Source: http://www.cisg.law.pace.edu/cisg/biblio/kelso.html
Timestamp: 2019-04-19 05:22:08+00:00

Document:
In re Marlene Industries Corp. and Carnac Textiles, Inc.
C. Itoh & Co. v. Jordan Int'l, Co.
Lea Tai Textile Co. v. Manning Fabrics, Inc.
At its eleventh plenary meeting in the spring of 1980, the United Nations Commission on International Trade Law (UNCITRAL) promulgated a final draft of the Convention on Contracts for the International Sale of Goods (the "Convention"). The Convention will enter into force one year following the tenth ratification or accession. Thus far, only two countries have ratified the [page 529] Convention, France and Lesotho. The American Bar Association has, with a minor reservation, called for ratification by the United States. Naturally, ratification by the United States would significantly improve the Convention's chances of coming into force.
The Convention applies to "contracts of sale of goods between parties whose places of business are in different States: (a) when the States are Contracting States; or (b) when the rules of private international law lead to the application of the law of a Contracting State." It governs "the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract," but not "the validity of the contract or any of its provisions or of any usage" or "the effect which the contract may have on the property in the goods sold." The Convention recognizes the primacy of the contract  and allows the parties to "exclude the application of this Convention or . . . derogate from or vary the effect of any of its provisions." Where gaps exist in the [page 530] Convention's provisions, they are to be filled "in conformity with the general principles on which [the Convention] is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law."
An "offer" under article 14 of the Convention is a "proposal for concluding a contract [that] indicates the intention of the offeror to be bound in case of acceptance [and is] sufficiently definite [in that it] indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price." There are two requirements for an offer: intention to be bound and definiteness.
Whether the offeror has expressed an intention to be bound in case of acceptance depends on the interpretation of parties' statements and other conduct, a matter governed by article 8. Subsection (1) embodies a subjective approach to intent: "For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was." Subsection (2) uses an objective standard. If subsection (1) is not applicable, "statements made by and other conduct of a party are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances." Whether a court adopts as its guide subjective intent or objective meaning can change the results in particular cases. One commentator has noted, however, that cases in which the distinction makes a difference "are more discussed than seen." Subsection (3) determines what sort of evidence may be presented to prove intent under either subsections (1) or (2). It provides that "due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties."
"(2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned."
Articles 8(3) and 9 are two of the most important provisions of the Convention. They give the court the power, when determining whether or not a contract was formed, to look outside the rules of formation of contract embodied in the Convention. The court may look to rules of formation established by the parties or the marketplace, rules that may be more practical than the provisions of the Convention.
The second requirement for finding an "offer" under the Convention is definiteness. An offer is sufficiently definite under article 14 if it "indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price." The analogous provision of the UCC, section 2-204(3), provides that "even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy."
Article 14 is nearly as broad as UCC 2-204(3). The offeror must "indicate the goods" but need not specifically identify the goods to the contract. The Commentary makes that clear by noting [page 535] that requirements or concession contracts do not run afoul of article 14. In a requirements contract, for example, the seller may agree to furnish to the buyer "all of buyer's requirements of X." In such a contract, the specific goods, X, may not exist at the time of contracting. Nevertheless, the goods are "indicated," and a contract has been formed. In practice, the UCC imposes a similar requirement that the goods be indicated. If the goods are not indicated, a court may not have a "reasonably certain basis for giving an appropriate remedy."
"Where the buyer sends an order for good 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. . . . 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."
UCC 2-305 contains a slightly broader rule that allows "[t]he parties . . . [to] conclude a contract for sale even though the price is not settled." The price need not be implicitly fixed by the parties. When such a contract is formed, UCC 2-305 provides the missing price term: "a reasonable price at the time for delivery."
Honnold argues that article 55 "makes clear that a contract may be 'validly concluded' even though it 'does not expressly or implicitly fix or make provision for determining the price.'" Thus, article 14 cannot be interpreted as requiring in all contracts a fixed price since article 55 contains a provision to fill just that gap. Therefore, article 14 cannot be interpreted as requiring all three of the stated elements.
Honnold's argument misinterprets the purpose of article 55 and does harm to the plain meaning of article 14. Article 55 is in Part III of the Convention dealing with the obligations of the parties. Under article 92(1), a state may declare that it will not be bound by Part II of the Convention dealing with formation, but will be bound by Part III, which deals with contract obligations. Article 55 was designed to be used when such a declaration had been made, and a contract without a fixed price had been validly formed under whatever non-Convention law was applicable. For [page 537] example, states A and B declare that they will be bound by Part III but not Part II. Companies C and D of A and B, respectively, enter into a contract which, under applicable non-Convention law, has been validly concluded without making provision for the price. C and D have a falling-out and now are in court arguing about the price. Article 55 fills the gap in their contract by supplying the "price generally charged" as the price term. In view of this legislative history, article 55 should not be used, as Honnold would use it, to modify the plain meaning of article 14. An offer under article 14 is sufficiently definite only if it contains all three of the stated elements.
"(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."
This subsection fairly closely parallels the law in the United States under the UCC and common law. UCC 2-205 allows irrevocable offers for up to three months if there is a writing signed by the offeror which assures that the offer will remain open. Further, [page 538] if the offeree reasonably relies upon an offer as being irrevocable, the court may find that a binding option contract exists under section 87 of the Restatement (Second) of Contracts, even if UCC 2-205 is inapplicable.
An "acceptance" under article 18(1) of the Convention is "[a] statement made by or other conduct of the offeree indicating assent to an offer. Silence or inactivity does not in itself amount to acceptance." Whether a statement or other conduct indicates assent would seem to be a question of intent to be dealt with under articles 8 and 9. Subsections (2) and (3) of article 18 provide, respectively, for two types of acceptance: by return promise and by performance.
Under article 18(2), an acceptance by return promise "becomes effective at the moment the indication of assent reaches the offeror . . . [unless] the indication of assent does not reach the offeror within the time he has fixed or, if no time is fixed, within a [page 539] reasonable time. . . ." An acceptance that is late and ineffective under article 18(2) may, however, be effective under article 21(1) "if without delay the offeror orally so informs the offeree or dispatches a notice to that effect." A late acceptance which shows that it would not have been late but for a delay in transmission will be effective under article 21(2) "unless, without delay, the offeror orally informs the offeree that he considers his offer as having lapsed or dispatches a notice to that effect." Article 21(2), thus, puts a burden on the offeror to inspect a late acceptance to determine whether the cause of its lateness rests with the offeree or the post office. If it is clear from the face of the acceptance that the offeree is not at fault, the offeror must object or find himself bound.
