Source: http://cisgw3.law.pace.edu/cisg/biblio/ho19.html
Timestamp: 2018-01-16 21:37:33
Document Index: 56310830

Matched Legal Cases: ['Art. 19', 'Art. 19', 'Art. 19', 'Art. 9', 'Art. 9', 'Art. 14', 'Art. 18', 'Art. 35', 'Art. 17', 'Art. 16', 'Art. 18', 'Art. 16', 'Art. 8', 'Art. 9', 'Art. 29']

John O. Honnold - Article 19
Excerpt from John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed. (1999), pages 182-192. Reproduced with permission of the publisher, Kluwer Law International, The Hague.
Acceptance with Modifications
A.	The Commercial Setting
(1)	The Offeror is Silent in the Face of a Modification
(2)	The Offeror Objects
(a)	What Modifications are "Material"
C.	Contract Formation Based on Acts of Performance
(1)	Scope of the Rules of Offer and Acceptance
(2)	Conduct of the Parties and Contract Formation
(3)	Problems Not Solved by the Contract Terms
(4)	Conduct Showing Agreement: "Last Shot Theories"
(5)	Gap-filling by the Convention
�165 A. The Commercial Setting
We now face the following situation: A reply to an offer purports to be an acceptance but states one or more provisions that add to or are inconsistent with provisions in the offer. Such "acceptances" are a common form of commercial life. High-speed, standardization production has been accompanied by measures to accelerate the placing and the acceptance of orders; the central tools in this process are pre-printed Purchase or Sales Order and Acknowledgment of Order forms. The front of the form has blank lines and spaces where the seller or buyer states the description, quantity and price and other individualized aspects of the transaction; the front of the form also states that additional terms and conditions appear on the back of the form.
These additional terms on the back of 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. A businessman who responded to a survey about the use of such forms added the wry comment that business would come to a halt if sellers and buyers should "read the back-sides of the other�s forms."[1]
It is vital to focus on the precise and full situation from which each problem arises. Needless to say, no problem arises when O sends an offer to R whose reply rejects the offer. Difficulty arises only when R�s reply is subject to ambiguity: The reply "purports to be an acceptance" but adds one or more terms that add to or differ from the offer. To complete the picture we need to know what, if anything, happens next. If O, without undue delay, objects to the modifications in R�s reply the answer [page 182] should be clear: There is no contract and will be none unless the parties agree on the disputed terms.
As we have seen, difficulty results from the routine exchange of Order and Acknowledgment forms without attention or objection to discrepancies between the terms printed on their forms.
In this setting the transaction usually moves ahead without controversy. Orders for standard goods are likely to be filled promptly before either party has reason to regret the transaction. When the transaction calls for delay in delivery, as in an order for the production of goods to the buyer�s specifications, changes in costs or price levels occasionally may lead one of the parties to claim that it is not bound by contract.
Most problems, however, develop after delivery of the goods when the buyer claims that defects in goods lead to dissatisfaction or claims by subpurchasers, or defects in production materials or machinery cause shut-down costs or other consequential damages. In this setting the problem is not "Was there a contract?" but "What were its terms?" A common source of difficulty is a provision in the seller�s form limiting its responsibility to replacement or repair of defects; controversy has also developed from a clause in one of the forms that disputes shall be resolved by arbitration.
It is fortunate that problems arising out of the "battle of the forms" do not arise more frequently for legal science has not yet found a satisfactory way to decide what the parties have "agreed" when they have consummated a transaction on the basis of the routine exchange of inconsistent forms.
� 166 B. The Convention
The Convention, of course, could not ignore this problem:
"(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 constitutes a counter-offer.[page 183]
"(3) 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."
