Corporate and Business Law (Global) · Introduction to the UN Convention on Contracts for the International Sale of Goods and ICC Incoterms

Formation of Contract under the CISG: Offer and Acceptance

Updated 11 October 2026 · Fact-checked

Under the CISG (Part II), a contract is formed when an acceptance of an offer becomes effective. An offer must be addressed to specific persons, be sufficiently definite and show intent to be bound. Acceptance is effective when the indication of assent reaches the offeror. Silence alone is not acceptance.

Understand Formation of Contract under the CISG

The CISG is the UN Convention on Contracts for the International Sale of Goods. Part II deals with how a contract is formed. It applies when the CISG itself applies to the sale, and it can be excluded by the parties. Its aim is a single, neutral set of rules for buyers and sellers in different countries.

An offer is a proposal to conclude a contract. It must be addressed to one or more specific persons. It must be sufficiently definite: it must indicate the goods and expressly or implicitly fix or allow the determination of quantity and price. It must show the intention of the offeror to be bound if it is accepted. A proposal not addressed to specific persons, such as a general advertisement, is treated only as an invitation to make offers, unless the proposer clearly indicates otherwise.

An acceptance is a statement or other conduct by the offeree indicating assent to the offer. Silence or inactivity does not in itself amount to acceptance. Acceptance is effective when the indication of assent reaches the offeror. This is the receipt rule. It differs from the common law postal rule, under which acceptance by post is effective when posted. The CISG has no postal rule. An acceptance is also not effective if the indication of assent does not reach the offeror within the time fixed, or within a reasonable time if none is fixed. Oral offers must be accepted immediately unless circumstances show otherwise.

An offer takes effect when it reaches the offeree. Until then it can be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer. After the offer reaches the offeree, it can be revoked if the revocation reaches the offeree before the offeree has sent an acceptance. But an offer cannot be revoked if it states a fixed time for acceptance or is otherwise irrevocable, or if the offeree reasonably relied on it as irrevocable and acted in reliance. Under common law, an offer can generally be revoked at any time before acceptance, even if it says it is open for a period, unless an option is supported by consideration. That is a key contrast.

A reply that adds to or changes the offer is a counter-offer and rejects the original offer. But the CISG softens the common law mirror image rule. A reply with additional or different terms that do not materially alter the offer is still an acceptance, unless the offeror objects without undue delay. Terms relating to price, payment, quality and quantity of goods, place and time of delivery, extent of liability and dispute settlement are treated as material. Also, the CISG does not require consideration for a contract to be formed, and it has no general writing requirement.

Key formulas to remember

Offer: Offer = specific addressee(s) + sufficiently definite + intent to be bound; Definite means it indicates the goods and fixes or allows determination of quantity and price.
Advertisements: Proposal to unspecified persons = invitation to make offers; Unless the proposer clearly indicates otherwise.
Offer takes effect: Offer effective on reaching the offeree; Withdrawal must reach the offeree before or at the same time as the offer.
Revocation: Revocation must reach the offeree before the offeree dispatches acceptance; Not allowed if the offer states a fixed time or is irrevocable, or the offeree reasonably relied on it.
Acceptance: Acceptance effective when assent reaches the offeror, within the time fixed or a reasonable time; No postal rule. Silence or inactivity alone is not acceptance.
Modified reply: Reply with materially different terms = counter-offer; non-material additions = acceptance unless offeror objects without undue delay; Price, payment, quality, quantity, delivery, liability and dispute settlement are material.
Late acceptance: Late acceptance is effective only if the offeror promptly tells the offeree it is so; Otherwise it is treated as a new offer or ineffective.
Contract formed: Contract concluded at the moment acceptance becomes effective; No consideration or writing needed under the CISG.

How to solve Formation of Contract under the CISG questions

Use this order for any scenario question on formation. Track the dates when communications reached each party, not just when they were sent.

1Confirm the CISG applies to the facts. It must be a sale of goods between parties in different states, and not excluded by the parties.
2Test the first communication as an offer: specific addressee, sufficiently definite, intent to be bound. If it fails, it is only an invitation to make offers.
3Note when the offer reached the offeree, since it takes effect on receipt.
4Check any withdrawal or revocation. Did it reach the offeree in time, and was the offer irrevocable by a fixed time or reasonable reliance?
5Analyse the reply. Is it unqualified assent, or does it change terms? Decide whether changes are material (counter-offer) or not (acceptance unless objection).
6Apply the receipt rule and the time limit. Did the assent reach the offeror in time? Remember silence is not acceptance.
7State when the contract is formed, or that none is formed, and add the common law contrast if the question asks for it.

Quickest way: Receipt-and-materiality check

When to use it: Use this in Section A or B objective questions where you must pick the correct statement quickly.

