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Timestamp: 2019-04-24 07:48:50+00:00

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A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. 1. A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price.
2. A proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make offers, unless the contrary is clearly indicated by the person making the proposal.
In Part II of the CISG, entitled Formation of the Contract, the Convention provides the rules on contract formation, making reference to the model of offer and acceptance, CISG Arts. 14 to 24. In the UNIDROIT Principles of International Commercial Contracts, the counterpart provisions on formation, also adopting the model of offer and acceptance, are located in Chapter 2, UP Arts. 2.1. to 2.22.
In both instruments the offer is defined and the relevant requirements are listed, which will be analyzed in these remarks. In the Convention, the definition of and the requirements of an offer are contemplated in Art. 14. In the UNIDROIT Principles, it is Art. 2.2 that provides the definition of an offer.
"A proposal for concluding a contract [...] constitutes an offer [...]"
"A proposal for concluding a contract constitutes an offer [...]"
The concept of "offer" is common in the two instruments, in the sense that both instruments conceive it as the invitation by one of the parties to conclude a contract, accompanied by other requirements to which we will refer in this comparative analysis.
The following difference between the counterpart provisions must, however, be noted: the regime of contract formation under the UNIDROIT Principles can be applicable to any type of commercial contract, whereas the Convention's regime is, in principle, limited to the formation of contracts of international sale of goods, i.e., only contracts to which the Convention is directly applicable.
The international doctrine on contract formation has provided various analyses of what constitutes an "offer", the characteristic element of which, as several authors highlight, is the declared will of the offeror to be bound, in case of acceptance, to a contract.
"(1) A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price."
Art. 14(1) provides two indispensable requirements for an offer to be sufficiently definite: that the proposal (i) indicates or describes the goods, and (ii) expressly or implicitly fixes or makes provision for determining the quantity and the price of the goods.
The first thing to be noted in that provision is that Art. 14 CISG does not expressly require that the offeror identify precisely the goods that are to be the object of the contract; it will be enough to merely indicate the nature and the characteristics that would allow the offeree to identify the goods which are of interest to the offeror, as well as the quantity of the goods, or parameters of an objective order to determine the quantity.
In determining the qualities and characteristic of the goods, except for any expressed stipulation by the parties, important relevant matters to bear in mind are the concept of reasonableness, the intention of the contracting parties and good faith - which are provided in the content of Arts. 7(1), 8(1) and 8(2) of the Convention.
It is, furthermore, equally important to consider that as it is the obligation of the seller to deliver "goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract". Those specified elements (i.e., the quantity, quality, description and appropriate packaging of the goods) would perhaps have to be indicated in the proposal made to the offeree, in order for him to indicate effectively his assent to the offer.
The quantity of the goods, based on the inference drawn from the related provision in Art. 35 CISG, should be fixed in the proposal or, at least, the parties must have agreed on the manner of determining the quantity according to objective parameters - that is a matter that has to be resolved in the same sense in the offer. However, and in view of the prescription contained in Art. 14 CISG, it would be advisable to include in the offer a certain quantity of the goods or to fix maxima, or minima, of quantity in order to ensure the observance of the aforementioned requirement. There are several relevant factors that may end up determining the quantity of the goods, present as much in the offer as at the moment of conclusion of the contract, following any practice established previously between the parties, or according to the approaches of good faith and reasonableness.
It must be noted, however, that Art. 55 CISG, dealing with "open-price" terms, provides a regime different to that in Art. 14 CISG regarding the determination of the price of the goods. Pursuant to Art. 55 CISG, parties to validly concluded contracts are considered, in the absence of any contrary indication, to have impliedly agreed on the price generally paid under comparable circumstances in the trade concerned.
The apparent contradiction between those two provisions of the Convention can be traced back to the different drafting solutions debated in the sessions held by UNCITRAL, and which reflect the different solutions given to that matter in different national juridical classifications.