Paragraph (1) of Article 19 states the traditional and widely accepted rule that a reply which purports to accept an offer but which contains modifications "is a rejection of the offer and constitutes a counter-offer." Paragraphs (2) and (3) state exceptions from the traditional rule. We shall need to consider the article as a whole.[3]
� 167 (1) The Offeror is Silent in the Face of a Modification
Example 19A. On June 1 Seller delivered to Buyer a Sales Order form that proposed the sale of $1,000 bags of No. 1 quality sugar on specified terms, including shipment on July 1. Printed provisions on the back of the Sales Order form included the statement: "The goods will be packaged in sound bags." On June 5 Buyer delivered to Seller a Purchase Order form that purported to accept Seller�s offer. The back of the Purchase Order had printed terms that, in general corresponded with those on Seller�s form, but included the statement: "Shipment in new packages or bags." Seller did not object to Buyer�s Purchase Order and expected to ship the sugar on July 1 in new bags. On June 25 there was a sharp drop in the price of sugar. Buyer consulted his lawyer to see whether he was legally bound. Comparison of the two forms revealed the divergency as to "new bags," and on June 27 Buyer cancelled the order on the ground that Seller had not accepted his "offer" of June 5.[page 184]
Under Article 19, the cancellation probably would not be effective. A tribunal could conclude that the "modification" did not "materially alter the terms of the offer" (Art. 19(2)). Since the offeror (Seller) did not object to the "modification," the parties were bound by a contract consisting of "the terms of the offer with the modifications contained in the acceptance"�i.e., shipment in new bags. The Buyer would consequently be liable to Seller for breach of contract.
The approach of Article 19 is probably inconsistent with traditional doctrine in many legal systems. However, there is evidence that tribunals have found ways to defeat attempts to escape from contracts because of immaterial deviations between the offer and "acceptance"�by finding that the alleged deviation was not really inconsistent with the offer in the light of commercial practice or good faith, or was a request for modification of an agreement, or had been waived by the proposer or accepted in silence by the other party.[4]
Moreover, legislative measures in a few countries have responded to this problem. Particularly significant is legislation adopted in the Scandinavian countries, since this was the basis of a provision that was added during the course of the 1964 Hague Conference and (after redrafting) became Article 19 of the 1980 Convention.
Answer Deviates from Offer; Material? (1) GER. LG Baden-Baden, 4 O 113, 14 August 1991. Modification in "acceptance" by offeree (S): B must give notice of defects within 30 days; S�s modification was not material. UNILEX D. 1991�7. (2) FR. CA Paris, Fauba v. Fujitsu, 22 April 1992, sustained, C. de Cass. (Sup. Ct.), 4 January 1995; Modification in acceptance, stating terms for revision of price in response to market trends, was not a material alteration. UNILEX D. 1995�1.3. (3) AUSTRIA, ObB ("Sup. Ct."), 2 Ob 58/97m, 20 March 1997. B (Russ. Fed.) ordered from S (Austria) 10,000 tons of chemicals (MAP), giving chemical specifications. S�s reply "accepted" the offer but set forth different specifications. The issue: Did S�s reply materially alter the offer? (CISG Art. 19(2) & (3)) The Court directed the lower court to ascertain whether S�s reply altered B�s offer in a way that favored B; if so, a contract was concluded. CLOUT 189; UNILEX D. 1997�6. See: Schlechtriem, Com. (1998) 140�141.[page 185]
Battle of the Forms; Comments: Gabriel, H.D., 49 Bus. Lawyer 1053�1064 (1994); Moccia C., 34 Ford. Int.L. J. 649�677 (1989�90); Kenji Nakata, G., Transn. Lawyer 141�163 (1994); Vergne, F., 33 Am. J. Comp. L. 223�285 (1985); Bonell/Ligouri, ULR (1996�1) 162�163, (1997�3) 584�586.
� 168 (2) The Offeror Objects
Example 19B. On June 1 and June 5 Seller and Buyer exchanged Sales Order and Purchase Order forms like those in Example 19A. In this case (unlike Example 19A where there was no objection) on June 6 Seller wired Buyer: "Do not have adequate supply of sugar in new bags; can ship sugar in sound, secondhand bags." On June 7 Buyer replied: "Insist on new bags." On June 8 Seller wired "Cannot comply with your request." Buyer did not reply and Seller did not ship. By July 1 the price of sugar had advanced, and Buyer claims damages for breach of contract.
Under the Convention (and the Scandinavian legislation) no contract was formed. Seller "without undue delay" objected to "the discrepancy" (Art. 19(2)). Consequently, the answer is supplied by paragraph (1): Buyer�s reply, because of the modification, was "a rejection of the offer"; the "counter-offer" was not accepted and no contract was formed.
