CYIL 2012

LARRY A. DĎMATTEO CYIL 3 ȍ2012Ȏ the contract is divisible then the right to terminate the contract for non-performance can only be applied to the part of the contract related to the non-performance. For example, the buyer could technically be able to terminate a sale of goods part of the contract, but remain bound to the supply of services part of the contract. 64 However, CESL then limits this separability rule, rather vaguely, by stating that it does not apply “where the buyer or customer cannot be expected to accept performance of the other parts.” 65 Finally, Article 9 states that if the contract is not divisible, then the buyer or customer can only terminate “if the non-performance is such as to justify termination of the contract as a whole.” 66 In a B2C contract this may be any not insignificant breach; but, in a B2SME contract, the CISG standard, or fundamental breach, may be needed. A different issue relating to mixed-purpose contracts is found in CESL Article 6 of the Explanatory Memorandum. The title to Article 6 refers to mixed-purpose contracts linked to consumer credit transactions. 67 Even though the title of the Article seems to require a linkage to consumer credit contracts, the language is much broader in the text. It states that CESL “cannot be used for mixed-purpose contracts including any elements other than the sale of goods, the supply of digital content and related services.” Thus, if a contract is ninety-five percent sale of goods, and supply of digital content or related services, and five percent something else CESL would not apply. 3.6 Contract Formation This section reviews the formation rules found in CESL including, the certainty or definiteness requirement and the problem of varying terms in the exchange of forms. 3.6.1 Definiteness of Contract In the area of contract formation, CESL requires that the proposed contract possess “sufficient content and certainty for there to be a contract.” 68 This requirement found in Article 30(1)(c) (requirements for the conclusion of a contract) and Article 31 (offer) both use this terminology. But how does one determine if there is sufficient content and certainty? CESL fails to provide any criteria or parameters for making such a determination. Does this mean the contracting parties must agree on all “material” terms? Should one look to Article 38(2) and its definition of materiality in the battle of the forms 69 (“modified acceptance”) scenario? Since most of CESL’s

64 CESL, Article 9(2). 65 CESL, Article 9(3). 66 CESL, Article 9(4). 67 CESL, Article 6(1) of the Explanatory Memorandum. 68 CESL, Article 31 1(b).

69 The “battle of forms” scenario refers to the common way that sale of goods contracts are formed, especially in B2B transactions. Each party sends the other a form such as a price quotation, pro forma invoice, purchase order, or written confirmation where one form is considered an offer and the other an acceptance. The problem is that these are almost always standard forms that contain conflicting terms one having pro-seller terms and the other pro-buyer terms.

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