Larry_A_DiMatteo_-_International_Sales_Law_A_Global_Challenge-Cambridge_University_Press_2014

The maxim a verbis legis non est recedendum (“You may not vary the words of a statute”) is not an absolute, especially when a law contains conflicting provisions or when the law needs to be extended to a change in practice. A situation of conflicting provisions is CISG Article 14’s specificity of price requirement and CISG Article 55’s open price term. The foundational question is whether an offer with an open-price term constitutes a valid offer despite the clear wording of Article 14(1). Theoretically, a failure to specify a price term, as required under Article 14(1), could be rectified by the open price term provision of Article 55.6 Without using the rationale of the parties implicitly opting out of the Article 14(1) requirement, the wording of one of the provisions must be neglected. A preference should be given to the default rule of Article 55 CISG as lex specialis. An example of the need for a dynamic interpretation of a narrowly worded provision is the obsolescence of CISG Article 13’s definition of the written form (“writing includes telegram and telex”). First, various electronic means of communication have been interpreted to be writings. Second, CISG Article 24’s notice of “reaching the addressee” requires a determination as to when electronic communications reach the receiving party.7 Thus, Articles 13 and 24 require dynamic interpretation to respond to technological changes.8

A more complex question arises in situations where CISG Part II covers an area, but fails to provide an express rule. This is not unexpected given that Part II provides a mere nine substantive rules (CISG Articles 23 and 24 are merely definitional in nature). It is supported, however, from the general provisions of Part I.9 A weak and less convincing interpretation of the formation rules of Part II is that it is a set of exhaustive rules leaving no gaps. The stronger and persuasive interpretation is that contract formation is governed but not for all issues settled by Part II.10 The CISG formation rules therefore have a number of internal gaps or lagunae. In such cases, the interpreter turns to the gap-filling provision of CISG Article 7(2). The use of general principles allows the interpreter to build a bridge over the failing express rule or rules to regulate alternative means of contract formation. The combination of these provisions of Part I and II CISG are the means by which autonomous and dynamic interpretations can be made.11

6See Article 55: “Where a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price.” See generally John O. Honnold, Uniform Law for International Sales, 3rd ed. (The Hague, 1999), 154–5 (legislative history of the two provisions).

7Compare here CISG Advisory Council Opinion No. 1 Electronic Communications under CISG, available at http://www.cisgac.com.

8The question of whether to include new electronic means of communication under the definition of the “written form” (Article 13) is a question of interpretation and not a gap-filling question under Article 7(2). However, for an alternative argument, see J. Lookofsky, Understanding the CISG, 4th ed. (The Netherlands, 2012), 35–6.

9See Articles 7(1), 8, and 9; see also note 1.

10See the arguments by Morten M. Fogt, “Konkludente Vertragsannahme und grenzuberschreitendes¨ kaufmannisches¨ Bestatigungsschreiben¨ nach CISG,” 27 Praxis des Internationalen Privatund Verfahrensrechts (IPRax) 361 et seq. (2007). For a detailed discussion of the mechanism of gap-filling according to Article 7(2), see Morten M. Fogt, “Private International Law in the Process of Harmonization of International Commercial Law: The ‘Ugly Duckling’?,” in Fogt, Uniformity and Harmonization, 57 et seq., 91–8.

11Cf. Honnold, Uniform Law, §21, 17 (“How can one establish the general principles on which the Convention is based? How diligently should a tribunal look for such principles before it turns, via rules of private international law, to a rule of domestic law?”).

B. The CISG’s Principles of Contract Law

Two overarching principles of contract law are freedom of contract and pacta sunt servanda, and these principles find unequal treatment in the CISG. CISG Article 6 recognizes freedom of contract as the premier principle of contract law.12 If the CISG applies, Article 6 gives the contracting parties the freedom, except for the application of national form requirements under Articles 12 and 96, to derogate or vary from the CISG rules.13 In fact, the parties may opt out of the CISG and choose the lex contractus, which in most legal systems will provide the same degree of freedom of contract.14 The fact that the CISG only applies to commercial transactions15 allowed the drafters to codify an extensive freedom of contract regime. An implied limitation on contractual freedom under the CISG is the general principle of good faith. Freedom of contract does not mean that parties are free to act in bad faith, not to cooperate in the performance of the contract, or to abuse contractual rights. This limitation will exist independently of whether it is based on good faith as an underlying principle of the CISG or on the lex contractus governing validity issues.