� 169 (a) What Modifications are "Material"?
The Convention provides a definition of "material". Under paragraph (3) the modifications that are considered to be "material" cover most of the aspects of the contract. As a result, most cases will probably fall under the traditional rule, stated in paragraph (1), that a reply with modifications "is a rejection of the offer and constitutes a counter-offer."[5][page 186]
In some settings, an obligation to reply to a purported "acceptance" with even "material" alterations might be based on usage or on the practices the parties have established between themselves. (See Art. 9, supra at �112.) But the issue needs to be sharpened: The 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. Such a usage or practice would be more readily established where the transaction is large and does not call for rapid and routine handling. And even for a modest and routine order one might find that objection would be expected if the acceptance form was transmitted by a letter that stated: "We call your attention to the provision, on the back of the enclosed from, that provides for arbitration." If the recipient of such a letter proceeded with the transaction a tribunal might well conclude that he had agreed to the arbitration clause�but not to the other provisions of the form. See �100 and �160, Example 18B, supra, and Articles 39(1) and 48(2) on the duty to communicate needed information to the other party.
A term may be rendered immaterial by the fact that it states an obligation that would be an implied term of the contract because of practices established by the parties or by trade usage (Art. 9, ��112�122, supra).[6] Suppose that the parties� practices or trade usage imply an obligation to arbitrate disputes. Article 19(3) states that terms relating to "settlement of disputes" are considered "material". However, an arbitration clause that reflects the parties� practices or an applicable trade usage should not make a material modifications in an offer that does not deal with dispute settlement. Thus, such a reply could close a contact if the offeror fails to object to this added term.[7][page 187]
C. Contract Formation Based on Acts of Performance
� 170 (1) Scope of the Rules of Offer and Acceptance
The Introduction to Part II of the Convention (�132.1, supra) discussed the special and restricted scope of the Convention�s provisions on whether a contract is formed when all that has happened is a communication by one party ("O") and a reply by the second party ("R"). As we have seen, these rules are necessary and useful in dealing with situations limited to an exchange of communications. In this setting we have met these problems: Is O�s communication "sufficiently definite" and does it sufficiently indicate O�s "intention to be bound" so that a contract is made if R replies "I accept"? (Art. 14, supra at ��134�137.) Does O have the right to withdraw or revoke an offer communicated to R? (Arts. 15 and 16, supra at ��138�143.) Who bears the risk of the delay or loss in the transmission of R�s reply to O? (Art. 18, supra at �162.)
Under Article 19 we meet this problem: On receipt of an offer from O, a reply from R, although purporting to be an acceptance, deviates from the offer. In this setting the rules of Article 19 are strict: R�s reply to O�s offer will not close a contract if it contains a "material" deviation from the offer; an "immaterial" deviation will be fatal if O objects without undue delay. This strict approach is appropriate. Within the period between R�s reply and the time allowed for O�s objection substantial reliance interests rarely develop.[8] If a dispute develops at this threshold stage of a transaction the terms of an agreement can be settled more effectively by the parties than by the law. Thus, it would be fair to say that Article 19 follows a "traditional" approach. However, the important question is whether this approach is confined, as its terms suggest, to the effect of an "offer" and a "reply to an offer" or whether it extends to transactions where agreement is shown by the parties� conduct.
Serious problems do develop if the "offer"�"reply" provisions of Article 19 are extended more widely. Fortunately, the Convention does not deny commercial reality by suggesting that contracts can develop only from the exchange of communications. Under Article 18(3) an offeree "may indicate assent by performing an act, such as one relating to the dispatch of the goods or payment of the price..." By Article 18(3), and by several other provisions noted below, the Convention gives legal [page 188] effect to the fact that in sales transactions (as in other human affairs) actions can speak more loudly than words.[9]
Contract Based on Conduct. FR. CA Grenoble, Veyron v. Ambrosio, RG 93/1613, 26 April 1995. B�s acceptance of goods bound B to S�s proposed price. CLOUT 151, UNILEX D. 1995�15. To similar effect: GER. OLG Frankfurt a M., 5 U 209/94, 23 May 1995. UNILEX D. 1995�15.3.
