CISG and Formation of Contract

Posted on 14 December 2015

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Translucent Globe on Euros

Image by © Rob Chatterson/Corbis

One of the reasons that I prefer to adopt The Vienna Convention on Contracts for the International Sale of Goods 1980 (CISG), as the choice of law, for the contract of international sale of goods – because it shares similar principles with English contract law.

The following are some of the salient points of CISG, with regards to the formation of the contract.

Offer

  • An offer needs to be ‘sufficiently definite’ with the intention to create legal relations. An offer is ‘sufficiently definite’ if the goods (expressly or implicitly) are fixed, or there is provision to determine the quantity and the price. [Art 14(1)]. Comparatively, English law requires more as the offer needs to be definite.
  • An offer need to be addressed to one or more specific person. [Art 14(2)]. In the context of English law, this is the bilateral offer.
  • An offer is effective once it reached to the offeree. [Art 15(1)]. In contrast, English law has the higher requirement which required the offer to be communicated, instead of delivered or reached.
  • Offer could be revoked before acceptance is made.[Art 16(1)].

Acceptance

  • An acceptance is effective once it reached to the offeror. [Art 18(2)]. (Note: An offer or an acceptance is reached if it reached the business place or mailing address of the recipient.) As mentioned before, English law requires communication instead of a mere delivery.
  • Acceptance could be revoked before it is reached to the offeror. [Art 22].
  • Any additions, limitations or modifications to the offer, is a rejection of the offer, and constitutes as a counter-offer. [Art 19(1)]. This is in parallel with English law’s of “mirror image” rule.
  • If the additions or modification does not materially alter the term, and the offeror does not object, then it is a valid acceptance. [Art 19(2)]. Both of these are in parallel with English law.

Overall, the provisions in CISG seems fair, and it is a suitable neutral ground between the domestics law of both parties in an international trade.

Note: This article also published at LinkedIn.

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Posted in: Contract Law