"[I]f, 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 [subsection (2)]."
Article 18(3) adopts a rule that the offeree may, in appropriate cases, bind the offeror to the contract by performing an act  without [page 540] giving any notice to the offeror. It does this by making the acceptance "effective at the moment the act is performed." When an acceptance becomes "effective," a contract is formed under article 23. Further, article 16 provides that once a contract is concluded, the offeror loses the power to revoke his offer, even though the offeree has not dispatched an acceptance but has merely performed an act.
Professor Honnold has fashioned an argument which would significantly undermine article 18(3). He argues that subsection (3) must be read in conjunction with the more general provision in subsection (2) that the indication of assent reach the offeror within a reasonable time under the circumstances of the transaction. Thus, according to Honnold, performance of an act should not create a contract under subsection (3) unless the offeror receives notice within a reasonable time that the act has been performed. According to Honnold, the only function of subsection (3) "is to relax the form of the communication sufficiently to permit the offeree safely to take prompt action in response to an offeror's request." In this regard, Honnold believes article 18(3) performs the same function as article 16 on limiting the offeror's power of revocation. Specifically, Honnold argues that performance of an act such as dispatch of the goods or payment of the price may constitute reasonable reliance under article 16(2) or dispatch of an acceptance under article 16(1).
Professor Honnold's interpretation is at odds with the clear [page 541] language of article 18(3). The first question under 18(3) is whether the offer is one which may be accepted by performing an act. If so, the remaining issue is whether the offeree can demonstrate his acceptance of the offer by showing, through his performance of an act, that he has relied on the existence of a contract. It is the offeree's reliance, not the communication of notice to the offeror, that creates a contract under 18(3). That is why an acceptance by performance is "effective" at the moment the act is performed; the contract comes into existence when the act is performed. This interpretation imposes no unfair burdens on the offeror. Article 18(3) applies only in cases where the offeror should have known that the offeree might accept by performing without giving notice of having accepted. If the offeror wants to know the status of his offer, he should contact the offeree. Further, the offeror can avoid the problem entirely by including a provision in his offer that the offer may not be accepted by performance. Finally, a court could avoid injustice by finding that the offer required as a condition prompt notification of acceptance. Breach of that condition could result in damages for the offeror and, perhaps, discharge from the contract. It is, thus, not necessary to engage in a strained reading of the text of article 18(3) in order to reach a just result.
In the transaction in which the parties exchange forms that contain different terms, the question arises whether a contract [page 542] has been formed and, if so, on what terms: the offer's terms, the acceptance's terms, or some combination of the terms in the offer and acceptance. At common law, the offeree was required to accept on the offeror's terms; this rule was dubbed the mirror-image rule since the acceptance was supposed to be the mirror image of the offer. Under this rule, if the offeree's purported acceptance contained additional or different terms, it was treated as a rejection and counter-offer. If the parties performed the contract, the offeror was presumed to have accepted the offeree's terms. UCC 2-207 changed this rule in the United States. Generally, a purported acceptance will not fail to conclude a contract on the ground that it contains additional or different terms. With the common law mirror-image rule thus rejected, UCC 2-207 focuses on the task of determining what terms are included in the contract. The basic rule is that the offeree's additional or different terms will not become part of the contract when the offeree knew or should have known that the offeror objected to the modifications. Thus, although UCC 2-207 prevents the offeror from taking refuge behind the mirror-image rule, it does not substantially modify the rule that the offeror is master of his offer.
The Convention's basic rule regarding acceptances that vary the terms of the offer is stated in 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 [page 543] constitutes a counter-offer."
Article 19 applies only if the offeree's reply purports to be an acceptance. Many communications by the offeree will not purport to be an acceptance. For example, the offeree may reject the offer outright or may send a reply indicating that negotiations should continue. Thus, the offeree can make inquiries concerning the offeror's terms, suggest new terms or make a counter-offer, while not rejecting the original offer. None of these communications purports to be an acceptance, and article 19 is, therefore, not applicable.
A purported acceptance under article 19 must contain "additions, limitations or other modifications." The precise scope and meaning of these words is far from clear. Is any modification, no matter how trivial, a "modification" for article 19(1) purposes? Or does article 19(1) cover only those modifications which are like additions or limitations to the terms of the contract? For example, suppose the offeror's telex reads "1000 widgets, FOB NY" and the offeree replies with "Accepted. Free on Board Pier 55, NY, 1000 widgets." Is the reordering and spelling out of FOB a "modification"? The specifications of Pier 55? The preparatory materials [page 544] give conflicting indications as to the meaning of these words.
The importance of this issue lies in the fact that if 19(1) does not apply because the purported acceptance contains no 19(1) modifications, the offer will have been accepted in accordance with article 18, and a contract will have been concluded under article 23. Thus, by defining "modifications" so that it does not include trivial changes, a court may be able to find a contract without considering whether the trivial changes are material under 19(2) and (3). This is important because, as will be shown below, the materiality and objection provisions of article 19(2) can produce harsh results, and a court wishing to avoid such results might be responsive to an argument that a sufficiently trivial difference between the offer and acceptance does not amount to an addition, limitation or modification.
"[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 [page 545] contained in the acceptance."
Under article 19(2), a purported acceptance will be treated as a rejection and counter-offer in two cases: (1) the offeror objects "without undue delay" to any additions or differences, and (2) the reply contains "material" additions or differences.
The objection provision has several problems. Under the provision, the offeror seems to have power for a short time after an exchange of forms or telexes to turn an acceptance into a rejection regardless of the nature of the modifications contained in the purported acceptance. Since the offeror must object "without undue delay" it may well be in many cases that the offeree will not have relied to his detriment before being notified of the objection. It is by no means clear, however, that "undue delay" is or should be measured solely by the offeree's opportunity to rely. The case may arise where the offeree begins performance thinking a contract exists, but the offeror's objection arrives in time to frustrate the contract.
"[I]f the offeror objects to a reply which adds 'ship immediately' on the grounds that, where no delivery date is specified, the seller must deliver the goods 'within a reasonable time after the conclusion of the contract', the reply is a rejection of the offer. . . .
