite if it measured quantity by the amount of goods available to the seller or by the requirements of the buyer. This proposal was rejected by the Working Group (see Yearbook, VIII (1977), 79). Paragraph (2) of the proposal repeated the wording of Article 4(2) of ULFC. This paragraph became superfluous when, after lengthy discussion, the Working Group decided to delete it and to assemble all of ULFC's provisions on interpretation, as well as Articles 3, 4 and 5 of the Draft Uniform Law on Validity of Contracts, in a new general provision on interpretation (see Yearbook, VIII (1977), 78). Later it was decided not to prepare a uniform law on validity but still to use the above-mentioned articles on interpretation of the parties' conduct as a basis for an article in the Convention. These rules appeared in the UNCITRAL Draft Convention as Article 7 (now Article 8).
At its eighth session the Working Group also decided to place in paragraph (1) the words «addressed to one or more specific persons» in brackets (see Yearbook, VIII (1977), 79). It also bracketed the second sentence in paragraph (2). Accordingly, where there is no provision made for the determination of the price, the proposal is considered to be for the price generally charged by the seller at the time of conclusion of the contract, or, if no such price is ascertained, then the price generally prevailing at the aforesaid time for such goods sold under comparable circumstances (Yearbook, VIII (1977), 89). At that time there was no rule for public offers (but see § 1.3., infra). At its ninth session the Working Group renumbered the article as Article 8 and rearranged it. There was no change in paragraph (1) but for the deletion of the brackets. Paragraph (2) contained the rule on public offers which figures now in Article 14(2). There were no changes in paragraph (3) except again for the deletion of the brackets (see Yearbook, IX (1978), 73-74). At the eleventh session the Commission decided to integrate the three paragraphs [page 134] proposed by the Working Group into two (see Yearbook, IX (1978), 38). In this way the final text of Article 14 of the Convention was drafted (see Yearbook, IX (1978), 15). At the same session the Commission decided to integrate the Formation Draft with the Sales Draft (see Yearbook, IX (1978), 13). One effect of this integration was that problems connected with the price appeared in two separate articles (Articles 14(1) and 55 of the Convention). This led to heated discussions and much confusion.
At the Vienna Conference Article 12(1) of the UNCITRAL Draft Convention (now Article 14(1)) was again the object of a lengthy discussion. Seven amendments were filed (Official Records, I, 12). Four of the seven amendments proposed deleting the second sentence of paragraph (1). Nine delegations supported these proposals; twelve opposed. Deletion was supported mainly on the ground that Article 51 of the UNCITRAL Draft Convention (now Article 55) would suffice to solve the problem of price; that the requirements «sufficiently definite» and «intention to be bound» needed no further explanation: and that the second sentence of the paragraph was neither desirable as a rule nor valid as an example. On the other hand deletion was opposed on the ground that a fixed or determinable price belonged to the essentialia negotii; and that contracts frequently covered raw materials that were to be delivered over a period of years at prices that were difficult to fix. Another amendment proposed deletion of the words «expressly or implicitly» in order to avoid complications in interpreting the idea of implicitly fixing quantity and price (see Official Records, II, 275-277).
