The UN Convention for International Sales of Goods (will be mentioned as CISG) article 14 describes how a proposal can be validly constituted. It is one of the major tasks for the parties to be able to conclude an agreement successfully. Because, composing an agreement depends on the strict rules which explain the roles for both parties. Before we enter the scope of CISG art. 14, we should give brief information on concluding a contract. The persons whose aim is concluding an agreement must send an proposal to the other party. Because, as a usual treat, the opposite side must know the intention and the offer of the other party. Thats why, first on the way to contract is to send a proposal. Also, This proposal must have some qualities which convert an ordinary proposal to an offer. What the major factor is the intention of offerer. This is the first step which must be done by seller. After a proposal offered in accordance of the terms, the opposite party which is called buyer, has 3 opportunities to reply. Seller can assert its intention that is about making an contract. So, yes or no can be responses. Apart from these, an answer that is subjected to an condition can create a different effect if the intention of offering a new proposal can be clearly obtained. In this situation, roles changes and who makes proposal become the one who receives a new offer from the party that is offered previously. But the offers which are like «I promise to sell you my house if I so desire», are clear that the offeror had no intention to be bound by his proposal. Thats why, this kind of offers can be taken neither an offer nor counter offer.
As it is arranged in every legal system, CISG states its own rules about formatting a contract. Thus, Article 14 deals with offer, acceptance and public offer. Also CISG art. 14 dictates the rules for concluding an contract.
The 1980 United Nations Convention on Contracts
for the International Sale of Goods
2. CISG, ARTİCLE 14
(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 invitation to make offers, unless the contrary is clearly indicated by the person making the proposal.
3. HISTORY OF THE PROVISION
3.1. Antecedent of Article 14.
Article 14 deals with the definition of an offer for concluding a contract. Its antecedents are to be found in Article 4 of ULFC which read:
1. The communication which one person addresses to one or more specific persons with the object of concluding a contract of sale shall not constitute an offer unless it is sufficiently definite to permit the conclusion of the contract by acceptance and indicates the intention of the offeror to be bound.
2. This communication may be interpreted by reference to and supplemented by the preliminary negotiations, any practices which the parties have established between themselves, usage and any applicable legal rules for contracts of sale.
3.2. The Main Conflict on Article 14.
At the 1964 Hague Conference the Committee on Formation discussed the article. The main issue discussed was the problem of public offers. An overwhelming majority favoured its deletion; nonetheless, a proposal to the effect that public offers should be excluded only when addressed to particular persons was supported by a large majority when put to a vote. One delegation suggested that a public offer should constitute merely an invitation for an offer. The latter proposal was not adopted but was later taken up by UNCITRAL and became Article 14(2) of the present Convention. Later a Working Group was established and its report was adopted by the Commitee on Formation. Public offers were not mentioned at all in this second discussion
3.3. Formation Of Article 14 .
Article 14 of this Convention is the first of four successive articles on offers. The article has a positive and a negative paragraph. The former defines the offer, and the latter excludes public offers from the scope of proposals for concluding a contract.
Under Article 14(1) an offer must meet two main requirements. It should be sufficiently definite, and it should indicate the intention of the offeror to be bound in case of acceptance. In the UNCITRAL Working Group the Secretariat prepared a very elaborate text which was considered to be an alternative to Article 4 of ULFC. The first paragraph of this proposed text continued to contain the two requirements mentioned above as did the revised text of the Drafting Group .The first paragraph of the Secretariat's proposal was identical to that of the present Article 14(1). However, it was felt that the expression «sufficiently definite» would mean an offer which «expressly or implicitly indicates at least the kind and quantity of the goods and that a price is to be paid». The final version omitted «at least the kind and quantity of», and replaced «indicates» by «fixes or makes provision for determining the quantity and the price». On the other hand, it was suggested that determination of the price fell within the scope of sale of goods rather than within formation .In fact, the provision on price in Article 14 creates considerable difficulties with respect to Article 55 . Paragraph (4) of the Secretariat's proposal considered an offer to be sufficiently definite despite the lack of a stated price, and offered a rule under which the price nevertheless became ascertainable. This proposal was, however, first put into square brackets by the Working Group to indicate the opposition of some representatives to offers which do not indicate a price or make provision for its determination.
