Журнал международного права и международных отношений. 2018. № 3-4 (86-87). С. 14—19.

Journal of International Law and International Relations. 2018. N 3-4 (86-87). P. 14—19.

международное право / international law — соотношение международного и национального права / relationship between international law and domestic law

Proposal for Sale Contracts under the CISG’s Regulations in Comparison with the PICC and the Vietnamese Civil Law 2015

Luu Thi Bich Hanh 

Author:
Luu Thi Bich Hanh — Lecturer of International Business Law of the Foreign Trade University — Ho Chi Minh Campus, e-mail: Этот адрес электронной почты защищён от спам-ботов. У вас должен быть включен JavaScript для просмотра.
Foreign Trade University. Address: 15D5, 25 ward, Binh Thanh District, Ho Chi Minh City, Vietnam 

The contracting process plays an important role in the formation of a contract, which is formed by the two elements: an offer to enter into a contract and acceptance of such an offer. Therefore, these two factors are regulated by a number of legal documents, such as the United Nations Convention on Contracts for the International Sale of Goods (CISG), the UNIDROIT Principles of International Commercial Contracts (PICC) and Civil Code 2015 of Vietnam (CL 2015), all of which have provisions on these two issues. In order to have an overview of the law in the contracting process, this article analyzes and compares provisions on contract conclusion in the above documents through some case studies.

The objective of this article is to compare and clarify the differences in the approach to CISG contract provisions, the PICC and the Vietnamese Law. The article uses a comparative research methodology and analyzes case lawsuits, which make sense in providing key concepts and perspectives on how to deal with combined offers under the approach of the CISG, the PICC and the Vietnamese Law. The results of this comparison may help to draw some comments on the conditions of the offer to enter into a contract, the duration of the validity of the offer to enter into a contract, the right to cancel the offer to enter into a contract. The contract ensures that the contracting parties understand their rights and obligations and avoid legal risks arising in the course of performance of the contract.

Keywords: contract; offer; offeree; offeror; proposal to conclude a contract.

«Оферта на основании Венской конвенции ООН о договорах международной купли-продажи товаров: сравнительный анализ с Принципами УНИДРУА и Гражданским кодексом Вьетнама 2015 г.» (Лью Тхи Бич Хань)

В процессе заключения договора важную роль играют такие элементы, как предложение вступить в договорные отношения (оферта) и принятие данного предложения (акцепт). Они регулируются такими правовыми документами, как Венская конвенция ООН о договорах международной купли-продажи товаров 1980 г., Принципы международных коммерческих договоров УНИДРУА и Гражданский кодекс Вьетнама 2015 г. В статье дается обзор подходов к регулированию процесса заключения договора, на примерах судебных дел анализируются и сравниваются положения о заключении договора в указанных документах.

Целью статьи является выявление и сравнение различий регулирования порядка заключения договора Венской конвенцией ООН о договорах международной купли-продажи товаров 1980 г., Принципами международных коммерческих договоров УНИДРУА и вьетнамским законодательством. В статье используется метод сравнительного исследования, анализируется правоприменительная практика, что способствует формированию представления о том, как регулируется оферта нормами Венской конвенции ООН о договорах международной купли-продажи товаров, Принципов УНИДРУА и вьетнамскам внутренним правом. Результаты такого сравнительного анализа могут использоваться при разработке условий предложения о заключении договора, сроке действия оферты, праве отозвать оферту. Договор оговаривает, что его стороны понимают свои права и обязанности и избегают юридических рисков, возникающих в ходе исполнения договора.

Ключевые слова: договор; оферта; оферент; предложение о заключении договора.