1.3. - Another question concerning offers was how to deal with public offers in the broad sense. This was to a great extent addressed to a technical problem, since there was never strong support for acknowledging public offers as proposals for concluding a contract. The discussion centered mainly on whether such offers should be mentioned at all and if so, how this should be done. Under Article 4(1) of ULFC a proposal (a «communication») for concluding a contract needed to be addressed to one or more specific persons. This wording, reappearing by decision of the Working Group at its eighth session (see Yearbook, VIII (1977), 79) indicates that public offers are not considered to act as proposals for concluding a contract. In the discussion on this [page 135] matter at the 1964 Hague Conference (see 1964 Hague Conference Records, I, 202-204) there was but negligible support for treating public offers as proposals to conclude a contract, and much greater support for not mentioning public offers at all. However, the majority was in favour of concluding that public offers do not amount to proposals to conclude a contract. Some held the view that public offers should be treated as offers subject to contract. Later on, it became clear that this school of thought found it sufficient to state that an offer must be addressed to one or more specific persons. This approach was adopted as Article 4 of ULFC. The UNCITRAL Working Group, however, discussed the problem of public offers, considered the Draft Uniform Rules on the Formation of International Contracts in General elaborated by UNIDROIT and was ready to adopt the text in principle as a new Article 4(2) (see Yearbook, IX (1978), 73). Some representatives went even further: they addressed the possibility or impossibility of withdrawal or revocation of public offers (see Yearbook, IX (1978), 133, 134). After making a number of changes in the wording of the UNIDROIT Draft, the Working Group adopted the present paragraph of public offers (see Yearbook, IX (1978), 74).
At the Vienna Conference only one proposal was made concerning paragraph (2). At the eighth meeting of the First Committee an amendment was proposed that the «sufficiently definite» requirement should apply to public offers also. This amendment was taken up at the thirty-fifth meeting of the First Committee but after the rapporteur stated that the requirements of paragraph (1) applied to paragraph (2) as well, the sponsor withdrew that amendment (see Official Records, II, 276-277; 424).
2. Meaning and purpose of the provision.
2.1. - Since the contracting process starts with an offer and comes to an end by an acceptance, an offer is the first and the second to last declaration in the course of concluding a contract. This is, however, a simplified presentation since in many cases offers and counter-offers follow each other. In these cases when a final acceptance reaches the offeror, the offer is no longer the first declaration of intent, but only the one which preceded final [page 136] acceptance. This description is, however, also simplified. Rarely does it occur that at one stage the parties agree on certain points and continue to bargain about others. In that case the contract is concluded successively: each partial acceptance is preceded by an offer, provided that the contract is in the end concluded.
In these circumstances it is crucial to know what kinds of declarations of intent are to be considered as offers. After all, the addressees of a declaration must have good grounds for relying on a declaration purporting to be an offer. Therefore, it is necessary to state in the law the criteria of an offer to conclude a contract, in contrast to other declarations of intent such as, for instance, a mere invitation to conclude a contract. In the latter case an eventual affirmative answer would be an offer provided it meets the requirements thereof.
2.2. - For the purposes of concluding a contract it is sufficient in a considerable number of jurisdictions to show agreement in any manner (see, e.g., § 2-204 of the United States Uniform Commercial Code; STARCK, Droit civil. Obligation, Paris (Librairies Techniques), 1973, 1128). As long as there is no ground for avoiding a contract, it suffices that offer and acceptance correspond with each other; and in certain situations not even a complete correspondence is needed. As to formal requirements, see Article 11 and 96.
Article 14 was intended to be more specific about what constitutes an offer. A proposal purporting to be an offer:
All these requirements must be present in a proposal for concluding a contract. Of course, other stipulations may also be contained in the proposal. For instance, a proposal purporting to be an offer may also include a clause to the effect that the offer is conditional, depending on whether a future event ensues. A conditional sale is possible under the Convention provided that the requirements for an offer (and for an acceptance) are duly satisfied.
2.2.1. - The term «specific persons» includes individuals, legal persons, partnerships and joint ventures carrying out a [page 137] business in common and capable of suing or being sued in the name of the partnership. In such cases all partners act as each other's agents. Consequently, the offer may be addressed to all or several partners as well as to one of them, since one partner binds all others. What is relevant here is not necessarily the name of the addressee, but it must be clear from the words used which specific person(s) is (are) the addressee(s).
The number of addresses of an offer is immaterial. Proposals to buy or sell sent in the mail directly to the addresse(s) meet the requirement of «specific persons», even if thousands of such proposals have been mailed to specific addresses (see Secretariat's Commentary, Official Records, I, 20). However such proposals might not satisfy the other requirements of an offer for concluding a contract.