"In the normal course of events in which the offeror objects to [such] a non-material addition or limitation, [page 546] the two parties will agree on mutually satisfactory terms without difficulty. However, since the offer was rejected by the addition of the non-material alteration to which the offeror objected, the offeree may no longer accept the original offer."
Of course, the offeror in the above example may have had a good reason to object. But there seems to be no room in the language of article 19(2) to inquire into the offeror's reasons for objecting to modifications contained in the offeree's purported acceptance.
Another example of a bad-faith use of the power of objection may arise in connection with an irrevocable offer. Suppose an offer to sell sugar at a named price indicates that it will remain open for five days. Under article 16, such an offer cannot be revoked within the five days. The offeree responds on the second day with a telex that purports to accept the offer but contains non-material modifications. If the offeror now objects without undue delay, the offeree's purported acceptance will be transformed into a rejection of the offer. Under article 17, a rejection of an offer, even an irrevocable offer, terminates the offer. Thus, unless the offeree is careful not to add in his purported acceptance any modifications of the offer, the offeree may find that the seemingly irrevocable offer has been terminated at the offeror's option.
These problems involving good faith were recognized by the Netherlands delegation, which proposed an amendment to give the offeree the chance to withdraw its alterations after the offeror had [page 547] objected. If the offeree withdrew his modifications, the contract would be formed on the offeror's terms. The delegation correctly observed that article 19(2), in its present form, "could give rise to abuse and affect good faith in international trade." The rejection of the amendment was unfortunate, because the provision in its present state largely undermines the purpose of article 19, which, as Professor Farnsworth noted for the United States, was to prevent the offeror's "refuge behind the so-called 'rule of the mirror.'"
"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."
This list of material terms is extensive but not exclusive; the phrase "among other things" makes that clear. But what other terms will a court consider material? The least material modifications are changes regarding "insignificant matters such as grammatical changes, typographical errors or the specification of detail implicit in the offer;" the offeree is accepting what the offeror intended but for drafting mistakes or stylistic differences.
The acceptance may contain "different wording of the terms of the contract without modifying its contents." For example, [page 548] surely no one would think there was any material difference between an offer containing a term for "arbitration in New York City under UNCITRAL rules" and an acceptance containing a term for "arbitration to be held pursuant to UNCITRAL rules of arbitration; arbitration to be held in New York City." This type of change results in no change in the obligations of the parties.
The more difficult question is whether the sole key to materiality is that a new term "relates" to the list of terms contained in subsection (3). An alternative view would be that terms which "relate" must rise above a de minimis level of importance to be judged material. The preparatory materials seem to support the former statement that any change in obligations relating to the list in 19(3) will be considered a material change. Professor Honnold has noted that "[u]nder paragraph (3) the modifications that are considered to be 'material' cover most of the aspects of the contract."
Subsection (3) indicates that the terms therein listed "are considered" to be material. The preparatory materials make it clear that subsection (3) has the effect of raising a presumption of materiality. There are no comments in the summary records, however, indicating what type or quantum of evidence is required in order to rebut the presumption of materiality. The relevant evidence would seem to include the parties' intentions, previous practices and trade usages. Two questions are particularly relevant. [page 549] First, is there a practice between the parties or a trade usage demonstrating that the modification contained in the offeree's reply is not considered to be material? Suppose that there is a trade usage of providing for arbitration of disputes. The buyer sends a purchase order which contains only a description of the goods, the price and delivery terms. The seller replies with his form containing the same information plus the arbitration clause which is standard in the trade. Article 9 provides that such trade usages are, absent contrary agreement, applicable to the contract, and the offeror-buyer should be bound by the arbitration clause. The first question, thus, focuses on the substance of the particular modification contained in the offeror's reply.
The second question is "whether applicable usages and practices, in point of fact rather than legal theory, include the scrutiny of the clauses on the back of an acceptance form in a transaction like the one in question." This question focuses on the procedure by which the parties enter into a contract. The substance of the offeree's modifications is irrelevant for these purposes. Suppose that the offeror includes in the printed portion of his form the following: "The offeror considers every term herein to be material." Neither the offeror nor the offeree makes a practice of reading the terms on the forms they exchange. In analogous circumstances arising under UCC 2-207, several commentators have argued that giving effect to such a clause would undermine the effectiveness of UCC 2-207 since the offeree, not having read the form in any case, would not be on actual notice as to the offeror's demands. Courts deciding cases under the Convention should follow this approach and should endeavor to ascertain whether the parties could reasonably have been expected to scrutinize the terms contained on their forms.
Marlene as buyer and Carnac as seller orally agreed to a sale of fabrics and then exchanged a "purchase order" and an "acknowledgement of order." Carnac's form included an arbitration provision not found in Marlene's form and not previously discussed. Both parties began performance, and when Marlene allegedly breached the contract, Carnac instituted arbitration proceedings. Marlene brought suit to stay the arbitration proceedings. The court held that the arbitration clause contained in Carnac's form was a material addition under UCC 2-207(2)(b) and was, therefore, not part of the contract. The arbitration proceedings were permanently stayed.
Under article 23 of the Convention, a contract was formed when Marlene and Carnac orally agreed to the sale. The exchange of forms was, therefore, an exchange of confirmations and not an offer and acceptance. Under UCC 2-207, a confirmation, if sent within a reasonable time, may supply terms that become part of the contract. The court in Marlene properly used UCC 2-207 for its analysis. But article 19 of the Convention does not refer to confirmations. Confirmations are dealt with under article 29, which provides that "[a] contract may be modified or terminated by the mere agreement of the parties." The act of exchanging forms would be evidence that the parties agreed to modify the oral contract. But article 29 does not address in detail the more difficult problem of determining what modifications were agreed to. Terms that appear in both parties' forms should become part of the [page 551] contract since there is objective evidence that both parties agreed on those terms. Conflicting terms should cancel each other out, since there is objective evidence that the parties did not agree. Terms that appear in only one form should probably be dropped from the contract absent evidence of agreement. In Marlene, only Carnac's form contained an arbitration clause. It should not be included in the contract absent evidence that Marlene agreed to the arbitration clause.
