4 March 1994,
Subsequent to making a basic inquiry about [seller’s] products, the [buyer], located in Sweden, invited by letter the [seller] to make an offer for specified screws of a certain quality [W]. The [seller] answered by filling in the prices and the delivery periods. By fax dated 5 March 1992, [buyer] ordered 3,400 pieces of the named screws, stated by price, as well as 290 pieces of six other items not previously mentioned. On 10 March 1992, the [seller] thanked the [buyer] for the order and informed the [buyer] of [seller’s] request for payment in advance or a letter of credit. In the pro-forma invoice that was requested by the [buyer], the [seller] listed all ordered items of a [lower quality] with their respective prices. The [buyer] immediately objected and requested delivery in the ‘ordered’ quality. The [seller] replied that, according to the catalogue, only items in the [lower quality] could be delivered; for items in the higher quality there would be longer delivery periods and higher prices applied. The [buyer], through its lawyer’s letter, dated 16 March 1992, rejected [seller’s] reply and insisted on delivery of goods in the [higher quality] for the prices stated in the pro-forma invoice and threatened to file a claim for damages for breach of contract. […]
[…] [T]he Court of First Instance dismissed the [buyer’s] claim with appropriate reasoning. The [buyer] does not have a claim for damages against the [seller] … since no contract has come into existence. The fax dated 12 February 1992 constituted—and the [buyer] does not dispute this—merely a production inquiry, the response to which did not constitute a contractual obligation. The inquiry the [buyer] made on 17 February 1992, with which it requested an offer, is to be assessed as an invitation to make an offer (invitatio ad offerendum), so that the return fax containing the pricing constitutes an offer by the [seller]. The [seller’s] fax contains all the essential elements of a contract for the sale of goods: namely, description of the goods, quantity, price, and time of delivery. However, the [buyer] did not accept this offer, certainly not by placing its ‘order’ dated 5 March 1992. With this order the [buyer] deviates from the [seller’s] offer insofar as the [buyer] ordered quantities different than the offered terms and, furthermore, additional items which had not yet been offered as deliverable and for which the price was not yet determined. … An acceptance containing a modification is classified as a rejection according to … Art 19(1) [CISG]. The Court of First Instance held that the [buyer’s] order constitutes a counter-offer according to … Art 19(1) CISG; however, this new offer could not lead to an effective conclusion of a contract due to lack of sufficient certainty. An offer is sufficiently definite within the meaning of … Art 14(1) CISG, only if it provides the basis for determining the price upon acceptance. This was not possible in the present case, since the price of some ordered items was neither fixed nor determinable. Though it could be conceivable to presume a contractual agreement pertaining to the matching items in the [seller’s] offer, this presumes a divisibility of the complete order. However, that would be something that the [buyer] explicitly did not want: in its written order dated 5 March 1992, the [buyer] expressly insisted on the delivery of the total order of all items. Therefore, only the pro-forma invoice sent by [seller] at [buyer’s] request contained the essential elements of an offer that is sufficiently definite and which could be accepted by a simple ‘yes’. However, this offer was not accepted by the [buyer], who rejected it due to the different quality offered, whereby the contractual efforts of the parties finally failed.
(a) Explain the mechanism of Article 19 CISG in the above case (C 19-1).
(b) How would this case have been decided under your domestic legal system?
(c) What are the similarities and differences between that system and the CISG?
III. Article 19(2) CISG
Article 19(2) CISG addresses immaterial changes contained in an acceptance of an offer. Whether alterations to an offer are to be regarded as material or immaterial is to be interpreted under Article 8 CISG. If the parties substantially agree on the terms of their contract, a consensus exists; mere discrepancies in wording or different forms of expression will not materially alter the terms of the offer. However, the offeror still retains the right to object to a contract coming into existence on immaterially different terms.
Landgericht Baden-Baden (Germany),
14 August 1991,
[…] The Italian [seller] brings a claim against the German [buyer] for the amount still owing for two deliveries of wall tiles. The parties have been in an ongoing business relationship since 1982. The [buyer] ordered tiles from the [seller]. Under ‘Terms of Payment’ in Order No. 1853 is written: ‘14 Days 3%–30 Days net.’ And in Order No. 1856: ‘as in the past.’ These represent written confirmations sent to the [buyer] of orders which were previously communicated orally. Underneath, on the right side, is written: ‘We thank you for this order, which was accepted under reservation of confirmation according to our delivery and payment conditions; respectively, delivery and payment conditions of the shop for which this order is destined.’ The [seller] debited the [buyer’s] account on February 22, 1990 in the amount of 8436.92 DM and, on June 7, 1990, in the amount of 8466.30 DM. The invoice of the [seller] contained the following printing: ‘complaints will be acknowledged only before the installation of the goods; in any case the goods may be rejected only up to 30 days from the date of the invoice.’ The [buyer] paid only an installment payment. She gave notice of lack of conformity of the ‘Anna’ tiles which were invoiced on February 22, 1990, and were already installed. Based on the foregoing, the [seller], the [buyer] and the layer of the tiles agreed that the delivery of replacement tiles be without charge and that the [buyer] be credited. The replacement delivery of tiles was never installed due to reported defects. The [buyer] maintains that the Second shipment of tiles displayed an even higher number of defects than the original one. She therefore asserts a set-off claim for damages.