� 170.1 (2) Conduct of the Parties and Contract Formation
The introduction to Article 19 (supra at �165) stressed the importance of facing the full setting of the transaction. As a step towards analyzing more complex problems we may consider the following example.
Example 19C. On June 1 Buyer delivered to Seller a Purchase Order that offered to purchase specified production machinery. The Order, in addition to identifying the machinery, stated the price at $20,000, to be paid one month after receipt of the machinery, and called for shipment by August 1. The reverse side of the Order set forth the following terms: Clause #1: Seller will be responsible for damages resulting from defects in the machinery; Clause #2: Any dispute will be settled by arbitration.
On June 15 Seller delivered to Buyer an Order Acknowledgment stating that Seller would ship the machine ordered by Buyer by August 1 and that the price was $20,000 to be paid one month after receipt, as has been set forth in Buyer�s Order. The reverse side of Seller�s form included the following terms: Clause #1: Seller will replace or repair any defective part of the machinery but will not be responsible for shut down costs or other consequential damages; Clause #2: An arbitration clause like the one in Buyer�s Order.
Neither party mentioned the terms on the reverse of the other�s forms. Seller shipped the goods on July 15 and they were received and put into use on August 1. However, Buyer failed to pay for the goods.[page 189]
In response to Seller�s demand for payment Buyer claimed: Seller�s Acknowledgment included a provision (Clause #1, above) on the "extent of one party�s liability to the other"; under Article 19(3) this was a "material alternation" of Clause #1 in Buyer�s Order. Consequently, under Article 19(1), Seller�s purported acceptance was a rejection of the offer and a "counter-offer". Since Buyer did not accept Seller�s counter-offer there was no contract on which Seller could base an action for the price.
How would a tribunal react to Buyer�s objections? In practice one could not avoid seeing the transaction in its full context: The exchange of Purchase and Acknowledgment forms followed by shipment and acceptance of the goods show that Seller and Buyer made a contract. The Order and Acknowledgment forms showed agreement on these basic terms: the description of the goods, the price, the time for shipment, and payment and the procedures for resolving disputes. As we have seen, this examination of the transaction as a whole is required by the Convention in Articles 18(1) and (3), 16(2), 8(1), 8(2), 9(1) and 29(2), quoted above at note 10.
�170.2 (3) Problems Not Solved by the Contract Terms
In the above Example the parties� communications agreed on the point at issue�the price for the goods that Buyer ordered and received. We now turn to a case where the communications fail to provide a solution for the problem that develops.
Example 19D. The facts are the same as in Example 19C except for the situation that led to difficulty: Shortly after Buyer placed the machinery in operation, defects in the machinery led to shutdown in Buyer�s assembly plant with serious consequential damages. Seller offered to repair or replace the defective machinery pursuant to Clause #1 on the back of Seller�s Acknowledgment. Buyer contended that, in addition, Seller must pay for shutdown and other consequential damages pursuant to Clause #1 on the back of Buyer�s Order.
Does Article 19 of the Convention answer the above problem? Immediately after the exchange of forms the answer was clear: Because of the material difference between the terms of Buyer�s offer and Seller�s reply, there was no contract; either party could refuse to perform.
This case, however, involves much more than the exchange of forms. For reasons developed in connection with Example 19C, above, it is clear from the parties� conduct�the exchange of an offer and a purported acceptance, followed by shipment and acceptance of the goods�that the parties made a contract. What rule governs the scope of Seller�s responsibility for the defective goods?[page 190]
�170.3 (4) Conduct Showing Agreement: "Last Shot Theories"
One approach seeks a way to choose between the terms of the two conflicting communications. One application of this approach gives effect to the last form in the sequence on the ground that further performance indicates agreement to its terms.[10] (This is often called the "Last Shot" approach, invoking the metaphor that the parties have been engaged in a "Battle of the Forms" and the aphorism that battles are won by the side that "fires the last shot".)
