14 Part One. Documents of the Conference delay by the other party in taking possession of the goods or in taking them back or in paying the cost of preserva­ tion, provided that notice of the intention to sell has been given to the other party. (2) If the goods are subject to loss or rapid deteriora­ tion or their preservation would involve unreasonable ex­ pense, the party who is bound to preserve the goods in accordance with articles 74 or 75 must take reasonable measures to sell them. To the extent possible he must give notice to the other party of his intention to sell. (3) The party selling the goods has the right to retain out of the proceeds of sale an amount equal to the rea­ sonable expenses of preserving the goods and of selling them. He must account to the other party for the ba­ lance. CHAPTER V. PASSING OF RISK Article 78 Loss or damage to the goods after the risk has passed to the buyer does not discharge him from his obligation to pay the price, unless the loss or damage is due to an act or omission of the seller. Article 79 (I) If the contract of sale involves carriage of the goods and the seller is not required to hand them over at a particular destination, the risk passes to the buyer when the goods are handed over to the first carrier for trans­ mission to the buyer. lethe seller is required to hand the goods over to a carrier at a particular place other than the destination, the risk does not pass to the buyer until the goods are handed over to the carrier at that place. The fact that the seller is authorized to retain documents controlling the disposition of the goods does not affect the passage of risk. (2) Nevertheless, if the goods are not clearly marked with an address or otherwise identified to the contract, the risk does not pass to the buyer until the seller sends the buyer a notice of the consignment which specifies the goods. Article 80 The risk in respect of goods sold in transit is assumed by the buyer from the time the goods were handed over to the carrier who issued the documents controlling their disposition. However, if at the time of the conclusion of the contract the seller knew or ought to have known that the goods had been lost or damaged and he has not dis­ closed such fact to the buyer, such loss or damage is at the risk of the seller. Article 81 (1) In cases not covered by articles 79 and 80 the risk passes to the buyer when the goods are taken over by him or, if he does not do so in due time, from the time when the goods are placed at his disposal and he commits a breach of contract by failing to take delivery. (2) If, however, the buyer is required to take over the goods at a place other than any place of business of the seller, the risk passes when delivery is due and the buyer is aware of the fact that the goods are placed at his dispo­ sal at that place. (3) If the contract relates to a sale of goods not then identified, the goods are deemed not to be placed at the disposal of the buyer until they have been clearly identi­ fied to the contract. Article 82 If the seller has committed a fundamental breach of contract, the provisions of articles 79, 80 and 81 do not impair the remedies available to the buyer on account of such breach. D. COMMENTARY ON THE DRAFT CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS, PREPARED BY THE SECRETARIAT DocummtA/CON~9V5 PART I. SPHERE OF APPLICATION AND GENERAL PROVISIONS CHAPTER I. SPHERE OF APPLICATION Article 1 [Sphere of application]' (I) This Convention applies to contracts of sale of goods between parties whose places of business are in different States: , The titles to the articles have been prepared by the Secretariat at the request of the United Nations Commission on International Trade Law [Original:EnglishJ [14March 1979J (a) when the States are Contracting States; or (b) when the rules of private international law lead to the application of the law of a Contracting State. (2) The fact that the parties have their places of busi­ ness in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the con­ tract. but have not been approved by the Commission (United Nations Com­ mission on International Trade Law, summary record of the 208th meeting, A/CN.9/SR.208, para 47). Proposals, reports and other documents IS (3) Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration. PRIOR UNIFORM LAW Uniform Law on the International Sale of Goods (ULlS), articles I, 2 and 7. Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF), article I. Convention on the Limitation Period in the International Sale of Goods (Prescription Convention). articles 2 and 3. Commentary I. This article provides the general rules for determining whether this Convention is applicable to a contract of sale of goods as well as to its formation. Basic criterion. paragraph (1) 2. Article I (I) provides that the basic criterion for the application of this Convention to a contract of sale of goods as wellas to its forma­ tion is that the places of business of the parties are in different States.I 3. This Convention is not concerned with the law governing con­ tracts of sale or their formation where the parties have their places of business within one and the same State. These matters will normally be governed by the domestic law of that State. 4. By focusing on the sale of goods between parties whose places of business are in different States, the Convention will serve its three ma­ jor purposes: (I) to reduce the search for a forum with the most favourable law; (2) to reduce the necessity of resorting to rules of private internatio­ nallaw; (3) to provide a modern law of sales appropriate for transactions of an international character. Additional criteria. subparagraphs (/) (a) and (1) (b) S. Even though the parties have their places of business in different States, this Convention applies only if: (I) the States in which the parties have their places of business are Contracting States; or (2) the rules of private international law lead to the application of the law of a Contracting State. 6. If the two States in which the parties have their places of busi­ ness are Contracting States this Convention applies even if the rules of private international law of the forum would normally designate the law of a third country, such as the law of the State in which the contract was concluded. This result could be defeated only if the litigation took place in a third non-Contracting State, and the rules of private interna­ tionallaw of that State would apply the law of the forum, l.e.• its own law. or the law of a fourth non-Contracting State to the contract. 7. Even if one or both of the parties to the contract have their pla­ ces of business in a State which is not a Contracting State, the Conven­ tion is applicable if the rules of private international law of the forum lead to the application of the law of a Contracting State. In such a si­ tuation the Question is then which law of sales of that State shall apply. If the parties to the contract are from different States, the appropriate law of sales is this Convention. 8. A further application of this principle is that if two parties from different States have desiganted the law of a Contracting State as the law of the contract, this Convention is applicable even though the parties have not specifically mentioned the Convention. 2 If a party has places of business in more than one State, the relevant place of business is determined by article 9 (a). A wareness of situation. paragraph (2) 9. Under paragraph (2), the Convention does not apply if "the fact that the parties have their places of business in different States ... does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract". One example of such a situation is where the parties appeared to have their places of business in the same State but one of the parties was acting as the agent for an undisclosed foreign principal. In such a situation paragraph (2) provides that the sale, which appears to be between parties whose places of business are in the same State, is not governed by this Convention. Nationality of the parties, civil or commercial character of the transaction. paragraph (3) 10. International conventions which affect the rights of individuals are often intended to protect the rights of the nationals of the Contract­ ing States in their dealings in or with the other Contracting State or Sta­ tes. Therefore. it is typical that these conventions apply only to rela­ tions between "nationals" of the Contracting States. II. However. the Question whether this Convention is applicable to a contract of sale of goods is determined primarily by whether the rele­ vant "places of business" of the parties are in different Contracting States. The relevant "place of business" of a party is determined by application of article 9 (a) without reference to his nationality, place of incorporation, or place of head office. This paragraph reinforces that rule by making it clear that the nationality of the parties is not to be taken into consideration. 12. In some legal systems the law relating to contracts of sale of goods is different depending on whether the parties or the contract are characterized as civil or commercial. In other legal systems this distinc­ tion is not known. In order to ensure that the scope of application pro­ visions of this Convention are not interpreted to apply only to contracts of sale characterized as "commercial" or between parties characterized as "commercial" under the law of a Contracting State. article I (3) pro­ vides that the civil or commercial character of the parties or of the con­ tract is not to be taken into consideration. 13. It should be noted, however, that article 2 excludes from the sphere of application of this Convention certain contracts for the sale of goods which are likely to be characterized as "civil" contracts by a legal system which recognizes the distinction between civil and com­ mercial contracts. Most notably. article 2 (a) excludes from the sphere of application of this Convention sales "of goods bought for personal. family or household use." 14. Paragraph (3) applies only to the scope of application provi­ sions of this Convention. It does not mean that the civil or commercial character of the parties may not be taken into consideration for the purposes of determining such matters as the period of time which is to be regarded as a reasonable period of time for giving notice of lack of conformity of the goods under article 37 (1). Article 2 [Exclusions from Convention] This Convention does not apply to sales: (a) of goods bought for personal, family or household use, unless the seller, at any time before or at the conclu­ sion of the contract, neither knew nor ought to have known that the goods were bought for any such use; (b) by auction; (c) on execution or otherwise by authority of law; (d) of stocks, shares, investment securities, negotiable instruments or money; (e) of ships, vessels or aircraft; (f) of electricity. 16 Part One. Documents of the Conference PRIOR UNIFORM LAW ULIS, article s. ULF, article I (6). Prescription Convention, article 4. Commentary I. Article 2 sets out those sales which are excluded from the appli­ cation of this Convention. The exclusions are of three types: those based on the purpose for which the goods were purchased, those based on the type of transaction and those based on the kinds of goods sold. Exclusion of consumer sales, subparagraph (a) 2. Subparagraph (a) of this article excludes consumer sales from the scope of this Convention. A particular sale is outside the scope of this Convention if the goods are bought for "personal, family or household use." However, if the goods were purchased by an indivi­ dual for a commercial purpose, the sale would be governed by this Convention. Thus, for example, the following situations are within the Convention: the purchase of a camera by a professional photographer for use in his business; the purchase of soap or other toiletries by a bu­ siness for the personal use of the employees; the purchase of a single automobile by a dealer for resale. 