Автор:
Лью Тхи Бич Хань — преподаватель международного коммерческого права Университета внешней торговли (филиал в г. Хошимине), e-mail: Этот адрес электронной почты защищён от спам-ботов. У вас должен быть включен JavaScript для просмотра.
Университет внешней торговли (филиал в г. Хошимине). Адрес: 15D5, 25 ward, Binh Thanh District, Ho Chi Minh City, Vietnam

A proposal to conclude a contract is the object of scientific interest and research worldwide. Many scholars devote their studies to this issue: Robert W. Emerson, John W. Hardwick, Business Law, Barron’s educational series Inc., USA, 1997; J. Smyth, D. A. Soberman, J. H. Telfer, R. Johanson, Australian business law, Prentice Hall of Australia Pty. Ltd., Australia, 1980. There are also some other authors such as Corinne Renault — Brahinsky — Outline of contract law, Culture and Information Publisher, Hanoi, 2002; Lawrence S. Clark, Robert J. Aalberts, Peter D. Kinder, Law and Business — The Regulatory Environment, Fouth edition, McGraw-Hill, Inc., 1994; James Barnes, Terry Morehead Dworkin, Eric L. Richards, Law for Business, Fourth Edition, Irwin, USA, 1991; Paul Latimer, Australian Business Law, CCH Australia Limited, 1987. This issue was also covered by Larry A. DiMatteo, Lucien Dhooge, Stephanie Greene, Virginia Maurer and Marisa Pagnattaro, in their article «The Interpretive Turn in International Sales Law» (2004) in Northwestern Journal of International Law and Business; by John E. Murray in «An Essay on the Formation of Contracts and Related Matters under the United Nations Convention on Contracts for the International Sale of Goods» (1988) in the Issue 8 of the Journal of Law and Commerce. However, most of the aforementioned works have studied the regulations relating to the proposal to enter into a general contract in the analytical review of commercial law. Therefore, there is no separate and in-depth study on the proposed merger, especially proposal to enter into a contract in accordance with the provisions of the CISG in relation to the PICC and the current Civil Law of Vietnam.

In Vietnam, there are very few studies related to the proposal to enter into a contract, in particular the study of the proposal to enter into a contract under the provisions of the CISG in relation to the PICC and the Civil Law 2015 of Vietnam. In most studies, authors pay much attention to the regulations on accepting the proposal to enter into a contract. For example, «Research on the proposal to enter into contracts in the context of comparative Law in Vietnam» by Duong Anh Son (Faculty of Economics, Vietnam National University). Ho Chi Minh’s article «The provisions of the Civil Code 2005 on the proposal to enter into a contract and accept the offer to enter into a contract — from a comparative law perspective» analyzes the proposal to enter into a contract and accept the proposal to enter into a contract and states that there are three legal documents regulating the signing and performance of contracts: Ordinance on Economic Contract 1989, Civil Code 1995 and Law Commercial in 1997. However, the author did not analyze all the provisions related to the offer to enter into a contract and acceptance of the proposal to enter into a contract but only analyzed and explained some provisions in relation to the practice and compared the legal validity of the proposal to enter into contracts and acceptance of the contract with the laws of some
countries.

In the current context of Vietnam, which has joined the CISG since the effective enforcement date on the 1st of January 2017, and when the Vietnam Civil Code 2015 adjustment of the offer to enter into the contract took effect on the 1st of January 2017, the study of an offer to enter into a contract under the CISG regulation, in relation to the PICC and the current Civil Code of Vietnam, contributes to the facilitation of the CISG operation in Vietnam.

In the formation of a contract, a party must have an intention to enter into a contract, which is expressed through a proposal to enter a contract. A proposal for concluding a contract may be addressed to one or more specific persons. In case of acceptance by the offeree, that offer shall become effective, and then a contract is formed and the obligations of the parties become legally binding. This may seem simple, but in the practice of the CISG, the PICC, the CL 2015, many legal issues arise.

An offer to enter into a contract is the expression of intent, indicating the will to enter into a contract, which will be addressed to the offeree and bind the offeror in case of acceptance. In this regard, the similarities and differences in the CISG, PICC and CL 2015 regulations on some key issues should be analyzed

Conditions for the validity of an offer

The CISG 1980, Article 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. Accordingly, an offer to enter into a contract should meet three conditions: clarity of the offer, the determination of the proposed person and the will of the offeror who wishes to be bound by the proposal himself.

