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A Comparative Legal Research on Contract

Formation via Electronic Means: Time Lag of

Contract Creation in the International Sales

Transaction

Sung-Ho Park*1)

Abstract

Although international uniform laws and rules relating to international

sales transactions have attempted to harmonize differing legal systems

throughout the world, different legal norms still exist, inter alia, the time

of contract formation has been one of the controversial issues between

jurisdictions. The application of the postal rule or receipt rule provides

interesting legal and scholarly discourse in the case of inter-distance

business communications. As using electronic communication means to

create international sales contracts has significantly increased, the issue

may be highly controversial.

In that respect, this article analyses how to solve the legal and

practical uncertainty at the time of contract formation. In doing so, the

provisions of the time of contract formation via electronic means which

are ruled by international instruments and domestic laws relating to

e-commerce will be compared and discussed.

Key Words : Postal Rule, Receipt Rule, CISG, MLEC, KBLEC, UETA,

ECIC, EC Directive

* PhD(2000) at Keimyung University in Korea. PhD Candidate, Centre for Commercial Law

Studies(CCLS), Queen Mary, University of London. I am grateful to Prof. Loukas Mistelis,

Queen Mary, University of London, and anonymous scholars for their comments on an

earlier draft of this article. Errors and omission are entirely of my own commission.

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Ⅰ. Introduction

Generally, in the international sales transaction, the use of a written

document as a contract may contribute to minimizing the uncertainty or

risk of the transactions. The written document undoubtedly plays a role

in the basic terms and conditions - i.e. both contractual parties have not

only to perform their own obligations, but also to be able to claim their

own rights. In the light of this context, the formation of a contract is

becoming one of the indispensable models to accomplish an international

sales transaction. Therefore, the formation of a contract is one of the

most important issues and themes among the procedures of commercial

transactions because it is the first stage of a commercial transaction, as

well as considering that all deeds of commercial transactions must be

followed by agreements on the contract.

Since the Internet has been a crucial communication instrument, the

international sales transaction via electronic means has been significantly

facilitated and has provided many benefits for MNEs (Multi-National

Enterprises), SMEs (Small and Medium size Enterprises), and even

individual people. They can conduct business faster and easier than ever

before.

However, there exist some arguable issues. For example, is there any

difference between contract formation via electronic means or traditional

means? Can the traditional commercial rules adequately regulate contract

formation via both means? Are there any different provisions between

national laws and international regulations relating to electronic contract

formation?

Although much research has dealt with these questions, there are still

some arguable issues due to the differences in fundamental legal notions

between legal systems, such as common law and civil law systems. An

example might regard the time of contract formation where both parties

use remote communication methods.

Therefore, this research will examine when a contract will be legally

formed in the electronic communication environment and how the

differences can be practically sorted out. This article focuses on the

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electronic contract formation by employing a comparative methodology to

reveal the differences of proportions of selected national (UK1), USA,

and Korea) and international (UNICTRAL, UNIDROIT, and EU)

regulations.

Ⅱ. Theoretical Concept of the Contract Creation

Many ways of communication are available to commercial parties

following the development of information communication technology.

These include letters, telegrams, telephone, facsimile, telex, EDI

(Electronic Data Interchange), email, Web, and so on. In any case, the

time of dispatch and receipt of the message or intention, even by

electronic means, is important in deciding when the contract becomes

effective. There are four possible theories as to when a contract is

concluded that may be considered: "Declaration Theory", "Dispatch

Theory", "Receipt Theory", and "Information Theory".2) Among them,

dispatch theory and receipt theory may be generally prevailing in the

common marketplace.3)

The international sale of goods especially raises significant concerns in

1) In the UK, there are three different legal territories: England and Wales, Scotland, and

Northern Ireland. In this article, the UK law or English law represents the law in

England and Wales.

