Commentary on CISG Art 16(Revocation of Offer)

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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.

(2) However, 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 the offer.

COMMENT

1. Three aspects of Art. 16 call for consideration:

(a) Notice to offeree where offer made to the public. Art. 16(1) seems to require that the revocation must actually reach the offeree even where the offer is made to the public. This seems inconsistent with art. 14(2) which, as has been noted, does recognize the validity of offers made to non-specific persons if this was the intention of the person making the proposal. Presumably the meaning of "reaches" must be relaxed accordingly and, in the case of an offer made to the public, or a part thereof, an offer will be effectively revoked if reasonable steps are taken to bring it to the attention of the offerees. [Gaston, para. 34].

(b) Binding character of offer stated to be irrevocable. The Anglo-Canadian common law is exceptional in not recognizing the binding character of an offer stated to be irrevocable unless it is supported by consideration. The reversal of the rule was recommended before the war by an English Law Reform Committee and has been recommended again in a recent Working Paper by the English Law Commission [Firm offers: Working Paper No. 60 (1975)] if the firm offer is made in the course of a business. UCC 2-205 also recognizes the binding character of a firm offer by a merchant for a maximum period of three months and provided it is made in a signed writing. A similar, though not identical, recommendation appears in the OLRC Sales Report, pp. 91-95.

In view of these precedents, there is nothing startling about art. 16(2)(a) and it can be accepted as reflecting modern thinking in the common law as well as the non-common law legal community.

(c) Reasonable reliance by offeree. Art. 16(2)(b) has no clear counterpart in the Canadian common law though there is evidence that some courts may be moving in the same direction by penalizing an offeror who acts in bad faith. Art. 16(2)(b) is also supported by section 89B(2) of the Tent. Rest. 2d on Contracts (American Law Institute, Tent. Drafts Nos. 1-7, 1973), which reads:

"89B. (2) An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice."


Since it is often in the interests of the offeror that the offeree should have a reasonable opportunity to determine whether or not to accept the offer, the implication of a firm offer as provided in Art. 16(2)(b) seems to be a fair interpretation of the offeror's intention. Whether the implication should be drawn in a particular case will of course depend on all the circumstances, including the relevant trade practices and usages.







As for the revocation of an offer, the Convention distinguishes, on the one hand, between the revocation of an offer that already has reached the addressee and is therefore fully effective (Article 16), and, on the other hand, the withdrawal of an offer that has not yet reached the addressee (Article 15(2)). The possibility of withdrawing an offer until, or in any case simultaneously with, its arrival coincides with ULF Article 5(1) and § 130(1) sentence 2 of the German Civil Code.[170] The antagonism between legal systems that permit the revocation of offers for a fixed period or that have been declared irrevocable and those legal systems that prefer to bind the offeror to his offer already dominated the Hague [page 52] Conference. It erupted once again in Vienna.[171] The result was the same as the compromise already worked out by UNCITRAL, but the discussions made it clear that the various viewpoints will be reflected in divergent interpretations of the offeror"s intent to be bound. In particular, a fixed time, which was understood by some delegates to be an irrebuttable presumption of an intent to be bound,[172] may be subject to different interpretations depending on the legal system in which the offeror lives.[172a]

Of course an offer can no longer be revoked once the contract has been concluded by an effective acceptance. In addition, Article 16(1), like ULF Article 5(4), makes the offer irrevocably binding from the moment the acceptance is sent. The offeror can also declare the offer to be irrevocable. He does not need to do this expressly, but rather his intent to be bound can be deduced from the circumstances relevant to the interpretation of the offer and particularly from his setting a fixed period during which the offer is open (Article 16(2)(a)).[173] Finally, the offer is binding if the offeree could reasonably rely on the irrevocability of the offer and has in fact relied on it (Article 16(2)(b)). The provision is designed to cover those cases in which not just the offer itself but rather other conduct by the offeror or the special circumstances and exigencies of the proposed transaction enable and necessitate the offeree"s presumption that the offer would be valid for a certain length of time, such as when calculations or cover transactions had to be and actually were made. This rule essentially covers those situations for which ULF Article 5(2) is applicable.[174][page 53]

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