Proposal, acceptance and pre-contractual responsibility. Vienna Convention and the Civil Code compared.
The purpose of this article is to give the reader an overview of how the Vienna Convention has regulated the institutions of the proposal of an offer, its acceptance, pre-contractual liability in negotiations and the main differences from Italian law.
At the outset, it should be pointed out that, since the Vienna Convention is characterised by freedom of form (and of proof) under Article 11, the proposal and acceptance are also to be considered free-form acts, since they may be manifested in any manner (thus either orally or by conclusive facts).[1] This provision is in any event derogable in nature, with the consequence that not only may the parties provide for the necessity of a specific form for the validity of the contract they intend to enter into, but also that such a derogation may result from the existence of usages and customs (on this point cf. commentary on art. 9).
1. Art. 14: Definition of proposal.
"A proposal for a contract, addressed to one or more specified persons, constitutes an offer if it is sufficiently definite and if it indicates the intention of its author to be bound in case of acceptance. A proposal is sufficiently definite when it indicates the goods and, expressly or by implication, fixes the quantity and price or gives indications capable of determining them.
A proposal addressed to unspecified persons is considered only as an invitation to offer, unless the person making the proposal has clearly indicated otherwise."
The definition of a proposal in the Vienna Convention is finalised in Article 14(1), which lists in detail what are the necessary elements for it to be considered valid.
In particular, that article provides that the proposal, to be such, must be "sufficiently precise", indicate the offeror's willingness to be bound, expressly state the goods or goods to be contracted and also implicitly fix (or in any event give indications for determining them) the quantity of those goods and the price[2]by referring, where they have not been determined, to the trade customs and practices referred to in Articles 8 and 9 of the Convention.
- Read also: International trading and the importance of customs and traditions: Vienna Convention and Civil Code compared.
Importantly, if one wishes to expressly exclude that the manifestation of will can be regarded as a genuine proposal, it should therefore be expressly provided for, through the insertion of formulae such as 'this is an expression of interest, not an offer to buy'.
This provision, although it has no express equivalent in the civil code (which does not list in any article what the requirements of an effective proposal are), however, reflects principles that are basically common domestic law: the proposal must manifest the will of the party to be bound and, likewise, be of sufficient content to define the contractual programme to be performed.[3]
An element that is detaches instead from our right and certainly that of Art. 14(2), which provides that a contract proposal must be addressed to one or more specified persons. If, on the other hand, the proposal is addressed to a generality of persons, it has the value of a mere invitation to negotiate or to offer, unless the contrary is clearly indicated.
Therefore, the legislator of the Convention did not accept the rule (known and present in Italian law) of theoffer to the public referred to in Art. 1336 of the Civil Code as a proposal capable of leading to the conclusion of the contract at the time when acceptance is brought to the knowledge of the principal.
2. Art. 15: Withdrawal of the proposal.
"An offer has effect when it reaches the addressee.
An offer, even if irrevocable, may be withdrawn if the relevant declaration reaches the addressee before or at the same time as the offer."
Like Italian law (Art. 1335 of the Civil Code), the Vienna Convention also configures the proposal (and offer) as recetive actwhich takes effect only when it has been brought to the knowledge of the addressee. The Convention, in order to better explain when a proposal (and offer) is brought to the knowledge of the other contracting party, expressly provides in Art. 24 that
"For the purposes of this Part of the Convention, an offer, a declaration of acceptance or any other manifestation of intent "is received" by its addressee when it is addressed orally to the addressee or is delivered by any other means to the addressee at its place of business or mailing address or, if it has no place of business or mailing address, at its habitual residence"
The second paragraph of Article 15 also recognises the proposer's right to "withdraw"(and not revoke, a power granted to it by Art. 16(1)) the offer within the time limit of its delivery to the offeree.
The Civil Code does not regulate this difference, but only regulates the institution of the offer in Art. 1328 of the Civil Code, and the difference between these elements is 'only' developed by doctrine.[4]
It should be noted that the two hypotheses (withdrawal and revocation) differ in that in the first case the proposal is eliminated, even before it has become effective; in the second case of revocation, on the other hand, a manifestation of will already producing effects is eliminated.[5]
3. Art. 16: Revocation of the proposal
"As long as the contract has not been concluded, an offer may be withdrawn if the withdrawal reaches the offeree before the latter has made an acceptance.