2) From some European scholars’ perspectives, such as Italian, Spanish, Belgian etc., four

theories have been perceived. See der Pilar Perales Viscasillas, "Contract Conclusion

Under CISG," 16 J. Law & Commerce (1997) on p.319-21. In addition, there are two

concepts of receipt theory: one is only to reach the addressee’s hand or mailbox, The

other is that the addressee must have taken cognizant notice of acceptance as well.

The latter is called the "cognisance theory". See Henk Snijders, "The moment of

effectiveness of e-mail notices," in E-commerce Law: National and Transnational Topics and Perspectives (Henk Snijders and Stephen Weatherill eds., 2003) at 79-80 .

3) In this article, two theories, the postal and receipt rule, would be simplified because

the courts of many countries have developed the two rules and the others can be

absorbed into the two rules even though some countries persuade the Information

Theory, which means that the offeror knows of the acceptance, or namely, it requires

knowledge of the acceptance for a contract to be formed, such as France, Belgium,

Italy, etc. See Viscasillas, id., at 321. See also K. Zweigert and H. Kötz, translated by

Tony Weir, An Introduction to Comparative Law (3rd Rev. ed., 1998) at 316.

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respect to the choice of law and jurisdiction. Thus, the moment of the

online contract takes on a new, greater level of importance. The courts

of many countries essentially developed two rules: the postal rule4) and

the receipt rule, to determine the moment of acceptance of contracts

formed by post or telex.

Although the basic principle of communication in all countries adopts

the receipt rule,5) some countries, such as the UK6), USA7), and Korea8),

adopt the postal rule in particular situations, such as nonsimultaneous

business communications. However, international instruments like the

United Nations Convention on Contracts for the International Sale of

Goods (hereinafter CISG) and UNIDROIT Principles of International

Commercial Contracts (hereinafter PICC) adopt the receipt rule even in

an nonsimultaneous business communication.

With respect to electronic communications as can be seen in <Table

1>, as far as the current technology of electronic communication is

concerned, we can divide them into five basic communication means:

EDI, Email, Chat, Web-based, and Web-board. These electronic

communication means also can be classified into two sections:

4) In this article, the dispatch rule, mailbox rule, and postal rule are considered to have

the same meaning.

5) Entores Ltd. v. Miles Far East Corporation [1955] 2 QB 327; Korean Civil Code

(hereinafter KCC) Article 111 (1): "An intention that a person present to another will

be effective when it reaches the other."

6) Adams v. Lindsell (1818) 1 B. & Ald. 681, 106 ER 250; Dunlop v. Higgins (1848) 1

HLC 381.

7) The Restatement (Second) of Contracts (hereinafter the Restatement) § 63; Mactier’s Administrators v. Frith 6 Wend. 103 (N.Y. 1830); Morrison v. Thoelke 155 So. 2d

889-899 (Fla. Dist. Ct. App. 1963). In American cases, it is difficult to recognize which

rule is adopted in a contract by phone and telex. According to reflection of the

Restatement (second) of Contract and cases, there were some legal cases that applied

the receipt rule. For example, Linn v. Employers Reinsurance Corp., 139 A. 2d 638,

640 (Pa. 1598); holding that even if a telephone communication is instantaneous and

two-way, acceptance is still effective when sent over the phone wires; cited in Valerie

Watnick, "Electronic formation of contracts and The Common law "Mailbox Rule"," 56 Baylor L. Rev., (2004) fn. 190 . See also Dick v. United States, 82 F. Supp. 326 (Ct.

