The CISG: Formation of the Contract

In one line

Articles 14 to 24 govern the formation of a contract under the Convention, and the four provisions worth knowing against Indian law are article 14 on definiteness, article 16 on revocation, article 18 on acceptance and silence, and article 19 on the battle of the forms.

Article 14: what is an offer

14(1): a proposal 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.

14(2): a proposal other than one addressed to one or more specific persons is merely an invitation to make offers, unless the contrary is clearly indicated.

Three comparisons with section 2(a) of the Contract Act.

The CISG requires DEFINITENESS on three points: goods, quantity and price. Section 2(a) requires none of them, and Indian certainty is governed by section 29, which voids an agreement whose meaning is not certain or capable of being made certain.

The Indian rule is more generous on price. Section 9 of the Sale of Goods Act supplies a reasonable price where the contract fixes none; the CISG requires the price to be fixed or determinable for there to be an offer at all, though article 55 supplies a price for a contract validly concluded without one.

And article 14(2) reverses the general-offer position. A proposal to the world is an invitation to make offers unless the contrary is clearly indicated, whereas Carlill v. Carbolic Smoke Ball Co., (1893) 1 QB 256 and section 8 of the Contract Act treat a general offer as capable of acceptance by performance.

Articles 15 to 17: effectiveness, withdrawal and revocation

Article 15(1): an offer becomes effective when it REACHES the offeree.

Article 15(2): an offer, even if irrevocable, may be WITHDRAWN if the withdrawal reaches the offeree before or at the same time as the offer.

The Convention distinguishes WITHDRAWAL from REVOCATION and Indian law does not. Withdrawal operates before the offer takes effect; revocation operates afterwards. An irrevocable offer may still be withdrawn, which is only a paradox if the distinction is missed.

Article 16(1): until a contract is concluded an offer may be revoked if the revocation reaches the offeree BEFORE HE HAS DISPATCHED AN ACCEPTANCE.

Article 16(2): but an offer cannot be revoked (a) if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is IRREVOCABLE; or (b) if it was reasonable for the offeree to RELY on the offer as being irrevocable AND the offeree has ACTED IN RELIANCE on it.