Scholarly opinion is divided on the manner in which the two provisions interact with one another; some commentators analyze the application of CISG Art. 14 in an isolated way, while others prefer the application of CISG Art. 55.
The different approaches in the available doctrine are also reflected in the relevant international case law. As an example of the divergent approaches, mention may be made of the decision of the Hungarian Supreme Court in the case of Pratt & Whitney vs. Malev Hungarian Airlines as well as the subsequent scholarly critiques of that decision.
Following the criticism of that decision in the commentary offered by PERALES, it is clear that the court did not consider the interplay between Art. 14 and Art. 55 of the Convention. In that critique, it is furthermore noted that that there is a further important element to consider, that is the use of the rules of interpretation of the conduct of the parties (CISG Art. 8) according to which, even in a case where the price has not been determined in the offer and there is no market price for the particular goods, it might still be possible to deduce the price of the goods based on all the relevant circumstances of the case and, thus, to conclude that a price has been implied into the agreement of the parties.
Support for that proffered approach can be found in the case law, where tribunals have dealt with the matter of determination of the price according to objective parameters agreed by the parties previously or tacitly, as well as in situations where the parties have not agreed the price but have concluded contracts with "open-price" terms. Such an interpretive approach would provide much desired uniformity on the issue under examination.
It is also worthwhile to examine the treatment afforded by the counterpart provisions of the UNIDROIT Principles to this issue. The UNIDROIT Principles, in Art. 2.2, stipulate as relevant requirements that the proposal should be sufficiently definite and indicate the intention of the offeror to be bound in case of acceptance by the offeree.
The Principles require that the parties understand one another in terms of the precision of the offer which should indicate with sufficient clarity the elements incorporated into the contract. That would be achieved in spite of some elements not being precisely determined in the proposal but are at least determinable by means of the practices established by the parties or by reference to internationally accepted usages; in that way the Principles provide for filling gaps in some of its other related provisions.
Thus, under the UNIDROIT Principles, the essential elements of an offer might be uncertain, without that uncertainty resulting into fatal inexactness of the offer, because the vital element is the intention of the parties to be bound by the offer and it subsequent acceptance.
"(1) If the parties intend to conclude a contract, the fact that they intentionally leave a term to be agreed upon in further negotiations or to be determined by a third person does not prevent a contract from coming into existence."
(b) the third person does not determine the term, provided that there is an alternative means of rendering the term definite that is reasonable in the circumstances, having regard to the intention of the parties."
Under that regime of the Principles, the parties may decide to leave undetermined some contractual matters that are essential elements of the contract, provided there is an agreement between the parties on the manner in which those matters will be determined subsequently. That approach can be adopted if the parties themselves resolve the pending matters at a later stage (i.e., subsequent to the conclusion of the contract), or this function is assigned to a third party -- this function and, in any event, the existence of the contract are not affected even if the parties themselves subsequently do not reach agreement on the terms left open or the third party does not determine them, so long as there exists another way of determining the open terms in a reasonable fashion according to the circumstances of the case and the intention of the parties.
Therefore, according to the Principles, the absence of final determination of certain essential element of the contract would not prevent formation of the contract or undermine its existence, because what determines the existence or non-existence of the contract is the question of the intention of the parties to conclude the contract.
The available doctrine distinguishes between the offer, in a strict sense, and a preliminary invitation to conclude a contract, holding that in the first case the offeror has the intention to be bound in case his proposal is accepted by the offeree, while such intention does not exist in an invitation to consider entering into a contract.
In practice it can be very difficult to determine the exact moment when the offeror is bound, having crossed the dividing line between preliminary invitation to the other party (to consider entering into a contract) and the actual offer made to the offeree.
"[a] proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance" [emphasis added].
It is clear that under the Convention an offer must include, in principle, the intention on the part of the offeror to be bound in the event of acceptance of his proposal.
The UNIDROIT Principles in Art. 2.2 include the same requirement and in similar wording to that found in the counterpart provision in the Convention.