Let us examine the "last shot" theory in the setting of Example 19D, �170.2, supra. One will recall that under Article 19 Seller�s reply purported to accept Buyer�s offer but contained a material modification and therefore was "a rejection of the offer" and constituted a "counter-offer". Seller then shipped the goods to Buyer. Since no contract was formed, Buyer would have been free to reject the goods but, instead, accepted them. Acceptance of the goods was an acceptance of Seller�s "counter-offer"; Buyer is bound by the provision in Seller�s Sales Order that limited liability to repair or replacement of the defective goods.
Again, the precise facts become important. Suppose the Seller had sent its Order Acknowledgment with a covering letter that drew attention to Clause #1 on the back of the form and asked Buyer to reply before the agreed time for shipment.[11] In this setting Buyer�s silence could be construed as assent. However, when there is merely an exchange of forms with a conflict between clauses on the reverse side, it is difficult to conclude that the Buyer gave (or was bound to give) closer attention to the Seller�s form than the Seller apparently gave to Buyer�s form.
It is especially troubling to place this burden on one who received a reply that purported to be an acceptance and thereby created an ambiguity between the purported acceptance on the front of the Acknowledgment and one of the form clauses on the back. When both parties proceed with performance in the face of this ambiguity, if it were necessary to choose between competing forms, Article 8(2) would be relevant: statements or conduct of one 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"�the generally accepted principle that doubt is to be resolved against the party who created the ambiguity. This [page 191] approach also might discourage ambiguity by denying benefit to the party who created the ambiguity by sending an ambiguous "acceptance".[12] However, even this approach for choosing between conflicting forms seems artificial. (There may be a better way. See part (5), �170.4, infra.)
We can test the reality (as well as the practicality and fairness) of the "last shot" approach by the following case: Suppose that after arrival of the goods Buyer rejected the shipment. The "last shot" theory that there was no contract until buyer accepted the goods would support Buyer�s rejection. It is difficult to conclude that such a rejection, in view of the transportation and redisposal costs typical in international sales, would be consistent with commercial expectations or with standards of good faith and fair dealing.[13]
"Last shot" theories have been rightly criticized as casuistic and unfair.[14] They do not reflect international consensus that justifies importing them into the Convention.
� 170.4 (5) Gap-Filling by the Convention
Analysis of Example 19D led to the following conclusions: (1) Performance by the parties showed that they made a contract of sale; (2) The question that led to dispute was not resolved by contract.
If these conclusions are sound we are dealing with the commonest problem in commercial law: a contract fails to solve a problem that leads to dispute. Indeed, providing solutions to gaps left in contracts is the most basic function of laws applicable to commercial sales. For the gap in the contract in Example 19D, the Convention, of course, supplies an answer�a body of rules on remedies for breach (Arts. 45�52, 61�65) and especially the general rule on measurement of damages in Article 74.[15] The rule of Article 74 (and of many domestic systems) that a party in breach is liable for foreseeable consequential damages is not popular with sellers. Under Article 6 the parties can exclude or modify this and other provisions of the Convention but this must be done by agreement; fictitious theories for finding agreement should not suffice.[page 192]
FOOTNOTES: Chapter on Article 19
1. Waddams, Research Paper No. II.1, summarized on Ont. L. Ref. Com., I Sale 81 n. 25. This Research Paper reported that as many as 60% of the businesses that responded to a questionnaire had contacts with conflicts between sales and purchase forms. Additional data on the widespread use of such forms in Europe appears in van der Velden, Uniform International Sales Law and the battle of the forms, in Sauveplanne Festschrift 233 (study of Dutch practices by F. A. J. Gras). See Symposium, Battle of the Forms, 4 Canad. Bus. L. J. 261 (1980); Rawlings, The Battle of the Forms, 42 Mod. I. Rev. 715 (1979).
2. A careful review of the legislative history of Article 19 of the Convention appears in Vergne, 33 Am. J. Comp. L. 233, 235�238 (1985) (high-lights difference in outlook between East and West).
3. The prevailing rules of domestic law are canvassed in von Mehren, The "Battle of the Forms," 38 Am. J. Comp. L. 265 (1990); Cigoj, International Sales: Formation of Contracts, 23 Neth. Int. L. Rev. 257, 291�295 (1976). On the binding effect, in German (F. R. G.) law, of silence after receipt of a commercial letter of confirmation, see von Mehren, supra, p. 290 n. 77; Esser, supra at �1670, n. 4.