3. A rationale for excluding consumer sales from the Convention is that in a number of countries such transactions are subject to various types of national laws that are designed to protect consumers. In order to avoid any risk of impairing the effectiveness of such national laws, it was considered advisable that consumer sales should be ex­ cluded from this Convention. In addition, most consumer sales are domestic transactions and it was felt that the Convention should not apply to the relatively few cases where consumer sales were internatio­ nal transactions, e.g. because the buyer was a tourist with his habitual residence in another country! or that the goods were ordered by mail. 4. If the goods were purchased for personal, family or household use, this Convention does not apply "unless the seller, at any time be­ fore or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use." The seller might have no reason to know that the goods were purchased for such use if the quantity of goods purchased, the address to which they were to be sent or other aspects of the transaction were those not normal in a consumer sale. This information must be available to the seller at least by the time of the conclusion of the contract so that he can know whether his rights and obligations in respect of the sale are those under this Convention or those under the applicable national law. Exclusion of sales by auction, subparagraph (b) 5. Subparagraph (b) of this article excludes sales by auction from the scope of this Convention. Sales by auction are often subject to spe­ cial rules under the applicable national law and it was considered desi­ rable that they remain subject to those rules even though the successful bidder was from a different State. Exclusion of sales on execution or otherwise by authority of law, subparagraph (c) 6. Subparagraph (c) of this article excludes sales on judicial or ad­ ministrative execution or otherwise by authority of law, because such sales are normally governed by special rules in the State under whose authority the execution sale is made. Furthermore, such sales do not constitute a significant part of international trade and may, therefore, safely be regarded as purely domestic transactions. Exclusion of sales of stocks, shares, investment securities, negotiable instruments or money, subparagraph (d) 7. This subparagraph excludes sales of stocks, shares, investment securities, negotiable instruments or money. Such transactions present problems that are different from the usual international sale of goods and, in addition, in many countries are subject to special mandatory I See article 9 (b). rules. Moreover, in some legal systems such commercial paper is not considered to be "goods." Without the exclusion of the sales of such paper, there might have been significant differences in the application of this Convention. 8. This subparagraph does not exclude documentary sales of goods from the scope of this Convention even though, in some legal systems, such sales may be characterized as sales of commercial paper. Exclusion of sales of ships, vessels or aircraft, subparagraph (e) 9. This subparagraph excludes from the scope of the Convention all sales of ships, vessels and aircraft. In some legal systems the sale of ships, vessels and aircraft are sales of "goods" while in other legal systems some sales of ships, vessels and aircraft are assimilated to sales of immovables. Furthermore, in most legal systems at least some ships, vessels and aircraft are subject to special registration requirements. The rules specifying which ones must be registered differ widely. In order not to raise questions of interpretation as to which ships, vessels or aircraft were subject to this Convention, especially in view of the fact that the relevant place of registration, and therefore the law which would govern the registration, might not be known at the time of the sale, the sale of all ships, vessels and aircraft was excluded from the application of this Convention. Exclusion of sales of electricity, subparagraph (f) 10. This subparagraph excludes sales of electricity from the scope of this Convention on the ground that in many legal systems electricity is not considered to be goods and, in any case, international sales of electricity present unique problems that are different from those pre­ sented by the usual international sale of goods. Article 3 [Contracts for servicesor for goods to be manufactured] (1) This Convention does not apply to contracts in which the preponderant part of the obligations of the sel­ ler consists in the supply of labour or other services. (2) Contracts for the supply of goods to be manufac­ tured or produced are to be considered sales unless the party who orders the goods undertakes to supply a sub­ stantial part ofthe materials necessary for such manufac­ ture or production. PRIOR UNIFORM LAW ULIS, article 6. ULF, article I (7). Prescription Convention, article 6. Commentary I. Article 3 deals with two different situations in which the contract includes some act in addition to the supply of goods. Sale ofgoods and supply of labour or other services by the seller, paragraph (1) 2. This paragraph deals with contracts under which the seller un­ dertakes to supply labour or other services in addition to selling goods. An example of such a contract is where the seller agrees to sell machi­ nery and undertakes to set it up in a plant in working condition or to supervise its installation. In such cases, paragraph (1) provides that if the "preponderant part" of the obligation of the seller consists in the supply of labour or other services, the contract is not subject to the pro­ visions of this Convention. 3. It is important to note that this paragraph does not attempt to determine whether obligations created by one instrument or transaction comprise essentially one or two contracts. Thus, the question whether Proposals, reports and other documents 17 the seller's obligations relating to the sale of goods and those relating to the supply of labour or other services can be considered as two separate contracts (under what is sometimes called the doctrine of "severabili­ ty" of contracts), will be resolved in accordance with the applicable na­ tionallaw. Supply of materials by the buyer, paragraph (2) 4. The opening phrase of paragraph (2) of this article provides that the sale of goods to be manufactured or produced by the seller to the buyer's order is as much subject to the provisions of this Convention as the sale of ready-made goods. 5. However, the concluding phrase in this paragraph "unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture or production," is desig­ ned to exclude from the scope of this Convention those contracts under which the buyer undertakes to supply the seller (the manufacturer) with a substantial part of the necessary materials from which the goods are to be manufactured or produced. Since such contracts are more akin to contracts for the supply of services or labour than to contracts for sale of goods, they are excluded from the scope of this Convention, in line with the basic rule of paragraph (I). Article 4 [Substantive coverage of Convention] This Convention governs only the formation of the contract of sale and the rights and obligations of the sel­ ler and the buyer arising from such a contract. In parti­ cular, except as otherwise expressly provided therein, this Convention is not concerned with: (a) the validity of the contract or of any of its provi­ sions or of any usage; (b) the effect which the contract may have on the pro­ perty in the goods sold. PRIOR UNIFORM LAW ULIS, articles 4, 5 (2) and 8. Commentary 1. Article 4 limits the scope of the Convention, unless elsewhere ex­ pressly provided in the Convention, to governing the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from a contract of sale. Validity, subparagraph (a) 2. Although there are no provisions in this Convention which ex­ pressly govern the validity of the contract or of any usage, some provi­ sions may provide a rule which would contradict the rules on validity of contracts in a national legal system. In case of conflict the rule in this Convention would apply. 3. The only article in which the possibility of such a conflict is ap­ parent is article 10, which provides that a contract of sale of goods need not be concluded in or by writing and is not subject to any other requi­ rements as to form. In some legal systems the requirement of a writing for certain contracts of sale of goods is considered to be a matter rela­ ting to the validity of the contract. It may be noted that pursuant to ar­ ticle 11 and article (X), a Contracting State whose legislation requires a contract of sale to be concluded in or evidenced by writing may make a declaration that, inter alia, article 10 shall not apply where any party has his place of business in a Contracting State which has made such a declaration. Passing ofproperty, subparagraph (b) 4. Subparagraph (b) makes it clear that the Convention does not govern the passing of property in the goods sold. In some legal systems property passes at the time of the conclusion of the contract. In other legal systems property passes at some later time such as the time at which the goods are delivered to the buyer. It was not regarded possible to unify the rule on this point nor was it regarded necessary to do so since rules are provided by this Convention for several questions linked, at least in certain legal systems, to the passing of property: the obligation of the seller to transfer the goods free from any right or claim of a third person;' the obligation of the buyer to pay the price;2 the passing of the risk of loss or damage to the goods.! the obligation to preserve the goods.f Article 5 [Exclusion, variation or derogation by the parties] The parties may exclude the application of this Con­ vention or, subject to article 11, derogate from or vary the effect of any of its provisions. PRIOR UNIFORM LAW ULIS, article 3. ULF, article 2. Prescription Convention, article 3 (3). Commentary 1. The non-mandatory character of the Convention is explicitly sta­ ted in article 5. The parties may exclude its application entirely by choosing a law other than this Convention to govern their contract. They may also exclude its application in part or derogate from or vary the effect of any of its provisions by adopting provisions in their con­ tract providing solutions different from those in the Convention. 2. The second sentence of ULIS, article 3, providing that "such exclusion may be express or implied" has been eliminated lest the spe­ cial reference to "implied" exclusion might encourage courts to con­ clude, on insufficient grounds, that the Convention had been wholly excluded. CHAPTER II. GENERAL PROVISIONS Article 6 [Interpretation of Convention] In the interpretation and application of the provisions of this Convention, regard is to be had to its internatio­ nal character and to the need to promote uniformity and the observance of good faith in international trade. PRIOR UNIFORM LAW ULIS, article 17. Prescription Convention, article 7. Commentary International character of Convention 1. National rules on the law of sales of goods are subject to sharp divergencies in approach and concept. Thus, it is especially important to avoid differing constructions of the provisions of this Convention by national courts, each dependent upon the concepts used in the legal sys­ tem of the country of the forum. To this end, article 6 emphasizes the importance, in the interpretation and application of the provisions of 1 Articles 39 and 40. 2 Article 49. 3 Articles 78 to 82. 4 Articles 74 to 77. 18 Part One. Documents of the Conference the Convention, of having due regard for the international character of the Convention and for the need to promote uniformity. Observance ofgood faith in international trade 2. Article 6 requires that the provisions of the Convention be inter­ preted and applied in such a manner that the observance of good faith in international trade is promoted. 