However, an offer cannot be revoked:
- (a) if it indicates, by setting a specified time for acceptance or otherwise, that it is irrevocable; or
- (b) whether it was reasonable for the addressee to regard the offer as irrevocable and whether it acted accordingly."
As noted above, while Art. 15 governs the withdrawal of the proposal, Art. 16 governs the different institution of revocation.
From an initial and cursory analysis of that article, it might be thought that the uniform law discipline is aligned to the point of matching that of domestic law: although Art. 16(1) provides that a proposal may be revoked as long as the contract has not been concluded, it makes the effectiveness of the revocation conditional on the assumption that the same reaches the receiver, before it has sent its acceptance.
In fact, on closer inspection, the civil law discipline otherwise provides that the proposal may be revoked up to the conclusion of the contract, but Art. 1326(1) of the Civil Code provides that this moment occurs thereafter, i.e. when "the proposer has knowledge of the other party's acceptance"
Thus, if a person makes a contractual proposal relating to a contract of sale governed by the civil code he is free to revoke it until he has knowledge of the acceptance; if the contract is governed by the Vienna Convention, he may revoke it only until the contract is concluded, but the revocation reaches the offeree before he has sent the acceptance.
There are actually two situations in which the final moment by which the power of revocation is exercised actually coincides with the moment of conclusion of the contract.
The first hypothesis is, of course, that of a contract concluded orally: in this case there is undoubtedly contextuality between sending and receipt of acceptance.
The second hypothesis, which would in itself require more elaboration (unfortunately not compatible with the mould of the present article), when the addressee of the offer may manifest consent by means of an activity in the performance of the contract itself, pursuant to Art. 18 para.[6] Since the performance of that activity entails the conclusion of the contract, the power of revocation may only be exercised before the offeree performs that activity, which in effect replaces the declaration of acceptance.
This principle, however, has two exceptions, contained in the second paragraph of this article.
With reference to the exception provided for in Art. (a), it should be noted that in principle the fixing of a specific time limit does not in itself determine the irrevocability of the contractual proposal, but represents a presumption[7] of irrevocability. In that case, in order to avoid any uncertainty as to irrevocability, it is also advisable to include in the notice a formula such as 'this offer is valid and irrevocable until [date]'.or "our offer is still valid until [date].".
As to Art. (b) of that para. it provides that the proposal may not be revoked where the offeree has reasonably believed it to be irrevocable. It is important that, also for the purposes of proof, the offeree has actually acted accordingly, for instance by producing or designing the product, by purchasing raw materials, by entering into contracts functional to the business with third parties, by hiring seasonal workers, etc.[8]
4. Art. 17: irrevocable proposal.
"An offer, even if irrevocable, expires when its rejection reaches the offeror."
Since the offeror's power of revocation is an inconvenience for the offeree, who cannot rely with certainty on the conclusion of the contract on the terms indicated in the offer, in order to facilitate acceptance the principal may make its offer firm for a certain time. In such a case the offer is irrevocable until the expiry of the time limit.
But what happens if the offeree declares that he or she rejects the proposal.
The Convention regulates this issue clearly and explicitly in Art. 17, providing precisely that such notification (which must be made in the manner and according to the precepts briefly analysed above), entails the forfeiture of the offer.
This question is not, however, developed in our Civil Code; hence the problem of the fate of the irrevocable proposal once the offeror has refused it is debated (in doctrine). It therefore remains open whether the question should be resolved in the sense that the offeror would reacquire the right to revoke, or whether with the rejection the offeree consummates its power to accept, without the need for a revocation of the proposal in order to exclude the continuation of its effectiveness until the expiry of the time limit even after the rejection has occurred.[9]
5. Art. 18: acceptance of the proposal.
"A statement or other conduct of the recipient indicating assent to an offer constitutes acceptance. Silence or inaction alone cannot amount to acceptance.