The Civil Code of Vietnam in 2015 (CL2015) and the PICC also have a similar approach. Under Article 386 of the Civil Code 2015, a proposal to enter into a contract is the expression of the intent of the offeror to enter into a contract, the offeror to the identified party or to the public. CL2015, Article 386: Offer to enter into a contract means a clear expression by the offeror of its intention to enter into a contract and to be bound by such offer made to another specific party or the public (hereinafter referred to as the offeree). And (Art. 2.1.2 (Definition of offer)): a proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of
acceptance.

Firstly, in terms of clarity of an offer, the CISG 1982 states that «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». Therefore, under the CISG, the conditions for an offer to enter into a contract are clear enough and must include the goods, quantity and price. In addition, according to Article 55, the CISG provides for the determination of prices by considering prices under similar conditions of the relevant trade in case contracts do not state this explicitly or implicitly, or if there is no clear pricing clause. There is a difference in the content of Article 14 and Article 55 of the CISG. Based on the principle of the interpretation of the CISG, under Article 8, in the event that the will of the parties to enter into a contract is clearly expressed, but without the price terms, the value of the intention shall be higher than the requirement of the price determination under Article 14. Thus, the price shall be determined under Article 55.

However, in practice, the laws of the countries applying Civil Law system will often require the determination of the price on the offer. Accordingly, an offer must include a definite or identifiable price. The condition for Article 55 to apply is only if «a contract has been legally established» [see: 6]. This characteristic is clearly illustrated in following case [1]:

Summary of the case: The buyer sent a letter requesting the seller to make a quotation for 220,000 at a minimum price of crystal test tubes with lids according to the normal standard with a coefficient of expansion not exceeding 5.5 x 10-7. In addition, the buyer asked if Pyrex glass was used for producing test tubes. The seller sent the buyer a fax offering the Schott type glass which answered the description in the buyer’s request. There were no other requests form the seller in the fax. After that, the buyer sent the seller a fax with the reference to the seller’s offer and ordered 220,000 test tubes with lids made of colorless Duran grade 1 glass with a coefficient of expansion of 5.5 x 10-7 as per attached design. Through telephone and fax communication, the seller sent the buyer the drawing according to the request of the buyer’s customer. Moreover, the seller requested the buyer to confirm that the hydrolytical-Schott grade 1 glass would be used rather than Pyrex or Duran. Through multiple exchanges, the buyer finally responded to the seller by fax saying: «We confirm our acceptance of glass tubes with lids made of Schott grade 1 glass, the hydrolytical type».

When the seller delivered test tubes with lids made of Fiolax glass to the buyer with an invoice in the amount of DM 123,380.00, the seller asked the buyer to make a payment of the trading value. The buyer refused to pay because he ordered Duran type test tubes with higher quality than those delivered by the seller. The seller filed a lawsuit against the buyer to the German court.

Arguments and conclusions of the Court: Under no circumstances will any contract be entered into by either party. Based on the buyer’s written request, the seller gave an offer for the sale of colorless glass tubes to the size as per the drawings of the seller, and it is certainly that the product complies with the description of the buyer. The prices for Pyrex glass tubes at buyer’s request are not included. As far as the situation is concerned, the seller only offered the Fiolax glass because that was the only glass having a 5.5 x 10-7 expansion factor as required by the purchaser. In the request letter, by referring to Pyrex glass tubes, the buyer only wanted to ask for the price for the glass of this quality, but not of the other kind of quality.

In contrast, in Common Law states, laws do not require the determination of prices in an offer. It is only necessary to determine whether the parties have a willingness to agree on the manner of determining prices. On the other hand, under Article 6 CISG, the parties to the contract have an option not to apply Article 14. Therefore, an offer for the purpose of establishing a non-price term contract will not be considered invalid. Then, Article 55 will be applied to determine the price [see: 6].