3. There are numerous applications of this principle in particular provisions of the Convention. Among the manifestations of the requi­ rement of the observance of good faith are the rules contained in the following articles: - article 14 (2) (b) on the non-revocability of an offer where it was reasonable for the offeree to rely upon the offer being held open and the offeree acted in reliance on the offer; - article 19 (2) on the status of a late acceptance which was sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time; - article 27 (2) in relation to the preclusion of a party from rely­ ing on a provision in a contract that modification Or abrogation of the contract must be in writing; - articles 35 and 44 on the rights of a seller to remedy non­ conformities in the goods; - article 38 which precludes the seller from relying on the fact that notice of non-conformity has not been given by the buyer in ac­ cordance with articles 36 and 37 if the lack of conformity relates to facts of which the seller knew or could not have been unaware and which he did not disclose to the buyer; - articles 45 (2), 60 (2) and 67 on the loss of the right to declare the contract avoided; -articles 74 to 77 which impose on the parties obligations to take steps to preserve the goods. 4. The principle of good faith is, however, broader than these examples and applies to all aspects of the interpretation and application of the provisions of this Convention. Article 7 (Interpretation of conduct of a party] (1) For the purposes of this Convention statements made by and other conduct of a party are to be interpre­ ted according to his intent where the other party knew or could not have been unaware what that intent was. (2) If the preceding paragraph is not applicable, state­ ments made by and other conduct of a party are to be in­ terpreted according to the understanding that a reasona­ ble person would have had in the same circumstances. (3) In determining the intent of a party or the under­ standing a reasonable person would have had in the same circumstances, due consideration is to be given to all rele­ vant circumstances of the case including the negotia­ tions, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties. PRIOR UNIFORM LAW ULIS, article 9 (3). ULF, articles 4 (2), 5 (3), 12 and 13 (2). UNIDROIT Draft of a Law for the Unification of Certain Rules re­ lating to Validity of Contracts of International Sale of Goods, articles 3,4 and 5. Commentary 1. Article 7 on interpretation furnishes the rules to be followed in interpreting the meaning of any statement or other conduct of a party which falls within the scope of application of this Convention. Inter­ pretation of the statements or conduct of a party may be necessary to determine whether a contract has been concluded, the meaning of the contract, or the significance of a notice given or other act of a party in the performance of the contract or in respect of its termination. 2. Article 7 states the rules to be applied in terms of interpreting the unilateral acts of each party, i.e, communications in respect of the pro­ posed contract, the offer, the acceptance, notices, etc. Nevertheless, ar­ ticle 7 is equally applicable to the interpretation of "the contract" when the contract is embodied in a single document. Analytically, this Con­ vention treats such an integrated contract as the manifestation of an offer and an acceptance. Therefore, for the purpose of determining whether a contract has been concluded as well as for the purpose of interpreting the contract, the contract is considered to be the product of two unilateral acts. Content of the rules of interpretation 3. Since article 7 states rules for interpreting the unilateral acts of each party, it does not rely upon the common intent of the parties as a means of interpreting those unilateral acts. However, article 7 (1) re­ cognizes that the other party often knows or could not be unaware of the intent of the party who made the statement or engaged in the con­ duct in question. Where this is the case, that intent is to be ascribed to the statement or conduct. 4. Article 7 (1) cannot be applied if the party who made the state­ ment or engaged in the conduct had no intention on the point in ques­ tion or if the other party did not know and had no reason to know what that intent was. In such a case, article 7 (2) provides that the statements made by and conduct of a party are to be interpreted according to the understanding that a reasonable person would have had in the same cir­ cumstances. 5. In determining the intent of a party or the intent a reasonable person would have had in the same circumstances, -it is necessary to look first to the words actually used or the conduct engaged in. How­ ever, the investigation is not to be limited to those words or conduct even if they appear to give a clear answer to the question. It is common experience that a person may dissimulate or make an error and the pro­ cess of interpretation set forth in this article is to be used to determine the true content of the communication. If, for example, a party offers to sell a quantity of goods for Swiss francs 50,000 and it is obvious that the offeror intended Swiss francs 500,000 and the offeree knew or could not have been unaware of it, the price term in the offer is to be in­ terpreted as Swiss francs 500,000. 6. In order to go beyond the apparent meaning of the words or the conduct by the parties, article 7 (3) states that "due consideration is to be given to all relevant circumstances of the case." It then goes on to enumerate some, but not necessarily all, circumstances of the case which are to be taken into account. These include the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties. Article 8 [Usages and established practices] (1) The parties are bound by any usage to which they have agreed and by any practices which they have estab­ lished between themselves. (2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their con­ tract a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned. Proposals, reports and other documents 19 PRIOR UNIFORM LAW ULIS, article 9. ULF, article 13. Commentary 1. This article describes the extent to which usages and practices between the parties are binding on the parties to the contract. 2. By the combined effect of paragraphs (1) and (2), usages to which the parties have agreed, are binding on them. The agreement may be express or it may be implied. 3. In order for there to be an implied agreement that a usage will be binding on the parties, the usage must meet two conditions: it must be one "of which the parties knew or ought to have known" and it must be one "which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned." The trade may be restricted to a certain product, re­ gion or set of trading partners. 4. The determining factor whether a particular usage is to be consi­ dered as having been impliedly made applicable to a given contract will often be whether it was "widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concer­ ned." In such a case it may be held that the parties "ought to have known" of the usage. 5. Since usages which become binding on the parties do so only be­ cause they have been explicitly or implicitly incorporated into the con­ tract, they will be applied rather than conflicting provisions of this Convention on the principle of party autonomy.1 Therefore, the provi­ sion in ULIS article 9, paragraph 2, that in the event of conflict bet­ ween an applicable usage and the Uniform Law, the usages prevail un­ less otherwise agreed by the parties, a provision regarded to be in con­ flict with the constitutional principles of some States and against public policy in others, has been eliminated as unnecessary. 6. This article does not provide any explicit rule for the interpreta­ tion of expressions, provisions or forms of contract which are widely used in international trade and for which the parties have given no in­ terpretation.I In some cases such an expression, provision or form of contract may be considered to be a usage or practice between the par­ ties, in which case this article would be applied. Article 9 [Place of business] For the purposes of this Convention: (a) if a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract; (b) if a party does not have a place of business, refe­ rence is to be made to his habitual residence. PRIOR UNIFORM LAW ULIS, article 1 (2). ULF, article 1 (2). Prescription Convention, articles 2 (c) and (d). Commentary 1. This article deals with the determination of the relevant "place of business" of a party. I Article 5. 2 Article 7 provides rules for the interpretation of statements made by and other conduct of a party. Place of business, subparagraph (a) 2. Subparagraph (a) deals with the situation in which a party to a contract has more than one place of business. The question arises in this Convention in respect of a number of different matters. 3. First, the determination of the relevant place of business may be important in determining whether this Convention applies to the con­ tract. For this Convention to apply, the contract must be between par­ ties whose places of business are in different States. I Moreover, in most cases those States must be Contracting States.J For the purpose of de­ termining whether this Convention applies no problem arises where all the places of business of one party (X) are situated in Contracting Sta­ tes other than the Contracting State in which the other party (Y) has his place of business. Whichever one is designated as the relevant place of business of X, the places of business of X and Y will be in different Contracting States. The problem arises only when one of X's places of business is situated either in the same State as the place of business of Y or in a non-Contracting State. In such a case it becomes crucial to de­ termine which of X's different places of business is the relevant place of business within the meaning of article I. 4. The determination of the relevant place of business is also neces­ sary for the purposes of article II, 18(2), 22, 29 (c), 40 (1) (b), 53 (1) (a) and (X), In the case of articles 18 (2), 22, 29 (c) and 53 (1) (a) it may be necessary to choose between two places of business within a given State as to choose between places of business in two different States. 5. In addition, article 81 (2) provides the rule in respect of passage of risk of loss when "the buyer is required to take over the goods at a place other than any place of business of the seller. . ." In this case it is not necessary to determine the relevant place of business under article 9. 6. Subparagraph (a) lays down the criterion for determining the re­ levant place of business: It is the place of business "which has the clo­ sest relationship to the contract and its performance." The phrase "the contract and its performance" refers to the transaction as a whole, in­ cluding factors relating to the offer and the acceptance as well as the performance of the contract. The location of the head office or princi­ pal place of business is irrelevant for the purposes of article 9 unless that office or place of business becomes so involved in the transaction concerned as to be the place of business "which has the closest rela­ tionship to the contract and its performance." 7. In determining the place of business which has the "closest rela­ tionship," subparagraph (a) states that regard is to be given to "the cir­ cumstances known to or contemplated by the parties at any time before or at the conclusion of the contract." Therefore, when article 9 (a) refers to the performance of the contract, it is referring to the perfor­ mance that the parties contemplated when they were entering into the contract. If it was contemplated that the seller would perform the con­ tract at his place of business in State A, a determination that his "place of business" under article 9 (a) was in State A would not be altered by his subsequent decision to perform the contract at his place of business in State B. 8. Factors that may not be known to one of the parties at the time of entering into the contract would include supervision over the making of the contract by a head office located in another State, or the foreign origin or final destination of the goods. When these factors are not known to or contemplated by both parties at the time of entering into the contract, they are not to be taken into consideration. Habitual residence, subparagraph (b) 9. Subparagraph (b) deals with the case where one of the parties does not have a place of business. Most international contracts are entered into by businessmen who have recognized places of business. Occasionally, however, a person who does not have an established "place of business" may enter into a contract of sale of goods that is intended for commercial purposes, and not simply for "personal, family or household use" within the meaning of article 2 (a) of this I Article 1 (1). See, however, article 5. 