Formation of contracts – CISG

1.Introduction
In what concerns international sales relations, the contracts regarding the buying and selling of goods
constitute an important legal instrument. The formalities of the formation of contracts are deeply
rooted in the common law tradition. Both traditional and modern forms of international exchanges of
goods are based on the fundamental principles of the sales contract.

The main regulations are established by the United Nations Convention on Contracts for the
International Sales of Goods (CISG), signed in Wien, on April 11 th 1980. The formation of contracts is
regulated by articles 14-24 of the Convention but is also corelated to several other articles. As such, the
CISG provides an excellent example of compromise between the two legal traditions – civil and common
law.

2.Legal relationship
The CISG adheres to the traditional conception of the manner in which private parties create contractual
obligations. Therefore, contractual obligations are born through expressions of mutual agreement;
according to Article 14 of the CISG, ”a proposal for concluding a contract 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” and ”a proposal other than one addressed to one or more specific
persons is to be considered merely as an invitation to make offers, unless the contrary is clearly
indicated by the person making the proposal”. However, the CISG also recognizes that a contract may be
established ”by performing an act”, according to Article 18. Moreover, Article 8 provides that”
statements made by and other conduct of a 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 elements of formation of a contract can be proven by any means since the statute of frauds does
not apply under the CISG. In connection to this, Article 11 states that ”a contract of sale need not be
concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be
proved by any means, including witnesses.”. This applies of course with the exception of countries who
have declared reservations. Therefore, any documentation, correspondence or actions in correlation to
the contract can be admissible to prove said contract.

3.Offer
The offer is the proposal to form a contract. According to Article 14, the offer must fulfill the following
conditions of validity: it must be made to one or multiple specific persons, it must be precise enough (by
indicating the goods and expressly or implicitly fixing or making provisions for determining the quantity
and the price), it must express the offeror's will to engage themselves in case of acceptance.

The proposal addressed to multiple undetermined persons is considered to be no more than an

Under the CISG, the notions of retraction and revocation are distinct. Although they both refer to the
offeror giving up on the offer, they differ from each other when it comes to the sphere of application in
time. The offer can be retracted even if it is irrevocable. Retraction becomes effective if it reaches the
recipient before or at the same time as the offer itself (Article 15, par. 2). The offer can be revoked until
the contract is concluded. Revocation intervenes if it arrives to the recipient before them having sent
the acceptance (Article 16, par. 1).

However, in the case of an irrevocable offer, the proposal of the offeror cannot be revoked. According to
Article 16 par. 2, revocation does not operate in the following cases: if it is established that it is
irrevocable; if it was reasonable for the recipient to consider the offer irrevocable, acting accordingly.

The effects of the offer, even if it is irrevocable, cease when the non-acceptance reaches the offeror.

4.Acceptance
The acceptance is a declaration or some other type of manifestation from the recipient which expresses
their agreement/willingness regarding the offer (Article 18, par. 1).

The will of the acceptant can manifest itself both in an express or tacit manner. Silence or inaction on
their own cannot constitute acceptance. However, the exceptions established by the parties based on
the law, customs or practices can be permitted.

In the case of express acceptance, the effects appear the moment when the indication of acceptance
reaches the offeror. By derogation, acceptance does not cause any effects if the indication does not
reach the offeror within the established term or, in lack of such stipulation, in a reasonable term taking
into account the circumstances of the transaction and the promptitude with which the offeror
communicates. If the offer is verbal, the proposal needs to be accepted immediately, excepting the case
in which the circumstances imply the contrary (Article 18, par. 2).

In the case of tacit acceptance, the recipient performs an act through which they show that they accept
the proposal without communicating it to the offeror. The act which confirms the tacit acceptance may
be in regard to, for instance, the delivery of goods or the payment of the price. The intention of the
recipient must result in accordance to the offer, or to the customs or practices established by the
parties. The effects of tacit acceptance begin when such an act is performed within the stipulated term
or within a reasonable one (Article 18, par. 3).

In what concerns the content, the acceptance must be pure and simple. For the existence of a whole
agreement between partners, it is required that the acceptance is in accordance with the offer.
According to Article 19, par. 1, a response which tends to be the acceptance of an offer but contains
additions, limitations or other modifications constitutes a refusal of the offer and therefore, is a
counteroffer.

As an exception to the rule, a response which tends to be the acceptance of an offer but contains
complementary or different elements which do not substantially alter the terms of the offer, constitutes
an offer. The terms of the contract will be those of the offer, with the modifications stated in the
acceptance.

According to Article 20, par. 1, the calculation of the term of the acceptance depends on the
communication method used by the offeror.