Advanced Program Class

CONTRACT FOR THE

INTERNATIONAL SALE OF GOODS

LLM. NGO NGUYEN THAO VY

International Law Faculty
International Trade Law Division
CONTRACT FORMATION AND
DRAFTING UNDER CISG
TRANSACTION
v
DIRECT INDIRECT
 OFFER
v
ART. 14 CISG:

(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.
OFFER
v

SPECIFIC PERSON
ADDRESSED

INTENTION SUFFICIENT
TO BE BOUND DEFINITENESS
SPECIFIC PERSON ADDRESSED
v
INTENTION TO BE BOUND
v
ARTICLE 8:

 Interpret the intention of the offeror (subjective approach)

 According to the understanding that a reasonable person of

the same kind as the other party would have had in the
same circumstances (objective approach)

 Due consideration is to be given to all relevant

circumstances of the case
 INTENTION TO BE BOUND
v
Switzerland 5 December 1995 Commercial Court St. Gallen
(Computer hardware devices case)

• “Order no. 1847 - 2 December

1991”
• “Order”, “We order”
• “Delivery due immediately”
• “To our address in St. Gallen”

Delivery

 The recipient may have and must have assumed that, from
the side of the orderer, an intention to be bound to the
purchase of the plotters existed.
SUFFICIENTLY DEFINITE
v

Goods

Quantity Price
SUFFICIENTLY DEFINITE
v

 Fixed price: Chinchilla furs case

 Trade usages: Adamfi Video v. Alkotók Studiósa

Kisszövetkezet

 Expressly or implicitly fixes or makes provision for

determining the quantity and the price.
 SUFFICIENTLY DEFINITE
v
France 4 January 1995 Supreme Court (Fauba v. Fujitsu)

“According to market
increases and decreases”

 The offer which allowed prices to be modified 'according to

market increases and decreases' was sufficiently definite.
 SUFFICIENTLY DEFINITE
v
Russia 3 March 1995 Arbitration proceeding 309/1993
(Implicit agreement on price case)

“The price of the goods would be

agreed ten days prior to the beginning
of the new year”

Delivery

It is merely an expression of consent to determine the price of

the goods at a future date by agreement between the parties.
=> could not be interpreted as making provision for
determining the price of the goods.
EFFECT OF THE OFFER
v
 Art. 15 & 24 CISG: “An offer becomes effective when it
reaches the offeree.”

OFFER

 An offer is not effective when:

Acceptance
Denied
term expiry

Revoked Withdrawn
 ACCEPTANCE
v

ARTICLE 18(1) CISG:

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.

 Art. 8 CISG
 ACCEPTANCE
v
Switzerland 10 July 1996 Commercial Court Zürich (Plastic chips case)

Notice to increase the price

No reply

Delivery

The parties to the original agreement did not show the desire for the
price of goods to be determined depending on objective circumstances,
nor such trade practice exists between the two parties.

=> Mere silence or non-action does not mean accepting an offer,

pursuance to Article 18(1) CISG.
ADDITIONS, LIMITATIONS OR OTHER MODIFICATIONS TO THE OFFER
v

ARTICLE 19 (1) & (3) CISG:

 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.
 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.
 CONFLICTING TERMS TO BE REPLACED WITH THE PROVISIONS
OF THE CISG
v
Germany 9 January 2002 Supreme Court (Powdered milk case)

Offer

Confirmation with changes

made to the seller’s liabilities

“Partially diverging general terms and conditions become an

integral part of a contract (only) insofar as they do not
contradict each other; the statutory provisions apply to the
rest.”

=> “KNOCK-OUT RULE”

 EITHER OF THE CONFLICTING TERMS TO BE REJECTED
v
Germany 11 March 1998 Appellate Court München (Cashmere sweaters case)

Order

Confirmation with
dispute settlement clause

The Buyer accepted those additional General Conditions which

modified its offer by carrying through with the contract.