The principle of pacta sunt servanda is not expressly codified in the CISG.16 However, the binding effect of a contract is self-evident. The main remedy provisions in CISG Part III provide for no fault liability for breach of contract, except for the narrow exemption provided in CISG Article 79. CISG Articles 45(1) and 61(1) make clear that the remedies are available in the case of the other party’s failure “to perform any of his obligations under the contract or this Convention.”

III. The CISG’s Traditional Contract Formation Regime

The “meeting of the minds” model of mutual consent confirmation posited on offeracceptance rules was prevalent across legal systems at the beginning of the twentieth century. The acceptance had to mirror the offer in order for a contract to be formed. Because the traditional “offer” and “acceptance” model was part of the common core of

12Cf. Article 1.1 UPICC, Article 1:102 (1) PECL, Article II 1:102 of the European Draft Common Frame of Reference (DCFR) and Article 1 of the European Commission Proposal for a Common European Sales Law, COM (2011) 635/4, October 12, 2011 (CESL). See also Articles 30, 35(1), and 53 (“required by the contract”).

13There are few provisions in the CISG that, depending on the domestic law applicable, may have a mandatory character, such as the form reservation in Article 96 and rules on civil procedure applicable under Article 28.

14See Honnold, Uniform Law, para. 82, at 84.

15Article 2(a) excludes consumer protection laws from CISG transactions, unless they apply to the commercial seller who “neither knew or ought to have known” it was faced with a consumer. Domestic consumer protection rules that are qualified as validity provisions control under CISG Article 4 (validity). Mandatory and in particular international mandatory consumer protection rules, such as EU law, can under the European Private International Law regime demand application and should in such consumer cases be given preference over the commercial regime of the CISG; see Morten M. Fogt, “Private International Law Issues by Opt-out and Opt-in Instruments of Harmonization: A Comparison between CISG and CESL,” in Liber Amicorum Ole Lando (ed. M. J. Bonell et al.) (2012), 117 et seq., 129–32. But see Franco Ferrari in Kommentar zum Einheitlichen UN-Kaufrecht (CISG), 5th ed. (ed. Peter Schlechtriem and Ingeborg Schwenzer) (Munich, 2008), Article 2, Randnote (Rn.) 25–6 and obiter dictum by Austrian Supreme Court (February 11, 1997), Case No. 10 ob. 1506/95, available at http://www.unilex.info/case.cfm?id=283.

16The principle of pacta sunt servanda; see, e.g., Article 1.3 UPICC.

most legal systems, it was a natural basis for harmonization of international contract law.17 However, in the drafting of the Hague Convention on a Uniform Law on the Formation of Contracts for the International Sale of Goods from 1964 (ULF) and the UNCITRAL CISG draft in 1978, and as adopted in 1980, the common core or traditional model remained unchanged. The 1935 draft for an international sales law was divided into two sections; one concerning the offer (L’offre) and another addressing the acceptance (L’acceptation). CISG Part II (Articles 14–23) mimics the ten articles of the 1935 draft for an international sales law.18 This first draft, however, contrary to the adopted text of the Part II CISG, did give effect to silence on the part of the offeree based on an established practice between the parties and included a provision on the incorporation of standard terms.19 The contract formation rules of the CISG merely reflect the model found in most national contract acts or codes of the nineteenth and twentieth centuries20 – a contract is formed by indication of assent in an acceptance to a definite offer. Fortunately, the general provisions of CISG Part I can supplement and, thus, mitigate some of the drawbacks of the traditional formation rules of Part II.

CISG Part II is nevertheless innovative in the sense that some peculiar national doctrines and concepts were avoided. The common law doctrine of “consideration”21 and the Romanic concept of a “cause” or “causa” are not incorporated into the CISG. These core concepts were also avoided in the drafting of the Principles of European Contract Law (PECL) and the UNIDROIT Principles of International Commercial Contracts (UPICC).22 As Professor Ole Lando states in a recent essay on a possible future global commercial code:

In fact, the English and American courts have had problems with the doctrine of consideration and have tempered it by relying on commercial usages, estoppel and “invented consideration” to avoid some of the hardship which the doctrine creates. For these reasons the PECL and UPICC follow the continental rule, which does not require consideration. Chinese law appears to be to the same effect.