[…] 2. The set-off claim, set off against the sales price, pursuant to the invoice of February 22, 1990 and of June 7, 1990, with further claims for damages for the delivery of defective tiles, which were sold to customers, is invalid. The [buyer] cannot recover damages because she did not complain in a timely fashion to the [seller] about the defects. The [seller] made the acknowledgment of rejections depend on their being declared before the installation of the goods, but in any case no later than 30 days after the invoice date. This statement, which appeared on the invoices of the [seller], became a part of the contract. The [seller’s] agent referred to this statement in his confirmations of the orders. Pursuant to Article 19(2), CISG, a modified acceptance, modified by comparison with the original order of the [seller], would be effective, because such a modification would not fundamentally change the terms of the offer and the [buyer] did not object to it.
(b) How could a term appearing on an invoice become part of the bargain?
(c) Did the court decide that this term was a material or an immaterial deviation?
Oberlandesgericht Hamm (Germany),
22 September 1992,
A German buyer, defendant, offered to purchase ten lots of wrapped bacon from an Italian seller, plaintiff. The seller’s reply to the buyer’s offer referred instead to unwrapped bacon. However, in its reply to the seller, the buyer did not object to the change in terms. After four lots had been delivered, the buyer refused to accept further deliveries. Therefore, the seller declared the contract avoided and sold the remaining six lots at a price much lower than both the market—and the agreed purchase—price. The seller claimed damages, the outstanding purchase price and interest.
The court held that the seller’s reply to the buyer’s offer was a counter-offer (Article 19(1) CISG) and not an acceptance (Article 18(1) CISG), and that the buyer’s reply to the counteroffer, in as much as it did not contain any objections to the change in terms, should be considered an unconditional acceptance (Article 8(2) CISG). Consequently, the seller was entitled to declare the contract avoided because the buyer’s failure to take delivery of more than half of the goods constituted a fundamental breach of contract (Article 64(1)(a) CISG).
The court also held that the seller was entitled to claim damages (Articles 61(1)(b) and 74 CISG).
(b) Do you agree with the finding of the court?
(c) How would this have been decided under your national legal system?
IV. Article 19(3) CISG
The most obvious potential problem that could arise in respect of the interpretation of Article 19 CISG has already been dealt with in the Article itself—that of the materiality of the proposed amendments. Although the matters listed in Article 19(3) CISG should not be regarded as exhaustive, they do provide some useful guidelines for the determination of other material matters which would change an acceptance into a new offer.
Cour de Cassation (France),
16 July 1998,
On [buyer’s] first argument
The appeal is of a ruling that set aside the competence of the Commercial Tribunal of Orléans as stipulated in the order form the French [buyer] addressed to its German supplier through [seller’s] intermediary, the French company Lonza. The Court of Appeals ruled that the French tribunal is not competent to rule on the argument relative to the delivered goods. [Buyer] alleges that the Court’s ruling against [buyer’s] jurisdiction clause did not take into consideration the role of [seller’s] subsidiary company, Lonza France; and that the Court erred by relying on a contradictory jurisdiction clause stipulated by the [seller].
However, considering that [seller’s] terms and conditions contained a clause, conferring jurisdiction upon the courts at [seller’s] principal place of business [in Germany], the Court of Appeals came to the justified conclusion that the different jurisdiction clause stipulated in [buyer’s] forms could not be found applicable. Indeed, considering articles 18 and 19 of the Vienna Convention of 11 April 1980 on International Sales Contracts, an answer which leans towards the acceptance of an offer, but contains different elements substantially altering the terms of the offer, such that, according to article 19(3), there is a different stipulation on the settlement of disputes, does not lead to the application of the clause contained in [buyer’s] form.
Reasons given by counsel for [buyer]
[Buyer’s] first reasons for reversal
[Buyer] bases its claim on the clause contained in its purchase order form specifying that the Commercial Tribunal of Orléans shall have jurisdiction in the event of dispute.
[Buyer] emphasizes that on this form it is stated that ‘the acceptance of our orders implies the acceptance of the general conditions of purchase stipulated in the front and the back of this form.’
[Seller] cannot take advantage of the different jurisdiction clause contained in its general sales conditions which, obviously, were not accepted by the buyer.
Article 8 of [buyer’s] general purchase conditions provides that the sending of an acknowledgment of receipt joined with the order ‘will mark’ the acceptance of the provider of both the order and the general purchase conditions and its particularities. By focusing only on the fact that such an acknowledgment of receipt was not sent by [seller], the Court of Appeals erred in deducing that [seller] did not accept [buyer’s] jurisdiction clause, without removing any other element that would result for this company—without any explanation for why, once the litigation began, [seller] can take advantage of solely the jurisdictional clause. …