1. INTERNATIONAL BUSINESS CONTRACTS
CISG: Part 2
CONTRACTS

2. When does a contract exist?
Offer +
Acceptance =
Contract

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

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

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

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

7. IMPLIED ACCEPTANCE
If the past dealings between the offeror and the offeree so indicate,
then
an act performed by the offeree shall be construed as an acceptance

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

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

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

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

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

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

14. FORMATION OF CONTRACTS UNDER COMMON LAW

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

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

17. Modified from: Richards, E. 1994. Law for global Business. Irwin, USA
CASE
Todd contracted to build the Cariocias a cabin for $ 20,000. Before completing his work, Todd informed the Cariocias that he would not complete the job unless they paid him an additional $ 5,000. The Cariocias agreed to pay the extra $ 5,000.
Under
1) British Common law rules
2) CISG
would Todd be entitled to this additional compensation although the Cariocias refuse to pay?
Modified from: Richards, E Law for global Business. Irwin, USA

18. Modified from: Richards, E. 1994. Law for global Business. Irwin, USA
SOLUTION 1)
Todd paid no consideration for the promise of additional ($5,000) compensation
=> The Cariocias must pay only $ 20,000 2)
The CISG holds that contracts may be modified by mere agreement of the parties
=> As long as the modification meets the formal requirements of the contract the Cariocias must pay
$ 25,000
Modified from: Richards, E Law for global Business. Irwin, USA

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

20. DETAILS OF CONTRACT

21. NON-DISCLOSURE AGREEMENT
An NDA is a contract through which the parties agree not to disclose information covered by the agreement
Creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets
Can be concluded to protect any type of information that is not generally known
should be signed at an early stage of negotiations
Contents
definition of confidential information
exclusions from confidential information
obligations of receiving party
time periods, and
miscellaneous provisions.
An NDA can be mutual or one-way

22. NON-WAIVER CLAUSE
A non-waiver clause aims to preserve a party's rights and remedies if that party fails, whether intentionally or by oversight, to take action in respect of a breach of contract
Generally such clauses will provide that:
a failure or delay in enforcing an obligation, or exercising a right or remedy, does not amount to a waiver of that obligation, right or remedy
a waiver of a breach of a term does not amount to a waiver of a breach of any other term in the agreement
a waiver of a particular obligation in one circumstance will not prevent a party from subsequently requiring compliance with the obligation on other occasions