1. INTERNATIONAL BUSINESS CONTRACTS
CISG: Part 2
Satu Pitkänen
2015

2. When does a contract exist?
4/5/2019
When does a contract exist?
Offer +
Acceptance =
Contract
HELIA / Satu Pitkänen

3. MIRROR IMAGE CONTRACT Formation of a CISG contract: Intent to be bound
4/5/2019
Intent to be
bound
OFFER
Definite terms
Communication to one or
more specific persons
CONTRACT
Communication from party
to whom offer was intended
OFFER
To be an offer the expression must be
Addressed to one or more specific persons
Sufficiently definite
Indicate the intention of the offeror to be bound in the case of acceptance
ACCEPTANCE
Same terms
Intent to be bound to same
obligation as offeror
Source: Erick L. Rchards. Law for Global Business
HELIA / Satu Pitkänen

4. ACCEPTANCE WITH MODIFICATIONS
Modified acceptance is generally considered as a rejection of the offer
=> it constitutes a counter offer
Unless
the modifications are nonmaterial
=> they become part of the contract unless the offeror promptly notifies

5. Specifically addressed Addressed to the offeror
Definite terms
Specifically addressed
Intent to be bound 1 3 2
ACCEPTANCE
Addressed to the offeror
Same terms
On time
ACCEPTANCE
Modified
Late
REFUSAL
COUNTER
OFFER
NEW OFFER
CONTRACT
OFFER
LAPSES

6. LATE ACCEPTANCE Delayed acceptance constitutes a new offer unless
1. The offeror approves the acceptance and informs about his approval Or
2. The delay is due to abnormal transmission and the offeror does not notify

7. CASE
Buyer: ”Ship me 100 widgets on 16 March at the latest”
-> Seller ships on 14 March
-> Buyer phones and cancels on 15 March
Is there a contract?

8. IMPLIED ACCEPTANCE
If the offer, usage, or past dealings between the offeror and the offeree so indicate, then an act performed by the offeree shall be construed as an acceptance
Silence or inactivity does not amount to acceptance

9. CASE
Cortez, in a letter, offered to sell sugar to Wyatt at a fixed price. However, soon the market price of sugar began to rise.
Cortez wanted to cancel his offer. Can he do it?

10. Timeliness and CISG Contract Formation OFFER
effective
ACCEPTANCE
DISPATCHED
OFFER DISPATCHED
OFFER RECEIVED
Offeror may revoke
unless the offer was
irrevocable
Offeror may
revoke
Irrevocable offer
becomes binding
Offer becomes
binding
Modified from: Richards, E Law for global Business. Irwin, USA

11. OFFER Offer is effective when it reaches the offeree But
It can be revoked until the offeree dispatches his acceptance
unless
The offer is stated as irrevocable or the offeree relies on its irrevocability

12. CASE
Cortez, in a letter offered to sell sugar to Wyatt at a fixed price. After Wyatt mailed an acceptance the market price for sugar began to fall.
Wyatt immediately contracted to buy the sugar at a lower price from another supplier and telegraphed a rejection to Cortez.
Was the revocation acceptable?

13. Timeliness and CISG Contract Formation ACCEPTANCE
4/5/2019
Timeliness and CISG Contract Formation ACCEPTANCE
Contract is
concluded
OFFER
RECEIVED
ACCEPTANCE
RECEIVED
ACCEPTANCE
DISPATCHED
Offeror may revoke unless
the offer was irrevocable
Offeree may reject,
offeror may not revoke
Acceptance
becomes binding
Offer
becomes binding
Irrevocable offer
becomes binding
Modified from: Richards, E Law for global Business. Irwin, USA
HELIA / Satu Pitkänen

14. ACCEPTANCE
The offeree must respond within reasonable time, and oral offers must be responded immediately
The acceptance becomes effective and the contract is formed when the acceptance reaches the offeror
The offer cannot be revoked after the acceptance has been dispatched

15. FORMATION OF CONTRACTS UNDER COMMON LAW

16. British Common Law Mailbox Rule => Offer: Acceptance:
Can be revoked any time before the offeree dispatches an acceptance
According to the doctrine of consideration offer as a unilateral act can’t be binding
Acceptance:
Becomes binding when dispatched

17. Modified from: Richards, E. 1994. Law for global Business. Irwin, USA
Timeliness and Contract Formation according to British Common Law
Contract is
concluded
OFFER
DISPATCHED
OFFER
RECEIVED
ACCEPTANCE
MAILED
Offeror may revoke
Offer and acceptance
become binding
Modified from: Richards, E Law for global Business. Irwin, USA

18. United States Uniform Commercial Code, UCC An offer An acceptance
Becomes binding when the acceptance is dispatched
Unless
The offeror is a merchant and he has in a signed writing promised that the offer is irrevocable
An acceptance
Becomes binding when dispatched unless the offer states that “acceptance effective only when received”