The facts in Marlene produce the same result under the Convention and the UCC, but for different reasons. Consider the following: Seller receives a telex from Buyer offering to buy some grain. The telex refers the Seller to Buyer's standard form contract and also asks the Seller to "ship immediately." The Seller dispatches the goods and then sends a telex which refers the Buyer to the Seller's standard form contract. Under article 18(3), Seller's dispatch of the goods can amount to an acceptance by performance of Buyer's offer contained in the first telex. Seller accepted the contract on the Buyer's terms, since Seller's telex was a confirmation, not an acceptance under article 19. To avoid this result, a court could interpret article 18(3) to provide that Seller's dispatch of the goods is not an acceptance or could rule that the Buyer, by failing to object to the Seller's telex, agreed to modify the contract under article 29.
B. C. Itoh & Co. v. Jordan Int'l, Co.
Itoh sent a purchase order for steel coils to Jordan. Jordan accepted with a form that contained the following language: "Seller's acceptance is, however, expressly conditional on Buyer's assent to the additional or different terms and conditions set forth below and printed on the reverse side. If these terms and conditions [page 552] are not acceptable, Buyer should notify Seller at once." Jordan's form contained an arbitration provision which did not appear in Itoh's purchase order. After it received the coils and payed for them, Itoh sued Jordan, alleging that the goods were defective and delivered late. Jordan moved to stay the proceedings pending arbitration. The court reasoned that no contract was formed under UCC 2-207(1), since the Buyer did not assent to Seller's terms as contained in his form. But both parties recognized the existence of the contract by performing, and the terms of the contract were, according to UCC 2-207(3), "those terms on which the writings of the parties agree[d], together with any supplementary terms incorporated under any other provisions of [the Code]." The court held that a provision for arbitration was not a supplementary term under UCC 2-207(3), and the arbitration was stayed.
Itoh's purchase order was an article 14 offer, and Jordan's form was an article 19(1) purported acceptance. Itoh did not object to the terms in Jordan's form, and a contract existed under article 19(2) if Jordan's modifications did not materially alter the terms of the offer. The arbitration clause in Jordan's form was presumptively material since it related to "settlement of disputes," and, therefore, Jordan's purported acceptance operated under article 19(1) as a rejection and counter-offer. Nevertheless, by accepting shipment of the goods, Itoh accepted Jordan's counter-offer, and the contract included Jordan's arbitration provision.
A practical rule may be drawn from this case. If the parties to a contract perform their obligations before a dispute arises, the offeree has a good chance of winning the battle of forms. If the [page 553] offeree's modifications are non-material, they become part of the contract under article 19(2). If the offeree's modifications are material, the offeree's form becomes the basis of the contract by virtue of the offeror's performance. More generally, the party who fires the "last shot" will win the battle of forms.
C. Lea Tai Textile Co. v. Manning Fabrics, Inc.
Manning entered into contracts to purchase cotton cloth from Lea Tai. The parties admitted that a contract existed, but they disagreed on its treatment of arbitration. Manning's form provided for arbitration of disputes in New York by the American Arbitration Association or a textile trade arbitrator. Lea Tai's form provided that each party would select one arbitrator and that the Hong Kong Code of Civil Procedure applied to the arbitration. The court held that the two clauses were hopelessly in conflict and that each clause constituted an objection to the other under UCC 2-207(2)(c). Thus, the two clauses cancelled each other out, and the contract contained no provision for arbitration.
Under the Convention, the first task is to determine which form was the offer. For purposes of analysis, we may assume that Manning's form was the offer and Lea Tai's form the purported acceptance. Lea Tai's arbitration provision probably constituted a material modification since it related to "settlement of disputes" and was significantly at variance with Manning's provision. The parties had already performed the contract, and Manning was bound by Lea Tai's arbitration provision under the "last-shot" rule.
The court in Lea Thai interpreted UCC 2-207(2)(c) to allow each party to object to terms in the other form. The court, thus, put the parties on equal footing. Manning's form put Lea Tai on notice that Manning objected to Lea Tai's arbitration provision, and Lea Tai's form put Manning on notice that Lea Tai objected to Manning's arbitration provision. The Convention, however, [page 554] gives only the offeror the power to object and apparently requires that the offeror's objection be given subsequent to receipt of the offeree's form. Thus, the Convention, unlike the UCC, does not treat the parties equally.
The Convention and the UCC embody different approaches to the law of contract formation. The UCC authorizes courts to look behind the form of the agreement to the "real" agreement between the parties. It is not the exchange of documents that defines the legal relations between the parties, but the intent of the parties as perceived by the court. The documents are, of course, good evidence of that intent, but the inquiry does not stop there. The Convention, on the other hand, adopts a rigid offer and acceptance model of contract formation with the narrow exception of article 19. Article 19 has virtually no application when modifications are material, and most terms of the contract will be considered material under subsection (3). Further, the offeror apparently has the power to object to any modifications, whether or not the objection is in good faith. Finally, the "last shot" rule seems likely to persist.
The approach taken in the UCC can function adequately as long as the decision-making authority is of the same general cultural background as the parties. For example, in a purely domestic contract action, the expectations of the parties, the fact-finder and the judge will be somewhat similar. Results are thus reasonably predictable despite the absence of black-letter law because everyone has a similar background; everyone speaks the same language.
In the international setting, on the other hand, where it is not certain who will act as the decision-making authority and the backgrounds of the parties may not be at all similar, delegating great discretion to the decision-maker to "do justice" presents greater dangers. To mitigate this problem, UNCITRAL strove for greater specificity in rule-making in order to control the decision-maker and increase certainty.
1. United Nations Conference on Contracts for the International Sale of Goods -- Official Records, U.N. Doc. A/Conf.97/19, at 230, Sales No. E.81IV.3 (1981) [hereinafter cited as the Official Records]. The Official Records are a compilation of documents which were considered at and produced by the Conference. It includes previous drafts of the Convention, a commentary to the penultimate draft prepared by the Secretary-General, comments by governments and international organizations on previous drafts, text of amendments submitted at the Conference and summary records of plenary and committee meetings. The Commentary that accompanied the penultimate draft of the Convention was prepared by the Secretary-General. There is, unfortunately, no commentary to the final draft, and there were some significant amendments to the penultimate draft which make reliance on the Commentary somewhat problematic. The text of the United Nations Convention on Contracts for the International Sale of Goods is located at Official Records, supra, p. 178-190, U.N. Doc. A/Conf.97/18 Annex I (1980) [hereinafter cited as the Convention].