2 Article I (l) (a). 20 Part One. Documents of the Conference Convention. The present provision provides that in this situation, refe­ rence is to be made to his habitual residence. Article 10 [Form of contract] A contract of sale need not be concluded in or eviden­ ced by writing and is not subject to any other require­ ments as to form. It may be proved by any means, in­ cluding witnesses. PRIOR UNIFORM LAW ULIS, article 15. ULF, article 3. Commentary 1. Article 10 provides that a contract of sale need not be evidenced by writing and is not subject to any other requirements as to form.! 2. The inclusion of article 10 in the Convention was based on the fact that many contracts for the international sale of goods are con­ cluded by modern means of communication which do not always in­ volve a written contract. Nevertheless, any administrative or criminal sanctions for breach of the rules of any State requiring that such con­ tracts be in writing, whether for purposes of administrative control of the buyer or seller, for purposes of enforcing exchange control laws, or otherwise, would still be enforceable against a party which concluded the non-written contract even though the contract itself would be en­ forceable between the parties. 3. Some States consider the requirement that contracts for the in­ ternational sale of goods be in writing to be a matter of important public policy. Accordingly, article 11 provides a mechanism for Con­ tracting States to prevent the application of the rule in article 10 to transactions where any party has a place of business in their State. Article 11 [Effect of declarations relating to form] Any provision of article 10, article 27 or Part II of this Convention that allows a contract of sale or its modifica­ tion or abrogation or any offer, acceptance, or other in­ dication of intention to be made in any form other than in writing does not apply where any party has his place of business in a Contracting State which has made a decla­ ration under article (X) of this Convention. The parties may not derogate from or vary the effect of this article. PRIOR UNIFORM LAW None. Commentary 1. Article 11 recognizes that some States consider that it is an im­ portant element of public policy that contracts or their modification or abrogation be in writing. Therefore, article 11 enables a Contracting State to make a declaration under article (X)! to prevent the application of any provision of article 10, article 27 or Part II of the Convention which allows a contract of sale or its modification or abrogation or any offer, acceptance, or other indication of intention to be made in any 1 See also para. 3 of the commentary to article 4 and the commentary to article 11. 1 The text of article (X) is reproduced with the other proposed final clauses in document A/CONF.97/6. form other than in writing where any party has his place of business in that Contracting State. 2. As the operation of article 11 is confined to articles 10 and 27 and to Part II of this Convention (i.e. articles 12 to 22) it does not en­ compass all notices or indications of intention required under the Con­ vention but only those which relate to the formation of the contract, its modification and its abrogation. Other notices may be given by means appropriate in the circumstances.i 3. Since the requirement of writing in relation to the matters men­ tioned in article II is considered to be a question of public policy in so­ me States, the general principle of party autonomy is not applicable to this article. Accordingly, article II cannot be varied or derogated from by the parties. PART II. FORMATION OF THE CONTRACT Article 12 [Offer] (1) 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. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price. (2) A proposal other than one addressed to one or more specific persons is to be considered merely as an in­ vitation to make offers, unless the contrary is clearly in­ dicated by the person making the proposal. PRIOR UNIFORM LAW ULF, article 4. Commentary 1. Article 12 states the conditions that are necessary in order for a proposal to conclude a contract to constitute an offer. Proposal sent to one or more specific persons 2. In order for a person to accept an offer, that offer must have been addressed to him. In the usual case, the requirement causes no dif­ ficulties since the offer to buy or sell goods will have been addressed to one specific person or, if the goods are to be bought or sold by two or more persons acting together, to those specific persons. The specifica­ tions of the addressee will usually be by name, but it could be made in some other way such as "the owner or owners of ...". 3. It is also possible that an offer to buy or sell will be made simul­ taneously to a large number of specific persons. An advertisement or catalogue of goods available for sale sent in the mail directly to the addressees would be sent to "specific persons," whereas the same ad­ vertisement or catalogue distributed to the public at large would not. If an advertisement or catalogue sent to "specific persons" indicated the intention to be bound to a contract in case of acceptance and if it was "sufficiently definite", it would constitute an offer under article 12 (1). Proposal sent to other than one or more specific persons, paragraph (2) 4. Some legal systems restrict the concept of an offer to communi­ cations addressed to one or more specific persons while other legal sys­ tems also admit of the possibility of a "public offer". Public offers are of two types, those in which the display of goods in a store window, 2 See articles 24 and 25 and the commentary thereto. Proposals, reports and other documents 21 vending machine or the like are said to be a continuing offer to any per­ son to buy that article or one identical to it, and advertisements direc­ ted to the public at large. In those legal systems which admit of the pos­ sibility of a public offer, the determination as to whether an offer in the legal sense has been made depends upon an evaluation of the total cir­ cumstances of the case, but does not necessarily require a specific indi­ cation of intention to make an offer. The fact that the goods are on dis­ play for sale or the wording of the advertisement may be enough for a court to determine that there was a legal offer. 5. This Convention, in article 12 (2), takes a middle position in re­ spect of public offers. It states that a proposal other than one addressed to one or more specific persons is normally to be treated merely as an invitation for the recipients to make offers. However, it constitutes an offer if it meets the other criteria for being an offer and the intention that it be an offer is clearly indicated. Such an indication need not be an explicit statement such as "this advertisement constitutes an offer" but it must clearly indicate an intention to make an offer, for example, by a statement that, "these goods will be sold to the first person who pre­ sents cash or an appropriate banker's acceptance". Intention to be bound, paragraph (1) 6. In order for the proposal for concluding a contract to constitute an offer it must indicate "the intention of the offeror to be bound in case of acceptance." Since there are no particular words which must be used to indicate such an intention, it may sometimes require a careful examination of the "offer" in order to determine whether such an in­ tention existed. This is particularly true if one party claims that a con­ tract was concluded during negotiations which were carried on over an extended period of time, and no single communication was labelled by the parties as an "offer" or as an "acceptance". Whether there is the requisite intention to be bound in case of acceptance will be established in accordance with the rules of interpretation contained in article 7. 7. The requirement that the offeror has manifested his intention to be bound refers to his intention to be bound to the eventual contract if there is an acceptance. It is not necessary that he intends to be bound by the offer, i.e. that he intends the offer to be irrevocable. As to the revo­ cability of offers, see article 14. An offer must be sufficiently definite, paragraph (1) 8. Paragraph (1) states that a proposal for concluding a contract must be "sufficiently definite" in order to constitute an offer. It goes on to state that an offer is sufficiently definite if it: - indicates the goods, and - expressly or implicitly fixes or makes provision for determining the quantity, and - expressly or implicitly fixes or makes provision for determining the price. 9. The remaining terms of the contract resulting from the acceptan­ ce of an offer which only indicates the goods and fixes or makes provi­ sion for determining the quantity and the price would be supplied by usage or by the provisions in Part IlIon the law of sales: If, for exam­ ple, the offer contained no term as to how or when the price was to be paid, article 53 (I) provides that the buyer must pay it at the seller's pla­ ce of business and article 54 (I) provides that he must pay it when the seller places either the goods or documents controlling their disposition at the buyer's disposal. Similarly, if no delivery term is specified, article 29 provides how and where the goods are to be delivered and article 31 provides when they are to be delivered. 10. Nevertheless, the fact that a proposal contains only the three terms necessary for the offer to be sufficiently definite may indicate, in a given case, that there was no intention on the part of the offeror to be bound in case of acceptance. For example, it would be necessary to in­ terpret the proposal in the light of article 7 to determine whether there was an intention to be bound in case of acceptance where a seller offe­ red to sell equipment to be manufactured with the only specifications being the type and quantity of the goods and a price of Swiss francs 10 million. It would normally be the case that a seller would not con­ tract for such a large sale without specification of delivery dates, quali­ ty standards, etc. Therefore, the lack of any indication in respect of these matters suggests that there might have been as yet no intention to be bound to a contract in case of acceptance. However, even in the case of such a large and complicated sale, the applicable law of sales can supply all of the missing terms if the intention to contract is found to have existed. Quantity of the goods, paragraph (1) II. Although, according to article 12, the proposal for concluding a contract will be sufficiently definite to constitute an offer if it express­ ly or implicitly fixes or makes provision for the quantity of goods, the means by which the quantity is to be determined is left to the entire discretion of the parties. It is even possible that the formula used by the parties may permit the parties to determine the exact quantity to be de­ livered under the contract only during the course of performance. 12. For example, an offer to sell to the buyer "all I have available" or an offer to buy from the seller "all my requirements" during a cer­ tain period would be sufficient to determine the quantity of goods to be delivered. Such a formula should be understood to mean the actual amount available to the seller or the actual amount required by the buyer in good faith. 