Cl. 1949); Rhode Island Tool Co. v. United States, 128 F. Supp. 417 (Ct. Cl. 1955), in

K. Zweigert and H. Kötz, supra note 3, at 359.

8) KCC, Article 531: "A inter-distance contract is concluded when a notice of acceptance

is posted,"

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Jurisdiction

Communicationmethods

English Law American Law Korean LawUNCITRAL Model Law,CISG, PICC

General Principle of intention Receipt Rule Receipt Rule Receipt Rule Receipt Rule

The intention

of acceptance

Real-time

Chat Receipt Rule Receipt Rule Receipt Rule Receipt Rule

EDI Receipt Rule Receipt Rule Receipt Rule Receipt Rule

Web-based

Receipt Rule Receipt Rule Receipt Rule Receipt Rule

Non real-time

Email Postal RulePostal Rule

(Receipt Rule)Postal Rule Receipt Rule

Web-board

Postal RulePostal Rule

(Receipt Rule)Postal Rule Receipt Rule

"real-time" and "non real-time" according to the responding system as

"inter-dialogue" and "inter-distance" by the traditional communication

means.

In the case of chatting, a real-time communication is regarded as a

telephone or a facsimile communicator because the parties can send and

receive most digital files, namely documents, photos, and even voice

chatting can also be provided.9) In addition, both EDI and Web-based

communications can fall under the real-time category because they can

convey messages instantaneously. However, email is not considered an

instantaneous communication method at the present.10)

<Table 1> The different rules of contract creation by electronic means

9) "Internet phone" and "Internet Screen Meeting" may be dealt with the same as the

chatting.

10) Email is the digital equivalent of a letter which can be typed out, with things

sometimes attached to it. Email can do all things that paper mail can do. Email is even

sent and received like paper mail. The sender puts it in his outbox, the digital

equivalent of a post-box, and this is then collected by his mail server, who forwards it

to the recipient’s mail server, who then delivers it to the recipient’s box, which may

be seen as the equivalent of his letter-box. This process, although usually very quick,

is not instantaneous. Just as in actual reality, letters can be delayed or even lost in

the post; see Andrew A. Murray, "Entering into Contracts Electronically: The Real

W.W.W.," cited in Law & the Internet: a framework for electronic commerce (Lilian

Edwards and Charlotte Waelde ed., 1997) at 18.

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An examination of these two rules, which attempts to seek equitable

means for both the offeror and the offeree, might suggest how the

courts would deal with email, EDI and web-based contracts. Where the

online contract is applied by the traditional concept of legal norm, the

postal rule has been adopted in the UK, USA and Korea while the

receipt rule has been adopted by international instruments like CISG and

PICC.11) This implies that there may be different results as to when the

contract is concluded, where the contract is, for example, made between

foreign business parties where one is in the UK and the other is in

Germany.

While English law and Korean law still retain the postal rule in the

case of non real-time communication and even for electronic

communications, American law has been changed to the receipt rule. In

the case of email for cross-border transactions, jurisdiction problems

cannot be settled unless the business parties agree to the governing law

of their contract.

Ⅲ. Comparative Analysis of the Messaging Time

One of the traditional problems is when a message is sent by a sender

and when it reaches a recipient. There are similar questions around that

issue in the electronic environment; when an electronic message is sent

from a sender or reaches a recipient; when an electronic file arrives at

a recipient or his/her server; when a recipient opens it; what does it

mean when a sender clicks the "send" button on his/her computer

screen.12)

11) Common law has not always adopted the postal rule where an acceptance is sent by

post or telegram, but the receipt rule can be adopted as long as the contractual

parties agree to it. Consequently, the parties should stipulate which rule is adapted to

the contract. See C. M. Schmitthoff, Schmitthoff’s Export Trade, (9th ed., 1990) at 93.

12) Wolfgang Hahnkamper, "Acceptance of an Offer (Article 18): The CISG Communication

Tool Box,25 Years Later," 25 Years United Nations Convention on Contracts for the International Sale of Goods (CISG), Vienna, March 15-16, 2005.

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1. Time of Message Dispatch

Traditionally, the time of sending the post can be easily recognized

because the post cannot be controlled by the sender from when a letter

is dropped in a mailbox or is passed to a postman. But in the computer

network, it is more or less sophisticated when an electronic message is

dispatched or sent.

