Transcript LUMSA – International Commercial Law

LUMSA – International Commercial Law
7 November 2014
Prof. Avv. Roberto Pirozzi
Email: [email protected]
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 14
Intention to be bound, paragraph (1)
In order for the proposal to conclude 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 Art. 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 15
Electronic communications
The term "reaches" corresponds to the point in time when
an electronic communication has entered the offeree's server.
An offer, even if it is irrevocable, can be withdrawn if the
withdrawal enters the offeree's server before or at the same
time as the offer reaches the offeree. A prerequisite for
withdrawal by electronic communication is that the offeree has
consented, expressly or impliedly, to receive electronic of that
type, in that format and to that address.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 15
In traditional means of communication this rule enables the
offeror to withdraw his offer by a faster means of communication.
He may, for instance, send an offer by letter through ordinary mail
(snail mail) and then later withdraw it by sending a fax that
reaches the offeree before the letter.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 15
The problem in relation to electronic means of communication is
that there are rarely any practical means of faster communication
than electronic messages sent by e-mail or communicated over
websites or other arrangements.
Thus, a question of practical importance arises when the offer is
sent by a traditional letter written on a paper and sent by
traditional mail while the withdrawal is sent electronically.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 15
The difficulty from a conceptual point of view is that the
addressee of an electronic withdrawal does not have to be
physically present at the place where the message arrives.
The place of the message is a functional concept rather than a
physical one.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 15
The message could be located on any server in the world,
including the sender's - the important question is whether the
addressee can retrieve it.
The following are the most important situations that are likely to
be considered in relation to the term "reaches" in the context of
electronic communications.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 15
Situation "A". From a pragmatic point of view it is clear that the
addressee of an electronic communications withdrawal may read it
as soon as it is located on his server.
He may have problems reaching his server due to internal problems
in his network system. This is normally within his "sphere of
influence". Irrespective of how harsh it may be for the offeree that
messages have arrived to his server but cannot be read by him due
to internal problems, it is not appropriate to put the risk on the
offeror for the offeree's technical problems. The offeree may reduce
the risk by choosing appropriate internet service providers or
designing an adequate technical infrastructure to make sure that
the internal communication functions satisfactorily. The sender of
an electronic communication ought not to assume this risk.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 15
Situation "B". It is not sufficient that a withdrawal has entered the
offeree's server. The offeree's willingness to accept electronic
communications must be taken into account in determining
whether an electronic communication withdrawal has "reached"
the offeror. The consent of the offeree may be evident CISG Art. 8,
governing the interpretation of the conduct of the parties. CISG Art.
9(1) may also be relevant if the parties have established a practice
in their business. CISG Art. 9(2) may apply in connections to trade
usages which the parties knew or ought to have known and which in
international trade are widely known to, and regularly observed by,
parties to contracts of the type involved in the particular trade
concerned.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 15
Situation "C". A related problem is when the e-mail address is not
correctly stated in the message containing a withdrawal. Such
messages may enter the addressee's server - but never reach the
addressee personally, so that it cannot be accessed by the
addressee. For such situations the risk is on the sender, since the
receiver has not indicated his willingness to receive electronic
messages incorrectly addressed. Sometimes an electronic
communication with an incorrect address is forwarded by the
postmaster to the correct address. If the forwarded communication
reaches the addressee's server in time, the withdrawal is effective.
The addressee has in such a situation informed the postmaster that
e-mails incorrectly addressed in a certain way should be forwarded
to him, and by doing so he has expressed his general willingness to
receive also electronic messages incorrectly addressed.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 15
Situation "D". Another problem in relation to "reaches" is whether the
offeree is able to process and understand the electronic communication.
Due to incompatible computer programs, the text appearing at the
offeree's computer may be incomprehensible. The situation is rather close
to the problem of a message being written in a language that the offeree
is unable to understand. The question at issue here is whether an
electronic withdrawal that cannot be accurately processed by the offeree
has "reached" the offeree when it has entered his server. The crucial issue
is to what extent the offeree has indicated that he is willing to receive that
type of electronic communications. It is not sufficient that the offeree has
agreed to generally receive electronic communications. He must have
consented to receiving electronic messages of that type, in that format,
and to that address. Here again, CISG Art. 8 will be relevant for the
interpretation of the conduct of parties, CISG Art. 9(1) will be relevant for
any practices established between the parties, while CISG 9(2) may
indicate, as a matter of trade usage, whether the offeror has impliedly or
expressly agreed to receive electronic messages of a certain type.