It is submitted that in the context of the Convention as well as the UNIDROIT Principles, the intention to be bound need not be specifically declared immediately or in the document that contains the proposal. It will be enough that in an unequivocal way such an intention is deduced, having regard to the type of the contract (see 3.3, infra) or the circumstances that surround the offer.
Equally, the existence of the requisite intention to be bound by the proposal in case of its acceptance by the offeree will depend on the interpretation of the parties' statements or conduct, based on the content of some positive dispositions expressed in the Convention -- such as: the observance of good faith in interpretation, the subjective intent of the party making the statement or engaging in conduct (if the other party knew or could not have been unaware what was that intent), or, if the former is not applicable, the understanding of a reasonable person of the same kind as the offeree would have had in the same circumstances, including the negotiations between the parties, any established practices, usages and any subsequent conduct of the parties (i.e., objective standard) to determine that intent. Further relevant factors are the content of any previous conduct or practices established previously between the parties in negotiations as well as any trade usages applicable to contracts of the type involved in the particular trade concerned.
In order for the statements or conduct of the party to lead towards the production of the desired legal effects, it is required that the relevant intent transcend the party's internal domain, that it is externalized and manifested.
It should be noted that it is not in all cases that the manifested conduct imposes a binding force upon the actor when it transcends his internal domain. In some cases, the law (domestic law) or the parties, might require that the manifestation of intent is channeled through some established means that comprise a general formality. Without it, there might not be a legal effect, unless what the parties want is that the relevant conduct or the contract that might have already been concluded is evidenced in writing. In other cases, it might be required that the manifestation of relevant intent reaches the offeree, either by being properly dispatched to him, or even that the offeree has indeed taken cognizance of the content of the communication. Such requirements might be found in regimes used in different domestic jurisdictions to establish the specific moment when the offer becomes binding and capable of leading to conclusion of a contract based on the conduct or statement communicated to the offeree. Such approaches are not, however, generally favored in most jurisdictions and the international doctrine.
The conclusion of a sales contract by electronic means, if the Convention is applicable to the contract, will be held to the norms of offer and acceptance contained in CISG Arts. 18(2) and 15(1), when the sale is international, as the provisions of the Convention regarding formation have sufficient scope of application to regulate such transactions. For example, CISG Art. 13 arguably provides a suitable extension of the term "writing" to include messages of data in general, and not only to telegram or the telex. It is submitted that the textual reference in that provision is not limiting or restrictive, but rather on the contrary, by analogy, it can be understood as including electronic means.
Under the regime of the Convention, like the UNIDROIT Principles, the offer becomes effective from the moment that it reaches the offeree, adopting the "system of the reception".
"(1) Where notice is required it may be given by any means appropriate to the circumstances.
(2) A notice is effective when it reaches the person to whom it is given.
(3) For the purpose of paragraph (2) a notice "reaches" a person when given to that person orally or delivered at that person's place of business or mailing address.
(4) For the purpose of this article 'notice' includes a declaration, demand, request or any other communication of intention."
"For the purposes of this Part of the Convention, an offer, declaration of acceptance or any other indication of intention "reaches" the addressee when it is made orally to him or delivered by any other means to him personally, to his place of business or mailing address or, if he does not have a place of business or mailing address, to his habitual residence."
b) if the offer is in writing, when it is delivered to him in his place of business or postal address, or if he has no place of business to his habitual residence (i.e., receipt theory).
This principle of receipt may, however, be modified by means of an expressed pact of the parties that can adopt any other system, for example, that of the expedition.
On a literal interpretation of CISG Art. 14, which states that "[a] proposal other than one addressed to one or more specific persons is [...]" [emphasis added], it is arguable that the Convention's provisions do not apply to offers made to the public, unless the contrary is clearly indicated by the person making the proposal.
The UNIDROIT Principles make no reference to offers made to the public - that might be used to make an even stronger argument that a similar approach also fits the Convention, unless the offeror indicates the opposite.