The acceptance of an offer takes effect when the expression of consent reaches the author of the offer. The acceptance has no effect if it does not reach the author of the offer within the time stipulated by the offeror or, in the absence of such stipulation, within a reasonable time having regard to the circumstances of the transaction and the rapidity of the means of communication used by the author of the offer. An oral offer must be accepted immediately, unless the circumstances imply otherwise.
If, however, by virtue of the offer, custom or usage established between the parties the offeree may indicate that it accepts the offer by performing an act relating, for example, to the dispatch of the goods or the payment of the price, without giving notice to the author of the offer, the acceptance will take effect at the time when that act is performed, provided that it is done within the time limits set out in the preceding paragraph."
With reference to the first part of the first paragraph (concerning form), the principles of freedom of form art. 11 already briefly analysed above, which leave the offeree a wide choice in determining the manner of manifestation of consent (unless, of course, it has been derogated from by agreement or such derogation can be inferred from custom and usage).
With regard to the second part of the second paragraph, case law has recognised as conclusive behaviour Valid as acceptance: acceptance of the goods by the buyer; payment of the goods by the buyer; taking delivery of the goods by a third party; acceptance by the seller of a bank guarantee and commencement of production of the goods; issuance of a letter of credit; drafting and issuance of a pro forma invoice.[10]
The last part of this paragraph provides that inaction or the silence in themselves cannot constitute acceptance and therefore do not lead to the conclusion of the contract, unless of course this has been agreed between the parties or can be inferred from any usage or commercial practice between the parties.
Article 18 para. 1 has no immediate counterpart in the Italian legal system.
Indeed, although theArticle 1326 of the Civil Code does not deal with the modalities of acceptance, it is however settled case-law that acceptance may be expressed not only by a declaration, but also by any other conduct from which the person's negotiating intent may be inferred.[11]
- Read also: General terms and conditions: battle of the forms, Vienna Convention and civil code.
Similarly, silence counts as a declaration when, having established a certain relationship between the parties, a common course of action or good faith imposes on the party the burden or duty to speak.[12] Case law confirms this orientation, adding the possibility that, according to a given historical and social moment, having regard to the quality of the parties and their business relations, the silence of one may be understood as adherence to the will of the other.[13]
6. Revocation and pre-contractual liability: civil code.
Under civil law, revocation of consent is effective even if unjustified. Indeed, as noted above, the offeror may as a rule revoke its consent until it has had notice of the offeree's acceptance.
The principal who justifiably withdraws the proposal is (only) liable, formerly Art. 1328(1) of the Civil Code to indemnify the offeree for the costs and losses incurred by the offeree as a result of having unsuccessfully commenced performance of the contract before having notice of the revocation[14] (this provision of the Civil Code constitutes a case of blameless responsibility[15] and by lawful act).
When the withdrawal of consent is unjustified, it may give rise to pre-contractual liability[16] if it infringes a reasonable expectation (formerly Article 1337 of the Civil Code)[17] of the other party on the conclusion of the contract.[18] It is stated in case law:
"Where the contacts between two parties are not such as to lead to the conclusion of the contract because of the lack of unambiguous conduct, they may nevertheless constitute negotiations that have reached such a stage of development as to give rise to a justified expectation on the part of one party that the contract will be concluded; in such a case, unjustified termination gives rise only to pre-contractual liability, with the consequent obligation to pay damages. On the other hand, the conclusion of agreements on certain points of the contract to be concluded or partial agreements, in view of their provisional nature and their effectiveness subject to the positive outcome of the negotiations, do not go beyond the scope of the pre-contractual phase and certainly do not prove the conclusion of a contract.. "[19]
Thus, while the Civil Code certainly does not impose a duty on the parties engaged in negotiations to conclude a contract, it does oblige them to conduct them according to good faithsuch as to give rise to a reasonable expectation that the contract would be concluded.