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).
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 16
Under article 16(2), an offer will be irrevocable if its express
terms indicate irrevocability. The offeror need not use the words,
"I promise not to revoke." An assurance that "I will hold this offer
open until June 15" will make the offer irrevocable until June
15. It has also been suggested that words like "this is a firm
offer" unambiguously indicate irrevocability
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 16
Recall that under CISG article 16(2)(b), an offer is irrevocable "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. Even if the words of the offer do not indicate irrevocability
under paragraph (2)(a), the offeree may be able to establish
irrevocability under paragraph (2)(b) if he has reasonably relied
on an implied promise not to revoke.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 16
Paragraph (2)(b) looks very much like common law promissory
estoppel doctrines, although it does not expressly require that
the offeree's reliance must have been foreseeable to the offeror
and does not expressly require that the offeree's reliance be
detrimental. Despite these omissions, we can expect that many
tribunals will apply paragraph (2)(b) in much the same fashion as
common law courts have used promissory estoppel.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 16
If the offeree's reliance was not reasonably foreseeable to the
offeror, a court applying paragraph (2)(b) could usually find that
the offeree's reliance on the offer's being irrevocable was
unreasonable. And courts could easily assume that "reliance"
means detrimental reliance. To rely on a belief (for example, a
belief that the offeror will not revoke) is to act in a way that will
impair one's future well-being if the belief turns out to be false.
Cases arise under paragraph (2)(b) because an offeree's belief
that the offeror would not attempt to revoke has turned out to
be false.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 16
The critical issue under paragraph (2)(b) is whether the offeree
reasonably relies on the offer's being irrevocable. Presumably,
the offeree (1) must have had a good reason for believing that
the offer was irrevocable and (2) must also have acted
reasonably in relying on that belief (did not engage in a
foolhardy form of reliance). Both requirements will probably be
met when the parties understand that the offeree might use the
offer in preparing his own offer to a third person, as in cases
where a supplier of goods makes an offer to a general contractor
who is bidding for a construction contract or when the parties
understood that the offeree would have to undertake a costly
investigation in order to decide whether to accept the offer.
LUMSA – International Commercial Law
CISG - OFFER
CISG Article 16
It is not clear whether an offeree can satisfy the requirements of
paragraph (2)(b) when his reliance takes the form of inaction (an
omission or forbearance). The English version of paragraph (2)(b)
uses the word "acted." A court might decide that an offeree has
not acted in reliance if his only reliance was a failure to act.
At least one commentator, however, suggests that the word
"acted" means not only a positive act, but also a failure to act,
for example, a demonstrable failure to solicit other offers.
LUMSA – International Commercial Law
CISG – OFFER AND REJECTION
CISG Article 17
An offer, even if it is irrevocable, is terminated when a rejection
reaches the offeror.
Article 17 was designed for a simple, limited purpose: the
protection of the reasonable expectations of the offeror. Having
received a rejection from the offeree, the offeror should be free
to take his business elsewhere. Indeed, even if the offeror was
originally bound by an irrevocable offer, the offer dies when the
rejection is received.
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 18
According to the rule in paragraph (1), an acceptance may
consist of a statement or of other conduct, e.g., shipping goods
which the buyer has offered to buy. Whatever the form, for a
statement or conduct to constitute an acceptance, it must
provide some indication of the offeree's assent.
On the other hand, since the CISG does not impose upon the
offeree a general duty to reply, silence or inactivity does not - in
itself - amount to acceptance. Therefore, the offeror cannot bind
the offeree in advance merely by stating that silence will be
treated as an indication of the offeree's assent.