2.2.2. - An offer must be sufficiently definite. This requirement has its roots in English court practice (see DAVID, Les contrats en Droit Anglais, Paris (Librairie Generale de Droit et de Jurisprudence), 1973, 246-247). For the purpose of the Convention an offer is «sufficiently definite» if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price. Consequently, indications of the goods to be bought or sold, and the quantity and price thereof seem to be the essentialia negotii under this article. These indications must be present, and are sufficient (but see §. 2.2.4., infra). However, in most jurisdictions, if a party insists on an agreement concerning further issues such as the modalities of delivery or payment, such issues also belong to the essentialia. As such demands emanate from party autonomy or freedom of contract, they must be respected when concluding a contract under the Convention.
If the proposal mentions nothing else with respect to the requirements now under discussion [other] than the goods, the quantity and the price and none of the parties insists on an agreement concerning other issues, in most cases additional terms are left open. Since the essentialia negotii are present, the offer is sufficient for the purpose of concluding a contract -- again supposing that all other requirements of an offer are satisfied. In such cases the open terms may be supplied by recourse to usage, to any practices established between the parties (Article 9), and in general to interpretation of the parties' conduct (Article 8). [page 138]
2.2.3. - In contrast to the objective character of the «sufficiently definite» requirement, the requirement of «intention to be bound in case of acceptance» is of a subjective nature. It points to a state of mind which often cannot be fully ascertained. The Convention quite understandably does not specify the words to be used to express the intent to be bound. Moreover, the word «indication» in itself implies that the addressee is confronted not with facts but with suppositions. At the same time, «indications» also suggests that in a significant number of cases it is nevertheless warranted to conclude that the intention to be bound was meant seriously. Excessive caution is unnecessary here since offers are predominantly made with a serious purpose in mind.
Serious doubts arise as to the intention to be bound if the following, proposal is made: «I'm thinking of selling you X tons of timber for Y US Dollars. How would you react to that proposal?» Even less convincing are the so-called illusory promises: «I promise to sell you my house if I so desire». In such cases it is clear that the offeror had no intention to be bound by his proposal.
A proposal purporting to be an offer may stipulate that the offeror reserves his right to release himself from the contract by paying a penalty. In such, cases the offeror does in fact bind himself either to execute the contract or to pay a penalty. Therefore, the offer is sufficiently definite to conclude a contract.
If the purported seller offers a sale upon approval, he clearly indicates his intention to be bound in case of acceptance but he then runs the risk that the other party will not execute the contract. Such a sale is unilaterally conditional on the side of the acceptor: the latter is not bound to buy the goods offered. This, however, has no bearing whatsoever on the offer.
At any rate the intention to be bound can best be ascertained on the basis of the conduct of the parties (see Article 8). Furthermore, the prospective parties commonly enter into preliminary negotiations. Such negotiations may also indicate the seriousness of the offer or the lack thereof.
The intention to be bound does not imply a promise that the offer will not be withdrawn or will be irrevocable. Withdrawal and revocation fall under Articles 15 and 16. [page 139]
In cases of a counter-offer the roles of the prospective parties reverse. Accordingly, the party making the counter-offer must have the intention to be bound.
A mistake in the offer does not in itself affect the intention to be bound since such intention may be present equally where there is a mistake as where there is none. In fact, mistake belongs to the sphere of validity of the contract and, since the issue of validity is excluded from the Convention (Article 4(a)) the rules of the applicable domestic law of the contract bearing on mistake have to be applied.
The presence or absence of intention to be bound may also be inferred from other requirements of an offer for concluding a contract. For instance, Article 14 requires an indication of the goods, but requires no further specification about them. In many cases a general indication suffices. But there may be cases where without specification the offer becomes ambiguous. Perhaps the goods cannot be manufactured without specifications, or the goods indicated may have variants. Under such circumstances, a suspicion may arise that at the time of the proposal the addressor had no intention to be bound yet in case of an acceptance (see also § 2.2.4., infra).