Ask: is the communication addressed to specific persons? If not, it is an invitation.
Ask: who must receive what? Under the CISG almost everything depends on reaching the other party.
Spot the trap words: posted, silence, open for 14 days, additional terms.
If a fixed time is stated in the offer, it cannot be revoked.
If a reply changes price, payment, quantity, quality, delivery, liability or dispute settlement, it is a counter-offer.
Choose the option that matches the CISG, not the common law answer.

Common mistakes in Formation of Contract under the CISG

Applying the postal rule so that acceptance is effective when posted.
Students carry over domestic common law contract rules.
Fix: Under the CISG acceptance is effective when the assent reaches the offeror.
Treating an advertisement or catalogue as an offer.
It looks like a proposal to sell.
Fix: Check for specific addressees. Without them it is an invitation to make offers unless clearly stated otherwise.
Saying an offer can always be revoked before acceptance.
This is the general common law position.
Fix: Under the CISG an offer cannot be revoked if it fixes a time for acceptance, is stated to be irrevocable, or the offeree reasonably relied on it.
Treating any change in the reply as a counter-offer.
Students apply the mirror image rule.
Fix: Only materially altering terms make a counter-offer. Minor additions can still be acceptance unless the offeror objects without undue delay.
Treating silence or inaction as acceptance.
Students assume that failing to object means agreement.
Fix: Silence or inactivity does not in itself amount to acceptance. Look for a statement or conduct showing assent.
Looking for consideration or a written document.
Common law contracts need consideration.
Fix: The CISG requires neither consideration nor writing for formation.

Worked examples

Example 1

On 1 March, Seller A in State X emails Buyer B in State Y: 'We offer 500 units of component Z at $20 each, delivery in May. This offer stays open until 15 March.' The email reaches B on 1 March. On 5 March A emails revoking the offer, which reaches B on 6 March. On 8 March B emails acceptance, reaching A on 8 March. Assuming the CISG applies, is there a contract?

Show the solution

The email is addressed to a specific person, identifies goods, quantity and price, and shows intent to be bound. It is an offer, effective on 1 March.
The offer states a fixed time for acceptance (until 15 March). Under the CISG an offer with a fixed time cannot be revoked.
So the revocation reaching B on 6 March is ineffective.
B's acceptance reached A on 8 March, within the stated time, and it is unqualified assent.
Acceptance becomes effective on reaching A, so the contract is formed on 8 March.

Answer: Yes. A contract was formed on 8 March because the offer was irrevocable, the revocation was ineffective and B's acceptance reached A in time. Under common law, the revocation might have succeeded.

Example 2

Buyer P in State M offers by letter to buy 200 tonnes of wheat from Seller Q in State N at $300 per tonne. Q replies: 'We accept, but delivery will be in July, not June.' P says nothing. Later, P argues there is no contract. Assuming the CISG applies, advise.

Show the solution

P's letter is a valid offer: specific addressee, goods, quantity and price, intent to be bound.
Q's reply purports to accept but changes the delivery time.
Under the CISG, delivery time is among the terms treated as materially altering the offer.
So Q's reply is a counter-offer and rejects the original offer, not an acceptance.
P's silence does not amount to acceptance of the counter-offer.
No contract is formed unless P later assents, for example by statement or conduct.

Answer: No contract has been formed. Q's reply is a counter-offer because it changes the delivery time, which is a material term, and P's silence is not acceptance.

Exam tips

Read dates carefully and ask when each message reached the other party. Sent dates are often a distraction.
Memorise the list of material terms: price, payment, quality, quantity, place and time of delivery, extent of liability, dispute settlement.
In Section B, expect a mix of offer, revocation and counter-offer in one scenario. Take each message in order.
When asked about differences from common law, name three: no postal rule, no consideration needed, and a softer mirror image rule with limited irrevocability of offers.
Remember the CISG deals with formation only in Part II. Validity of the contract and some other matters are left to domestic law.

Practice questions from Introduction to the UN Convention on Contracts for the International Sale of Goods and ICC Incoterms

Formation of Contract under the CISG: frequently asked questions

Does the CISG have a postal rule?

No. Under the CISG an acceptance is effective when the indication of assent reaches the offeror. It is not effective when posted or sent.

Can an offer be revoked under the CISG?

Yes, but only if the revocation reaches the offeree before the offeree sends an acceptance. An offer cannot be revoked if it fixes a time for acceptance or is stated to be irrevocable, or the offeree reasonably relied on it as irrevocable.

Is consideration needed for a CISG contract?

No. The CISG does not require consideration. It also does not require the contract to be in writing, so a contract can be formed by conduct or orally.

What happens if the acceptance adds extra terms?

If the extra terms materially alter the offer, the reply is a counter-offer. If they do not, it is still an acceptance unless the offeror objects without undue delay, and the contract includes the offer's terms with the modifications.