13. It appears that most, if not all, legal systems recognize the legal effect of a contract by which one party agrees to purchase, for exam­ ple, all of the ore produced from a mine or to supply, for example, all of the supplies of petroleum products which will be needed for resale by the owner of a service station. In some countries such contracts are considered to be contracts of sale. In other countries such contracts are denominated as concession agreements or otherwise, with the provi­ sions in respect of the supply of the goods considered to be ancillary provisions. Article 12 makes it clear that such a contract is enforceable even if it is denominated by the legal system as a contract of sale rather than as a concession agreement. Price, paragraph (l) 14. Article 12 provides the same rule in respect of the price that it does in respect of quantity. Thus, for the proposal to constitute an of­ fer it must expressly or implicitly fix or make provision for the price. It is not necessary that the price could be calculated at the time of the conclusion of the contract. For example, the offer, and the resulting contract, might call for the price to be that prevailing in a given market on the date of delivery, which date might be months or even years in the future. In such a case the offer would expressly make provision for determining the price. 15. Where the buyer sends an order for goods listed in the seller's catalogue or where he orders spare parts, he may decide to make no specification of the price at the time of placing the order. This may occur because he does not have a price list of the seller or he may not know whether the price list he has is current. Nevertheless, it may be implicit in his action of sending the order that he is offering to pay the price currently being charged by the seller for such goods. If such is the case, the buyer has implicitly made provision for the determination of the price and his order for the goods would constitute an offer. 16. Similarly, where the buyer orders goods from a catalogue for future delivery it may be implicit in his order and from other relevant circumstances that the buyer is offering to pay the price currently being charged by the seller at the time of the delivery. 17. In order to determine whether a proposal implicitly fixes or makes provision for determining the price it is necessary to interpret the proposal in the light of article 7, and in particular paragraph (3) of that article. Article 13 [Time of effect of offer; withdrawal of offer] (1) An offer becomes effective when it reaches the offeree. (2) An offer may be withdrawn if the withdrawal rea­ ches the offeree before or at the same time as the offer. It may be withdrawn even if it is irrevocable. 22 Part One. Documents of the Conference PRIOR UNIFORM LAW ULF, article 5. Commentary 1. Article 13 (1) provides that an offer becomes effective when it reaches! the offeree. Therefore, until that moment event though the of­ feree may have learned of the dispatch of the offer by some means, he cannot accept it. 2. For most purposes the rule as stated above is only of theoretical interest. However, it assumes practical importance if the offeror chan­ ges his mind after dispatch of the offer but prior to the time the offer reaches the offeree. 3. If the offeror withdraws the offer and the withdrawal reaches the offeree before or at the same time as the offer, the offer never beco­ mes effective. Therefore, an offer which, once it became effective, would be irrevocable under article 14 (2), can nevertheless be with­ drawn so long as the withdrawal reaches the offeree no later than the offer reaches him. 4. This distinction between withdrawal of an offer and revocation is of less significance if the offer is revocable under article 14 (1) since a purported withdrawal which reached the offeree after the offer had reached him would be treated as a revocation. For the effect of the dis­ patch of an acceptance after the arrival of an offer but prior to the arri­ val of the revocation, see paragraph 4 of the commentary to article 14. Article 14 [Revocability of offer] (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 upon the offer as being irrevocable and the offeree has acted in re­ liance on the offer. PRIOR UNIFORM LAW ULF, article 5. Commentary Revocation of an offer, paragraph (1) 1. Article 14 states that offers are in general revocable and that the revocation is effective when it reaches! the offeree. 2. The right of the offeror to revoke his offer terminates at the mo­ ment the contract is concluded. For the reasons explained in paragraph 4 of this commentary, this basic rule applies only in those cases in which the offeree orally accepts the offer and in those cases in which the offeree accepts the offer in conformity with article 16 (3). 3. Under article 16 (3) if, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent without giving notice to the offe­ ror by performing an act, such as one relating to the dispatch of the goods or payment of the price, the acceptance is effective at the mo­ ment the act is performed. Since the acceptance is effective and the con­ tract is concluded at the moment the act is performed, the right of the offeror to revoke his offer terminates at that same moment. 4. In the typical case in which the offer is accepted by a written in­ dication of assent, article 14 (I) provides that the right of the offeror to I Article 22 contains a definition of the term "reaches". revoke his offer terminates at the moment the offeree has dispatched his acceptance, and not at the moment the acceptance reaches the offe­ ror. This rule was adopted even though article 16 (2) provides that it is at this later moment that the acceptance is effective and the contract is therefore concluded in accordance with article 21. 5. The value of a rule that a revocable offer becomes irrevocable prior to the moment at which the contract is concluded lies in the fact that it contributes to an effective compromise between the theory of ge­ neral revocability of offers and the theory of general irrevocability of offers. Although all offers except those which fall within the scope of article 14 (2) are revocable, they become irrevocable once the offeree makes his commitment by dispatching the acceptance. Irrevocable offers, paragraph (2) 6. Article 14 (2) (a) provides that an offer cannot be revoked ifit in­ dicates that it is irrevocable. It should be noted that this provision does not require a promise on the part of the offeror not to revoke his offer nor does it require any promise, act or forbearance on the part of the offeree for the offer to become irrevocable. It reflects the judgement that in commercial relations, and particularly in international commer­ cial relations, the offeree should be able to rely on any statement by the offeror which indicates that the offer will be open for a period of time. 7. The offer may indicate that it is irrevocable in different ways. The most obvious is that the offer may state that it is irrevocable or that it will not be revoked for a particular period of time, The offer may also indicate that it is irrevocable by stating a fixed time for acceptance. 8. Article 14 (2) (b) provides that the offeror cannot revoke his of­ fer if it was reasonable for the offeree to rely upon the offer as being ir­ revocable and the offeree has acted in reliance on the offer. This would be of particular importance where the offeree would have to engage in extensive investigation to determine whether he should accept the offer. Even if the ~fer does not indicate that it is irrevocable, it should be i~­ revocable for the period of time necessary for the offeree to make his determination. Article 15 [Termination of offer by rejection] An offer, even if it is irrevocable, is terminated when a rejection reaches the offeror. PRIOR UNIFORM LAW None. Commentary 1. Once the offeror has received a rejection of an offer, he should be free to contract with someone else without concern that the offeree will change his mind and attempt to accept the offer which he had pre­ viously rejected. Most, if not all, legal systems accept this solution in respect of revocable offers. Many legal systems also accept it in respect of irrevocable offers, but some legal systems hold that an irrevocable offer is not terminated by a rejection. Article 15 accepts the solution in respect of both revocable and irrevocable offers and provides that an offer, even if it is irrevocable, is terminated when a rejection reaches the offeror. 2. An offer may be rejected either expressly or by implication. In particular, article 17 (1) provides that "a reply to an offer which pur­ ports to be an acceptance containing additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer." A tribunal may find that a given communication from the offeree to the offeror which contained inquiries about possible changes in the terms or which proposed different terms did not purport to be an acceptance and, therefore, that it did not fall under article 17 (1)1. Nevertheless, if the communication was found to contain addi­ tions, limitations or other modifications to the offer, the offer would be rejected and the offeree could no longer accept it. I See paragraph 4 of the commentary to article 17. Proposals, reports and other documents ---------------------= 3. Of course, the rejection of an offer by a reply which contains ad­ ditions, limitations or other modifications of the offer does not make it impossible to conclude a contract. The reply would constitute a counter-offer which the original offeror might accept. If the additions, limitations or other modifications did not materially alter the terms of the offer, article 17 (2) provides that the reply would constitute an acceptance and the terms of the contract are the terms of the offer with the modifications contained in the acceptance. If the offeror rejected the proposed additions, limitations or other modifications, the parties could agree to contract on the terms of the original offer. 4. Therefore, in the context of a reply to an offer which constitutes an explicit or implicit rejection, the significance of article 15 is that the original offer terminates and any eventual contract must be concluded on the basis of a new offer and acceptance. Article 16 [Acceptance; Time of effect of accceptance] (1) A statement made by or other conduct of the offe­ ree indicating assent to an offer is an acceptance. Silence shall not in itself amount to accceptance, (2) Subject to paragraph (3) of this article, acceptance of an offer becomes effective at the moment the indica­ tion of assent reaches the offeror. An accceptance is not effective if the indication of assent does not reach the of­ feror within the time he has fixed or, if no time is fixed, within a reasonable time, due account being taken of the circumstances of the transaction, including the rapidity of the means of communication employed by the offe­ ror. An oral offer must be accepted immediately unless the circumstances indicate otherwise. (3) However, if, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent by performing an act, such as one relating to the dispatch of the goods or payment of the price, without notice to the offeror, the acceptance is effective at the moment the act is performed provided that the act is performed with­ in the period of time laid down in paragraph (2) of this article. PRIOR UNIFORM LAW ULF, articles 2 ( 2), 6 and 8. Commentary I. Article 16 sets out the conduct of the offeree which constitutes acceptance and the moment at which an acceptance is effective. Acts constituting acceptance, paragraph (1) 2. Most acceptances are in the form of a statement by the offeree indicating assent to an offer. However, article 16 (1) recognizes that other conduct by the offeree indicating assent to the offer may also constitute an acceptance. 