The functions which French law and other Romanist legal systems have attributed to the legal cause by invalidating contracts due to absence of legal basis, illegality or immorality, absent or insufficient quid pro quo, etc., are better taken care of by specific rules governing these matters. One may conclude that cause is an unclear concept with several incoherent roles. It is unknown in German law, the Nordic laws and the Common Law. I have not found traces of it in Chinese Contract Law. The UPICC and PECL do without it.23

17See the comparative work of Ernst Rabel: Ernst Rabel, Recht des Warenkaufes, Eine rechtsvergleichende Darstellung, 1. Band (Berlin, 1936), 71 et seq. See also Formation of Contract: A Study of the Common Core of Legal Systems, 2 vols. (ed. Rudolph B. Schlesinger) (New York: Oceana, 1968).

18French version of draft in Rabel, Recht des Warenkaufes, 116.

19See Articles 9–10, 1935 Draft, supra n. 17.

20See Ole Lando, “Tradition versus Harmonization in the Recent Reforms of Contract Law,” in The Xiamen Academy of International Law, Collected Courses 2010 (The Netherlands, 2010), 83–15, 107.

21See Michael Bridge, The International Sale of Goods, Law and Practice, 2nd ed. (Oxford, 2007), 550: “Consideration is not merely formally absent from the CISG; it is also deprived of any secondary effect on promises to keep offers open and on contractual variation.” See also id., at 557–8.

22Cf. Lando, “Tradition versus Harmonization,” 107.

23Cf. id., 109 and 111.

The CISG’s drafters also ignored the Nordic countries’ “promise theory” of contract formation. The Nordic promise theory (løfteprincip) recognizes the binding nature of reasonable reliance on promises of businesspersons to ensure certainty and predictability. Businesspersons are expected to act in good faith in upholding their promises. In contrast to the Roman-influenced concept of a contractual obligation, which can only be created by a contractual agreement, under Nordic law the promise in itself creates the obligation.24 Consequently, an offer is legally binding. Although practical and in principle convincing, the Nordic doctrine of the promise theory25 is not represented in the CISG.26 In the Nordic countries, this lack of the promise theory has been given as one of the reasons for the Nordic countries’ reservation to CISG Part II, which now has been withdrawn by Sweden, Finland, and Denmark.27

A. Contract Formation: The Offer

Contract formation under the CISG is a combination of the traditional provisions of CISG Part II with the general principles of CISG Part I. This combination anchors CISG contract formation in the traditional approach and yet provides pragmatic flexibility for nontraditional modes of contract formation. A U.S. Court in Geneva Pharmaceuticals Technology Corp. v. Barr Laboratories, Inc.28 states:

The CISG, intended to ensure the observance of good faith in international trade, CISG Article 7(1), embodies a liberal approach to contract formation and interpretation, and a strong preference for enforcing obligations and representations customarily relied upon by others in the industry . . . A contract may be proven by a document, oral representations, conduct, or some combination of the three. CISG Article 11. The usages and practices of the parties or the industry are automatically incorporated into any agreement governed by the Convention, unless expressly excluded by the parties. CISG Article 9.

While embodying a liberal approach, the CISG does not vitiate the need to prove concepts familiar to the common law, including offer, acceptance, validity and performance.29

24See Ernst Rabel, supra note 17, at 70: “Zur Entstehung einer Schuldverpflichtung gehort¨ in den meisten Rechten grundsatzlich¨ ein Vertrag. Eine Ausnahme macht die skandinavische Lofte¨-Theorie. Danach entsteht die Obligation der Parteien nicht durch ihre Willensubereinstimmung,¨ sondern dadurch, daß jeder in seiner Vertragserklarung¨ eine Verpflichtung ubernimmt:¨ Der Verkaufer¨ zu liefern, der Kaufer¨ zu bezahlen.”

25See Rabel, Recht des Warenkaufes, 71: “Die vom romischen¨ Recht beeinflußten Rechtsvorstellungen der meisten Lander¨ werden wohl hier den Ausschlag geben mussen¨.”

26A reflection of the Nordic “promise theory” may be seen in the PECL Article 2: 107: “A promise which is intended to be legally binding without acceptance is binding.” Lando, “Tradition versus Harmonization,” 111.

27National proposals to withdraw the Article 92 CISG reservation to CISG Part II were presented and adopted in 2011–12. The withdrawal of the Nordic Article 92 reservations took effect on December 1, 2012, for Sweden and Finland, and on February 1, 2013, for Denmark. For these Nordic countries (including Iceland, which did not make an Article 92 reservation in the first place), the CISG will now apply to contract of the sale of goods with other non-Nordic CISG states according to Article 1(1)(a) but not according to the Article 94 neighboring reservation to inter-Nordic sales.

