III. Modification or Termination of Contract

Systematically misplaced in Part III of the Convention, Art. 29(1) provides:

(1) A contract may be modified or terminated by the mere agreement of the parties.

This provision rejects the common law notion of consideration according to which a contract can only be concluded or modified if both parties offer something of value, thereby preventing unilaterally advantageous amendments. Under the CISG, however, no such limitation exists.

The agreement to modify or terminate a contract is a contractual agreement in itself and thus is governed by Arts. 8 and 14 et seq. In application of these provisions, the common case that modifications are proposed with delivery of the goods, e.g. on the invoice, only in exceptional circumstances leads to a modification since it is highly unlikely that the recipient of such offer impliedly is willing to accept a modification to its detriment by performing its own obligations. Further, parallel to the principle of freedom of form laid down in Art. 11, also Art. 29(1) does not recognize any formal requirements with regard to modification or termination of a contract. As with regard to Art. 11, due regard is to be had to Art. 12 and any corresponding reservations made by the relevant states pursuant to Art. 96. Finally, due to the unequivocal wording of the provision, it only covers agreements to modify the contract between the parties, i.e. the parties of the original contract. Not within the scope of the provision or even the Convention are agreements between the initial parties and a third party shifting part of or all obligations and or rights of one party to the third party. Such agreements are governed by the law applicable by virtue of the relevant conflict of law rules.

Art. 29(2) specifically deals with writing requirements or no-oral-modification clauses

(2) A contract in writing which contains a provision requiring any modification or termination by agreement to be in writing may not be otherwise modified or terminated by agreement. However, a party may be precluded by his conduct from asserting such a provision to the extent that the other party has relied on that conduct.

This provisions contains a carefully balanced system that in the first place recognizes writing requirements and in contrast to certain domestic legal systems does not allow oral derogation from a no-oral-modification clause. In a second step however, a party that acts in conformity with an oral modification despite a writing requirement, e.g. by performing in accordance with the oral modification, and through this conduct induces reliance on the part of the other party cannot rely on the writing requirement.  Sometimes it is even the mere fact that a party proposes or agrees to an oral modification despite a writing requirement is considered sufficient to induce reliance (disputed).

Last modified: Friday, 23 October 2015, 12:55 PM