3. In the scheme used in this Convention, any conduct indicating assent to an offer is an acceptance. However, subject to the special case governed by article 16 (3), article 16 (2) provides that the acceptance is effective only at the moment the indication of assent reaches the offe­ ror. 4. Article 16 (I) also makes it clear that silence in itself does not amount to acceptance. However, if the silence is coupled with other factors which give sufficient assurance that the silence of the offeree is an indication of assent, the silence can constitute acceptance. In parti- cular, silencecan constitute an acceptance if the parties have previously so agreed. Such an agreement may be explicit or it may be established by an interpretation of the intent of the parties as a result of the nego­ tiations, any practices which the parties have established between them­ selves, usages and any subsequent conduct of the parties as provided by the rules of interpretation in article 7. Example 16A: For the past 10 years Buyer regularly ordered goods that were to be shipped throughout the period of six to nine months fol­ lowing each order. After the first few orders Seller never acknowledged the orders but always shipped the goods as ordered. On the occasion in question Seller neither shipped the goods nor notified Buyer that he would not do so. Buyer would be able to sue for breach of contract on the basis that a practice had been established between the parties that Seller did not need to acknowledge the order and, in such a case, the si­ lence of Seller constituted acceptance of the offer. Example 16B: One of the terms in a concession agreement was that Seller was required to respond to any orders placed by Buyer within 14 days of receipt. If he did not respond within 14 days, the order would be deemed to have been accepted by Seller. On I July Seller received an order for 100units from Buyer. On 25 July Seller notified Buyer that he could not fill the order. In this case a contract was concluded on 15July for the sale of 100 units. Moment at which acceptance by declaration is effective, paragraph (2) 5. Article 16 (2) provides that an acceptance is effective only at the moment a notice of that acceptance reaches the offeror. Therefore, no matter what is the form of the acceptance under article 16 (I), a notice of that acceptance must in some manner reach the offeror in order to bring about the legal consequences associated with the acceptance of an offer. 6. There are two exceptions to this rule. The first exception is men­ tioned in the opening words of article 16 (2) which state that the rule is subject to article 16 (3). Under article 16 (3), in certain limited circum­ stances, it is possible for an offer to be accepted by the performance of an act without the necessity of a notice. The other exception follows from the general rule in article 5 that the parties may, subject to article II, derogate from or vary the effect of any provision of this Conven­ tion. In particular, if they have agreed that the silence of the offeree will constitute acceptance of the offer, they have by implication also agreed that no notice of that acceptance is required} 7. It is not necessary that the indication of assent required by article 16 (2) be sent by the offeree. A third party, such as a carrier or a bank, may be authorized to give to the offeror the notice of the conduct which constitutes acceptance. It is also not necessary for the notice to state explicitly that it is notice of accceptance, so long as it is clear from the circumstances surrounding the notice that the conduct of the offe­ ree was such as to manifest his intention to accept. 8. Article 16 (2) adopts the receipt theory of acceptance. The indi­ cation of assent is effective when it reaches the offeror, not when it is dispatched as is the rule in some legal systems. 9. Article 16 (2) states the traditional rule that an acceptance is ef­ fective only if it reaches the offeror within the time fixed or, if no such time was fixed, within a reasonable time. However, article 19provides that an acceptance which arrives late is, or may be, considered to have reached the offeror in due time. Nevertheless, the sender-offeree still bears the risk of nonarrival of the acceptance. Acceptance of an offer by an act, paragraph (3) 10. Article 16 (3) governs the limited but important situation in which the offer, the practices which the parties have established be­ tween themselves or usage permit the offeree to indicate assent by per­ forming an act without notice to the offeror. In such a case the accep­ tance is effective at the moment the act is performed. 1 No specific rule is given as to when acceptance by silence is effec­ tive. See, however, example 16B in which it is concluded that the accep­ tance was effective at the expiration of the relevant period of time. In at least one legal system the effect of silence is related back to the time when the offer is received by the offeree. Swiss Code of Obligations, art. 10, subs. 2. 24 Part One. Documents of the Conference II. An offer might indicate that the offeree could accept by per­ forming an act by the use of such a phrase as "Ship immediately" or "Procure for me without delay ...". 12. The act by which the offeree can accept in such a case is that act authorized by the offer, established practice or usage. In most cases it would be by the shipment of the goods or the payment of the price but it could be by any other act, such as the commencement of production, packing the goods, opening of a letter of credit or, as in the second illustration in paragraph II above, the procurement of the goods for the offeror. Article 17 [Additions or modifications to the offer] (1) A reply to an offer which purports to be an accept­ ance containing additions, limitations or other modifica­ tions is a rejection of the offer and constitutes a counter­ offer. (2) However, a reply to an offer which purports to be an acceptance but which contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance unless the offeror objects to the discrepancy without undue delay. If he does not so object, the terms of the contract are the terms of the of­ fer with the modifications contained in the acceptance. (3) Additional or different terms relating, inter alia, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially, unless the offe­ ree by virtue of the offer or the particular circumstances of the case has reason to believe they are acceptable to the offeror. PRIOR UNIFORM LAW ULF, article 7. Commentary General rule. paragraph (1) J. Article 17 (I) states that a purported acceptance which adds to, limits or otherwise modifies the offer to which it is directed is a rejec­ tion of the offer and constitutes a counter-offer. 2. This provision reflects traditional theory that contractual obliga­ tions arise out of expressions of mutual agreement. Accordingly, an acceptance must comply exactly with the offer. Should the purported acceptance not agree completely with the offer, there is no acceptance but the making of a counter-offer which requires acceptance by the other party for the formation of a contract. 3. However, the acceptance need not use the exact same words as used in the offer so long as the differences in the wording used in the acceptance would not change the obligations of the parties. 4. Even if the reply makes inquiries or suggests the possibility of additional terms, it may be that the reply does not purport to be an ac­ ceptance under article 17 (I). The reply may be an independent commu­ nication intended to explore the willingness of the offeror to accept dif­ ferent terms while leaving open the possibility of later acceptance of the offer. 5. This point is of special importance in the light of article 15 which provides that "an offer, even if it is irrevocable, is terminated when a rejection reaches the offeror. " 6. Although the explanation for the rule in article 17 (I) lies in a wi­ dely held view of the nature of a contract, the rule also reflects the reali­ ty of the common factual situation in which the offeree is in general agreement with the terms of the offer but wishes to negotiate in regard to certain aspects of it. There are, however, other common factual situations in which the traditional rule, as expressed in article 17 (I), does not give desirable results. Article 17 (2) creates an exception to ar­ ticle 17 (I) in regard to one of these situations. Non-material alterations. paragraphs (2) and (3) 7. Article 17 (2) contains rules dealing with the situation where a reply to an offer is expressed and intended as an acceptance but con­ tains additional or different terms which do not materially alter the terms of the offer. Article 17 (3) provides that certain terms are nor­ mally to be considered as material. 8. In most cases in which a reply purports to be an acceptance the offeree does not consider the additional or different terms to be mate­ rial alterations of the offer. This is particularly the case where the par­ ties do not enter into formal negotiations but communicate with one another by means of an exchange of telegrams, telex or the like or by the exchange of an order form and an acceptance form. 9. If the additional or different terms do not in fact materially alter the terms of the offer, the reply constitutes an acceptance and, accord­ ing to article 21, a contract is concluded on its receipt. In such a case, the terms of the contract are the terms of the offer with the modifica­ tions contained in the acceptance. 10. Even if the additional or different terms do not materially alter the terms of the offer, the offeror may object to them. In such a case the reply of the offeree is to be considered as a rejection of the offer rather than as an acceptance. II. Additional or different terms which are of routine significance to the personnel engaged in ordering or selling the goods may constitute material alterations of the offer from a legal point of view. Article 17 (3), by way of example, sets out a non-exhaustive list of provisions in respect of which any additional or different term in the purported ac­ ceptance is considered to be material. Additional or different terms in respect of such a provision would not, however, be considered to be material alterations if the "offeree by virtue of the offer or the particu­ lar circumstances of the case has reason to believe they are acceptable to the offeror." 12. For example, an offeree might reply to an offer stating that the offeror has 50 tractors available for sale at a certain price by sending a telegram which accepts the offer but adds "ship immediately." Or a seller who receives an order for a certain quantity of a particular animal fibre might accept by use of a form containing a clause calling for arbitration by the relevant international trade association. 13. Article 17 (3) indicates that the additional or different terms contained in these two replies would constitute material alterations since the term "ship immediately" would change the time of delivery! and the arbitration clause is in respect of the settlement of disputes. 14. In both of these cases it may be that the offeree would have, by virtue of the offer or the particular circumstances of the case, reason to believe that the additional or different terms he proposed are accept­ able to the offeror. If that was the case, the terms would not constitute a material alteration. 15. If the reply contains a material alteration, the reply would not constitute an acceptance but would constitute a counter-offer. If the original offeror responds to this reply by shipping the goods or paying the price, a contract may eventually be formed by notice to the original offeree of the shipment or payment. In such a case the terms of the con­ tract would be those of the counter-offer, including the additional or different term. ! In the absence of the "ship immediately" term in the contract. deli­ very would have to be effected "within a reasonable time after the conclusion of the contract" by virtue of article 31 (c). Proposals, reports and other documents 25 Article 18 [Time fixed for acceptance] (1) A period of time for acceptance fixed by an offe­ ror in a telegram or a letter begins to run from the mo­ ment the telegram is handed in for dispatch or from the date shown on the letter or, if no such date is shown, from the date shown on the envelope. A period of time for acceptance fixed by an offeror by telephone, telex or other means of instantaneous communication, begins to run from the moment that the offer reaches the offeree. (2) If the notice of acceptance cannot be delivered at the address of the offeror due to an official holiday or a non-business day falling on the last day of the period for acceptance at the place of business of the offeror, the pe­ riod is extended until the first business day which fol­ lows. Official holidays or non-business days occurring during the running of the period of time are included in calculating the period. PRIOR UNIFORM LAW ULF, article 8 (2). UNCITRAL Arbitration Rules, article 2 (2). Commentary I. Article 18 (1) provides a mechanism for the calculation of the commencement of the period of time during which an offer can be accepted. 