With respect to the time of sending a message via electronic means,

two sending times can be recognized. First, most laws provide that the

moment of sending is when the electronic record cannot be controlled by

the sender or an official agent of the sender any more after the sender

dispatches it. Secondly, when the electronic record enters an information

processing system13) which is controlled by the recipient or the

Information Service Provider (hereinafter ISP) designated or used by the

recipient is the time of sending. It means that there are two crucial

viewpoints in those general notions. First, the time of sending is when

the electronic data sails out from the sender. Second, the time of

sending is when the electronic data is controlled by the recipient’s

region.

In Korean law, the Basic Law of Electronic Commerce (hereinafter

KBLEC), the dispatch of an electronic record shall be deemed to occur

when it enters a computer, etc. under the control of any person other

than the originator or the person who sent the electronic record on

behalf of the originator (sender).14) In addition, the UNCITRAL Model

Law on Electronic Commerce (hereinafter MLEC) provides that, unless

otherwise agreed between the originator and the addressee, the dispatch

of a data message occurs when it enters an information system outside

the control of the originator or of the person who sent the data message

on behalf of the originator.15)

13) According to the definition of MLEC, "information system" means a system for

generating, sending, receiving, storing or otherwise processing data message; In the

UETA, "Information processing system" means an electronic system for creating,

generating, sending, receiving, storing, displaying, or processing information.

14) KBLEC, Article 9 (1).

15) MLEC, Article 15 (1).

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In American law, however, the Uniform Electronic Transaction Act

(hereinafter UETA) provides that, unless otherwise agreed between the

sender and the recipient, an electronic record is sent when it is

addressed or directed properly to an information processing system that

the recipient has designated or uses for the purpose of receiving

electronic records or information. They must be able to not only be

retrieved by the recipient, but also be in a form capable of being

processed by that system. In addition, an electronic record is sent when

it enters an information processing system outside the control of the

sender or of a person who sent the electronic record on behalf of the

sender, or enters a region of the information processing system

designated or used by the recipient.16)

Compared with KBLEC and MLEC, American laws make the criterion

of sending time when the electronic data gets "out of the sender’s

control", UETA provides three additional requirements besides "out of

sender’s control": designating system, capability of retrieving, and

capability of processing.

Construing MLEC and KBLEC without such requirements, it is quite

natural to recognize requirements of capability of retrieving, capability of

processing except the requirement of designating system which can

result in different situations. Therefore, the time of sending in

accordance with MLEC and KBLEC can be a little earlier than that in

UETA, because the dispatch of an electronic record shall be deemed to

occur, if only it enters a computer under the control of any person other

than the originator even though the computer is not used or designated

by recipient.17)

As can be seen in <Figure 1>, if the time of sending follows the

provisions of the MLEC and the KBLEC, or even the UETA, it seems to

be quite complicated and within the realms of possibility that there are

five sending points (A, B, C, D, and E) in the present e-mailing

technology. First, a sender may not be able to control his/her email as

16) UETA § 15 (a).

17) Gyung Young Jung, "Korea’s Electronic Transaction Law: A Comparative Study," 28 Korean J. Int’l & Comp. L. (2000) at 94-5.

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E

D

C B

A

Sender’s ISP

Sender’s PC Recipient’s PC

MLEC, KBLEC, UETA

Recipient’s ISP

soon as it leaves from his/her information system which is the case with

"A". Second, a sender may not be able to control his/her email as soon

as it leaves from his/her ISP’s system (third party) or situation "B".

Third, a sender may not be able to control his/her email as soon as it

enters the system of the recipient’s ISP (third party) or situation "C".

Forth, a sender may not be able to control his/her email before a

recipient opens it or situation "D". This case will be precisely explained

below. Last, an email enters an information processing system used by

the recipient and which is under the control of the recipient as is the

case with "E".18) Therefore, it is complicated to know when an email

completely and precisely sails out from the sender’s control.

<Figure 1> The time of sending of the electronic message or record

Note: 1. The points of A, B and C may be connected instantly, but D and E may not be.