4. II Schlesinger, formation 969�971 (Eng., Australian, Canadian & New Zealand), 974�976 (France), 978�984 (German, Austrian, Swiss.); Schlechtriem, The Battle of the Forms Under German Law, 23 Bus. Lawyer 655 (1968) (case law prior to German Standard Terms Act 1969, discussed at Art. 35, infra at �222); Vergne, 33 Am.J. Comp.L. 233 (1985); Murray, 8 J. Law & Comm. 11 (1988). For comparative study and analysis of 1964 Hague approach see Goldstajn, Unification Symposium 1964 52�54, Lagergren, id. 67�70; Honnold, id. 10�11.
5. It has been suggested that the phrase "are considered" in Article 19(3) indicates that the provision sets up interpretative presumptions or guidelines that may yield to evidence based on the circumstances of the case. Schlechtriem, 1986 Commentary 55 n. 181; Secretariat Commentary, Art. 17 (later 19) No. 7 ("normally to be considered as material), Official Records 24, Documentary History 414,�The phrases "are considered", "to be considered" and the like appear in Articles 3(1), 9(2), 14(2), 19(3) and 55. This phrase usually refers to a presumed intent of the parties. On the relation between the intent of the parties and the Convention�s provisions see Articles 6 and 8.
The phrase "among other things" in Article 19(3) shows that the list is not exclusive so that tribunals must consider whether provisions falling outside the list "alter the terms of the offer materially". This phrase shows that the test is not whether the different term deals with a subject that is "material" but whether it materially "alters the terms of the offer".
6. Farnsworth in B-B Commentary, ��2.2 and 2.8 (Illustration 3) pp. 178, 181; Van der Velden, in Sauveplanne Frestschrift 233, 237.
7. It might be suggested that when the parties� practices or trade usage call for arbitration an arbitration clause in the reply made no modification of the offer; on this premise the reply closed a contract and the parties are bound to arbitrate even if the offeror promptly objected to the arbitration clause in the reply. This view seems incorrect. The parties were not obliged to continue with trade usage; the offeror�s prompt objection to the clause indicated unwillingness to continue with the practice.
8. When R reasonably relies on O�s offer, R�s reliance interest is protected by barring O�s revocation of the offer. Art. 16(1)(b), quoted in note 9, infra. See �144, supra.
9. Art. 18(1): acceptance may be made by a statement "or other conduct". Art. 16(1): An offer cannot be revoked if it indicates that it is irrevocable or "(b)...the offeree has [reasonably] acted in reliance on the offer." Art. 8(1) 8(2): Interpretation based on "statements made by and other conduct of a party..." Art. 9(1): Parties may be bound by "practices they have established...". Art. 29(2): "...a party may be precluded by his conduct" from asserting a contract provision permitting only written modifications. Thus, the Convention is not subject to Llewellyn�s reproach of the "promise for promise" emphasis in classical contract law as an approach that "binds eyes as ancient China [bound] a lady�s little feet�. 48 Yale L. J. 1, 32 (1938) quoted in Kelso, 21 Colum. J. Transn. L. 529, 533 n. 23 (1983).
10. Farnsworth in B-B Commentary 179�183.
11. One leading seller will not ship until the buyer signs and returns the seller�s form. See Murray, 4 Can. Bus. L. J. 290 (1980)(Item III of Panel Discussion). There are, of course, many ways to draw attention to a conflict in terms. See Kritzer Manual Ch. 20.
12. See ��107�108, supra.
13. Article 7(1) provides: "In the interpretation of this Convention, regard is to be had to the need to promote...the observance of good faith in international trade."
See Van der Velden in Sauveplanne Festschrift, 233, 244 (German doctrine of Treu and Glauben), 245 (Dutch new Civil Code rejects "the later reference"), 248.
14. See Van der Velden, supra, 241�242, Murray, 39 Vand. L. Rev. 1307, 1369�1371 (1986); Shanker, 4 Can. Bus. L. J. 263, 271 (1980).
15. For issues not explicitly settled see Articles 7(2) and 9, ��96�102, 112�122, supra.