LUMSA – International Commercial Law
CISG - ACCEPTANCE
CISG Article 18
Paragraph (2) of Article 18, which determines the point in time at
which an acceptance (under the first paragraph)
becomes effective. By virtue of the rules set forth in paragraph
(2), an acceptance becomes effective upon the timely anival of
the offeree's indication of assent.
In other words, to be effective, the acceptance must arrive, and
it must arrive 'in time'.
LUMSA – International Commercial Law
CISG - ACCEPTANCE
CISG Article 18
Receipt Theory
An important consequence of the 'receipt theory' of acceptance,
as adopted by the CISG in Article 18(2), is that the sender of the
acceptance (the offeree) must bear the risk of transmission, i.e.,
the risk that the acceptance may never really arrive, e.g., if the
acceptance is lost in the mail. In other words, absent contrary
prior agreement, the offeree's notice of acceptance must in
some manner actually reach the offeror, in order to bring about
the legal consequences generally associated with the acceptance
of a CISG offer.
LUMSA – International Commercial Law
CISG - ACCEPTANCE
CISG Article 18
Acceptance Within Time Fixed or Reasonable Time
In accordance with the principle that the offeror is the master of
the offer, the acceptance must reach the offeror within the time
which the offeror has fixed. If no time has been fixed, the CISG
default rule is that the acceptance must reach its destination
within a 'reasonable' time, taking due account of all the
circumstances. Thus, an offer sent by telefax will require a more
prompt reply than an offer sent by post. Absent contrary
indication, an oral offer requires an 'immediate' acceptance.
LUMSA – International Commercial Law
CISG - ACCEPTANCE
CISG Article 18
Assent By Performance of Act – Paragraph 3
Sometimes, the offeror will request - or at least impliedly condone –
that the offeree accept without actually making such a statement. For
example, the offeror may request or condone that the offeree accept
by performing an act, e.g. shipping the goods ordered by the offeror. A
similar understanding may follow from a 'course of dealing' established
between the particular parties concerned or from a broader usage
among merchants within the particular trade.
In all such cases, assuming the act is performed within the time fixed
by the offeror or within a reasonable time, the offeree's acceptance
becomes effective at the moment the act is actually performed.And
from this it follows that the offeror cannot revoke (even an otherwise
revocable offer) if the purported revocation reaches the offeree after
the act requested has been performed.
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 - ACCEPTANCE
CISG Article 19
Article 19 qualifies article 18 by providing that a purported
acceptance which modifies the offer is a rejection of the offer
and is considered instead to be a counter-offer.P
Paragraph (1) of article 19 states this basic proposition, while
paragraph (2) makes an exception for immaterial modifications
to which the offeror does not object.
Paragraph (3) lists matters which are considered material.
LUMSA – International Commercial Law
CISG - ACCEPTANCE
Material modifications
Paragraph (1) provides that a reply to an offer that adds to, limits
or otherwise modifies the offer is a rejection of the offer.
Paragraph (3) lists matters as to which modifications are to be
considered material: price; payment; quality and quantity of the
goods; place and time of delivery; settlement of
disputes. However, notwithstanding paragraph (3) one decision
has stated that modifications of matters listed in that paragraph
are not material if the modifications are not considered material
by the parties or in the light of usages.
LUMSA – International Commercial Law
CISG - ACCEPTANCE
Immaterial modifications
One court has stated that modifications that favour the
addressee are not material and do not have to be accepted
expressly by the other party(Austrian Supreme Court 1997)
The following modifications have been found to be immaterial: a
reply that modified an offer by stating that the price would be
modified by increases as well as decreases in the market price
and deferring delivery of one item; seller's standard term
reserving the right to change the date of delivery; a request that
buyer draft formal termination agreement; a request to treat the
contract confidential until the parties make a joint public
announcement; contractual requirement that buyer must reject
goods delivered within stated period.
LUMSA – International Commercial Law
CISG - ACCEPTANCE
Conflicting standard terms
The Convention does not have special rules to address the issues
raised when a potential seller and buyer each uses standard
contract terms prepared in advance for general and repeated
use (the so-called "battle of the forms"). Several decisions
conclude that the parties' performance notwithstanding partial
contradiction between their standard terms established
enforceable contracts.
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).