28Geneva Pharmaceuticals Technology Corp. v. Barr Laboratories, Inc., et al., Case No. 98CIV861 (RWS), 99CIV3607 (RWS), F. Supp. (Second Series) 201, 236 (S.D.N.Y. 2002), available at http://www.unilex

.info/case.cfm?id=739 (Geneva Pharmaceuticals).

29Id.

The general conditions for contract formation under the CISG are based on the principle of consensus. Consensus under the CISG requires a common intention to contract and the parties to agree on the essential elements of a sales contract. These essential elements must be found either in an offer and a corresponding acceptance or though alternative means of contract formation. An important limitation is that the CISG only regulates the apparent consensus of the contracting parties,30 whereas hidden defects in the consensus such as cases of mistake, fraud, duress or threat, unfairness, and contracts against the law or public policy are excluded from its scope.

1. Common Intention to Be Bound by a Contract (animus contrahendi)

The intention to be bound by a contract (animus contrahendi) is a general requirement under domestic laws and international contract law instruments. In principle, there must be an intention to be bound to the specific contract of sale and agreement on material, concrete terms and conditions. In the vast majority of international sale transactions governed by the CISG, there is some lack of express agreement on the terms of the contract, especially when standard forms are used. The contracting parties mostly agree on fundamental aspects of the transaction, such as description of the goods, quantity, and price. Other terms are to be determined later or left unaddressed and, thus, to be filled by established practice, usages, or default rules (CISG provisions).

2. Criteria for Distinguishing the Elements of a Contract

The terms of a contract can be divided based on different characteristics. First, the essential elements (essentialia negotii or essentialia contractus) must be agreed to by the parties to make a binding and enforceable contract. Second, the additional elements (accidentalia negotii) can be, but need not be, addressed in order to form a binding contract. Moreover, the naturalia negotii can be used to indicate the legal nature of the specific contract in question and characterize the rights and obligations stemming from the contract.31 If this terminology is employed the distinction results in the following: The naturalia negotii indicates the type of a contract and inherent rights and obligations of parties that were intended. The essentialia negotii (negotiated essential consensus) or essentialia contractus (contractual essential consensus) will be sine qua non for the formation of the contract. The accidentalia negotii can be regulated by the applicable default rules.

3. CISG essentialia negotii

The essential elements (essentialia negotii or contractus) of an offer or a sales contract are not specified in Article 4 ULF, which only states that an offer must be “sufficiently definite to permit the conclusion of the contract by acceptance and indicates the intention

30German doctrine makes a linguistic distinction by which the CISG only covers the objective consent (außerer¨ Konsens) and possible defects in subjective consent are excluded and left to the domestic law. See Peter Schlechtriem and U. Schroeter, in Schlechtriem and Schwenzer, Commentary, Rn. 1–2, pp. 253–4.

31The use of the Latin terms may differ, but for a similar use, see P. Cvetkovic, “The Characteristics of an Offer and Acceptance in CISG and PECL,” 14 Pace Int’l L. Rev. 121, 123 (2002).

of the offeror to be bound.”32 In its critical analysis of the ULF, the UNCITRAL Secretary in its report 1976 proposed an alternative text that in three new sections defines the essentialia contractus to be an agreement on “at least the kind and quantity of the goods and that a price is to be paid.”33 The comparative problem of the requirement of a definite price – pretium certum – that some legal systems have taken over from Roman law was strongly debated in the drafting of the CISG, ending without the achievement of consensus.34

According to the wording of the CISG, the essential requirements of an offer are stated in CISG Article 14(1) – specification of the goods, quantity, and price.35 Article 14(1) has in case law been interpreted as providing the essentialia contractus of a CISG sales contract.36 The Austrian Federal Supreme Court stated:

Der Vorschlag muß daher seinem Inhalt nach ausreichend bestimmt sein. Dies ist dann der Fall, wenn der Vorschlag die Ware bezeichnet und die Menge der zu liefernden Ware sowie den Preis ausdrucklich¨ oder stillschweigend festsetzt bzw deren Festsetzung ermoglicht¨. Diesem Erfordernis ist dann entsprochen, wenn die essentialia negotii im Anbot ausdrucklich¨ festgelegt werden, doch erlaubt Abs 1 Satz 2 dieser Bestimmung auch eine “stillschweigende Festsetzung.” Damit sind Anhaltspunkte gemeint, die eine Auslegung ermoglichen,¨ die zu einem bestimmten Preis, einer bestimmten Ware oder (und) ihrer Menge fuhrt¨ . . . Der Vertrag ist daher mit zumindest bestimmbarer Menge und bestimmbaren Preisen zustande gekommen.37

An alternative interpretation argues that prices are not an essential element of the contract. An open price term does not prevent the formation of a contract under the CISG – thus reducing the essentialia negotii under the CISG to goods and quantity.38 The price is presumed according to CISG Article 55 as long as the parties “have impliedly made reference to the price generally charged.”

