It would be inaccurate to conclude that the CISG acknowledges only offer-acceptance model, and ostracizes all other methods of contract formation, despite the absence of an explicit provision facilitating a more flexible method for contract formation.
4 April
2016
By Fatma Esra Güzeloğlu
All around the word, in most simple terms, a
contract is defined as a legally binding agreement. There are various ways to
conclude a legally binding agreement; the most common method is the “offer and
acceptance” model which is also adopted by the CISG and Turkish Contract Law.
UNIDROIT
Principles of International Commercial Contracts (“PICC”) embraces the offer
and acceptance mechanism along with an alternative method which takes “parties
conduct” as a basis. Article 2.1.1of PICC propounds: “A contract may be concluded either by the acceptance of an offer or by
conduct of the parties that is sufficient to show agreement.” Therefore the
PICC, by explicitly stating that the conduct of the parties which sufficiently
shows an agreement is also a way to conclude a contract, maximizes latters’
freedom to negotiate until they agree to contract on certain terms without any
need to isolate a distinct offer and acceptance between the parties.
As per the United
Nations Convention on Contracts for the International Sale of Goods (“CISG”),
at first sight, due to absence of an explicit provision facilitating a more
flexible method for contract formation, like the one stipulated under the PICC,
it may seem rather obsolescent; by neglecting other forms of reaching an
agreement. In fact, it is even criticized for following
the traditional treatment of a contract conclusion which is claimed to be
incapable of meeting “the requirements of
today’s world of business, especially when it comes to the conclusion of sales
contracts covering major and technically complicated objects”.
However, it
should be first stressed that the CISG defines offer as a “proposal” and not
exclusively as a “statement”. Correspondingly, in the doctrine, it is asserted
that under the CISG, a contract may be concluded based on the conduct of the parties
where only an implicit intention exists; provided that such consensus is fit
for proof. [4]
In that regard, depending on the circumstances of the case, other means, such
as dispatching of the goods, may constitute such a proposal. Hence, in such
circumstance where there are no clearly distinguishable and corresponding
declarations, but parties mutual intention is indicated by their conduct; a
contract is deemed to be concluded under CISG without any need to resort to
domestic law.[5]
On the other hand, for “acceptation”, the CISG explicitly sets forth that that
it can be in the form of a conduct, rather than an actual statement.
Moreover, it
would be inaccurate to conclude that the CISG acknowledges only
offer-acceptance model, and ostracizes all other methods of contract formation.
Article 6, itself, is sufficient to refrain from such deduction as it allows
parties to derogate from or vary the effect of any provision of the Convention.
That said there are indeed other articles in the Convention which accommodate
formation of a contract in the absence of a distinguishable offer and
acceptance, without any need to invoke Article 6. As such, Article 8(3)
provides that parties’ intentions are to be determined in consideration of 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.
Furthermore,
Article 9(1), as a manifestation of part autonomy principle, also stresses that
the parties are bound by any usage to which they have agreed and by any
practices which they have established between themselves. Second paragraph of
the said article, as a default rule, deems trade usages as applicable to
contract formation provided that such usages are acknowledged and widely
observed by the parties to contracts of such type involved in the particular
trade concerned. Therefore, it is seen that the CISG provides indispensable
flexibility that is required to facilitate formation of contract; even in
circumstances where it is difficult to isolate a distinct offer and acceptance such as agreements reached in point by point
negotiations or prolonged exchange of correspondence.
In summary, Part
II of the CISG has to be read and interpreted in light of the provisions set
forth under the Part I in order to give them a dynamic and up-to-date effect,
together with the autonomous interpretation of the Convention.
Should you have
any questions on international sales law and the CISG or
the contract
formation regime under Turkish law, please do not hesitate to
contact me at fatmaesra@guzeloglu.legal