Source: http://cisgw3.law.pace.edu/cisg/text/eorsi16.html
Timestamp: 2018-01-22 00:26:14
Document Index: 800690648

Matched Legal Cases: ['art. 13', 'art. 15', 'art. 13', 'art. 15', 'art.14', 'art. 16', 'art. 16', 'art. 18', 'Art. 22', 'art. 24', 'art. 18', 'art. 20', 'art. 16', 'art. 18', 'art. 16', 'art. 18', 'art. 16', 'art. 18', 'Art. 14', 'art. 16', 'art. 14', 'art. 16', 'art. 14', 'art. 16', 'art. 14', 'art. 16', 'art. 14', 'art. 14', 'art. 16', 'art. 16', 'art. 6', 'art. 7', 'art. 19', 'art. 21', 'art. 14', 'art. 16', 'art. 14', 'art. 16', 'art. 5', 'art. 14', 'art. 16', 'art. 16', 'art. 18', 'art. 14', 'art. 16', 'Art. 22', 'art. 24', 'art. 12', 'art. 14', 'art. 16']

For the most part, the Draft Convention, in accordance with Civil law tradition, applies the receipt theory. The offer (art. 13(1) [became CISG art. 15(1)]), the withdrawal of an offer (art. 13(2) [became CISG art. 15(2)]), the revocation of an offer (art.14(1) [became CISG art. 16(1)]), and the acceptance by declaration (art. 16(2) [became CISG art. 18(2)]) all become effective only when they reach the other party. Art. 22 [became CISG art. 24] makes clear when a declaration must be presumed to have reached the addressee.[20]
There is ground for objecting to the rule of art. 18(1) [became CISG art. 20(1)] that when the offeror by letter fixes a period of time for acceptance, the period begins to run from the date shown on the letter or, if no such date is shown, from the date shown on the envelope. The significant point is that the date on the envelope can be relied on only if there is no date on the letter. When there is a discrepancy of several days between the dates on the letter and the envelope, it is probable that the latter date is authentic. The offeror either antedated his letter or negligently posted it only after the lapse of several days. If recourse is had to this provision, the offeree might find himself at considerable disadvantage. In extreme cases, even the whole period of time for acceptance might expire before the letter reaches the offeree; in any case the time for acceptance will be shortened.[21]
In one important situation the Draft Convention does not follow the receipt theory. Under art. 16(3) [became CISG art. 18(3)] "if, 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 paragraph (2) of this article." Here something like the dispatch theory is followed: the offeree may be protected when he dispatches the goods, although he would not be protected by dispatching a letter of acceptance if the letter is delayed in the mails and reaches the offeror late.
The adoption of the dispatch theory in this case might be justified by the fact that the receipt of the goods as soon as possible would be in the interest of the buyer. In addition, acts related to sending goods or paying the price usually involve a more serious change of position, calling for legal protection, than sending a letter. Moreover, the declaration of acceptance might involve a waste of time, and is not important to the buyer. Finally the special provision for acceptance in art. 16(3 [became CISG art. 18(3)] is available only pursuant to the terms of the offer or in accordance with usage or practices established between the parties.
On the other hand, it should be noted that in the world of the Telex the loss of time involved in sending an acceptance is usually negligible. Further, in practice the seller would be expected to notify the buyer that he has sent the goods, especially when the goods will be en route for an extended period of time. Under paragraph (2) a notice that the goods have been sent, or some other "indication" of assent, would qualify as a notice of acceptance. It may, therefore, be argued that paragraph (3) is superfluous.[22]
Withdrawal is barred where the dispatch theory is applied; the declaration becomes effective on dispatch. This approach also applies when assent is indicated under art. 16(3) [became CISG art. 18(3)] (discussed above) by "performing an act." Here the offer cannot be withdrawn, nor is there need to apply rules restricting revocation: performance of the act is an acceptance of the offer, and a contract has been made.
On the other hand, where the receipt principle is applied, the written offer or its acceptance is not effective unless it reaches the other party. It can therefore be withdrawn before it has reached the other party, and also, for similar reasons, when the offer and its withdrawal or when the acceptance and withdrawal reach the other party at the same time -- e.g., by the same mail (Arts. 13(2), (20) [became CISG arts. 15(2), 22]).