32Article 4(1) ULF does not refer to a “proposal” but to “the communication . . . with the object of concluding a contract of sale.”

33Report of the Working Group on the International Sale of Goods on the Work of Its Eighth Session (New York, January 4–14, 1977) (A/CN.9/128, from February 3, 1977), Appendix I, Article 4, Proposed alternative text; published in John O. Honnold, Documentary History of the Uniform Law for International Sales (The Hague 1989), 254 et seq., see text at p. 260.

34See, e.g., the considerations by the Working Group Doc. A(14), IX YB, A/CN.9/142, at 73–4. For details on the legislative history on the “definite price” issue, see G. Eorsi¨ in Commentary on the International Sales Law (ed. C. M. Bianca and M. J. Bonell) (Milan 1987), Article 14, at 133–4.

35The definition of “material” terms in CISG Article 19(3) does not have any bearing on the issue of the essentialia negotii and refers to an acceptance and not an offer.

36See Ulrich Magnus, Staudinger Kommentar zum Burgerlichen¨ Gesetzbuch, Wiener UN-Kaufrecht (CISG), 2nd ed. (Berlin, 2005), Article 14, Rn. 3, 16–17: “Auch in den Fallen,¨ in denen Angebot und Annahme nicht als selbstandige¨ Erklarungen¨ identifizierbar sind, kommt ein Vertrag grundsatzlich¨ nur zustande, wenn die essentialia, die Article 14 Abs. 1 Satz 2 nennt, hinreichend bestimmt sind”; T. Dornis in Kommentar zum UN-Kaufrech, 2nd ed. (ed. H. Honsell) (Berlin/Heidelberg, 2010), Article 14, Rn. 1, at 96. Cf. K. Steensgaard, Standardbetingelser i internationale kontrakter (Copenhagen 2010): 82 et seq., at 86–7, who will limit Article 14(1) CISG to the minimum requirement of an offer only and find it difficult to view the provision as indication of the essentialia negotii of a CISG contract; perhaps similar to Eorsi¨ in Bianca and Bonnell, Commentary, Article 55, para 2.2.2, at 407: “Article 14 is concerned with offers and Article 55 with contracts. Once a contract has been concluded, the offer becomes irrelevant.”

37Austrian Federal Supreme Court, Oberster Gerichtshof (OGH) (November 10, 1994), Case No. 2 Ob 547/93, available at http://www.unilex.info/case.cfm?id=110, emphasis by author.

38This interpretation is in line with Article 2.1.2 UPICC (2010), Article 2:201 PECL, Article II. 4.201 DCFR, and Article 31 CESL, supra note 12.

The requirement of a definite price (pretium certum) was intensively debated during the Vienna Conference 1980 resulting in seemingly conflicting provisions in Articles 14 (need for indication of price) and 55 (implying a price into an open price term). The best resolution of this conflict is to ignore the principle of pretium certum and enforce a contract where the parties intended to be bound. Two exceptions to enforcement of a contract without a price term would be in cases where agreement on the price was made a condition to the formation of the contract and in the rare situation where a market price cannot be determined.39 A strong argument can be made that the interpreter should determine a market price based under Article 55 when there was intent to be bound. Article 55 will only salvage a contract when there are objective criteria for determining a reasonable price. The first criterion is to determine a price generally charged for such goods and under comparative circumstances in the trade concerned. Other criteria include the price used in previous sales by the parties or third parties, a seller’s normal overheads, a seller’s or producer’s average costs allocated to material, personnel, and production of similar or identical goods, and ordinary profit in the trade concerned. In order to rebut this presumption in dubio pro contractus, a party must show that it is impossible to determine a market price.40

4. Nonformalistic Definition of Offer and Counteroffer

A CISG offer must be “addressed to one or more specific persons” (offer ad personam),41 be “sufficiently definite” (essentialia negotii), and indicate “the intention of the offeror to be bound in case of acceptance” (animus contrahendi). The requirement of a definite price (pretium certum) should be reduced to an accidentalia negotii. The concepts of offer and counteroffer in the CISG formation regime are nonformalistic.