2. UETA presents conditional requirements.

Furthermore, if both business parties use the same ISP, an email might

be controlled by the sender until the recipient opens it. , "Daum.net"19),

for instance, provides that an email can be revocable by its sender until

the recipient opens it. That means that the email may not qualify as

dispatched until the recipient opens it. In that case, it seems that the

time of sending and receipt is the same time.

18) UETA § 15 (a) (3).

19) This is one of the leading Korean ISPs.

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Sender’s ISP Recipient’s ISP

Sender’s PC

Recipient’s PC

A

C

B

Receiving Point

D

Print Out

E

Click and transfer to the Recipient’s PC

According to the Working Group of UNCITRAL dealing with electronic

contracting, when the originator (sender) and the addressee (recipient)

use the same information system, both the dispatch and the receipt of a

data message occurs when the data message becomes capable of being

retrieved and processed by the addressee.20)

2. Time of receiving message

The time of receiving an electronic message is also complicated

because, as can be seen in <Figure 2>, there can be five different

points of receiving time in the present electronic system according to

different regulations. The time of receipt may be more important than

the time of sending because the jurisdiction can be fixed to the place of

receiving an acceptance according to conditions under contract.

<Figure 2> the time of receipt for email message

Note: According to the conditions of regulations, the point of time can be changeable21)

20) UN Official Records of the General Assembly, Report of the Working Group on Electronic Commerce on the work of its forty-second session, Vienna, 17-21 Nov.

2003, A/CN.9/546, para. 59.

21) For a more practical understanding of the figure, if the file of the contract document

is attached to an email, the point "B" can be explained as the point just before the

recipient downloads the file of contract document through the email. The point "C" is

at the time which the recipient downloads the file. The Point "D" is the time at which

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A – MLEC Art. 15 (2)(a)(i); KBLEC Art. 9 (1); UETA § 15 (b) – Designated ISP

B – EC Directive § 3 Art. 11 (1)(b)

C – MLEC Art. 15 (b) – Non-Designated ISP Common sense of Paper Mailing Service

D – MLEC Art. 15 (2)(a)(ii) –Retrieved by the addressee (get it back by the addressee)

E – KBLEC Art. 9 (2).

Glancing at all the mentioned regulations in terms of the time of

receipt, they are as follows. The receipt of an electronic message or

record shall be deemed to occur at any time falling under any of

following: if the addressee has designated a computer, etc., for the

purpose of receiving electronic messages or records; the time when the

electronic message or record enters that computer, etc. and, however, if

the electronic message or record is sent to a computer, etc., that is not

designated; the time when the electronic message or record is retrieved

or printed out by the addressee22); or if the addressee has not

designated a computer, etc., for the purpose of receiving an electronic

message or record; the time when the electronic message or record

enters a computer, etc. of the addressee.

According to the description of the time of receipt in the MLEC23),

there are two particular discriminations where the addressee has

designated an information system for the purpose of receiving messages.

In the first situation, unless otherwise agreed upon between the

originator and the addressee, the time of receipt is when the data

message enters the designated information system ("A" in <Figure 2>).24)

However, if the data message is sent to the addressee’s other

information system rather than the designated information system, the

time of receipt is when "the data message is retrieved by the

addressee" ("D" in <Figure 2>).25) In the second situation, where the

addressee has not designated an information system, the time of receipt

is when the data message enters an information system of the addressee

("C" in <Figure 2>).26)

the recipient opens the file. The point of E is at the time which the recipient prints

out the file.

22) KBLEC Article 9 (2).

23) MLEC Article 15.

24) Id. Article 15 (2)(a)(ⅰ).

25) Id. Article 15 (2)(a)(ⅱ).

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In addition, the EC Directive, established by the EU, provides that the

order and acknowledgment of a receipt is deemed to be received when

the parties to whom they are addressed are able to access them.27) It

can be analogically illustrated in <Figure 2> that the time of receipt is

point "B" because the parties can access their information system or a

third parties’ affiliated ISP.