2. If a period of time for acceptance is of a fixed length, such as 10 days, it is important that the point of time at which the to-day period commences be dear. Therefore, article 18 (1) provides that a period of time for acceptance fixed by an offeror in a telegram "begins to run from the moment the telegram is handed in for dispatch." 3. In the case of a letter the time runs "from the date shown on the letter" unless no such date is shown, in which case it runs "from the date shown on the envelope." This order of preference was chosen for two reasons: first, the offeree may discard the envelope but he will have available the letter as the basis for calculating the end of the period dur­ ing which the offer can be accepted and second, the offeror will have a copy of the letter with its date but will generally have no record of the date on the envelope. Therefore, if the date on the envelope controlled, the offeror could not know the termination date of the period during which the offer could be accepted. Article 19 [Late acceptance] (1) A late acceptance is nevertheless effective as an ac­ ceptance if without delay the offeror so informs the offeree orally or dispatches a notice to that effect. (2) If the letter Or document containing a late accept­ ance shows that it has been sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time, the late acceptance is ef­ fective as an acceptance unless, without delay, the offe­ ror informs the offeree orally that he considers his offer as having lapsed or dispatches a notice to that effect. PRIOR UNIFORM LAW ULF, article 9. Commentary I. Article 19deals with acceptances that arrive after the expiration of the time for acceptance. Power of offeror to consider acceptance as having arrived in due time, paragraph (l) 2. If the acceptance is late, the offer lapses and no contract is con­ eluded by the arrival of the acceptance. However, article 19 (I) pro­ vides that the late acceptance becomes an effective acceptance if the of­ feror without delay informs the acceptor orally or by the dispatch of a notice that he considers the acceptance to be effective. 3. Article 19 (I) differs slightly from the theory found in many countries that a late acceptance functions as a counter-offer. Under this paragraph, as under the theory of counter-offer, a contract is con­ eluded only if the original offeror informs the original offeree of his in­ tention to be bound by the late acceptance. However, under this para­ graph it is the late acceptance which becomes the effective acceptance as of the moment of its receipt, even though it requires a subsequent notice to validate it. Under the counter-offer theory it is the notice by the original offeror of his intention which becomes the acceptance and this acceptance is effective only upon its arrival. Acceptances which are late because of a delay in transmission, paragraph (2) 4. A different rule prevails if the letter or document which contains the late acceptance shows that it was sent in such circumstances that, if its transmission had been normal, it would have been communicated in due time. In such case the late acceptance is considered to have arrived in due time, and the contract is concluded as of the moment the accept­ ance reaches the offeror, unless the offeror without delay notifies the offeree that he considers the offer as having lapsed. 5. Therefore, if the letter or document which contains the late acceptance shows that it was sent in such circumstances that if its trans­ mission had been normal, it would have reached the offeror in due time, the offeror must notify, without delay, the offeree to prevent a contract from being concluded, If the letter or document does not show such proper dispatch and the offeror wishes the contract to be con­ eluded, he must notify, without delay, the offeree that he considers the acceptance to be effective pursuant to article 19 (1). Article 20 [Withdrawal of acceptance] An acceptance may be withdrawn if the withdrawal reaches the offeror before or at the same time as the acceptance would have become effective. PRIOR UNIFORM LAW ULF, article to. Commentary Article 20 provides that an acceptance cannot be withdrawn after it has become effective. This provision complements the rule in article 21 that a contract of sale is concluded at the moment the acceptance be­ comes effective.! Article 21 [Time of conclusion of contract] A contract is concluded at the moment when an ac­ ceptance of an offer is effective in accordance with the provisions of this Convention. I Articles 16 (2) and 16 (3) state when an acceptance becomes effec­ tive. 26 Part One. Documents of tbe Conference PRIOR UNIFORM LAW None. Commentary I. Article 21 specifically states tbat which would otherwise have un­ doubtedly been understood to be the rule, i.e. that the contract is con­ cluded at the moment that an acceptance of an offer is effective in ac­ cordance with the provisions of this Convention. It was thought desira­ ble to state this rule explicitly because of the large number of rules in this Convention which depend on the time of the conclusion of the con­ tract. 2. On the other hand article 21 does not state an express rule for the place at which the contract is concluded. Such a provision is unnecessa­ ry since no provision of this Convention depends upon the place at which the contract is concluded. Furthermore, the consequences in re­ gard to conflicts of law and judicial jurisdiction which might arise from fixing the place at which the contract is concluded are uncertain and might be unfortunate. However, the fact that article 21, in conjunction with article 16, fixes the moment at which the contract is concluded may be interpreted in some legal systems to be determinative of the place at which it is concluded. Article 22 [Definition: "reaches"] For the purposes of Part II of this Convention an of­ fer, declaration of acceptance or any other indication of intention "reaches" the addressee when it is made orally to him or delivered by any other means to him, his place of business or mailing address or, if he does not have a place of business or mailing address, to his habitual resi­ dence. PRIOR UNIFORM LAW ULF, article 12. Commentary I. Article 22 defines the point of time at which any indication of in­ tention "reaches" the addressee for the purposes of Part II of this Con­ vention. A communication "reaches" the addressee when it is delivered to him, not when it is dispatched. 2. One consequence of this rule, as set out in articles 13 and 20, is that an offer, whether revocable or irrevocable, or an acceptance may be withdrawn if the withdrawal reaches the other party before or at the same time as the offer or the acceptance which is being withdrawn. Furthermore, an offeree who learns of an offer from a third person prior to the moment it reaches him may not accept the offer until it has reached him. Of course, a person authorized by the offeror to transmit the offer is not a third person in this context. 3. An offer, an acceptance or other indication of intention "reaches" the addressee when it is delivered to "his place of business or mailing address." In such a case it will have legal effect even though some time may pass before the addressee, if the addressee is an indivi­ dual, or the person responsible, if the addressee is an organization, knows of it. 4. When the addressee does not have a place of business or a mail­ ing address, and only in such a situation, an indication of intention "reaches" the addressee on delivery to his habitual residence, i.e. his personal abode) As with an indication of intention delivered to the addressee's place of business or mailing address, it will produce its legal effect even though the addressee may not know of its delivery. 5. In addition the indication of intention "reaches" the addressee whenever it is made personally to him, whether orally or by any other , See also article 9 (b). means. There are no geographical limitations on the place at which personal delivery can be made.J In fact such delivery is often made di­ rectly to the addressee at some place other than his place of business. Such delivery may take place at the place of business of the other party, at the addressee's hotel, or at any other place at which the addressee may be located. 6. Personal delivery to an addressee which has legal personality in­ cludes personal delivery to an agent who has the requisite authority. The question as to who would be an authorized agent is left to the applicable national law. PART III. SALES OF GOODS CHAPTER I. GENERAL PROVISIONS Article 23 [Fundamental breach] A breach committed by one of the parties is funda­ mental if it results in substantial detriment to the other party unless the party in breach did not foresee and had no reason to foresee such a result. PRIOR UNIFORM LAW ULIS, article 10. Commentary 1. Article 23 defines "fundamental breach". 2. The definition of fundamental breach is important because various remedies of buyer and seller,' as well as some aspects of the passing of the risk,2 rest upon it. 3. The basic criterion for a breach to be fundamental is that "it re­ sults in substantial detriment to the [injured] party." The determina­ tion whether the injury is substantial must be made in the light of the circumstances of each case, e.g., the monetary value of the contract, the monetary harm caused by the breach, or the extent to which the breach interferes with other activities of the injured party. 4. Once this basic criterion is met, a criterion which looks to the harm suffered by the injured party, a breach is fundamental unless the party in breach can prove that he "did not foresee and had no reason to foresee such a result," i.e. the result which did occur. It should be noted that the party in breach does not escape liability merely by proving that he did not in fact foresee the result. He must also prove that he had no reason to foresee it. 5. Article 23 does not specify at what moment the party in breach should have foreseen the consequences of the breach, whether at the time the contract was concluded or at the time of the breach. In case of dispute, that decision must be made by the tribunal. Article 24 [Notice of avoidance] A declaration of avoidance of the contract is effective only if made by notice to the other party. 2 The Spanish language version of article 22 does not conform to the other language versions on this point. 1 See articles 42 (2),44 (I), 45 (I) (a), 47 (2), 60 (I) (a), 63, 64 (I) and 64 (2). 2 See article 82. Proposals, reports and other documents 27 PRIOR UNIFORM LAW None. Commentary I. Avoidance of the contract by one party may have serious conse­ quences for the other party. He may need to take immediate action to minimize the consequences of the avoidance such as to cease manufac­ turing, packing or shipping the goods or, if the goods have already been delivered, to retake possession and arrange to dispose of them. 2. For this reason article 24 provides that a declaration of avoid­ ance is effective only if made by notice to the other party. It follows that the contract is avoided at the time notice of the declaration of avoidance! is given to the other party. 3. The Convention does not require, as do some legal systems, that an advance notice be given of the intention to declare the contract avoided. This Convention requires only one notice, the notice of the declaration of avoidance.I 4. The notice can be oral or written and can be transmitted by any means. If the means chosen are appropriate in the circumstances, article 25 provides that a delay or error in the transmission of the notice does not impair the legal effect of the notice. Article 25 [Delay or error in communication] Unless otherwise expressly provided in Part III of this Convention, if any notice, request or other communica­ tion is given by a party in accordance with Part III and by means appropriate in the circumstances, a delay or er­ ror in the transmission of the communication or its fai­ lure to arrive does not deprive that party of the right to rely on the communication. PRIOR UNtFORM LAW ULIS, articles 14 and 39 (3). ULF, article 12 (2). Commentary I. Article 25 states that the risk of delay or error in the transmission of any notice, request or other communication under Part III of this Convention or its failure to arrive is to be borne by the addressee'! This rule applies if the communication is given "in accordance with Part III and by means appropriate in the circumstances." 