a. Offer by a specific offeror to a specific addressee

The identity of the contracting parties must be evident in the offer. Even though CISG Article 14(1) only notes the specification of the offeree, the identity of the person making the offer must also be known. This follows tacitly from Article 14(1) and other provisions of CISG Part II.42 In most cases the identity of the offeror will be clear from the facts of the case or can be determined by interpretation according to CISG Article 8 or by a practice established between the parties under CISG Article 9(1). Doubts about the identity of the offeror may, however, arise in international sales involving multinational companies with many branches and agents with authority to represent one or more companies.43 Contractual identity may also be confused where there is a

39See Supreme Court of the Republic of Hungary (September 25, 1992) (which held that a price for engines to airplanes did not have a market price and, therefore, a contract was not concluded). See also A. Vida, “Unwirksamkeit der Offerte wegen Unbestimmtheit nach UN-Kaufrecht,” 15 IPRax 1995, 261 et seq.; P. Amato, “U.N. Convention on Contracts for the International Sale of Goods: The Open Price Term and Uniform Application: An Early Interpretation by Hungarian Court,” 13 J. L. & Commerce 118 (1993).

40See CISG Articles 55 and 76 (references to market price).

41In contrast to an invitatio ad offerendum, see Article 14(2).

42Several provisions of CISG Part II presuppose a specific person as “offeror,” see Articles 17, 18(2), 19(2), 21–2, and Article 20(2) (“place of business of the offeror”).

43See, e.g., Austrian Supreme Court (Oberste Gerichtshof, OGH) (June 18, 1997), Case No. 3 Ob 512/96, available at http://www.unilex.info/case.cfm?id=284.

long supply chain of trading parties.44 Often, there are multiple parties involved in a particular international sale of goods, and the legal role of the participants is not always clear. Moreover, as a consequence of the traditional model of offer and acceptance, a negotiation of the parties will in many cases lead to a constant “shift of roles” as initial offeror and offeree to subsequent counter offeror and counter offeree and vice versa.

The Swiss Supreme Court was faced with a case involving a chain of sales contracts concluded between multiple parties (Swiss seller, Italian supplier or producer, subsequent Swiss buyer of wine).45 In the case, a Swiss buyer A (initial offeror) with place of business in Zurich¨ renegotiated with a Swiss seller B (initial offeree), also in Switzerland, a contract of sale of wine in gift packs of three pieces. The contract gave A the right to return parts of the wine because the business idea did not result in expected returns. Under previous contracts, B bought the wine from an Italian supplier, C, who purchased the goods from an Italian producer, D. The supplier D had previously made delivery directly to A in Switzerland. New renegotiation between A and B resulted in a price reduction and an agreement that B (seller) should deliver only one type of Italian wine in a gift pack of six pieces. Buyer A accepted a new offer from an employee of B under the renegotiated terms and agreed to take delivery of a large quantity of specified wine. B, however, forwarded A’s acceptance to D with the request that D deliver to A directly and demand payment from A directly. D delivered the ordered quantity of wine and A took delivery; the latter, then, rejected the request of payment from D. The question arose whether B or D was the offeror and contracting party to the sale transaction with A. In the proceeding before the Swiss Federal Supreme Court, D disputed the authority of the employee of B and claimed that the delivery of wine direct to A was an offer that A tacitly accepted by conduct.

Under domestic Swiss law, the court held that A and B had concluded a contract despite any lack of authority by B’s employee. Under Swiss law, the court made reference to the doctrine of the binding effect of nonreaction to a letter of confirmation (A’s acceptance of B’s offer), as well as to the principle of good faith (Treu und Glauben).46 However, the international sale under which the Italian supplier D claimed payment of the purchase price from the Swiss buyer A was governed by the CISG. A key factor, under a CISG analysis, is the common intention of the parties. The initial offer of A was addressed specifically to B, and D was considered by A a third party performing a sales contract on behalf of the seller B. In addition, a possible intention of seller B to transfer a contract or a contract proposal to its supplier D and the likewise intention of D to assume the obligation of performance and gain the rights under such the contract or proposal were not communicated to A. Therefore, this intention of B and D was not shared with A, which is a requisite for the subjective intention under CISG Article 8(1), nor would a reasonable person in A’s position expect D as a contracting party under Article 8(2).

44See Peter Schlechtriem and U. Schroder¨ in Schlechtriem and Schwenzer, Commentary, Article 14, Rn. 4, at 278–9.

