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Tuesday, Jan 25th 2022

The ACP Legal Association

  • OHADAC and ACP Legal

    The partisans of this project, called OHADAC (Organisation for the Harmonisation of Business Law in the Caribbean), decided to meet within the framework of the association ACP Legal, to help interested Caribbean States to implement the project.

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  • OHADAC in brief

    This brochure has been published by the ACP Legal Association.

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OHADAC PRINCIPLES ON INTERNATIONAL COMMERCIAL CONTRACTS

Article 2.2.1

Time of conclusion of the contract

Unless otherwise established in the offer, the contract is concluded at the time that the offeror receives the acceptance or at the time the offeror has knowledge of behaviour by the offeree implying acceptance.

1. Diversity of solutions as to the of time of conclusion of the contract

It is important to determine the time of confluence of the consents of both parties, which determines the conclusion of the contract in order to define the time after which obligations become enforceable, up till when the offer or acceptance may be withdrawn or revoked, the law applicable to the contract, the market price, the transfer of risks, the termination of contracts made in fraud of the obligees, etc. In the absence of agreement on the exact moment when contract is concluded, it is recommended that the offeror clearly indicates this time in its proposal. Otherwise, the parties run the risk of not being able to settle several issues related to their declaration of intention.

When contracts are made between parties that are found in the same location, there is no problem in determining the time or the place of conclusion of the contract. However, the parties may give themselves a cooling-off period and postpone their declarations of intention. The medium of communication used by the parties is also relevant. Being able to use an instant medium of communication does not give rise to the same problems as using a medium that requires some time for the other party to meet its counterpart. Therefore, rather than the physical presence of the parties in the same place, the most important point is the time between the manifestation of the first declaration of intention, which constitutes the offer, and the second, which is acceptance.

The declaration doctrine (Erklärungstheorie, Äusserungstheorie), according to which the conclusion of the contract occurs when the offeree expresses or externalises its declaration of will (Article 310 Cuban Civil Code; Article 54 Cuban Commercial Code) is hardly followed in Caribbean countries, insofar as it would allow the conclusion of the contract by the mere fact that the offeree has externalised his subjective intention, although this intention has not been communicated to the offeror.

The theory of expedition or remission (expedition doctrine, Absendetheorie Übermittlungstheorie, postal rule or mailbox rule), according to which the decisive moment is that in which the offeree releases his declaration of intention, sending it to the offeror, prevails in common law systems, through the postal rule. However, this old rule [Adams v Lindsell (1818), 12 Digest (Rweal.) 86, 477; Thomson v James (1855), 18 D1] is limited to the declarations sent via postal mail, and has been replaced by the use of the new means of telematic communications, that make English case law and common law systems actually close to reception theory (Section 64 Restatement (Second) of Contracts; Section 2-201 UCC). Article 317.2 Cuban Civil Code also provides that acceptance binds the offeree from when it is sent, although it does not bind the offeror but until the acceptance gets to the offeror's knowledge. This theory has the disadvantage of enabling the offeree to get the acceptance back from the post office or by giving the order to withdraw it when postal regulations allow it.

The theory of knowledge or information (information doctrine, Kenntnisnahmetheorie, Vernhemungstherorie) considers that the contract is concluded when the acceptance is known by the offeror. It is also considered as unfair if the offeree did the best to make its communication reach the offeror, and the offeror does not know of the acceptance by a fact imputable to it (for example, being away on a journey or taking advantage to revoke the offer and conclude a more advantageous contract with another party). This theory is accepted in Article 1.553.2 Honduran Civil Code, Article 1.214.2 of the Puerto Rican Civil Code, Article 112 of the Venezuelan Commercial Code, Article 1.137.1 of the Venezuelan Civil Code. The case of Cuba is unclear, since the Article 317.2 Cuban Civil Code provides that acceptance does not bind the offeror but once the acceptance reaches the offeror's knowledge, although it does bind the offeree from when the acceptance is sent. However, the theory of knowledge appears relaxed in many systems, and it is presumed that the offeror knows the acceptance only because it has been sent to its address. This safeguards legal security, since the offeror is not bound by a contract without knowing that it has been accepted, and prevents the proponent from delaying the time of knowledge of the declaration of intent of the offeree, so that it is said that it tries to maintain a fair balance (Article 1.137.5 of the Venezuelan Civil Code).

Indeed, as already noted in general in the comments on Article 1.3 of these Principles, the most widespread criterion reflects the theory of reception (reception doctrine, Empfangstheorie or Zugangstheorie), according to which the contract is concluded when the offeror receives the message containing the acceptance in its registered office or its place of business, that is, at home, at its business or mailing address [Article 864 of the Colombian Commercial Code; Article 444 Costa Rican Commercial Code (although Article 1.009 Costa Rican Civil Code appears that follows the rule of emission); Article 1523 Guatemalan Civil Code; Article 3:37.3 Dutch and Suriname Civil Code; Article 1.807 Mexican Civil Code; Article 80 Mexican Commercial Code; Article 84 Nicaraguan Commercial Code; Article 210 Commercial Code Panama; Article Venezuelan 1.137.5 Civil Code; Article 18.2 CISG; Article 1.10 UP; Article 2:205 PECL; Article II-4:206 DCFR; Article 22 Draft project reform of the French law on Obligations 2013]. This theory transfers to the offeror the diligence required to ascertain the content of the communication, so that even if the offeror does not have a real effective knowledge of the acceptance, the consequences are the same as if it had known the declaration of intention and the contract was concluded. This creates a better balance in the risk of uncertainty between the parties. Article 2.2.1 of these Principles follows the dominant theory. The accuracy of the time of receipt of acceptance will follow the rules laid down in Article 1.3.

Commentary

Article 2.2.2

Place of conclusion of the contract

Unless otherwise established in the offer, the contract is considered as concluded in the place of the establishment of the offeror.

Freedom of the parties to determine the place of the contract is generally accepted. The place of conclusion of the contract is of relative interest, but may be relevant to some collateral issues. That is why, in the absence of agreement, a subsidiary interpretative rule may be useful. Some legal texts in Caribbean countries deal with this issue. Article 91 of the Nicaraguan Commercial Code provides that the place of conclusion of the contract, if both parties reside in different places, is the residence of the party accepting the first proposal. On the other hand, Article 1.524 of the Guatemalan Civil Code provides, for cases in which the contract is done via telephone, by analogy with contracts between present parties, that the contract is concluded at the place where the offer was made, a rule generally followed in Article 864 of the of the Colombian Commercial Code and Article 115 of the of the Venezuelan Commercial Code.

These Principles have chosen the convergence between time and place, with the understanding that the place of the conclusion of the contract is the place where the declaration that concludes the contract is usually received, that is, the acceptance. This place is determined by the establishment of the offeror, which provides in any case a higher foreseeability and certainty.

Commentary

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OHADAC principles on international commercial contracts.pdf