At its eighth session the Working Group also decided to place in paragraph (1) the words «addressed to one or more specific persons» in brackets. It also bracketed the second sentence in paragraph (2). Accordingly, where there is no provision made for the determination of the price, the proposal is considered to be for the price generally charged by the seller at the time of conclusion of the contract, or, if no such price is ascertained, then the price generally prevailing at the aforesaid time for such goods sold under comparable circumstances . At that time there was no rule for public offers. At its ninth session the Working Group renumbered the article as Article 8 and rearranged it. There was no change in paragraph (1) but for the deletion of the brackets. Paragraph (2) contained the rule on public offers which figures now in Article 14(2). There were no changes in paragraph (3) except again for the deletion of the brackets . At the eleventh session the Commission decided to integrate the three paragraphs proposed by the Working Group into two. In this way the final text of Article 14 of the Convention was drafted . At the same session the Commission decided to integrate the Formation Draft with the Sales Draft. One effect of this integration was that problems connected with the price appeared in two separate articles which are Articles 14(1) and 55 of the Convention. This led to heated discussions and much confusion.
3.4. Final Steps on the way of determining article 14.
At the Vienna Conference Article 12(1) of the UNCITRAL Draft Convention was again the object of a lengthy discussion. Seven amendments were filed. Four of the seven amendments proposed deleting the second sentence of paragraph (1). Nine delegations supported these proposals; twelve opposed. Deletion was supported mainly on the ground that Article 51 of the UNCITRAL Draft Convention (now Article 55) would suffice to solve the problem of price; that the requirements «sufficiently definite» and «intention to be bound» needed no further explanation: and that the second sentence of the paragraph was neither desirable as a rule nor valid as an example. On the other hand deletion was opposed on the ground that a fixed or determinable price belonged to the essentialia negotii; and that contracts frequently covered raw materials that were to be delivered over a period of years at prices that were difficult to fix. Another amendment proposed deletion of the words «expressly or implicitly» in order to avoid complications in interpreting the idea of implicitly fixing quantity and price.
Another question concerning offers was how to deal with public offers in the broad sense. This was to a great extent addressed to a technical problem, since there was never strong support for acknowledging public offers as proposals for concluding a contract. The discussion centered mainly on whether such offers should be mentioned at all and if so, how this should be done. Under Article 4(1) of ULFC a proposal (a «communication») for concluding a contract needed to be addressed to one or more specific persons. This wording, reappearing by decision of the Working Group at its eighth session indicates that public offers are not considered to act as proposals for concluding a contract. In the discussion on this matter at the 1964 Hague Conference (there was but negligible support for treating public offers as proposals to conclude a contract, and much greater support for not mentioning public offers at all. However, the majority was in favour of concluding that public offers do not amount to proposals to conclude a contract. Some held the view that public offers should be treated as offers subject to contract. Later on, it became clear that this school of thought found it sufficient to state that an offer must be addressed to one or more specific persons.
At the Vienna Conference only one proposal was made concerning paragraph (2). At the eighth meeting of the First Committee an amendment was proposed that the «sufficiently definite» requirement should apply to public offers also. This amendment was taken up at the thirty-fifth meeting of the First Committee but after the rapporteur stated that the requirements of paragraph (1) applied to paragraph (2) as well, the sponsor withdrew that amendment
4.1. The reason why we need to obtain strict rules for an proposal to constitute an offer.
It is possible that sometimes parties that try to create an contract can have sufficient agreement but they may need or intend to make bargains about the other provision for themselves to supply the best profit. Although they reach the agreement about basic provisions, because of the reason we mentioned above, parties may reply the other partys offer and suggest them a new offer (counter offer). In these circumstances it is crucial to know what kinds of declarations of intent are to be considered as offers . Thats why, it is necessary to state in the law the criteria of an offer to conclude a contract,
Article 14 declares the conditions for a proposal to conclude an offer. According to article 14, a proposal must have some major provisions to conclude an offer . All the requirements must be present in a proposal purporting to be an offer for concluding a contract:
4.2. An offer must be sufficiently definite
An offer must be sufficiently definite. For the purpose of the Convention, an offer is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price. A proposal which fails to satisfy the requirement of definiteness can not be qualified as a CISG offer.