In general, the common people who are familiar with email over an

information processing system are apt to perceive that the time of

receipt is point "C" or "D" in <Figure 2> because it might be recognized

that an electronic message is really his/her possession after the

electronic message is downloaded into their own information system or

the electronic message can be seen their own eyesight. However, some

people, mostly senders, might be convinced that the time of receipt is

point "B" in <Figure 2> because they can recognize that an email has

arrived to an addressee’s email box at that time, and then the addressee

can connect and read it through the ISP’s system.

Practically, where correspondence exchanges via email, the points B,

C, and D in <Figure 2> may have no time lag to consider the time of

contract formation. However, where a contract form is attached on an

email, a time lag of contract formation can occur. For example, when a

recipient opens an email that has a file attached which is a contract

form, a message presents itself on the screen asking you to open, save

or cancel it. In case the file is opened directly, the document is opened

on your email box. But where the file is saved in your computer, the

document cannot read at the same time. In this case, points B, C, and D

in <Figure 2> can be timely segmented.

In the UETA, the time of receipt is when an electronic record enters

an information processing system that the recipient has designated or

uses for the purpose of receiving electronic records or information of

the type sent and from which the recipient is able to retrieve the

electronic record and it is in a form capable of being processed by that

system ("A" or "C" in <Figure 2> subject to the typical type).28) While

26) Id. Article 15 (2)(b).

27) EC Directive § 3 Article 11(1).

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the three acts make the criterion of the receiving time when the

electronic data gets into the recipient’s control according to the

provisions of MLEC, UETA provides an additional requirement of

capability of processing besides the "into recipient’s control"

requirement.

When comparing MLEC, UETA and KBLEC, where the data message is

sent to an information system of the addressee that is not the

designated information system though the addressee has designated an

information system for the purpose of receiving messages, the time of

receipt is when the data message is printed out by addressee ("E" in

<Figure 2>).29) Moreover, there is no difference in construing between

KBLEC and UETA with the requirement of capability of processing,

because the capability of processing is a kind of natural requirement.30)

As can be appreciated from the above analysis, unless it is otherwise

agreed between the originator and addressee, the time of contract

formation over the Internet results in complexity and uncertainty when

the contract is legally concluded considering supranational and domestic

laws point of view. It might be an obstacle in driving the pattern of

international trade through electronic communication means.

Ⅳ. Assessment of the Complication

In accordance with the above analysis, two basic problems can be

found: (1) technical complexity and (2) legal conflict between domestic

laws and international rules. Therefore, possible solutions to resolve

those problems would be the suggested blow.

1. Technical complexity

28) UETA § 15 (b).

29) KBLEC Article 9 (2).

30) G. Y. Jung, supra note 17, at 95-6.

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In a more fragmented approach, there might be two suggestions to

solve the above problems with respect to the different provisions of the

time of sending and receipt in advance. First, the point of sending and

receipt on the transfer data or message in the information processing

system should be simplified. As illustrated in the above figures, there

may be several different points of sending and receipt. It could cause

confusion to the electronic commercial practitioner.

Therefore, in the case of the sending point where the parties use

different ISPs, the point of "C" in <Figure 1> is proper because the

points "A", "B", and "C" can be connected as an automatic sequence of

processing. Where the parties use the same ISP, the point of sending

and receipt is equal, so that it might be the same as a telephone, telex,

or facsimile. If a message and data cannot reach to the point of "C" due

to a system error or any other problem, the message and data might not

have been sent. In this case, the recipient is not yet involved in the

communication parties because the recipient might be irrelevant to the

problem, the trouble is only related between the sender and sender’s

ISP. The point "C" might therefore be reasonable as the sending time.

The "D" or "E" are not proper to the sender because it must be able to

presuppose that, if a recipient is an ordinary business practitioner,

she/he would check their commercial correspondence every working day.