45Swiss Federal Supreme Court, Bundesgericht (BG) (August 4, 2003), Case No. 4C.103/2003, available at http://www.unilex.info/case.cfm?id=954.

46Id., at para. 3.4: “Demnach ware¨ die B . . . SA unter Berucksichtigung¨ des Umstands, dass sie mit der Beklagten bereits fruher¨ einen Kaufvertrag uber¨ Weine abgeschlossen hatte, nach Treu und Glauben gehalten gewesen, der Beklagten die eventuelle Ablehnung der Bestellung innert kurzer Frist mitzuteilen. Aus dem Umstand, dass die B . . . SA sich in der Folge nicht vernehmen liess, durfte die Beklagte daher nach dem Vertrauensprinzip darauf schliessen, die B . . . SA sei mit der Bestellung einverstanden gewesen.”

The requirement of a common intention of the parties, under Article 8, was not satisfied. Hence, the only fact that could amount to an implied offer from D would be the delivery itself. Given these circumstances, the Swiss Federal Supreme Court rightly held that this was not enough:

Aus der Lieferung des Weins musste die Beklagte nicht schliessen, die Klagerin¨ wolle mit ihr einen Kaufvertrag abschliessen. Vielmehr musste die Beklagte auf Grund der Tatsache, dass sie den gelieferten Wein bei der B . . . bestellt hatte und die Klagerin¨ fur¨ diese bereits die bei ihr bestellten 3er-Geschenkkartons geliefert hatte, annehmen die Klagerin¨ handle auch in diesem Fall als Erfullungsgehilfin¨ der B . . . Damit musste die Beklagte die Weinlieferung als Erfullungshandlung¨ der B . . . und nicht als Antrag der Klagerin¨ zu einem Vertragsschluss verstehen. Die Entgegennahme des Weins konnte demnach keine Annahme eines Vertragsangebots darstellen.

b. Specification of the offeree

CISG Article 14(1) requires that an offer in principle is a “private offer” to one or more specific persons. Article 14(2) does allow an offer to be addressed to an indefinite group of persons if the intent to be bound is clearly indicated by the offeror. A cautious seller will know to make use of the freedom of contract provided for in CISG Article 6. For example, seller could condition the public offer by stating it is only good for as long as stock is available. It is only by way of exception and in case of a clear indication that a “public offer” is binding under the CISG. In the lack of such a clear intent, an offer to an indefinite group of persons is an invitation to make an offer (invitatio ad offerendum) according to Article 14(2).

c. Sufficiently definite offer: Requirements of CISG essentialia negotii

The essentialia negotii for a sales contract should be deduced from a narrow interpretation of Article 14(1) to include an indication of the goods and an express or implicit fixing of the quantity. A tacit indication of the goods by the offeror is suitable for purposes of CISG Article 8.47 Moreover, a definite price should not be part of the essential elements even though the majority view seems to be that an offer must indicate a price expressly or implicitly.48 In determining whether an offer is sufficiently definite, existing practice established between the parties and international trade usage according to CISG Article 9 should be considered. Also, framework agreements between the parties may provide the means to imply a sufficient definition of the goods and quantity. It is important to note that the offer need not expressly fix a quantity, but can provide the means to determine a quantity at a later time by one of the parties or by a third party. This follows from the wide latitude, which Article 14(1), Sentence 2, allows for determining the quantity (and price) – the offer “expressly or implicitly fixes or makes provision for determining” price or quantity.

Determinability of the goods at a later date after the conclusion of the contract should not be regarded as sufficient, as this would not allow the contracting parties to estimate or predict their obligations and rights under the contract.49 An indication of the goods

47See Magnus, Staudinger, Article 14, Rn. 20, at 199.

48See in case law inter alia Golden Valley Grape Juice and Wine, LLC v. Centriys Corporation v. Centriys Corporation v. Separator Technology Solutions Pty Ltd, Case No. CV F 09–1424 LJO GSA (E.D. Cal. 2010), available at http://www.unilex.info/case.cfm?id=1510 (Golden Valley).