Since the CL2015 as well as Vietnamese Trade Law do not specifically regulate this issue, the clarity of the proposal to enter into a contract is very general. How is a proposal made clear in Vietnamese law? Typically, a proposal must be specific enough to form a contract when accepted. Vietnamese laws on trading do not have general provisions on the basic terms of the contract. Therefore, in practice, it depends on the nature of each type of contract. For example, for proposals to enter into sales contracts, only the subject and price need to be specified. Moreover, for a particular transaction, an offer may also contain other terms and conditions such as the time and place of delivery, and the packaging of the goods; the parties may also mutually agree what kinds of content are the important terms to form the contract, or the main terms should be laid down in each specific type of contract required by the law.

Secondly, on the determination of the offeree, under Article 14.1 of the CISG «A proposal for concluding a contract addressed to one or more specific persons», CL2015-Article 386: «Offer to enter into a contract means a clear expression by the offeror of its intention to enter into a contract and to be bound by such offer made to another specific party or the public (hereinafter referred to as the offeree)».

Besides, an offer becomes effective when it reaches the offeree (Art. 14.2 of the CISG), which the offeror clearly or expressly name in the sender section or in the proposal for the place of business (if it is a legal entity), permanent address (if it is a natural person or otherwise make it possible for the offeree to correctly identify the information. The proposed party may be one or more persons, identifiable. There is an exception to Article 14.2 of the CISG in the case where an offer to enter is addressed to more than one unidentified person that «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». This regulation of CISG is in the case where the proposal is addressed to many unidentified persons and no further statement by the proponent, such as leaflets, flyers, advertisements etc., means that it is only considered as an introduction, offer some products without forming a proposal to enter into a legally valid contract [2, p. 59].

However, if the offer is made to one or more undefined parties, but represents the offeror’s genuine offer, the offer is valid. The Vietnam Civil Code 2015 also allows the proposal to enter into a contract to the public, but the PICC does not have any regulations regarding this situation. For example, buying or selling at a commodity exchange or stock exchange where is considered to conduct ongoing offering, request continuously, there should be hard to recognize the determined parties, the same with promise of prize, contest’s award. The following case is an example presenting a case where an offer to enter into a contract through an intermediary, without the exactly determined offeree is still considered legally valid [5].

Case summary: On December 26th, 2011, PJICO passed a fire insurance policy with Huada through the Chung Kuo office. On January 12th, 2012, a fire occurred at the factory of Huada Company (Tam Phuoc Industrial Park, Bien Hoa City, Dong Nai Province). One day later, the examination revealed that the insurance policy had not been signed and stamped by Huada Furnire. On January 16, 2012, Huada Company transferred the insurance premium to PJICO. After that, Huada returned the signed and stamped policy to PJICO. As PJICO refused the insurance compensation, Huada Company filed a lawsuit to the People’s Court of Bien Hoa City, Dong Nai Province.

Judgment of the Court: The judgment of the Court of Appeal on February 02nd 2016 of the People’s Court of Dong Nai Province reported that Chung Kuo office is an insurance brokerage organization. Huada Company through this office dealing with PJICO is the contract proposal. As a result, PJICO sent insurance policy as evidence of agreement. Therefore, the People’s Court of Dong Nai province decided to amend the first verdict, accept the petitioner’s request and force PJICO to compensate the total amount of nearly 58 billion VND.

Thirdly, an offer is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. CISG, Civil Code 2015 and PICC, all of which have provisions on these issues, under Article 14.1 of the CISG: «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». The CL2015 also requires: «Offer to enter into a contract means a clear expression by the offeror» (Art. 386). Besides, PICC-article 2.1.2 states that «a proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance».

Does such a proposal clearly show the intention to enter into a contract?

