LUMSA – International Commercial Law
November 4, 2015
Prof. Avv. Roberto Pirozzi
Email: robertopirozzi13@hotmail.com
LUMSA – International Commercial Law
CISG
The United Nations Convention on Contracts for the
International Sale of Goods (1980) [“CISG” or the
“Convention”] represents the most recent attempt to unify or
harmonize international sales law.
The Convention is an attempt to create a uniform law for the
international sale of goods.
LUMSA – International Commercial Law
CISG
The CISG applies to international contracts for the sale of goods
between parties whose businesses are located in countries
which have adopted the treaty.
The CISG permits adopting countries to "opt out" of several
provisions so it is important to verify not only that your trading
partner's country is a signatory to the treaty, but also whether
and to what extent it has made acceptable variations to the
treaty terms as applied in its national law.
LUMSA – International Commercial Law
CISG
The CISG governs some key terms and conditions of contracts for
international sales of goods, but not all terms and conditions. It
covers formation of contracts, rights and obligations of sellers
and rights and obligations of buyers. It does not cover liability of
a seller for death or personal injury caused by the seller's goods.
It also does not cover transfer of title, existence of agency
relationships, forum selection, statutes of limitations, interest
rate issues, currency of payment or even the validity of the
contract itself.
LUMSA – International Commercial Law
CISG
The CISG does not apply to contracts for the sale of services.
Where, as is common, the sale of goods includes the sale of
services, a court determines which element constitutes the
preponderance of the obligation to decide applicability.
Generally the CISG does not apply to distributorship agreements
unless they include definite terms on material issues like
quantity to be sold, price of sales and delivery of goods.
LUMSA – International Commercial Law
CISG
Formation of the contract
Part II of the CISG consists of Articles 14-24. These articles
provide the offer-acceptance rules for the formation of contracts
under the CISG.
Articles 14-17 and 24 govern the criteria for an offer and its
revocability (including the CISG equivalent of the common law
“mailbox rule”).
Articles 18 and 20–23 govern the acceptance.
Finally, Articles 14(2) and 19 describe the “Battle of the Forms”
under the CISG.
LUMSA – International Commercial Law
CISG
Formation of the contract
Unlike the common law, the CISG does not include elements
such as “consideration” or the “intention to create legal
relations” in its regime. Also, the CISG contains no reference to a
statute of frauds or to the parol evidence rule.
These functions are filled in by other parts of the CISG, such as
Art. 8, which, for purposes of determining the intent of a party,
takes into consideration all relevant circumstances related to the
formation of the contract, and Art. 11 which allows a contract to
be concluded or evidenced without the need for a writing.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
(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.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Proposal sent to one or more specific persons
In order for a person to accept an offer, that offer must have
been addressed to him. In the usual case, the requirement
causes no difficulties since the offer to buy or sell goods will have
been addressed to one specific. The specifications of the
addressee will usually be by name, but it could be made in some
other way such as "the owner or owners of ... ".
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Proposal sent to one or more specific persons
It is also possible that an offer will be made simultaneously to a
large number of specific persons. An advertisement or catalogue
of goods available for sale sent in the mail directly to the
addressees would be sent to "specific persons," whereas the
same advertisement or catalogue distributed to the public at
large would not. If an advertisement or catalogue sent to
"specific persons" indicated the intention to be bound to a
contract in case of acceptance and if it was "sufficiently definite",
it would constitute an offer under article 14".
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Proposal sent to other than one or more specific persons, par.(2)
Some legal systems restrict the concept of an offer to
communications addressed to one or more specific persons while
others also admit of the possibility of a "public offer". Public offers
are of two types, those in which the display of goods in a store
window, vending machine or the like are said to be a continuing
offer to any person to buy that article or one identical to it, and
advertisements directed to the public at large.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Proposal sent to other than one or more specific persons, par. (2)
In those legal systems which admit of the possibility of a public
offer, the determination as to whether an offer in the legal sense
has been made depends upon an evaluation of the total
circumstances of the case, but does not necessarily require a
specific indication of intention to make an offer. The fact that the
goods are on display for sale or the wording of the advertisement
may be enough for a court to determine that there was a legal offer.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Proposal sent to other than one or more specific persons, par. (2)
This Convention takes a middle position in respect of public offers. It
states that a proposal other than one addressed to one or more
specific persons is normally to be treated merely as an invitation for
the recipients to make offers. However, it constitutes an offer if it
meets the other criteria for being an offer and the intention that it
be an offer is clearly indicated. Such an indication need not be an
explicit statement such as "this advertisement constitutes an offer"
but it must clearly indicate an intention to make an offer, for
example, by a statement that, "these goods will be sold to the first
person who presents cash or an appropriate banker's acceptance".