The counterpart provisions of the Convention and the UNIDROIT Principles define the offer in similar terms, of a proposal made by one party to another to conclude a contract.
Both instruments refer to the same essential requirements for such a proposal to constitute an offer, i.e. a) the proposal is sufficiently definite; b) the offeror indicates the intention to be bound in case of acceptance; and c) the proposal is communicated to the offeree.
The basic requirement of sufficient definition of the proposal can give rise to misunderstandings and divergent interpretations of the Convention's provisions. It is submitted that, based on the preceding comparative analysis, which found substantial similarities in the policy, structure and wording of the counterpart provisions, the UNIDROIT Principles may be of assistance in understanding and applying the Convention's requirement that a proposal be "sufficiently definite" in order to constitute an "offer" under the CISG.
* Lawyer (J.D.), Javeriana University (Bogot� D.C. - Colombia). Specialist in Commercial Law Javeriana University. Professor of Contracts and Commercial Law at La Sabana University (Bogot� D.C. - Colombia). He has been Lecturer in Colombian and other international universities. Author of publications on International Commercial Law in Argentina, Spain, Colombia, Peru, Mexico, and United States.
1. Art. 2.14 of the UNIDROIT Principles deals with contracts with "open terms"; in the Convention, it is Art. 55 CISG that deals with open-price contracts.
2. For a comparative analysis of CISG Art. 14 and the counterpart provisions of another Restatement of Contract law, see CVETKOVIK, P., "Remarks on the manner in which the PECL may be used to interpret or supplement CISG Art. 14", available online at <http://cisgw3.law.pace.edu/cisg/text/peclcomp14.html#er>.
3. CISG Arts. 1 to 6.
4. See FARNSWORTH, E.A., Contracts, Aspen Law & Business, New Cork, 1999, pp. 112-132; LEVY, D.A., "Contract formation under the UNIDROIT Principles of International Commercial Contracts: UCC, Restatement, and CISG", 30 Uniform Commercial Code Law Journal (1998) 249-332, at 277; PERALES VISCASILLAS, M. del P., La formación del Contrato de Compraventa Internacional de Mercaderías, Tirant Lo Blanch, Valencia, 1996, p 69.
6. FOLSOM, R.H., GORDON, M.W., SPANOGLE, J.A., International Business Transactions, Second Ed., West Group, St. Paul, Minn., United States, 2001, p. 30.
7. VÁZQUEZ LAPINETTE, T., Compraventa Internacional de Mercaderías. Una Visión Jurisprudencial, Aranzadi Editorial, Elcano (Navarra), 2000, p. 114.
"Reasonableness" is an important concept in the Convention; "reasonableness" is specifically mentioned in numerous provisions of the CISG and it is regarded a general principle of the CISG, see KRITZER, A.H., "Overview Comments on Reasonableness - A General Principle of the CISG", available online at <http://cisgw3.law.pace.edu/cisg/text/reason.html#overv>.
See also Art. 7(1) and (2) of the CISG, which contains the in-built interpretation mechanism of the Convention, with references to the concept of good faith; see also relevant scholarly writing on the proper interpretation of Art. 7 CISG, presentation available online at <http://cisgw3.law.pace.edu/cisg/text/e-text-07.html>.
8. Some jurisdictions do not allow "open-price" terms; see Colombian Civil Code Arts. 1591 and 592; Chilean Civil Code Arts. 1808 and 1809. Some other jurisdictions allow "open-price" terms; see BGB �315 and �453; Italian Civil Code Art. 1474; and UCC �2-305.
"Where a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price, the parties are considered, in the absence of any indication to the contrary, to have impliedly made reference to the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned."
"Article 55 deals with cases in which a contract has apparently been concluded but without any agreement on provision as to price. In these instances, Article 55 makes it clear that its provision takes effect subject to the contract having been validly concluded by the criteria of the applicable domestic law". The pre-Vienna Diplomatic Conference legislative history of the CISG is in accord. See UNCITRAL Yearbook VIII, A/CN.9/SER.A/1977, at pp. 48-49, paras. 323-330, 336-340; see also HONNOLD J., Uniform Law for International Sales under the 1980 United Nations Convention, 2d ed. (1991), p. 201.