In addition, in the cast of the receiving point where the parties use

different ISPs, the point "C" in the <Figure 2> is proper even whether

or not the acceptance message is sent to the designated or

non-designated ISP. As the difference between the processing of

traditional and electronic post system has come from the difference of

technical role between post office and ISP, a role of the ISP is not the

same as the role of the post office because the post office is likely to

be a common carrier, whereas the ISP is a private one. If the receipt

rule in the traditional mail system is adopted, point "A" is right, subject

to the function of ISP is alike a function of a mailbox in the place of a

recipient, because a postman throws an acceptance letter into the

recipient’s mailbox without considering whether the recipient opens it or

not. However, in particular, the recipient cannot manage an ISP's system

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by her/himself. Therefore, point "C" can be purely the point of receipt to

the recipient.

2. Unification of the Rules

Although the postal rule is still applied in some countries, such as the

UK, USA, and Korea, where a contract is concluded by using a remote

business communication, the rule should be replaced by the receipt rule

without exception according to the CISG and PICC. The reason is that

the receipt rule could be a solution because most international laws and

rules apply the receipt rule and, even from the electronic technical

perspective, the receipt rule is more reasonable than the postal rule.31)

As far as a theoretical base is concerned, the postal rule can remove

uncertainty about the time of the contract formation due to continuous

exchange of notification between two parties.32) However, where the

message of acceptance sent by the offeree does not reach the offeror, it

may be difficult to know not only how the offeror or the offeree can

manage it, but also who has the responsibility for this situation.33)

Furthermore, the notion in the Adams case that the receipt rule leads

to uncertainty seems to be a logical jump. Whether or not the contract

was concluded with many counter-offers,34) it must be identified who is

the final offeror and offeree,35) and subsequently the time of contract

31) In practice, as more countries join the ratified member of CISG, the receipt rule will

be more dominant rule than the postal rule in the international sale of goods. So far,

67 countries have ratified the CISG including Paraguay that will entry into force from

1 Feb. 2007.

32) See V. Watnick, supra note 7, at 199; S. Christenson, "Formation of Contracts by

Email - Is It Just the Same as the Post?" 1 Queensland Univ. of Tech. L. & Just. J. (2001) at 34.

33) In this case, the error of transmission is apt to be, in general, responsible to a

person who represents his/her intention to others. In the PICC Article 3.6 Error in

expression or transmission: An error occurring in the expression or transmission of a

declaration is considered to be a mistake of the person from whom the declaration

emanated.

34) CISG Art. 19 (1): A reply to an offer which purports to be an acceptance but contains

additions, limitations or other modifications is a rejection of the offer and constitutes a

counter-offer.

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formation can be determined as the moment at which the message of

acceptance reached the offeror.

The notification of receipt by the offeror to the offeree is just the

offeror’s substantial task.36) As far as modern communication technology

is concerned, the offeree can promptly receive the notification that the

offeror receives his/her acceptance. Therefore, it does not appear that

the postal rule rather than the receipt rule is the only solution to reduce

uncertainty.

In addition, according to Watnick’s statement, even though the postal

rule retains viability in the context of an acceptance sent by regular mail

in many countries’ regulations, the rule’s future is less clear in the

context of electronic acceptances.37) He insisted that the receipt rule is

more appropriate than the postal rule in the electronic communication

era.38) Nevertheless, English, American (not UETA) and Korean laws still

adopt the postal rule in real-time communication methods.39) That means

that, where companies in those countries want to have an international

business transaction, the companies must agree and indicate the

applicable law as to whether the postal rule or the receipt rule is

applied.

In the circumstance, the CISG can be a solution. There are two

reasons why the CISG may be one of the best keys to solve the above

35) In common law rule, there is no contract when dissimilar forms are exchanged. They

are just called counter-offers. To be a contract, the form and contents of offer and

acceptance must be similar each other. It is called "mirror-image rule". The contract is

formed as the last form and contents of whoever sends it. It is called "last shot

doctrine". Consequently, most parties of the contract want to use their own contract

form which they are familiar with and may provide an advantage for themselves.