• => “THE LAST SHOT RULE”

ACCEPTANCE WITH ANY MINOR AMENDMENT
v
ARTICLE 19 (2) CISG

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.
 ACCEPTANCE WITH ANY MINOR AMENDMENT
v
France 22 April 1992 Appellate Court Paris (Fauba v. Fujitsu)

OFFER

Acceptance, request the price to be

decreased upon market price

PHÁP ĐỨC
Confirmation, request the price to
be modified upon market price

This offer by the buyer does not show a difference of view to be

considered a counter offer.
 Seller's response is to accept the offer
EFFECT OF THE ACCEPTANCE
v
 Effect of acceptance to offer: Art. 18.2 & 21 CISG:
when the offeror receives a reply to accept the offer
 Within the period specified in the offer
 Within a reasonable time
 Immediate acceptance to verbal offers
 Late accept to offer: Art. 23 CISG
 Cancellation of acceptance of offer: Art.22 CISG
 EFFECT OF THE ACCEPTANCE
 THE GENTLEMEN AGREEMENT:
v
An unwritten agreement, not a contract, between two parties—
neither of which may be a gentleman—under which each party
believes the other side is fully bound, while its own performance
is strictly optional
 It is typically oral, but it may be written or simply understood as
part of an unspoken agreement by convention or through
mutually-beneficial etiquette
 PRELIMINARY AGREEMENT
 Preliminary agreements may be referred to as letters of intent,
commitment letters, binders, agreements in principle, and
memoranda of understanding.
 When parties have utilized preliminary agreements, courts may
impose precontractual liability based upon the intent provision of
Article 8 of the Convention.
CONTRACT CONCLUSION
v

 The contract is concluded with mutually agreed

terms between the parties.
 In case there is a conflict between contractual
clause and negotiation terms?
 CONTRACT CONCLUSION
v

• United States 29 June 1998 Federal Appellate Court [11th

Circuit] (MCC-Marble Ceramic Center v. Ceramica Nuova
D'Agostino)

• United States 8 February 2011 Federal District Court

[Maryland] (CSS Antenna, Inc. v. Amphenol-Tuchel
Electronics, GMBH.)
CONTRACT CONCLUSION
v
 The Parol Evidence Rule: to preserve the integrity of
written contracts by refusing to allow the admission of
[prior] oral statements or previous correspondence to
contradict the written agreement
 The Parol Evidence Rule has not been incorporated into
the CISG.
 A Merger Clause/Entire Agreement Clause: when in a
contract governed by the CISG, prevents a party from
relying on evidence of statements or agreements not
contained in the writing.
 A Merger Clause derogates from norms of interpretation
and evidence contained in the CISG.
CONTRACT CONCLUSION
v
• The common law ”Parol Evidence Rule” is clearly rejected
in Art. 8(3) CISG
• “Merger clause” in the contract: party autonomy?
• See CISG Advisory Council, Opinion No. 3, Paragraph 3:
”3. A Merger Clause, also referred to as an Entire Agreement
Clause, when in a contract governed by the CISG, derogates from
norms of interpretation and evidence contained in the CISG. The
effect may be to prevent a party from relying on evidence of
statements or agreements not contained in the writing. Moreover, if
the parties so intend, a Merger Clause may bar evidence of trade
usages.
However, in determining the effect of such a Merger Clause,
the parties' statements and negotiations, as well as all other
relevant circumstances shall be taken into account.”
 SPG Agreement
• 18. Entire agreement
•
• 18.1 This contract sets out the entire agreement between the Parties. Neither party
has entered into this contract in reliance upon any representation, warranty or
undertaking of the other party that is not expressly set out or referred to in this
contract. This Article shall not exclude any liability for fraudulent
• misrepresentation.
• 18.2 This contract may not be varied except by an agreement of the Parties in
writing, (which may include e-mail).
THANK YOU FOR YOUR
ATTENTION!