CISG Part II deals with the ‘Formation of the Contract’, but with Denmark’s article 92 reservation the rules applicable under Danish law to the formation of a contract had to be found in the Danish Contracts Act.
This difference will now be removed. In the future the rules applicable under Danish law to the formation of a contract are found in Part II of the CISG, unless the parties agree otherwise.
Differences between CISG Part II and the Danish Contracts Act.
The rules in the Danish Contracts Act regarding the formation of a contract are quite different from the rules laid down in CISG Part II. The most important of these deals with the questions of when an offer becomes effective, and how an offer can be revoked.
According to the CISG article 15 an offer becomes effective when it reaches the offeree, while section 7 of the Danish Contracts Act states that an offer becomes effective when the offer comes to the offeree’s notice.
Revocation of an offer under the CISG article 16 can take place if the revocation reaches the offeree before he has accepted the offer, unless the offer is irrevocable. The corresponding rule in section 7 of the Danish Contracts Act states that an offer can only be revoked if the revocation reaches the offeree before the offer comes to the offeree’s notice.
Entry into force of the withdrawal.
The procedure for withdrawal of a CISG reservation is complicated. This is why the withdrawal will not come into effect before the Danish Minister of Justice decides so. A date for the entry into force has still not been decided.
n this matter it is important to note that the applicable law to the formation of contracts which are negotiated or proposed before the withdrawal comes into effect will still be governed by the Danish Contracts Act.
Perspectives of the withdrawal.
In international trade the applicable law is usually the law in the country where the seller has his place of business. This will often lead to the application of the CISG (see art. 1 (1) (b)) in international distribution relationships (which include the sale of goods) even if the parties involved do not have their respective places of business in contracting states of the CISG (in which case the CISG will also apply, see art. 1 (1) (a)).
The withdrawal of the Danish reservation means that it will become much more transparent and predictable for an international – non-Scandinavian (all of which have made a declaration under article 94) – distributor to contract with a Danish supplier (seller) and choose Danish law, because it is now certain that the choice of Danish law in a contract will lead to the full application of the CISG.
The withdrawal will also make it easier for Danish distributors to persuade their foreign suppliers to choose Danish law, since they are more familiar with the CISG than the Danish Contracts Act. The withdrawal can also contribute to reducing the transaction costs that are connected to the negotiation of contracts.
It is expected that the rest of the Scandinavian countries will do the same as Denmark and remove their reservations in the near future.
Peter E. P. Gregersen , IDI agency & distribution country expert for Denmark.