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Intention to be bound, paragraph (1)
In order for the proposal for concluding a contract to constitute an
offer it must indicate "the intention of the offeror to be bound in
case of acceptance“. Since there are no particular words which must
be used to indicate such an intention, it may sometimes require a
careful examination of the "offer" in order to determine whether
such an intention existed.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Intention to be bound, paragraph (1)
This is particularly true if one party claims that a contract was
concluded during negotiations which were carried on over an
extended period of time, and no single communication was labelled
by the parties as an "offer" or as an "acceptance". Whether there is
the requisite intention to be bound in case of acceptance will be
established in accordance with the rules of interpretation.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Intention to be bound, paragraph (1)
The requirement that the offeror has manifested his intention to be
bound refers to his intention to be bound to the eventual contract if
there is an acceptance. It is not necessary that he intends to be
bound by the offer, i.e. that he intends the offer to be irrevocable.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
An offer must be sufficiently definite, paragraph (1)
Paragraph (1) states that a proposal for concluding a contract must be
"sufficiently definite" in order to constitute an offer. It goes on to state
that an offer is sufficiently definite if it: indicates the goods, and expressly
or implicitly fixes or makes provision for determining the quantity, and
expressly or implicitly fixes or makes provision for determining the price.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Quantity of the goods, paragraph (1)
Although, according to article 14, the proposal for concluding a
contract will be sufficiently definite to constitute an offer if it
expressly or implicitly fixes or makes provision for the quantity of
goods, the means by which the quantity is to be determined is
left to the entire discretion of the parties. It is even possible that
the formula used by the parties may permit the parties to
determine the exact quantity to be delivered under the contract
only during the course of performance.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Quantity of the goods, paragraph (1)
For example, an offer to sell to the buyer "all I have available" or
an offer to buy from the seller "all my requirements" during a
certain period would be sufficient to determine the quantity of
goods to be delivered. Such a formula should be understood to
mean the actual amount available to the seller or the actual
amount required by the buyer in good faith.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Article 14 provides the same rule in respect of the price that it
does in respect of quantity. Thus, for the proposal to constitute
an offer it must expressly or implicitly fix or make provision for
the price. It is not necessary that the price could be calculated at
the time of the conclusion of the contract. For example, the
offer, and the resulting contract, might call for the price to be
that prevailing in a given market on the date of delivery, which
date might be months or even years in the future. In such a case
the offer would expressly make provision for determining the
price.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Where the buyer sends an order for goods listed in the seller's
catalogue or where he orders spare parts, he may decide to
make no specification of the price at the time of placing the
order. This may occur because he does not have a price list of the
seller or he may not know whether the price list he has is
current. Nevertheless, it may be implicit in his action of sending
the order that he is offering to pay the price currently being
charged by the seller for such goods. If such is the case, the
buyer has implicitly made provision for the determination of the
price and his order for the goods would constitute an offer.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 15
(1) An offer becomes effective when it reaches the offeree.
(2) An offer, even if it is irrevocable, may be withdrawn if the
withdrawal reaches the offeree before or at the same time as
the offer.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 15
Article 15 provides that an offer becomes effective when it
reaches the offeree. Therefore, until that moment even though
the offeree may have learned of the dispatch of the offer by
some means, he cannot accept it.
For most purposes the rule as stated above is only of theoretical
interest. However, it assumes practical importance if the offeror
changes his mind after dispatch of the offer but prior to the time
the offer reaches the offeree.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 15
If the offeror withdraws the offer and the withdrawal reaches
the offeree before or at the same time as the offer, the offer
never becomes effective. Therefore, an offer which, once it
became effective, would be irrevocable under article 16(2), can
nevertheless be withdrawn so long as the withdrawal reaches
the offeree no later than the offer reaches him.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 16
(1) Until a contract is concluded an offer may be revoked if the
revocation reaches the offeree before he has dispatched an
acceptance.
(2) However, an offer cannot be revoked:
(a) if it indicates, whether by stating a fixed time for acceptance
or otherwise, that it is irrevocable; or
(b) if it was reasonable for the offeree to rely on the offer as
being irrevocable and the offeree has acted in reliance on the
offer.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 16
• Article 16 CISG deal with the problem of whether an offer is binding
and when it is irrevocable.