11. PERALES VISCASILLAS, (1996), op. cit., p. 318; HONNOLD, J. Derecho uniforme sobre compraventas internacionales (Convención de las Naciones Unidas de 1980), Madrid, Editorial Revista de Derecho Privado, Editoriales de Derecho Reunidas S.A., 1987, p. 189.
12. See Transcript of a Workshop on the Sales Convention, where leading CISG scholars discuss inter alia Contract Formation using a hypothetical case involving the interplay between Arts. 14(1) and 55 CISG, 18 Journal of Law & Commerce (1999) 191-258, excerpt also available online at <http://cisgw3.law.pace.edu/cisg/biblio/workshop-14,55,18.html>.
13. PERALES VISCASILLAS, (1996), op. cit., p. 336.
14. HONNOLD, op. cit., n� 137, pp. 187-188. DÍEZ PICAZO, "Comentario al artículo 14", in La Compraventa Internacional de Mercaderías. Comentario de La Convención de Viena. DÍEZ PICAZO and PONCE DE LEÓN, L., Civitas, Madrid, 1998, p. 168. FERNÁNDEZ DE LA GÁNDARA, L., CALVO CARAVACA, A.L., "El Contrato de Compraventa Internacional de Mercancías", in Contratos Internacionales, CALVO CARAVACA, A.L. and FERNÁNDEZ DE LA GÁNDARA, LUIS. (Directors), Tecnos, Madrid, 1997, p. 220.
- CISG Art. 55 cannot be used to determine the price term of an offer for goods which have no market price.
16. The reasoning of the decision of the Hungarian Supreme Court has been much criticized; a selection of relevant commentaries is available at <http://cisgw3.law.pace.edu/cases/920925h1.html#cabc>.
17. PERALES VISCASILLAS, (1996), op. cit., p. 368.
- SWITZERLAND 3 July 1997 Bezirksgericht [District Court] St. Gallen, CLOUT abstract no. 215, case presentation available at <http://cisgw3.law.pace.edu/cases/970703s1.html>.
GABUARDI, C.A., "Open Price Terms in the CISG, the UCC and Mexican Commercial Law", available online at <http://cisgw3.law.pace.edu/cisg/biblio/gabuardi.html>; AMATO, P., "U.N. Convention on Contracts for the International Sale of Goods -- The Open Price Term and Uniform Application: An Early Interpretation by the Hungarian Courts", 13 Journal of Law and Commerce (1993) 1-29; also available online at <http://cisgw3.law.pace.edu/cisg/biblio/amato.html>.
"A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offer or to be bound in case of acceptance".
"[...]. Even essential terms, such as the precise description of the goods or the services to be delivered or rendered, the price to be paid for them, the time or place of performance, etc., may be left undetermined in the offer without necessarily rendering it insufficiently definite: all depends on whether or not the offeror by making the offer, and the offeree by accepting it, intends to enter into a binding agreement, and whether or not the missing terms can be determined by interpreting the language of the agreement in accordance with Arts. 4.1 et seq., or supplied in accordance with Arts. 4.8 or 5.2. Indefiniteness may moreover be overcome by reference to practices established between the parties or to usages (see Art. 1.8), as well as by reference to specific provisions to be found elsewhere in the Principles (e.g. Arts. 5.6 (Determination of quality of performance), 5.7 (Price determination), 6.1.1 (Time of performance), 6.1.6 (Place of performance), and 6.1.10 (Currency not expressed))"
"A has for a number of years annually renewed a contract with B for technical assistance for A's computers. A opens a second office with the same type of computers and asks B to provide assistance also for the new computers. B accepts and, despite the fact that A's offer does not specify all the terms of the agreement, a contract has been concluded since the missing terms can be taken from the previous contracts as constituting a practice established between the parties."