Regarding compensable damage, case law[20] holds, however, that (in contrast to contractual liability), only the so-called "liability" in negotiations (unjustifiably interrupted) is compensable. negative interest(1), i.e. the harm the person suffers for having uselessly relied on the conclusion of the contract; this interest may be relevant both in terms of the
- emergent damage, i.e. the pecuniary loss that the person would have avoided if he had not relied on the conclusion of the contract (e.g. expenses incurred in the course of negotiations, wasted activity in negotiations), and of the
- loss of profit, which the latter could have obtained for other contracts from which it was diverted.
Therefore, anyone who has vainly trusted in the success of a negotiation is entitled to be compensated for the loss of advantage he could have made if, instead of employing his activity in the failed negotiation, he had devoted himself to other negotiations from which he could have made a certain profit: in this respect he will have to prove the profit he would have made from the execution of other potential business, the subject of specific advanced negotiations that he then abandoned in order to cultivate the one that failed due to the impropriety of the other party to the negotiation.
7. Revocation and pre-contractual liability: Vienna Convention.
Whereas in the Civil Code, as has been seen, the need to protect the offeree against the offeree's (broader) power of revocation is realised by making the offeree liable for the offeree's expenses and losses incurred formerly Art. 1328 of the Civil Code and, possibly, to compensation for negative interest, in the event of the application of the Vienna Convention (which as we have seen anticipates the time by which the offeror may revoke the proposal at the time of dispatch of acceptance by the offeree) the matter becomes not a little complicated.
Indeed, doctrine is not uniform as to whether the Vienna Convention regulates pre-contractual liability or not. There is, however, a prevailing orientation, which holds that the Convention does not regulate this.[21] On the other hand, there are, however, numerous commentators who consider that the Convention is nevertheless applicable to 'preliminary agreements', at least to the extent that such agreements provide for the manner in which the final contract is to be performed.[22]
In fact, in order to understand (or at least approach) these apparently conflicting orientations, it would first be necessary to differentiate the hypothesis of liability for breakdown of negotiations from the breach of specific contractual provisions regulated by the parties in a preliminary contract.
In fact, according to part of the doctrine, if the parties have not signed a proper preliminary contract and the issue concerns the mere breakdown of contract negotiationsthe issue would appear to be (indirectly) regulated by the Vienna Convention. In fact, since Articles 15 and 16 of the Convention, as we have seen, expressly deal with the question of the revocability of an offer, the fact that the Convention does not provide for any protection for the offeree leads us to believe that such a revocation does not confer on that party any right to claim damages,[23] resulting in the inapplicability of the civil law protections analysed above.
Less clear, however, is the case where the parties have signed a preliminary contract and one party defaults, since, as noted above, the Convention does not regulate the institution of pre-contractual liability.
It is certainly important to understand, at first analysis, whether the individual relationship is or is not regulated by the Convention. In fact, if one were to espouse the thesis that the Convention does not apply to any pre-contractual relationship, it would be common ground to argue that this issue is necessarily governed by the common law rules applicable to the existing relationship.[24]
Otherwise, if one were to follow the thesis of part of the doctrine,[25] which asserts that certain preliminary contracts are governed by the uniform law, it must be understood whether or not in the event of a breakdown of transactions or any breach of contract by one party during negotiations, the party suffering the harm can make use of the instruments recognised by the Convention, which concern, precisely, the breach of a contract of sale and certainly not of a preliminary contract. If this thesis were to be followed, the indemnifiable harm would therefore be (in fact) contractual in nature, with consequent greater protection than under civil law (which provides, as we have seen, for more limited compensation in the case of pre-contractual harm).
Certainly, this problem does not arise where the action seeks to recover damages for harm the object of which is excluded from the scope of Art. 2(a), Art. 4 or Art. 5. (e.g. damage caused during negotiations by fraudulent activity).
All these problems and doubts relating to the application and applicability of the Convention certainly entail greater uncertainty for the parties when concluding the contract than if only civil law were to be applied to the relationship; this element should certainly be taken into account, trying (compatibly with the difficulties that companies face daily in international trade) to regulate them as carefully as possible, not only the sales relationship, but also its negotiation.
[1] MASTROMATTEO, La vendita internazionale, Giappichelli Editore, 2013.