• Both the Convention and the PECL distinguish between the revocation
of an offer and the withdrawal of an offer. In the Convention,
revocation of an offer that has reached the offeree and is effective is
regulated by Article 16; withdrawal of an offer that has not yet
reached the offeree is regulated by Article 15(2).
• Similarly, under the PECL, an offer becomes effective when it reaches
the offeree (Article 1:303(2) and (6)) and a subsequent revocation of
the offer is regulated by PECL Article 2:202. However, the offer may
be withdrawn before it reaches the offeree. In that situation, it will not
become effective (PECL Article 1:303(5)).
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 17
An offer, even if it is irrevocable, is terminated when a rejection
reaches the offeror.
LUMSA – International Commercial Law
CISG - ACCEPTANCE
CISG Article 18
(1) A statement made by or other conduct of the offeree
indicating assent to an offer is an acceptance. Silence or
inactivity does not in itself amount to acceptance.
(2) An acceptance of an offer becomes effective at the moment
the indication of assent reaches the offeror. An acceptance is not
effective if the indication of assent does not reach the offeror
within the time he has fixed or, if no time is fixed, within a
reasonable time, due account being taken of the circumstances
of the transaction, including the rapidity of the means of
communication employed by the offeror. An oral offer must be
accepted immediately unless the circumstances indicate
otherwise.
LUMSA – International Commercial Law
CISG - ACCEPTANCE
CISG Article 18
(3) However, if, by virtue of the offer or as a result of practices
which the parties have established between themselves or of
usage, the offeree may indicate assent by performing an act,
such as one relating to the dispatch of the goods or payment of
the price, without notice to the offeror, the acceptance is
effective at the moment the act is performed, provided that the
act is performed within the period of time laid down in the
preceding paragraph.
LUMSA – International Commercial Law
CISG - ACCEPTANCE
CISG Article 19
(1) A reply to an offer which purports to be an acceptance but
contains additions, limitations or other modifications is a
rejection of the offer and constitutes a counter-offer.
(2) However, a reply to an offer which purports to be an
acceptance but contains additional or different terms which do
not materially alter the terms of the offer constitutes an
acceptance, unless the offeror, without undue delay, objects
orally to the discrepancy or dispatches a notice to that effect. If
he does not so object, the terms of the contract are the terms of
the offer with the modifications contained in the acceptance.
LUMSA – International Commercial Law
CISG - ACCEPTANCE
CISG Article 19
(3) Additional or different terms relating, among other things, to
the price, payment, quality and quantity of the goods, place and
time of delivery, extent of one party's liability to the other or the
settlement of disputes are considered to alter the terms of the
offer materially.
LUMSA – International Commercial Law
CISG
Formation of the contract - Artt. 18-19 (Acceptance)
The mirror image rule and modified acceptance (counter-offer or
acceptance?)
An acceptance must coincide with each and every term of an
offer in order to conclude a contract (see articles 19(1) CISG ).
This requirement is known as the "mirror image rule" since the
acceptance must be the very reflection of the offer in a mirror.
An exception is established for the possible introduction of new
terms into the acceptance that do not substantially alter the
offer.
LUMSA – International Commercial Law
CISG
Formation of the contract – Artt. 18-19 (Acceptance)
In that case, the acceptance will be valid; the contract will
consist of both the terms of the offer and those included in the
acceptance that do not substantially alter the offer, so long as
the offeror without delay does not object to the new terms
(articles 19(2) CISG), or the offer does not expressly limit
acceptance to the terms of the offer ; or the offeree does not
make his acceptance conditional upon the offeror's assent to the
additional or different terms, and the assent reaches the offeree
within a reasonable time (article 2:208(3)(c) PECL).
LUMSA – International Commercial Law
CISG
Formation of the contract - Acceptance
On the other hand, if an element that is included in the
acceptance adds new terms, modifies the terms of the offer or
introduces any other type of limitation to the offer that
substantially alters it, the contract will not be considered
concluded; the response to the offer will be regarded as a
counter-offer - that is, if it meets all requirements under the
CISG or the PECL to be considered an offer in and of itself (see
articles 14 CISG, and 2:208(1) PECL.
LUMSA – International Commercial Law
CISG
Formation of the contract - Acceptance
To determine when an element of an acceptance materially
alters the corresponding offer, a list of items is provided by the
Vienna Convention. However, the list merely provides examples
of such elements, as can be inferred from the expression "among
other things", in Art. 19(3) CISG. Furthermore, the list has a
presumptive nature since it predetermines that such
"[a]dditional or different terms … are considered to alter the
terms of the offer materially"