22. See Art. 2.2 UNIDROIT Principles: "A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance."
23. DÍEZ PICAZO L., (Director), La Compraventa internacional de Mercaderías. Comentario de la Convención de Viena, pp. 165-166. PERALES VISCASILLAS, M. del P., El Contrato de Compraventa Internacional de Mercancías (2001), available online at <http://cisgw3.law.pace.edu/cisg/biblio/perales1-14.html>; PERALES VISCASILLAS, La Formación del Contrato en la Compraventa Internacional de Mercaderías (1996), p. 270.
24. VÁZQUEZ LAPINETTE, op. cit., p. 111.
"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."
"In determining the intent of a party or the understanding a reasonable person would have had, 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."
29. ILLESCAS ORTIZ, R., Derecho de la Contratación Electrónica. Civitas, Madrid, 2001, p. 257.
30. See SCHROETER, U., "Editorial Remarks on Art. 13 CISG - PECL comparative provisions", available online at <http://cisgw3.law.pace.edu/cisg/text/peclcomp13.html>.
31. The counterpart provisions in CISG Art. 15(1) and UP Art. 2.3(1) contain identical wording: "An offer becomes effective when it reaches the offeree."
32. DÍEZ PICAZO Y PONCE DE LEÓN, L. La compraventa internacional de mercaderías. Comentario de la Convención de Viena, pp. 171-172. The system of the reception requires that the offer is received by the addressee when it reaches its destination. It does not matter under that system that the offer arrives but rather that the possibility exists that it is received by the offeree.
33. See Official Comments on Art. 1.9 of the UNIDROIT Principles, available online at <http://cisgw3.law.pace.edu/cisg/principles/uni24.html#official>.
"With respect to all kinds of notices the Principles adopt the so-called 'receipt' principle, i.e. they are not effective unless and until they reach the person to whom they are given."
"It is important in relation to the receipt principle to determine precisely when the communications in question 'reach' the addressee. In an attempt to define the concept, para. (3) of this article draws a distinction between oral and other communications. The former 'reach' the addressee if they are made personally to it or to another person authorized by it to receive them. The latter 'reach' the addressee as soon as they are delivered either to the addressee personally or to its place of business or mailing address. The particular communication in question need not come into the hands of the addressee. It is sufficient that it be handed over to an employee of the addressee authorized to accept it, or that it be placed in the addressee's mailbox, or received by the addressee's fax, telex or computer."
34. See also FELEMEGAS, J., "Comparison between provisions of the CISG (Article 24) and the counterpart provisions of the UNIDROIT Principles (Art. 1.9)", available online at <http://cisgw3.law.pace.edu/cisg/principles/uni24.html#ed>.
"The Principles define this formal requirement in functional terms. Thus, a writing includes not only a telegram and a telex, but also any other mode of communication that preserves a record and can be reproduced in tangible form. This formal requirement should be compared with the more flexible form of a 'notice'."
36. GARRO, A., "La Convención de las Naciones Unidas sobre los Contratos de Compraventa Internacional de Mercaderías: su Incorporación al Orden Jurídico Argentino", La Ley, p. 6. FERRARI, F., La Compraventa International. Aplicabilidad y aplicaciones de la Convención de Viena de 1980. Tirant Lo Blanch. Valencia, 1999, p. 66.
37. See the Official Commentary on Art. 1.9 UNIDROIT Principles, Comment 4, supra note 33.
"Dispatch principle to be expressly stipulated. The parties are of course always free expressly to stipulate the application of the dispatch principle. This may be appropriate in particular with respect to the notice a party has to give in order to preserve its rights in cases of the other party's actual or anticipated non-performance when it would not be fair to place the risk of loss, mistake or delay in the transmission of the message on the former. This is all the more true if the difficulties which may arise at international level in proving effective receipt of a notice are borne in mind."