2.2.4. - An offer must indicate the goods, their quantity and the price. The quantity and the price may be indicated implicitly.
188.8.131.52. - There is no provision to the effect that the goods must, if necessary to the contract, be specified. However, since Article 14(1) requires the goods to be indicated in order to render the offer sufficiently definite, if the goods are not sufficiently specified, neither can the order be regarded as sufficiently definite. Relevant specifications may include among others, the shape and colour of the goods, and standards for acceptable quality. The lack of such specifications may, under certain circumstances cast doubt upon the intention of the offeror to be bound.
184.108.40.206. - The quantity may be indicated in any way. The proposal need not refer to standard measures such as tons or barrels. If a prospective buyer proposes to buy «any quantity», the quantity is thereby indicated and if the addressee answers that he [page 140] is ready to sell five or 500,000 tons, this amounts to an acceptance to sell five or 500,000 tons, respectively, of the goods indicated. If, however, the addressee declares that he is equally ready to sell any quantity, a contract has not yet been concluded because the quantity remains undetermined.
If the offer proposes how to determine quantity, the quantity is sufficiently indicated. For instance: «We propose to buy the quantity corresponding to the amount bought by 5,000 Swiss francs at the place and time of delivery».
Under Article 14(1) the quantity may also be fixed implicitly. For instance, a proposal to sell fodder sufficient to feed a thousand cows for three months is sufficient.
220.127.116.11. - The rules for determining price are similar. Price may be indicated in any currency, preferably in a convertible one although this is not a requirement.
The price may also be indicated in an implied manner. It may happen that the offer of the prospective buyer makes no mention of the price. If the goods to be bought are of a standard character, such as spare parts, or if the offeror uses the seller's catalogue and it is otherwise clear from the offer that he feels himself bound in case of acceptance, it may be inferred that he accepted the price currently charged by the seller (see Secretariat's Commentary, Official Records, I, 21).
The price may also be indicated by making provisions for its determination either immediately or in the future. «100 Swedish crowns per ton» is an example of a provision which allows the determination of the price immediately. «We pay the price prevailing at the place and time of delivery» or a reference to a particular market or stock exchange price (HUBER, UNCITRAL-Entwurf, 433) are provisions permitting determination of the price in the future. Another way to determine price in the future is to agree that a third person will determine the price.
Where there is no indication of the price whatsoever, the proposal does not in itself amount to an offer. Still, if acceptance reaches the alleged offeror and he does not object promptly, then the contract is concluded. In such cases it becomes evident that the proposal indicated the intention to be bound in case of acceptance and that the proposal was regarded by the parties as an offer. In such cases Article 55 applies. [page 141]
2.2.5. - Paragraph (2) deals with proposals to unspecified persons. Such are leaflets distributed to the public or thrown into the mailbox, advertisements in newspapers offering goods for sale, vending machines, display goods in a store window, an announcement that goods will be sold by tender or by auction. All these are proposals to sell or buy directed to the public at large, that is, public offers. Legal systems differ as to how to deal with such offers. Article 14(2) makes two statements as to public offer: (a) public offers (offers to unspecified persons) are considered merely as invitations to make offers, and (b) this does not apply if a contrary intent is clearly indicated by the person making the proposal.
18.104.22.168. - For instance, in the case of an invitation to make offers, the invitation may consist of making available a vending machine to the general public. The person «accepting» the invitation, by inserting the due amount into the machine, becomes the offeror. The owner of the vending machine accepts the offer releasing the goods or he refuses the offer, as when the vending machine is empty. In the latter case he cannot be sued for the goods since no contract was then concluded. The would-be offeror is, however, entitled to get his money back. Nonetheless, not all cases are as simple as that. An advertisement promising to sell spare parts is certainly an invitation to make offers rather than an offer. Is the advertiser obliged to sell these spare parts to anybody who wants to buy or may he refuse to sell to specific persons? After all, the prospective buyer is the one who makes the offer. It might seem that an invitation to the public does not bind the person making such an invitation and therefore he may refuse the offer of the client, though this may run counter to good faith. But could it not be argued that the purpose of the rule on invitations to the public is to protect the prospective acceptor and not the person making a public offer? Could the prospective acceptor not rely on a public offer? Must he be satisfied with the reimbursement of his expenses and forget about the sale? There is little doubt that the purpose of Article 14(2) is to protect prospective clients.