2. Article 99 of the Convention provides in pertinent part that "[t]his Convention enters into force . . . on the first day of the month following the expiration of twelve months after the date of deposit of the tenth instrument of ratification, acceptance, approval or accession. . . ." Generally, a signatory state binds itself by ratifying a treaty while a non-signatory state binds itself by acceding to a treaty. See L. Henkin, R. Pugh, O. Schachter, & H. Smit, International Law 601-04 (1980). Article 91(3) of the Convention provides that the Convention is currently open for accession by non-signatory states despite the fact that the Convention is not currently in force.
3. The following countries have signed the Convention: Austria, Chile, China, Czeckoslovakia, Denmark, Finland, France, German Democratic Republic, Federal Republic of Germany, Ghana, Hungary, Italy, Lesotho, Netherlands, Norway, Poland, Singapore, Sweden, United States, Venezuela and Yugoslavia. Telephone interview with United Nations Office of Public Information (Dec. 19, 1982).
4. The American Bar Association advises that the United States make a reservation, under article 95, to article 1(1)(b). See 50 U.S.L.W. 2104 (Aug. 18, 1981). Article 1(1)(b) provides that the Convention shall apply to contracts for sale of goods "when the rules of private international law lead to the application of the law of a Contracting State." One of the difficulties with article 1(1)(b) is that the rules of private international law might point to one state for the law on formation of contract and another for the law on performance. Thus, article 1(1)(b) might imply that the Convention would apply to only part of a contract dispute. In the absence of article 1(1)(b), the Convention will apply "to contracts of sale of goods between parties whose places of business are in different States . . . when the States are Contracting States." Convention art. 1(1)(a).
9. J. Honnold, Uniform Law for International Sales 47-48 (1982).
"Any provision of article 11, article 29 or Part II of this Convention that allows a contract of sale or its modification or termination by agreement or any offer, acceptance or other indication of intention to be made in any form other than in writing does not apply where any party has his place of business in a Contracting State which has made a declaration under article 96 of this Convention. The parties may not derogate from or vary the effect of this article." Id. art. 12.
Article 11 provides that a contract need not be evidenced in writing. Article 29 provides that absent contrary agreement between the parties, a contract may be terminated or modified by mere agreement without a requirement of a writing. The Union of Soviet Socialist Republics objected to these provisions on the ground that they conflicted with their domestic law that required writings in foreign trade contracts. Article 12 allows the U.S.S.R. to make a declaration under article 96 which will nullify the effect of those provisions in the Convention that dispense with the requirement of a writing to evidence a contract or its modification or termination. Professor Honnold explains the legal consequences of article 12: "When Article 11 'does not apply,' the situation for parties to such a contract remains as it was before the Convention. A tribunal will apply the formal requirements of a declaring State only when it finds that, under conflicts principles, the law applicable to this question is the law of the declaring State." J. Honnold, supra note 9, at 156.
16. Uniform Commercial Code (1977).
17. Article 2 of the UCC has been adopted in forty-nine states, the District of Columbia, and the Virgin Islands. See Uniform Commercial Code XLII (West 1978). In international transactions, the UCC may apply either because of choice of law rules or because the parties have included a choice of law clause in their contract.
18. UCC 1-201(11) defines "contract" as "the total legal obligation which results from the parties' agreement." U.C.C. � 1-201(11) (1977). The common law rules of formation of contract supplement the provisions of the UCC. See U.C.C. �� 1-103, 1-201(3). Thus, the UCC allows reliance-based contracts in conformity with principles of the common law. A reliance-based contract lacks the traditional "meeting of the minds," but this does not mean that such contracts are formed without any of the indicia of "agreements." Reliance by the offeree must be "reasonable," and this imposes a requirement that at least one of the parties reasonably believed that there was an "agreement." See infra note 22.
Contract formation under the Convention is by way of offer and acceptance which evidences the agreement between the parties. See infra text accompanying note 21.
19. UCC 2-204(1) provides that "[a] contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract." U.C.C. � 2-204(1) (1977). UCC 2-204(3) provides that "[e]ven though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy." U.C.C. � 2-204(3) (1977).
20. "The principal thrust of Article 2 [of the UCC] is the more precise and fair identification of the 'bargain in fact' -- the real bargain -- between the parties. The definition of 'contract' in Article 1 is stated in terms of effect: 'the total legal obligation which results from the parties' agreement. . . . ' 'Agreement' is 'the bargain of the parties in fact . . .' and that factual bargain is to be found in their language and all other relevant circumstances including course of dealing, usage of trade or course of performance. Much of Article 2 is expressly designed to effectuate this underlying philosophy and there is nothing in Article 2 which contradicts it. The technical and mechanical rules of pre-Code, monistic contract law have been substantially modified and, in some cases, eschewed, in pursuit of specific underlying purposes. One of the dominant purposes of the entire UCC is to permit the continued expansion of commercial practices through the agreement-in-fact of the parties." Murray, Section 2-207 of the Uniform Commercial Code: Another Word about Incipient Unconscionability, 39 U. Pitt. L. Rev. 597, 598 (1978).
21. Convention art. 23. This provision does not mean that if a court cannot determine the exact time when a contract was formed, the court must deny the existence of a contract. Canada proposed an amendment to clarify this point, but the amendment was dropped apparently because other delegates felt it was superfluous. See Official Records, supra note 1, at 291-92.
22. Restatement of Contracts �� 19-74. There were a limited class of contracts which did not require mutual assent between the parties: Promise to pay a debt barred by the Statute of Limitations (� 86), Promise to pay a debt discharged in bankruptcy (� 87), Promise to perform a duty in spite of non-performance of a condition (� 88), Promise to perform a voidable duty (� 89), and Promise reasonably inducing definite and substantial action (� 90). On the growth of reliance based contracts, see generally Farnsworth, Contracts During the Half-Century Between Restatements, 30 Clev. St. L. Rev. 371 (1981); Knapp, Reliance in the Revised Restatement: The Proliferation of Promissory Estoppel, 81 Colum. L. Rev. 52 (1981). The theory of reliance-based contracts has largely replaced the doctrines of unilateral contract. See E.A. Farnsworth, Contracts � 3.24 n.2 (observing that Hamer v. Sidway, 124 N.Y. 538, 27 N.E. 256 (1891), would probably be decided today on principles of reliance rather than as an example of a unilateral contract).