The way how to obtain the definiteness for goods is to indicate the good. As it is stated in art. 14, the only way to provide definiteness for goods is to indicate the goods. Whereas, to obtain the definiteness of price and quantity, making or fixing expressly or implicitly is enough. So, we can understand that the strictness of obtaining the definiteness is more for goods. Implicitly determining goods doesnt provide the same conclusion and therefore a contract can not be concluded because of lack of requirements. The remaining terms of the contract resulting from the acceptance of an offer which only indicates the goods and fixes or makes provision for determining the quantity and the price would be supplied by usage or by the provisions in Part III on the law of sales. If, for example, the offer contained no terms as to how or when the price was to be paid, article 53(1) provides that the buyer must pay it at the seller's place of business and article 54(1) provides that he must pay it when the seller places either the goods or documentation controlling their disposition at the buyer's disposal. Similarly, if no delivery terms are specified, article 29 provides how and where the goods are to be delivered and article 31 provides when they are to be delivered . Unless the parties exclude or derogate the articles mentioned above, the CISG can automatically provide the other requirements. There is no provision to the effect that the goods must, if necessary to the contract, be specified . As we can understand, Sufficient certainty is not assured by means of supplemental reference to the preliminary negotiations, established practices between the parties, usages, and the applicable legal rules for sales contracts. Rather, the Convention establishes concrete requirements.
4.3. Quantity of the goods
The proposal for concluding a contract will be sufficiently definite to constitute an offer if it expressly 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 delivered under the contract only during the course of performance. For example, an offer to sell to the buyer &quot;all I have available&quot; or an offer to buy from the seller &quot;all my requirements&quot; during a certain 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.
The quantity does not have to be determined from the beginning. Quantity and price can be fixed later on the basis of objective factors. It may, however, also be left to one of the parties (list price) or a third person to fix quantity and price.
The quantity may be indicated in any way. As regards the requirement that CISG art. 14 demands for quantity, it can be expressly or implicitly determined. For instance, parties can agree about the amount of goods to sell and they can define it in the ways that they can understand or put precise conclusion which states for example 10 tons.
Article 14(1) requires the goods to be indicated in order to render the offer sufficiently definite, if the goods are not sufficiently specified, neither can the order be regarded as sufficiently definite. Relevant specifications may include among others, the shape and color of the goods, and standards for acceptable quality. The lack of such specifications may, under certain circumstances cast doubt upon the intention of the offerer to be bound .
The same rule for determining quantity is available for determining price too. According to CISG art 14, for the proposal to constitute an offer 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. 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. In this kind of situations, the buyer has implicitly made provision for the determination of the price and his order for the goods would constitute an offer.
A price can also be determined expressly or implicitly by reference to a particular market at delivery or at some other time. ... Reference to price lists or catalogues which reserve the right to change prices can also be understood as a reference to the price valid at the time of delivery.
The requirement of a fixed price in Art. 14(1) is apparently derived from French law and was the subject of intensive debate at Vienna. The debate was complicated by the fact that Art. 51 of the draft convention contradicted what was then Art. 12(1), because it provided that if the contract does not expressly or impliedly make provision for the price, &quot;the buyer must pay the price generally charged by the seller at the time of the conclusion of the contract&quot;
The price may also be indicated in an implied manner. It may happen that the offer of the prospective buyer makes no mention of the price. If the goods to be bought are of a standard character, such as spare parts, or if the offerer uses the seller's catalogue and it is otherwise clear from the offer that he feels himself bound in case of acceptance, it may be inferred that he accepted the price currently charged by the seller
4.5. Specification ( Public Offer )
A proposal must be sent to one or more specific persons. The CISG distinguishes between an offer, which binds the offerer, and an invitation that others make offers, which does not. CISG defines acceptance as either a statement or other conduct by an offeree indicating assent to an offer . Article 14 deals with the definition of an offer for concluding a contract. So, A proposal can be effectual when it is reached by a person or more persons who are supposed to receive the proposal. In CISG article 14, it is denominated as specific person(s). What is necessary for the specifications description in the meaning of article 14 is to despatch a proposal to whom the seller want to conclude a contract with. Offerer has an opportunity to choose the person(s) whom it may conclude an contract with. In the meaning of this chose, offerer can address proposal to everyone or only person(s) preferred. This kind of system is admitted by lots of countries but some countries and CISG doesnt accept a proposal addressed everyone or public as an offer. This language is obviously intended to make it clear that price lists, advertising circulars, catalogs and the like are not to be taken as offers. CISG denominates a communication addressed to a large group as a public offer and Public offer is not construed as an offer according to CISG. 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. Although this kind of conclusion is not available in CISG, the contrary situation is possible too if the intention of constituting an offer is obviously indicated in public offer. This means, that article allows a proposal generally addressed to be considered an offer if &quot;the proposer so intends. Again the importance of the intention of the offeror is reflected in the Convention. Such an indication need not be an explicit statement such as &quot;this advertisement constitutes an offer&quot; but it must clearly indicate an intention to make an offer. Via this point, it is probable for an offer that is even a public offer to be construed as an offer if meets the other criteria for being an offer and the intention that it is an offer is clearly indicated. An advertisement or catalogue of goods available for sale sent in the mail directly to the addressees would be sent to &quot;specific persons,&quot; whereas the same advertisement or catalogue distributed to the public at large would not. If an advertisement or catalogue sent to &quot;specific persons&quot; indicated the intention to be bound to a contract in case of acceptance and if it was &quot;sufficiently definite&quot;, it would constitute an offer under article 14.