[2] With reference to the quantification of the price, the present article merely points out that the provision under consideration would seem to be difficult to integrate with that of Art. 55 of the Convention, which anticipates: "If the sale is validly concluded without the price of the goods sold having been expressly or impliedly fixed in the contract, or by a provision enabling it to be determined, the parties shall, unless otherwise provided, be deemed to have tacitly referred to the price usually charged at the time of the conclusion of the contract, in the trade concerned, for the same goods sold in similar circumstances." Indeed, if the fixing of the price is a condition for the completion of the sale, it is difficult to admit that one can speak of a validly concluded contract without this determination, at least implicitly, having taken place. Precisely for this reason, most decisions have refused to apply Art. 55 Oberlandesgericht Frankfurt a.M., Germany, 15 March 1996, Bundesgerichtshof, Germany, 23 July 1997, Landgericht Alsfeld, Germany, 12 May 1995, Kantonsgericht Freiburg, Switzerland, 11 October 2004. On this point see. UNCITRAL Digest of Case Law on the United Nations Convention on Contracts for the International Sale of Goods, 2016 Edition.
[3] Case law holds that a statement can only qualify as a contractual proposal when it manifests a unambiguous will to commit and not merely a willingness or a wish, Cass. Civ. no. 6922 of 1982; VESSICHELLI, Commentary on Art. 14, at New civ. comm. laws, 1989, p. 51.
[4] Cf. BENEDETTI, From contract to unilateral transaction, Milan, 1969, 95.
[5] RUBIN, Commentary on Art. 15, at New civ. comm. laws, 1989, p. 51.
[6] Art. 18, third paragraph: "If, however, by virtue of the offer, custom or usage established between the parties the offeree may indicate that it accepts the offer by performing an act relating, for example, to the dispatch of the goods or the payment of the price, without giving notice to the author of the offer, the acceptance will take effect at the time when that act is performed, provided that it is done within the time limits set forth in the preceding paragraph. "
[7] MASTROMATTEO, op. cit.
[8] FERRARI, sub Article 16, International Sale of Goods tome II, in Commentario del codice civile Scaiola-Branca, edited by Galgano, 2006.
[9] On this point, see Pluris online, Annotated Civil Code, Article 1329 of the Civil Code, Wolters Kluwer, 2021.
[10] On this point cf. Unicitral digest of Case Law, sub. art. 18, 2016 Edition.
[11] Cf. Civil cassation 2003, no. 3341, which states that it is the task of the court of merit to identify and value elements from which to deduce a tacit manifestation.
[12] BIANCA, op. cit.
[13] Cass. Civ. 2014 No. 10533.
[14] On this point, see BIANCA, Civil Law, The Contract, Giuffrè, 1987.
[15] Cass. Civ. 1952 no. 1729. CIAN - TRABUCCHI, Short Commentary to the Civil Code, sub. art. 1328, CEDAM, 2014.
[16] See Cass. Civ. 1786/2015; Cass. Civ..1051/2012; Cass. Civ. 11438/2004.
[17] Art. 1337 of the Civil Code "The parties, in the conduct of negotiations and in the formation of the contract, must behave in good faith'.
[18] Cf. BIANCA,
[19] Cass. Civ. 1999 no. 5830.
[20] See on this point Cass Civ. 24795/2008, Cass Civ. 1632/2000.
[21] DIMATTEO - International sales law. A global challenge, Cambridge, 2014.
[22] TOWER - Preliminary Agreements and CISG Contracts, at Drafting Contracts under the CISG, p. 191 ff., 2008.
[23] FERRARI - Kommentar zum Einheitlichen UN-Kaufrecht, Art. 5, 2009.
[24] On this point, it should be noted that under European law, Article 12 of the Rome II Regulation states that: "The law applicable to non-contractual obligations arising out of pre-contractual negotiations, whether or not the contract has actually been concluded, is the law that applies to the contract or that would have been applicable to the contract had it been concluded." Thus, while the problem of identifying the applicable law for culpa in contrahendo does not arise in the case of application of European law, the same certainly cannot be said in the case the contractual relationship is (or may be) subject to a regulation extra-EU.
[25] TORSELLO, op. cit.