"I, too, am of the generation to whom Offer and Acceptance in traditional garb were as the rising of the sun. It had always been; it would always be; and it somehow was good. And the Law said, 'Let there be Promise for a Promise or Promise for an Act.' And that binds eyes as ancient China did a little lady's feet. Our generation will not easily regain a normal vision. But it does help a little to realize that it was not really so in the beginning." Llewellyn, On Our Case-Law of Contract: Offer and Acceptance, I., 48 Yale L.J. 1, 32 (1938).
24. See generally McCaulay, Non-Contractual Relations in Business: A Preliminary Study, 28 Am. Sociological Rev. 55 (1963).
25. See infra text accompanying notes 27-34.
28. Id. art. 8(2). Professor Honnold has written that "because of the practical barriers to proving identity between the intent of the two parties . . . most problems of interpretation will be governed by paragraph (2)." J. Honnold, supra note 9, at 138.
29. See generally E. A. Farnsworth, supra note 22, � 3.6 (1982).
30. J. Honnold, supra note 9, at 141.
33. The UCC has similar rules. "Agreement" is defined in the UCC as "the bargain of the parties in fact as found in their language or by implication from other circumstances including course of dealing or usage of trade or course of performance as provided in this Act." U.C.C. � 1-201(3) (1977). U.C.C. 1-205(3) provides that "[a] course of dealing between parties and any usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware give particular meaning to and supplement or qualify terms of an agreement." U.C.C. � 1-205(3) (1977).
34. See J. Honnold, supra note 9, at 144. See E.A. Farnsworth, supra note 22, � 1.10, on the adaptability of contract law.
35. See supra text accompanying note 26.
36. U.C.C. � 2-204(3) (1977).
37. Official Records, supra note 1, at 21, comments 11-13 to art. 12.
38. U.C.C. � 2-204(3) (1977).
40. See J. Honnold, supra note 9, at 162.
41. Official Records, supra note 1, at 21, comment 15 to art. 12.
42. U.C.C. � 2-305 (1977).
43. Id. The UCC provides in UCC 2-305 for a "reasonable price" while the example given in the Commentary, supra text accompanying note 41, indicates that the price might well be the seller's current price. The Commentary's conclusion follows from the facts in its example: the buyer placed an order after the seller had sent the buyer his catalogue which contained price quotations. Under different facts, it might be implicit in the offer that the price would be a "reasonable price." When faced with a dispute over the price term, a court should strive to ascertain what a reasonable price in the circumstances would be. There are several choices: the prevailing market price, the price ordinarily charged by the seller, the price ordinarily paid by the buyer, or some average of the above.
44. J. Honnold, supra note 9, at 163 n.8.
45. Convention art. 55, quoted in J. Honnold, supra note 9, at 163.
46. J. Honnold, supra note 9, at 163-64.
47. "A Contracting State may declare at the time of signature, ratification, acceptance, approval or accession that it will not be bound by Part II of this Convention or that it will not be bound by Part III of this Convention." Convention art. 92(1).
"[A]rticle  has effect only if one of the parties has his place of business in a Contracting State which has ratified or accepted this Convention as to Part III (Sale of goods) but not as to Part II (Formation of the contract) and if the law of that State provides that a contract can be validly concluded even though it does not expressly or implicitly fix or make provision for determining the price." Official Records, supra note 1, at 44, comment 2 to art. 51.
The delegates were aware of the seeming contradiction between articles 14 and 55. Amendments to both articles were rejected. See Official Records, supra note 1, at 275-77; Official Records, supra note 1, at 363-66.
49. See supra note 43.
51. See J. Honnold, supra note 9, at 167-68.
52. Exceptions to this rule involve the effectiveness of late acceptance. See infra text accompanying notes 58-60.
"An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror."
55. Section 87(2) provides that "[a]n offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice." Restatement of Contracts, Second � 87(2). The basis of a section 87(2) option contract is reliance rather than offer and acceptance. See id. comment e. It should be noted that the remedy to the offeree under 87(2) may not be the benefit of the bargain. Rather, justice may allow the offeree only his restitution or reliance interest. To the extent that 87(2) does not allow recovery on the contract, it operates more as a tort remedy than a contract remedy. See id. See generally Knapp, supra note 22, at 62-67. See also E.A. Farnsworth, supra note 22, � 3.23.
"On June 1 Buyer delivered the following to Seller: 'Please rush price quotation for the following goods [specifying quantity and quality]. If you do not hear from me within three days after I receive your quotation, consider your offer as accepted.' Seller delivered the quotation to Buyer on June 3; Buyer did not respond until June 10, when he objected to the prices that Seller had quoted." J. Honnold, supra note 9, at 182.
The basis of this example is the parties' ability to vary the effect of article 18(1). See supra text accompanying note 10.
57. See supra text accompanying notes 27-34.
"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." Convention art. 18(2).
62. Article 18(3) indicates that some sort of substantial act relating to performance of the contract is required, "such as one relating to the dispatch of the goods or payment of the price." Id. art. 18(3). The language of article 18(3) does not seem to require that the goods actually be dispatched or the price paid. Rather, the act need only relate to those aspects of performance.
64. See supra text accompanying note 21.
65. See supra text accompanying note 50.
66. J. Honnold, supra note 9, at 186-88.
67. Arrival of the goods or the price would constitute such notice, as would a letter or phone call which preceded receipt of the goods or price. Id.
69. Honnold cannot argue that performance of an act under article 18(3) constitutes, as a matter of statutory construction, dispatch of an acceptance under 16(1) which would cut off the offeror's power of revocation, because article 18(3) does not require dispatch of the goods or the price. See supra note 62. Honnold may be correct in his statement that performance of an act under article 18(3) would constitute reasonable reliance under article 16(2). The assumption is that if it was reasonable to interpret the offer as inviting acceptance by performance, then it must have been reasonable for the offeree to rely on the offer as having been irrevocable. There are, however, several reasons why such an interpretation should be avoided. First, the remedies for a wrongful revocation are less clear than for a breach of contract under the Convention. A court might conclude that the offeree's damages under article 16(2) are limited to the reliance interest. See J. Honnold, supra note 9, at 173-76, and supra note 55. Second, treating the offer as irrevocable binds the offeror but not the offeree. The offeree may, therefore, speculate at the offeror's expense even after the offeror has tried to revoke. See E.A. Farnsworth, supra note 22, � 3.24, at 180.