39. Pursuant to the principle of party autonomy embedded in Art. 6 CISG: "The parties may [...] derogate from or vary the effect of any of its provisions" [emphasis added].
A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance.
In defining an offer as distinguished from other communications which a party may make in the course of negotiations initiated with a view to concluding a contract, this article lays down two requirements: the proposal must (i) be sufficiently definite to permit the conclusion of the contract by mere acceptance and (ii) indicate the intention of the offeror to be bound in case of acceptance.
Since a contract is concluded by the mere acceptance of an offer, the terms of the future agreement must already be indicated with sufficient definiteness in the offer itself. Whether a given offer meets this requirement cannot be established in general terms. Even essential terms, such as the precise description of the goods or the services to be delivered or rendered, the price to be paid for them, the time or place of performance, etc., may be left undetermined in the offer without necessarily rendering it insufficiently definite: all depends on whether or not the offeror by making the offer, and the offeree by accepting it, intends to enter into a binding agreement, and whether or not the missing terms can be determined by interpreting the language of the agreement in accordance with Arts. 4.1 et seq., or supplied in accordance with Arts. 4.8 or 5.2. Indefiniteness may moreover be overcome by reference to practices established between the parties or to usages (see Art. 1.8), as well as by reference to specific provisions to be found elsewhere in the Principles (e.g. Arts.5.6 (Determination of quality of performance), 5.7 (Price determination), 6.1.1 (Time of performance), 6.1.6 (Place of performance), and 6.1.10 (Currency not expressed)).
1. A has for a number of years annually renewed a contract with B for technical assistance for A's computers. A opens a second office with the same type of computers and asks B to provide assistance also for the new computers. B accepts and, despite the fact that A's offer does not specify all the terms of the agreement, a contract has been concluded since the missing terms can be taken from the previous contracts as constituting a practice established between the parties.
The second criterion for determining whether a party makes an offer for the conclusion of a contract, or merely opens negotiations, is that party's intention to be bound in the event of acceptance. Since such an intention will rarely be declared expressly, it often has to be inferred from the circumstances of each individual case. The way in which the proponent presents the proposal (e.g. by expressly defining it as an "offer" or as a mere "declaration of intent") provides a first, although not a decisive, indication of possible intention. Of even greater importance are the content and the addressees of the proposal. Generally speaking, the more detailed and definite the proposal, the more likely it is to be construed as an offer. A proposal addressed to one or more specific persons is more likely to be intended as an offer than is one made to the public at large.
2. After lengthy negotiations the Executive Directors of two companies, A and B, lay down the conditions on which B will acquire 51% of the shares in company C which is totally owned by A. The "Memorandum of Agreement" signed by the negotiators contains a final clause stating that the agreement is not binding until approved by A's Board of Directors. There is no contract before such approval is given by them.
3. A, a government agency, advertises for bids for the setting up of a new telephone network. Such an advertisement is merely an invitation to submit offers, which may or may not be accepted by A. If, however, the advertisement indicates in detail the technical specifications of the project and states that the contract will be awarded to the lowest bid conforming to the specifications, it may amount to an offer with the consequence that the contract will be concluded once the lowest bid has been identified.
A proposal may contain all the essential terms of the contract but nevertheless not bind the proponent in case of acceptance if it makes the conclusion of the contract dependent on the reaching of agreement on some minor points left open in the proposal. See Art. 2.13.

References: Art. 14
 Art. 2

Art. 14
 Art. 14
 Art. 35
 Art. 14
 Art. 55
 Art. 14
 Art. 55
 Art. 14
 Art. 55
 Art. 14
 Art. 55
 Art. 8
 Art. 2
 Art. 2
 Art. 13
 Art. 14
 Art. 2
 Art. 55
 Art. 14
 Art. 14
 Art. 7
 Art. 7
 Art. 1474
 Art. 55
 Art. 1
 Art. 2
 Art. 13
 Art. 15
 Art. 2
 Art. 1
 Art. 1
 Art. 6
 Art. 1
 Art. 2