However, the strictness of art. 14 (1) is substantially qualified by the provision in 14(2) that a proposal not addressed to one or more specific persons may be treated as an offer if such an intention is &quot;clearly indicated . This statement explains that art. 14(2) was adopted as a &quot;middle position&quot; between legal systems that recognize public offices and those that do not.
The number of addresses of an offer is immaterial. Proposals to buy or sell sent in the mail directly to the addresse(s) meet the requirement of «specific persons», even if thousands of such proposals have been mailed to specific addresses. However, all the requirements needed for constituting an offer must be satisfied to provide this effect.
When the need and requires are examined practically, the conclusions of CISG art. 14 can be duly understood. The logical reason of construing public communications as not an offer is lying on the fact that a communication addressed to a large group can involve practical difficulties and hazards. For example, sellers often give wide distribution to catalogues describing a line of goods and indicating prices. Some months may be required for the preparation, printing, and distribution of the catalogue. During this period some of the goods may become unavailable because of heavy demand, shortage of materials, or other production difficulties, and cost increases may call for readjustment of prices. If supply or production difficulties are widespread, or if the general price level rises sharply, the seller may face a flood of orders. If these orders should be &quot;acceptances&quot; of an &quot;offer,&quot; the result could be ruin for the seller and a windfall for the buyers . As a result of these logical identifications, Paragraph (2) of Article 14 consequently reaffirms the starting point in. A proposal not addressed to one or more specific persons is to be interpreted - presumptively as an invitation to make offers. However, a proposal clearly evidencing an intention to be bound should be treated as a true offer . But as we mentioned above, just sending advertisements and communicating dont mean that this kind of all communications include the intention. The intention to be bound should be investigated in all circumstances according to facts and events of all situations. For example, a person can sent specifically you its companys advertisements that indicate the price, quantity and the other subsidiary details, in such situations, the recipient has right to construe the advertisement as an offer. But in another example, Coca Cola Companys communication that indicates only the statement drink Coca Cola can not be interpreted as an offer. Thats why, obtaining the intention to be bound of offer to conclude a contract is the crucial obligation for the parties and the way how to obtain the intention changes in every situations requires. The presence or absence of intention to be bound may also be inferred from other requirements of an offer for concluding a contract. For instance, Article 14 requires an indication of the goods, but requires no further specification about them. In many cases a general indication suffices. But there may be cases where without specification the offer becomes ambiguous. Perhaps the goods cannot be manufactured without specifications, or the goods indicated may have variants. Under such circumstances, a suspicion may arise that at the time of the proposal the addressor had no intention to be bound yet in case of an acceptance . 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. The CISG offeror is properly regarded as the 'master' of his offer, in that the offer is to be interpreted according to the offeror's intent. There are no particular words which must be used to indicate such an intention . It may sometimes require a careful examination of the &quot;offer&quot; in order to determine whether such an intention existed. So, when one party is in doubt over whether the other intends to be bound or merely to open negotiations the question can usually be resolved quickly by phone or wire. Moreover, doubts suggested by the bare text of the parties statements will often be dissipated when those statements are interpreted in their full context, including &quot;the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties&quot; to obtain the intent of offeror. Absent clear evidence of this, however, weight will be placed on the understanding that a 'reasonable person' in the position of the offeree would have had.
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