Form of the contract: agreement valid even if concluded via Sms or WhatsApp

Luca Davini
Lawyer in Milan and Turin


The Vienna Convention (hereafter referred to as Convention or CISG) has introduced a uniform system of rules on international sales for the benefit of trade between companies bound by an international sale contract, that therefore operate within a common legal framework in which rules are increasingly more suitable for international trade compared to the individual national regulations.

Among these rules there is the freedom of form of the contract: according to the Convention the sales contract, its modifications and even its dissolution are not subject to requirements of form (Articles 11 and 29 CISG), which is one of the most suitable rules of companies for the way of doing business: this absolute freedom of form (the so-called “informality” of the contract) covers both the formality requirements of the contract and the proof of the contract itself, which is therefore not subject to the procedural limits of national regulations.

It should be borne in mind, however, that some states have reservations about freedom of form (for example, Russia) by requiring compliance with their national form to conclude an international sale (normally in writing), which is why it will be necessary to verify the presence of such reservations for the purposes of the valid conclusion of the contract or proof of its existence.

It follows that according to the Convention, an international sales contract can be validly concluded verbally, by telephone, by email and even through an exchange of short messages (SMS) or through Apps that offer instant messaging services (for example WhatsApp), this being a more and more widespread method in certain product sectors. Therefore, to make a practical case, a sale of jewels concluded by telephone or via WhatsApp will be fully valid if the CISG is applied to the commercial relationship between the parties.

Offer and acceptance

After ascertaining the freedom of form of the international sales contract, it is necessary to ask how, according to the Convention, the contract between seller and buyer will be finalized, that is, what is the mechanism that leads the parties to be able to affirm that there is a binding contract between them.

Firstly, in the context of the contract formation process, we can generally always identify two fundamental elements: the offer and the acceptance.

According to Article 14 CISG, the offer must be “sufficiently precise”, indicating at least: i) the goods (products) covered by the contract, and ii) the definition of their type, quantity and price (the latter could in theory not be indicated, in which case, according to the Convention, reference will be made to the price generally charged for similar goods at the time of the conclusion of the contract).

The offer, if not marked as irrevocable, becomes effective when it is communicated to the addressee at his place of business. It can always be revoked, but the revocation must take place before the offer reaches the addressee or in any case before the addressee has accepted it. For example, in the case of an offer to sell one consignment of goods, sent by email to the potential buyer, the seller may revoke the offer as long as this is done before the buyer has sent his email of acceptance.

The acceptance of the offer is effective only when it reaches the party that sent the offer and can take place either through a statement expressed in writing or verbally, or through a conclusive conduct, for example by paying the down payment indicated in the offer.

Valueless silence

It should therefore be borne in mind that silence, contrary to a rather widespread erroneous belief that refers to the public law principle of silence consent, does not represent has acceptance according to the Convention.

Consequently, writing at the end of an order confirmation sent by the seller to the buyer that in the absence of a response within, for example, 48 hours the contract will be finalized, has no legal value but has the only effect of exposing the seller to the risk of having the delivered goods returned, unless there is a contractual practice established between the parties or a use in the sector in this sense.

In the event that the content of the acceptance is identical to the offer, the sale is finalized and the contract is considered concluded: the English authors metaphorically illustrate the concept in question speaking of the mirror image rule to emphasize the need for perfect identity between offer and acceptance.

Additional conditions

The real problem arises, however, when, for example, the seller sends the buyer an offer containing the elements on which the parties have reached an agreement (price, returning of goods and delivery date) and the buyer returns a final purchase order confirmation or its general conditions of purchase with additional clauses or different from the elements mentioned above in the offer, for example in terms of warranty, applicable law, jurisdiction. The parties seem to agree and probably agree on the substance of the deal, but not on everything: in these cases the sale has not yet been finalized and the contract cannot be said to be concluded.

Conclusive conduct

The CISG solves these situations by resorting to two principles: a) providing that an acceptance that does not comply with the offer is valid as a counteroffer (Article 19, paragraph 1) (for example, a purchase order with payment terms different from those provided for in the seller’s offer) and b) providing that acceptance can also take place through conclusive conduct (Article 18, paragraph 1).

This last principle, in particular, is in line with the practice of business according to which, if the parties really want to close the deal sooner or later they conclude the contract according to the conditions of the last party who sent the final document (the English speak in this case of last shot rule): for example, the buyer will, after having received the last offer from the seller perform a concluding conduct that effectively indicates the expression of his consent, paying the down payment or sending the carrier to collect the goods from the seller.

In any case, to avoid unpleasant surprises, the advice is to use general conditions of sale or written order confirmations to be returned signed for express acceptance by the commercial partner or by resorting to a specific contract for particularly important operations.

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Marcello

Dear Aurelia, the information you have provided are not sufficient for an answer which is subject to a professional engagement. In any case, we should study the provisions of the contract and identify governing law of the contract.If it does not provide anything on governing law then conflict law shall apply (in the most part of the countries likely the governing law will be the law of the country where the agent is domiciled). best regards Marcello Mantelli

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Aurelia

I signed a contract with a fashion agency but there were no termination clauses in the contract and decided to withdraw it before one week after signature so sent them an email but after 14 days they sent me an email and asserted that because i didnt withdraw in legal deadlines i have to perform the contract and pay whole money.Noboday told me about any deadlines and nothing was in the contract!! Why did they claim such a thing?

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