Art. 14 [became CISG art. 16] of the Draft Convention opens with the following general rule: "(1) Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance." [24] However, this general rule favoring revocability is subject to two exceptions, one of a Civil law and one of a Common law nature.[25] Unlike the above compromise between the dispatch and the receipt theories, this compromise inclines more closely to the Common law.
The cardinal question under the general rule is this: How long will the offer be revocable? The answer appears to be a simple one: The offer is revocable until the contract is made, i.e., until the acceptance is effective. However, in the event of revocation by a letter or telegram, the application of this rule is far from simple. Thus, a revocation may reach the offeree when he has already dispatched the acceptance, but the acceptance has not yet reached the offeror. At this point, art. 14(1) [became CISG art. 16(1)] of [the] draft Convention favors the moment of dispatch: "An offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance." [26] Yet, as we have seen, assent may also be indicated by "performing an act"; such an act concludes a contract.
The question arose whether acts like payment of the price may be construed to amount to the "dispatch of acceptance." To meet this problem, art. 14(1) [became CISG art. 16(1)] (quoted above) opens with the words, "Until the contract is concluded. . . ." Unfortunately the relationship between the two parts of art. 14(1) [became CISG art. 16(1)] is not perfectly clear. It is necessary to recall the basic principle: Until the contract has been made, the offer may be revoked, subject to exceptions set forth in art. 14 [became CISG art. 14]; one of these exceptions is that the right to revoke terminates when the offeree "has dispatched an acceptance." The puzzle is that, under art. 16(2) [became CISG art. 16(2)], the mere dispatch of an acceptance does not conclude a contract but does end the offeror's power to revoke his offer.
The uncertain position of the offeror under this rule can lead to problems. The offeror cannot know when his revocation reached the offeree, and even less when the offeree "indicated" his assent by "performing an act." Therefore, it might be useful to state in the Convention that the offeree is bound to give notice if the revocation has reached him late. The requirement (rejected by UNCITRAL) that the parties act in good faith would be helpful in dealing with such problems; it is doubtful whether the good faith clause hidden in art. 6 [became CISG art. 7(1)] among the rules on the interpretation and application of the Convention could be fully effective. Perhaps the most helpful avenue would be to draw an analogy from art. 19(2) [became CISG art. 21(2)], which requires the offeror to notify the offeree when, owing to abnormalities in transmission, an acceptance posted in due time arrives late and the offeror considers that his offer has lapsed.
Following this discussion, UNCITRAL contracted points (a)-(b)(quoted above) of the Working Group draft into a single provision in art. 14(2)(a) [became CISG art. 16(2)(a)]: An offer cannot be revoked, "if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable."
The Draft Convention sets forth a second exception from the general rule of revocability -- an exception "of Common law character" based on reliance. Under art. 14(2)(b) [became CISG art. 16(2)(b)] an offer cannot be revoked "if it was reasonable for the offeree to rely upon the offer as being irrevocable and the offeree has acted in reliance on the offer." The main significance of this rule is the protection it gives an offeree "who had to carry out investigations or make inquiries before deciding whether to accept an offer.[28] The Civil law affords such protection, in a manner characteristic of the Civil law (as does the ULF (art. 5(2)), by prohibiting revocation in bad faith. However some delegations from Civil law countries opposed the above-quoted reliance rule of art. 14(2)(b) [became CISG art. 16(2)(b)]; its wording seemed unusual to Civil law jurists. It is true though that similar protection could be derived from the provision in art. 16(2) [became CISG art. 18(2)] which makes the period of time within which the acceptance can effectively reach the offeror dependent (inter alia) on the "circumstances of the transaction." In view of the compromise character of the article, the opponents acquiesced and agreed to art. 14 of the Draft Convention [became CISG art. 16].[29]
20. Art. 22 of the 1978 Draft Convention [became CISG art. 24] provides: "For the purposes of Part II of this 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, his place of business or mailing address, or, if he does not have a place of business or mailing address, to his habitual residence." This provision is by far more explicit than the comparable provision of ULF art. 12(1): "For the purposes of the present law, the expression �to be communicated� means to be delivered at the address of the person to whom the communication is directed."
29. A proposal that the reliance rule of art. 14(2)(b) [became CISG art. 16(2)(b)] would be applicable only "if the offeror knew that the offeree had relied on the offer or if this reliance derived from an act of the offeror" did not receive the required support. Id. para. 10.