How to determine that the proposer has a «desire to be bound by that proposal»? In fact, it is not necessary for the offeror to make a clear statement that he or she wishes to be bound by this proposal. Usually, the nature and the content of the offer will be taken into consideration to define the intention of the proposer. The more detailed the proposal is, the easier it is to indicate the wish of being bound by the offeror.

In fact, the brochures and even draft contracts sent to partners, which include a statement «the contents of this offer are not valid as a contract» or «this offer is not valid as a contractual offer», are just invitations to negotiation, even if the offer contains the full contents of the contract [4].

Under Article 8 of the CISG, in order to determine whether the offeror wishes to bind himself in the event that the offer is accepted, all relevant facts should be taken into account; then, the will of the offeror in accordance with
Article 8.2 will be objectively considered, based on the will of an ordinary person of the same characteristics, and in the same context. For example, a buyer is considered having intention to enter into a contract when he or she sends the seller an order, stating that «we want to place an order» and requesting an «immediate delivery».

Duration and validity of an offer

The proposal to enter into a contract is a unilateral legal act from the offeror and is coercive to the offeror. The offer can only be effective when it reaches the proposed offeree. Article 15.1 of the CISG regulates that an offer of goods becomes effective when the offeree receives the offer, and Article 17 states that the offer shall terminate when rejection reaches the offeror. In addition, under Article 18.2, an acceptance is not effective if the indication of assent does not reach the offeror within the time he has fixed or, if no time is fixed, within a reasonable period of time, due account being taken of the circumstances of the transaction, including the rapidity of the means of communication employed by the offeror. An oral offer must be accepted immediately unless the circumstances indicate otherwise.

Thus, according to the CISG, a proposal to enter into a contract comes into effect from the time the proposed party receives the offer and terminates at the end of the response deadline. In addition, the requesting party has the right to set the time validity of the request. Despite the fact that the offer does not specify a time limit for the response, the proposer still remains bound within a reasonable period of time. Similarly, Article 388-CL 2015 does not consider the timing of the reply to be the condition of the request; therefore, a contractual agreement which does not mention the deadline for response, can still be considered a contract conclusion. The time when the offer to enter into the contract comes into effect is determined by the offeror. If the offeror fails to fix the time, the offer to enter into the contract shall be effective from the time the offeree receives the offer, unless otherwise provided for by the applicable law and under article 394 when the offeror does not mention the time limit for replying, acceptance of the offeree shall be deemed to be accepted only if it is conducted within a reasonable period of time.

On the other hand, the following situation may occur: A sends B an offer to enter into a contract on August 25th, 2017, in which sets the 10 days’ time period for the response without stating the starting date. In this case, how is the starting date determined? [3]

The CISG and the PICC have very specific regulations regarding such a situation. Article 20.1 of the CISG states: «A period of time for acceptance fixed by the offeror in a telegram or a letter begins to run from the moment 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 the offeror by telephone, telex or other means of instantaneous communication, begins to run from the moment that the offer reaches the offeree». Article 2.1.8 of the PICC stipulates: «(Acceptance within a fixed period of time) — A period of acceptance fixed by the offeror begins to run from the time that the offer is dispatched. A time indicated in the offer is deemed to be the time of dispatch unless the circumstances indicate otherwise». Accordingly, the 10 days period in the above example will be calculated from the date A sends the offer, no matter how A sends the offer. Meanwhile, if based on the CL 2015, we will stalemate in the above example because no exact date can be determined (August 25th, 2017 or the date when the offer is dispatched, or the date when B receives the offer) to be the starting date of the 10 days period for the offeree to accept due to the fact that CL2015 does not have such a specific regulation.

Withdrawal or termination of an offer

Before going into the analysis of specific legislation, the following scenario should be considered: «Ltd. Company A sends a purchasing offer to Ltd. Company B. When the purchasing offer has not been sent to company B, the director of company A called the office of company B to change the price terms in the contract. The secretary of Company B answered the call and promised to inform the director immediately but forgot to do so. When company A’s purchasing request was received, the director of Company B immediately agreed to accept the request and sent it back to company A. Company A did not reply. On the date of delivery stated on the request letter, Company B made a shipment to Company A but Company A did not receive the goods because there was no contractual agreement between A and B. Company B took Company A to court and demanded compensation. So, there was a contractual relationship between A and B».