22.214.171.124. - The second proviso of paragraph (2), («unless the contrary is clearly indicated by the person making the [page 142] proposal»), means that even if the proposal were not addressed to specific persons, it nevertheless may qualify as an offer for concluding a contract. Merely a clear indication to this effect by the person making the proposal suffices. During discussions at the Vienna Conference, one delegation drew the attention of the Conference to the fact that this rule does not even require that the proposal be sufficiently definite (see Official Records, II, 276-277). The validity of this observation depends on how the words «clearly indicated» are interpreted. The «clear intention» that the seemingly public offer constitutes, in fact, an offer for concluding a contract, should satisfy at least implicitly all the requirements of an offer for concluding a contract, except for the rule that the offer should be addressed to one or more specific persons. A statement to the effect that «this advertisement constitutes an offer» is not alone sufficient since a declaration of a person does not determine the legal character thereof. By and large the same applies to the following wording: «these goods will be sold to the first person who is ready to pay», although such a wording creates a stronger position for the alleged offeror, as it seems to indicate that he has the intention at least to be bound in case of acceptance. Yet, it is strongly suggested that all elements of an offer for concluding a contract must be assembled.
3. Problems concerning the provision.
3.1. - Practice will evidence whether the requirements of an offer for concluding a contract are too restrictive or, on the contrary, too wide. In particular, it remains to be seen whether the second sentence of paragraph (1) will be appropriate for defining «sufficiently definite». In either event, the policy of the legislators was to frame unambiguous definitions instead of open-ended directives, presumably under the assumption that greater security is assured by the former than by the latter, despite cases in which such a definition might cause difficulties.
3.2. - Article 14 provides that an offer must be sufficiently definite. An offer is sufficiently definite if, among other things, it indicates the goods. An indication of the goods is all that is required. Yet, in many cases, a simple indication without specification [page 143] of the goods remains too vague; such an indication may not qualify the proposal as sufficiently definite (see § 126.96.36.199., supra). It might have been advisable to require specification of the goods whenever the lack of such specification allows no realistic basis for acceptance. It may be argued that in this case the proposal was not sufficiently definite. Such an argument would, however, not be in accordance with the structure of Article 14(1), which provides that a proposal is sufficiently definite if the goods are indicated. Further difficulties may arise concerning implicit references to the goods or to the price, in that domestic jurisdictions may be able to restrict or to extend the scope of what is or is not an implicit reference. In such cases a liberal interpretation according to the criteria set forth in Article 8(3) and 9 would seem desirable similarly (see SCHLECHTRIEM, UN-Kaufrecht, 38-39; Uniform Sales Law, 51-52).
3.3. - The provision of paragraph (2) that a public offer may qualify as an offer when clearly intended to be an offer, may also create difficulties. It would seem from the wording that a simple statement by the person making the proposal clearly indicating that he considers himself to be an offeror is sufficient for qualifying the proposal as an offer for concluding a contract. This presumption is, however, hardly justified since it is not merely the intent of a prospective party to the contract that counts. Therefore, the «clear indication» must leave no doubts that all requirements of an offer for concluding a contract are satisfied (see § 188.8.131.52., supra).
3.4. - Article 14 provides that an offer should also either include the price or make provision for determining it. At the same time Article 55 provides for a situation in which a contract has been. «validly concluded but does not expressly or implicitly fix or make provision for determining the price». As there is no offer without an indication of the price, a contract without such an indication seems to be a manifest contradiction (but see § 2.2.2., supra and contrary on Article 55 2.3.2.). [page 144]