2. There may be more than one means of communication which is appropriate in the circumstances. In such a case the sender may use the one which is the most convenient for him. 3. A communication is appropriate "in the circumstances" if it is appropriate to the situation of the parties. A means of communication which is appropriate in one set of circumstances may not be appro­ priate in another set of circumstances may not be appropriate in an­ other set of circumstances. Fot example, even though a particular from of notice may normally be sent by airmail, in a given case the need for speed may make only electronic communication, telegram, telex, or te­ lephone, a means appropriate "in the circumstances". 1 Articles 45, 60, 63 and 64 provide for a declaration of avoidance of a contract under appropriate circumstances. 2 However, a party who declares the contract avoided pursuant to ar­ ticle 45 (I) (b) or article 60 (I) (b) must have previously fixed an addi­ tional period of time of reasonable length for performance by the other party under article 43 (1) or article 59 (I). In such a case the party who declares the contract avoided must necessarily send two communica­ tions to the other party. I Part II of the Convention contains special rules dealing with the time of effect of communications and other indications of intention made during the formation process. See, in particular, articles 19 and 22. 4. The general rule that the risk of delay, error or loss in respect of a communication is to be borne by the addressee arises out of the consi­ deration that it is desirable to have, as far as possible, one rule govern­ ing the hazards of transmission. Acceptance of a generalized receipt theory would have required that the Convention contain supporting procedural rules to establish whether a notice had in fact been received by the addressee since legal systems which operated on the theory that notices were effective on dispatch often did not contain such support­ ing rules. However, Part III of the Convention contains exceptions to this rule in cases where it was considered that a communication ought to be received to be effective.I Article 26 [Judgement for specific performance] If, in accordance with the provisions of this Conven­ tion, one party is entitled to require performance of any obligation by the other party, a court is not bound to en­ ter a judgement for specific performance unless the court could do so under its own law in respect of similar con­ tracts of sale not governed by this Convention. PRIOR UNIFORM LAW Convention relating to a Uniform Law on the International Sale of Goods, The Hague, 1 July 1964, article VII. ULIS, article 16. Commentary 1. This article considers the extent to which a national court is re­ quired to enter a judgement for specific performance of an obligation arising under this Convention. 2. If the seller does not perform one of his obligtions under the contract of sale or this Convention, article 42 provides that "the buyer may require performance by the seller". Similarly, article 58 authorizes the seller to "require the buyer to the pay the price, take delivery or per­ form his other obligations". 3. The question arises whether the injured party can obtain the aid of a court to enforce the obligation of the party in default to perform the contract. In some legal systems the courts are authorized to order specific performance of an obligation. In other legal systems courts are not authorized to order certain forms of specific performance and those States could not be expected to alter fundamental principles of their judicial procedure in order to bring this Convention into force. Therefore, article 26 provides that a court is not bound to enter a judgement providing for specific performance unless the court could do so under its own law in respect of similar contracts of sale not governed by this Convention, e.g., domestic contracts of sale. There­ fore, if a court has the authority under any circumstances to order a particular form of specific performance, e.g. to deliver the goods or to pay the price, article 26 does not limit the application of articles 42 or 58. Article 26 limits their application only if a court could not under any circumstances order such a form of specific performance.' 4. It should be noted that articles 42 and 58, where not limited by this article, have the effect of changing the remedy of obtaining an or­ der by a court that a party perform the contract from a limited remedy, which in many circumstances is available only at the discretion of the court, to a remedy available at the discretion of the other party. Article 27 [Modificaton or abrogation of contract] (1) A contract may be modified or abrogated by the mere agreement of the parties. 2 Articles 43 (2), 44 (4),59 (2), 61 (I), 61 (2) and 65 (4). 1 See also paragraph 9 of the commentary to article 42. 28 Part One. Documents of tbe Conference (2) A written contract which contains a provision re­ quiring any modification or abrogation to be in writing may not be otherwise modified or abrogated. However, a party may be precluded by his conduct from asserting such a provision to the extent that the other party has re­ lied on that conduct. PRIOR UNIFORM LAW UNCITRAL Arbitration Rules, articles 1 and 30. Commentary 1. This article governs the modification and abrogation of a con­ tract. General rule. paragraph (1) 2. Paragraph (1), which states the general rule that a contract may be modified or abrogated merely by agreement of the parties, is intend­ ed to eliminate an important difference between the civil law and the common law in respect of the modification of existing contracts. In the civil law an agreement between the parties to modify the contract is ef­ fective if there is sufficient cause even if the modification relates to the obligations of only one of the parties. In the common law a modifica­ tion of the obligations of only one of the parties is in principle not ef­ fective because "consideration" is lacking. 3. Many of the modifications envisaged by this provision are tech­ nical modifications in specifications, delivery dates, or the like which frequently arise in the course of performance of commercial contracts. Even if such modifications of the contract may increase the costs of one party, or decrease the value of the contract to the other, the parties may agree that there will be no change in the price. Such agreements accord­ ing to article 27 (1) are effective, thereby overcoming the common law rule that "consideration" is required. 4. In addition, article 27 (I) is applicable to the question as to whether the terms in a confirmation from or in an invoice sent by one party to the other after the conclusion of the contract modify the con­ tract where those terms are additional or different from the terms of the contract as it was concluded. If it is found that the parties have agreed to the additional or different terms, article 27 (I) provides that they become part of the contract. As to whether the silence on the part of the recipient amounts to an agreement to the modification of the contract, see article 16 (1) and the commentary to that article. S. A proposal to modify the terms of an existing contract by includ­ ing additional or different terms in a confirmation or invoice should be distinguished from a reply to an offer which purports to be an accept­ ance but which contains additional or different terms. This latter situ­ ation is governed by article 17. Modificaton or abrogation ofa written contract, paragraph (2) 6. Although article 10 provides that a contract of sale need not be concluded in or evidenced by writing, the parties can reintroduce such a requirement. A similar problem is the extent to which a contract which specifically excludes modification or abrogation unless in writing, can be modified or abrogated orally. 7. In some legal systems a contract can be modified orally in spite of a provision to the contrary in the contract itself. It is possible that such a result would follow from article 10 which provides that a con­ tract governed by this Convention need not be evidenced by writing. However, article 27 (2) provides that a written contract which excludes any modification or abrogation unless in writing cannot be otherwise modified or abrogated. 8. In some cases a party might act in such a way that it would not be appropriate to allow him to assert such a provision against the other party. Therefore, article 27 (2) goes on to state that to the extent the other party has relied on such conduct, the first party cannot assert the provision. 9. It should be noted that the party who wishes to assert the provi­ sion in the contract which requires any modification or abrogation to be in writing is precluded from doing so only to the extent that the other party has relied on the conduct of the first party. This may mean in a given case that the terms of the original contract may be reinstated once the first party denies the validity of the non-written modification. Example 27A: A written contract for the sale to A over a two-year period of time of goods to be manufactured by B provided that all mo­ difications or abrogations of the contract had to be in writing. Soon af­ ter B delivered the first shipment of goods to A, A's contracting officer told B to make a slight modificaton in the design of the goods. If this modification was not made, he would instruct his personnel to reject future shipment and not to pay for them. Even though B did not re­ ceive written confirmation of these instructions, he did modify the de­ sign as requested. The next five monthly deliveries were accepted by A but the sixth was rejected as not conforming to the written contract. In this case A must accept all goods manufactured according to the modi­ fied design but B must reinstate the original design for the remainder of the contract. CHAPTER II. OBLIGATIONS OF THE SELLER Article 28 [General obligations] The seller must deliver the goods, hand over any docu­ ments relating thereto and transfer the property in the goods, as required by the contract and this Convention. PRIOR UNIFORM LAW ULIS, article 18. Commentary Article 28 states the principal obligations of the seller and introduces chapter II of Part III of the Convention. The principal obligations of the seller are to deliver the goods, to hand over any documents relating thereto and to transfer the property in the goods. 1 The seller must carry out his obligations "as required by the contract and this Convention." Since article S of this Convention permits the parties to exclude its ap­ plication or, subject to article 11, to derogate from or vary the effect of any of its provisions, it follows that in cases of conflict between the contract and this Convention, the seller must fulfil his obligations as re­ quired by the contract. SECTION I. DELIVERY OF THE GOODS AND HANDING OVER OF DOCUMENTS Article 29 [Absence of specified place for delivery] If the seller is not bound to deliver the goods at any other particular place, his obligation to deliver consists: (a) if the contract of sale involves carriage of the goods - in handing the goods over to the first carrier for transmission to the buyer; (b) if, in cases not within the preceding subparagraph, the contract relates to specific goods, or unidentified goods to be drawn from a specific stock or to be manu­ factured or produced, and at the time of the conclusion of the contract the parties knew that the goods were at, or were to be manufactured or produced at, a particular I Although this Convention provides that the seller must transfer the property in the goods, article 4 (b) specifies that, unless expressly pro­ vided, the Convention is not concerned with the effect which the con­ tract may have on the property in the goods sold. This matter is left to the applicable law. See also article 39 and the commentary thereto.