70. The choice of the word "effective" in article 18(3) could not have been accidental. Article 23 provides that a contract comes into existence at the moment "an acceptance of an offer becomes effective." Convention, art. 23.
71. Article 18(3) applies only "by virtue of the offer or as a result of practices which the parties have established between themselves or of usage." See supra text accompanying note 61.
(c) the offer indicates that notification of acceptance is not required." Restatement of Contracts, Second � 54(2).
73. "The forms prepared by sellers include provisions that limit responsibility if supply or production difficulties are encountered, and limit liability for defects in the goods -- particularly liability for consequential damages. The forms prepared by buyers tend, of course, to emphasize different points. In routine transactions, these forms are exchanged and the goods are supplied without attention to the divergent provisions on the back of the forms." J. Honnold, supra note 9, at 188.
74. "A reply to an offer, though purporting to accept it, which adds qualifications or requires performance of conditions, is not an acceptance but is a counter-offer." Restatement of Contracts � 60.
75. The offeror was deemed to have accepted the offeree's counter-offer by performing the contract. See generally E.A. Farnsworth, supra note 22, � 3.21, at 159.
76. U.C.C. � 2-207 (1977). See generally, Hawkland, supra note 23.
77. "A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms." U.C.C. � 2-207(1) (1977).
78. UCC 2-207(2) provides that the offeree's terms will become part of the contract unless "(a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received." U.C.C. � 2-207(2) (1977). Under subsections (a) and (c), the offeree knows of the offeror's objections, and under subsection (b), the offeree should know that the offeror might object.
79. See Duesenberg, Contract Creation: The Continuing Struggle with Additional and Different Terms under Uniform Commercial Code Section 2-207, 34 Bus. Law. 1477 (1979); E.A. Farnsworth, supra note 22, � 3.21, at 160-61. But see infra note 122.
81. The characterization of a reply as a rejection has important consequences for the offeree. Article 17 provides that "[a]n offer, even if it is irrevocable, is terminated when a rejection reaches the offeror." Article 17 will work no unfair hardship where the irrevocable offer is not supported by consideration. But suppose the offeree has paid the offeror to keep an offer open for thirty days, and the offeree seems to reject the offer on the twentieth day? The common law would probably allow the offeree to rescind his rejection and accept the offer on the twenty-fifth day. See Restatement (Second) of Contracts � 37; E.A. Farnsworth, supra note 22, � 3.23 n.19. To achieve this result under the Convention, it might be argued that a firm offer supported by consideration does not constitute an irrevocable offer under articles 16 and 17, but, instead, constitutes an independent contract under articles 14 and 18(2) limiting the offeror's power of revocation. Compare Restatement (Second) of Contracts � 25 (dealing with irrevocable offers supported by consideration) with Restatement (Second) of Contracts � 87 (dealing with irrevocable offers not supported by consideration).
"Even if the reply makes inquiries or suggests the possibility of additional terms, it may be that the reply does not purport to be an acceptance under article 17(1). The reply may be an independent communication intended to explore the willingness of the offeror to accept different terms while leaving open the possibility of later acceptance of the offer." Official Records, supra note 1, at 24, comment 4 to art. 17.
See also UNCITRAL, International Sale of Goods -- Analytical Compilation of Comments by Governments and International Organizations, U.N. Doc. A/CN.9/146 �� 114-15 (1978).
83. The Commentary indicates that "the acceptance need not use the exact same words as used in the offer so long as the differences in the wording used in the acceptance would not change the obligations of the parties." Official Records, supra note 1, at 24, comment 3 to art. 17. Under this reading, article 19 would be applicable only where the alterations affect the obligations of the parties. On the other hand, members of several delegations were concerned that even trivial changes could arguably amount to "additions, limitations or modifications" under subsection (1). Thus, Australia suggested the following amendment to clarify subsection (2) of article 19: "Additional or different terms contained in a reply do not materially alter the terms of the offer if, but only if, they deal with insignificant matters such as grammatical changes, typographical errors or the specification of detail implicit in the offer." UNCITRAL, International Sale of Goods -- Analytical Compilation of Comments by Governments and International Organizations, U.N. Doc. A/CN.9/146 � 116 (1978).
84. See supra text accompanying note 21. A "purported acceptance" is clearly an indication of assent under article 18. See supra text accompanying note 56.
85. See infra text accompanying notes 89, 95, & 112.
86. Courts in the United States used similar techniques to avoid the harsh results produced by the mirror-image rule. See E.A. Farnsworth, supra note 22, � 3.21, at 158.
89. "When a modification in a purported 'acceptance' immediately provokes an objection, reliance on contract rights have not yet developed. And only grief can follow the attempt to bind parties when they disagree in the course of making a contract." J. Honnold, supra note 9, at 193. The UCC is to the contrary. An acceptance under UCC 2-207(1) creates the contract. If the offeror seasonably objects to terms in the offeree's form, then those terms do not become part of the contract, UCC 2-207(2)(c), but the contract is not thereby destroyed.
90. Article 7(1) provides that "[i]n the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade." Convention art. 7(1).
91. UNCITRAL, Secretary-General's Commentary on the Draft Convention on the Formation of Contracts for the International Sale of Goods, U.N. Doc. A/CN.9/144 �� 8-9 (1977).
92. The additional term "ship immediately" might place a greater obligation upon the offeror: in the absence of such a term, the offeror would have to ship within a reasonable time rather than immediately. It could be argued that the offeror may object only when the additional or different term imposes some greater burden upon the offeror. This might be an objective test for determining when the offeror is acting in bad faith. As a matter of interpretation, a bad-faith objection should not amount to an objection under article 19(2). See supra note 90.
93. See supra text accompanying notes 50-55.
94. See supra note 81.
95. See J. Honnold, supra note 9, at 178-79. During the 1978 meetings on the Convention, several delegates proposed amendments to delete the reference to "rejection" from article 19. UNCITRAL, Summary Record of 199th Meeting, U.N. Doc. A/CN.9/SR.199 �� 29 (Delegate for Greece) and 33 (Observer for Poland) (1978). The Finnish delegate objected on grounds that the amendments would make article 17 inoperative. Id. � 37.
96. The Netherlands proposed to insert the following between the first and second sentences of subsection (2): "If the offeror does so object, the offeree can promptly retract the additional or different terms and the terms of the contract are those of the offer." Official Records, supra note 1, at 96.