49Article 14(1), Sentence 2, applies to the “quantity and price” only, not to the goods. See Austrian Federal Supreme Court, Oberster Gerichtshof (OGH) (November 10, 1994) (“Zusammenfassend ist daher

can be made specifically (species of goods) and generically (genus of goods), provided that the goods are indicated by nature and type. The further specification of details can be made subsequently, which does not prevent the formation of the contract.50 CISG Article 65 recognizes the parties’ ability to determine the specifications of the goods subsequent to contract formation. The contract may require the buyer “to specify the form, measurement or other features of the goods,” and, failing to do so, the seller may provide the specifications. Article 65(2) requires seller to send proposed specifications to buyer and fix a reasonable time for buyer to amend the specifications. Upon the expiration of the time to change the specifications, buyer is bound by seller’s specifications.51 A specification under Article 65 does not require acceptance, but if the Article 65 specification is combined with a statement of different terms of the contract, inter alia time for delivery, this will amount to an amendment of the contract under CISG Article 29 and necessitate acceptance.52

As noted earlier, the CISG gives some flexibility regarding the offer’s fixing of the quantity of the goods. The offeror’s ability to “implicitly fix” the quantity of goods has been the issue in numerous cases, including the sale of tomato tins and truck loads,53 specification of 700–800 tons of propane gas,54 and for the delivery of textiles.55 In particular, weight has been attached to specifications of quantities well known to the parties or by commercial practice. A failure to agree to a fixed quantity may still be fixed by subsequent conduct under CISG Article 8(3). The key issue becomes whether the parties intended to be bound. The Federal Supreme Court of Austria concluded that the parties intended to be bound in the Chinchilla furs case.56 Without such

eine stillschweigende Festlegung und eine bloß die Festsetzung ermoglichte¨ Vereinbarung sowohl zur Umschreibung von Warenmenge als auch des Preises zulassig”)¨ . Cf. Peter Schlechtriem in Schlechtriem and Schwenzer, Commentary, Article 14, Rn. 5, at 191 (“The minimum elements do not have to be fixed by express indication or by indication capable of being interpreted; it is sufficient if ‘provision’ is made ‘for determining’ them, that is to say, if they are determinable”).

50Honnold, Uniform Law, §137(2), 150 (“this does not make a contract too indefinite”).

51Article 65(2) is one of the CISG provisions in Part III that expressly provides for a binding effect of silence, see also Article 48(3) and in Part II Article 19(2) and Article 21(2).

52See, e.g., Oberlandesgericht (OLG) Munich (February 8, 1995), Case No. 7 U 1720/94, available at http:// www.unilex.info/case.cfm?id=118, at para. III 2 c) bb). ”Die von der Beklagten mit Schreiben vom (April 14, 1992) (Anl. K 9) vorgenommene noch notwendige Spezifikation der Fahrzeuge (Article 65) sowie die Angabe der Lieferzeit ‘ca. Juli/August/September/Oktober 1992’ beinhaltet eine gem. 29 CISG zulassige¨ Vertragserganzung,¨ die der Annahme durch die Klagerin¨ bedurfte (Article 18 ff.). Soweit die Klagerin¨ in dem maßgeblichen Schreiben vom 10.04.1992 – gegenbestatigend¨ – die Lieferzeit abgeandert¨ hat, stellt dies eine Ablehnung des Angebots der Beklagten und ein Gegenangebot dar, welches von dem Angebot der Beklagten wesentlich abweicht. Insoweit bedurfte es der Annahme durch die Beklagte (Art. 19 CISG).”

53OLG Hamburg (July 4, 1997), Case No. 1 U 143/95 and 410 O 21/95, available at http://www.unilex.info/ case.cfm?id=438 (not unpublished): ”Die Klagerin¨ schlagt¨ darin vor, der Beklagten 20 LKW-Ladungen Tomatenmark bis Ende Mai 1994 zu liefern. Dabei sind die Beteiligten ganz offensichtlich von ihnen bekannten branchenublichen¨ Mengen betreffend Doseninhalt und Ladefahigkeit¨ eines LKW ausgegangen.”

54Austrian Federal Supreme Court, Oberster Gerichtshof (OGH) (February 6, 1996), Case No. 10 Ob 518/95, available at http://www.unilex.info/case.cfm?id=202: “Lieferung von 700–800 Tonnen Flussiggas¨ zu einem Preis von US-$ 376,- promt.”

55Bezirksgericht St. Gallen, Switzerland (July 3, 1997), Case No. 3PZ 97/18, available at http://www.unilex. info/case.cfm?id=306, where the buyer despite a later disagreement on the quantity requested a bill for delivered goods by stating: “Bitte lassen Sie das Material in Rechnung stellen.”

56Austrian Federal Supreme Court, Oberster Gerichtshof (OGH) (November 11, 1994) (“Dabei ist vor allem das spatere¨ Verhalten des Beklagten zu berucksichtigen,¨ der die ubersandten¨ Felle bis auf einen