36) In the international business transaction, however, any notification to another party

may be a compulsory obligation owing to the basic notion like good faith; See

Incoterms 2000, Seller’s obligation (A 7, 10) and Buyer’s obligation (B 7, 10), in any

of the 13 conditions.

37) V. Watnick, supra note 7, at 197.

38) Id.

39) Both Korea and USA are the members of the CISG ratification, but the UK is not.

Korean and American companies can therefore apply the receipt rule when they make

an international business transaction contract. Where a company in Korea makes a

contract with a company in England, however, they should agree as to the applicable

law on the contract in order to apply the receipt rule.

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problem. First, although there are some issues and suggestions to modify

the provisions of the CISG, most countries who have large amounts of

market share in international trade in the world have ratified the CISG.

Secondly, the Convention on the Use of Electronic Communication in

International Contracting (hereinafter ECIC)40), based on the MLEC and

CISG, can complement the lack of provisions related to electronic

contract in the CISG.41) It seems that the convention will play a decisive

role in international sale contracts concluded via electronic

communication means.

As the MLEC is based on the notion of CISG, all domestic law with

respect to the international sale of goods should try to have

compatibility with CISG and ECIC.42) Such compatibility between domestic

law and international rules would create better legal clarity and security

for all companies active in the world.

Ⅴ. Conclusion

With respect to the time of contract formation, both rules (postal and

receipt rule) may have pros and cons when applied to the traditional

sales contract. However, as can be seen from the above analysis, when

an electronic message is exchanged between an originator and an

addressee to make an international sales contract, five differences of

sending and receiving points may exist respectively depending on the

perspective. Consequently, unless otherwise agreed between originator

40) UNCITRAL Working Group considered an international convention of international

electronic contracting, A final draft was proposed and adopted in November, 2005.

41) UN Official Records of the General Assembly, Fifty-third Session, Supplement No. 17

(A/53/17), para. 209; UNCITRAL Working Group on Electronic Commerce, Thirty-

eighth session, A/CN.9/WG.Ⅳ/W P.89, para. 1; See Ad Hoc ICC Export Group, "Report

on Draft UNCITRAL Convention on Electronic Contracting", ICC, Dec. 5, 2001;

Available on the official Documentary A/CN.9/WG.Ⅳ/WP.96 in the UN General

Assembly.

42) There is no an unambiguous provision of the time of contract formation in the ECIC,

but the CISG can cover the issue as long as they agree to apply the CISG as a

gap-filler.

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and addressee, the time of contract formation via electronic means has

considerable complexity and uncertainty.

It is very understandable that the reason for these differences is that

both the sending and receiving time are reflected in different situations

as far as the technical regime of electronic transmission is concerned.

However, the problem is that the related provisions of sending and

receiving time of the selected national and international regulations do

not seem to be concurrent. Consequently, the time of contract formation

is not unambiguous when a practitioner would make a contract with

others who are in another jurisdiction, unless the contractual parties

present expressly choose of law clause on the contract.

In terms of those problems, there may be possible solutions as

follows. First, the legal provision of the sending and receiving point on

the transfer or message in the information processing system should be

simplified or reformulated. Second, the receipt rule must be a unique

rule of the time of contract formation because of two main reasons.

First, the receipt rule is more proper than the postal rule as mentioned

above. Second, the CISG, including the ECIC, is the only convention for

governing the international sales transaction which includes e-commerce

under the existing situations.

Exceptionally, although it may be an impossible task in the present

situation, a unique supranational mandatory rule with respect to the

international sales transaction, including e-commerce, should be regarded

rather than supplementary rules like ECIC, eUCP, etc. If that is done, all

sellers and buyers need not worry about the legal uncertainty.

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