Under Article 15.2 of the CISG, an offer may be withdrawn irrespective of the type of the offer. The only condition is that the offeree must be informed of the new intention of the offeror before or at the time the offeree receives the original offer. Vietnamese laws similarly stipulate the change and withdrawal of the offer to enter into a contract under Article 389 of the CL 2015. Thus, in this case, the change in the content of the proposal to enter into a contract is subject to the requirements of the CISG and the CL 2015: the changing content reaches the proposed party before the proposed party receives the offer, so in this case there is no contract between Company A and Company B provided that the channel information through the Secretariat is the official channel in Company B.

In terms of cancellation of a proposal to enter into a contract, under Article 16.1 of the CISG: «Until a contract is concluded, the offer may be revoked if the revocation reaches the offeree before he has dispatched an acceptance». However, also, under Article 16, the offer may not be revoked if that offer indicates by stating a time limit for acceptance or otherwise, that it is irrevocable; or, if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer (Art. 16.1 of the CISG).

Under the US law, a proposal to enter into a contract may be amended or withdrawn at any time before the time it is accepted by the other party [7]. With regard to the right to cancel the offer, the Vietnamese law differs from the CISG: Article 390 of the CL 2015 stipulates that an offer to enter a contract may only be cancelled if that offer contains provisions of the offeror’s right to cancel the offer, and the proposed party receives a notice of cancellation prior to sending the notice of acceptance of the offer to enter into the contract.

Some recommendations related to the proposal to enter into a contract

By analyzing the similarities and differences of the CISG and other legal documents, mainly the CL 2015, the following recommendations can be made:

1. Regarding the conditions of the offer to enter into a contract, the CISG and the CL 2015 are quite similar. However, there are some incompatible points such as the clarity of an offer to enter into a contract. In the CISG, there must be basic provisions such as subject, quantity, price, while CL2015 does not have such kind of the general provision of the basic terms of the contract, but depends on the nature of each type of contract to consider. Hence, in establishing the offer, attention should be paid to this content when the law applicable to the contract is the CISG. In addition, one of the complexities of applying the CISG is that, although the parties are parties to the convention, the interpretation and application of the convention is different. Businesses should take into consideration their partners and the court/arbitrator that will settle disputes applying a particular legal system to interpret or predict their explanations, as well as the judges using the CISG if a dispute relating to the determination of price (as analyzed above) arises.

2. As for the duration of the validity of an offer to enter into a contract, the CL2015 should be completed with the provisions on the manner of specifying the time of commencement of the acceptance response. When the offeror states the acceptance deadline without specifying the starting time, the solution is to refer to Article 2.1.8 of the PICC: «A period of acceptance fixed by the offeror begins to run from the time that the offer is dispatched. A time indicated in the offer is deemed to be the time of dispatch unless the circumstances indicate otherwise».

3. With regard to the right to cancel an offer, Vietnamese law differs from the CISG. Article 390 of the CL 2015 stipulates that an offer to enter into may only be canceled if the proposal contains provisions of the offeror’s right to cancel the offer and the offeree receives a notice of cancellation prior to sending the notice of acceptance of the offeror. This shows that the provisions on the right of cancellation of the proposal to enter into a contract in the CL2015 are very strict if the offeror does not anticipate to include it in the contract proposal, whereas under the CISG, until contracts are concluded, an offer may be cancelled if the offeree receives a notice of cancellation prior to the time they submit their acceptance of the offer. This difference requires traders to be cautious when establishing a contract conclusion.

List of References

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The article was received in February 2018.
Статья поступила в редакцию в феврале 2018 г.