97. Official Records, supra note 1, at 286, � 57.
99. Id. at 285, � 33.
100. See supra text accompanying note 87.
102. This conclusion is supported by the preparatory materials. See Official Records, supra note 1, at 287-88.
103. UNCITRAL, International Sale of Goods -- Analytical Compilation of Comments by Governments and International Organizations, U.N. Doc. A/CN.9/146 � 116 (1978).
105. These types of trivial alterations might not even amount to "additions, limitations or modifications" under 19(1), much less material modifications under 19(2). See supra text accompanying notes 83-86.
106. This conclusion is supported indirectly by the drafting history of article 19. In an early version, subsection (3) contained the following clause: "unless the offeree by virtue of the offer or the particular circumstances of the case has reason to believe they are acceptable to the offeror." Official Records, supra note 1, at 24. This clause can be seen as establishing a de minimis standard. The offeree would have reason to believe that trivial alternations were acceptable to the offeror. The clause was deleted at the tenth meeting of the First Committee. Id. at 286, �� 52-53. At the same meeting, the First Committee rejected an amendment to delete from subsection (3) references to payment, place and time of delivery, extent of liability, and settlement of disputes (leaving only price, quality and quantity as presumptively material). Id. at 286-88, ��62-86. The sense of the Committee was, as shown by votes on these amendments, to limit the effect of subsection (2) by making virtually all terms in the contract presumptively material.
107. J. Honnold, supra note 9, at 193.
108. See Official Records, supra note 1, at 24, comment 7 to art. 17 ("normally to be considered as material"); Official Records, supra note 1, at 287, �� 70 (Belgium: "The expression 'are considered', used in the article implied that it was only a supposition."); 74 (France: "emphasized that the expression 'are considered to alter the terms of the offer materially' indicated that it was a matter of mere supposition.").
109. See supra text accompanying notes 27-34.
110. See supra text accompanying note 32.
111. J. Honnold, supra note 9, at 193.
112. See Barron & Dunfee, Two Decades of 2-207: Review, Reflection and Revision, 24 Clev. St. L. Rev. 171, 184 (1975); Murray, supra note 20, at 613-14.
113. 45 N.Y. 2d 327, 380 N.E.2d 239, 408 N.Y.S. 2d 410 (1978).
114. Id. at 330, 380 N.E.2d at 240, 408 N.Y.S.2d at 411.
115. Id., 380 N.E.2d at 239, 408 N.Y.S.2d at 411.
116. Id. at 333-34, 380 N.E.2d at 242, 408 N.Y.S.2d at 413-14.
117. See supra note 48 and text accompanying note 21.
118. UCC 2-207(1) provides that "[a] definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance." U.C.C. � 2-207(1) (1977).
119. On the problem of treating confirmation as acceptances under 2-207(1), see Murray, supra note 20, at 614-18 n.56.
"If a confirmation of a prior contract of sale is sent within a reasonable time after the conclusion of the contract, any additional or different terms in the confirmation become part of the contract unless they materially alter it, or notification of objection to them is given without delay after receipt of the confirmation." UNCITRAL, International Sale of Goods, U.N. Doc. A/CN.9/142 � 213 (1977).
The provision was deleted by the Working Group because it thought any modifications should require agreement of the parties in accordance with article 29. Id. � 228.
"Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of [the UCC]." U.C.C. � 2-207(3) (1977).
UCC 2-207(2)(c) may also be read consistently with the knock-out doctrine. Comment 6 to UCC 2-207 provides that "[w]here clauses on confirming forms sent by both parties conflict each party must be assumed to object to a clause of the other conflicting with one on the confirmation sent by himself." U.C.C. � 2-207, comment 6 (1977). See generally White & Summers, Uniform Commercial Code � 1-2 (1980).
123. See supra text accompanying notes 61-72.
124. See supra text accompanying notes 61-72 and 56.
125. 552 F.2d 1228 (7th Cir. 1977)(applying New York law).
127. U.C.C. � 2-207(3) (1977).
128. See supra text accompanying note 26.
129. See supra text accompanying notes 80-82.
130. See supra text accompanying note 87.
131. Convention, art. 19(3). See supra text accompanying note 106.
"Two theories, with opposite consequences, might be advanced: (1) When Seller received no acceptance of his counter-offer, he accepted Buyer's initial offer by shipping the goods. . . . (2) Buyer, by receiving and accepting the goods, accepted Seller's counter-offer, with its provision limiting damages." J. Honnold, supra note 9, at 195.
Honnold's first argument is correct only if the Buyer's initial offer remained open for acceptance. But article 19(1) provides that the Seller's non-conforming acceptance operates as a rejection of the Buyer's offer, and article 17 provides that a rejection terminates the offer. Honnold's first theory is, therefore, inconsistent with express provisions of the Convention.
133. See generally E.A. Farnsworth, supra note 22, � 3.21 at 159.
134. 411 F. Supp. 1404 (S.D.N.Y. 1975) (applying the UCC as federal common law).
137. See supra note 122 on the knock-out doctrine.
138. The court did not indicate in its opinion which form was the offer and which was the acceptance. Under its interpretation of UCC 2-207(2)(c), it was not necessary to do so. Under the Convention, however, it is necessary to determine who was the offeror and who was the offeree. See infra text accompanying note 140.
139. See supra text accompanying note 133.
140. Perhaps article 19(2) will, nevertheless, be read consistently with UCC 2-207(2)(c). After all, there is nothing in the language of UCC 2-207(2)(c) that would seem to indicate that the offeree might have a power of objection or that a court may dispense with the task of determining who was the offeror and who was the offeree.
141. See supra text accompanying notes 19-20.
142. On the choice between rules and standards in the context of UCC 2-207, see Baird & Weisberg, Rules, Standards and the Battle of the Forms: A Reassessment of � 2-207, 68 Va. L. Rev. 1217, 1227-31 (1982). The authors argue that the mirror-image rule can produce satisfactory results assuming (1) some few buyers are sensitive to fine print, thus creating a floor on what seller's may include in their forms and (2) courts are willing to enforce the rule. On the latter requirement, the authors write: "Perhaps the stubbornest doubt about the mirror-image rule stems not from the rule's content, but from the unwillingness of courts to enforce formal rules of contract formation. The cases involving the statute of frauds or the parole evidence rule illustrate how courts permit exceptions to overwhelm rules." Id. at 1259 (footnote omitted).

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