Withdrawal and Revocation of Offer and Acceptance: A comparative

Study of the CISG, the Chinese Contract Law, the UNIDROIT

Principles and the Ethiopian Contract Law.

By: Wakgari Kebeta Djigsa1

The author received LL.B Degree with a Very Great Distinction from Mizan Tepi University, Ethiopia in 2014 and,
currently, he is pursuing LL.M in International Economic and Business Law at Haramaya University, Ethiopia. He is a
fulltime Assistant Lecturer at Wollega University School of Law, Ethiopia, and can be reached at
wakgarikebeta@gmail.com or kwakgarikebeta@gmail.com.

1. Abstract
Principally speaking, a contract is said to be concluded at the time when and
the place where the offeree declares the assent to be bound by the proposal
of the offeror. Determining the appropriate time of conclusion of a contract
is nevertheless not as easy as it may seem at a first glance. This problem is
exacerbated by the freedom of individuals to withdraw or revoke their
proposals of concluding a contract.
The regulation of withdrawal and revocation of offer and acceptance plays a
vital role not only in determining the time of conclusion of a contract but
also in maintaining smooth transactions among individuals. This, in turn,
helps the parties in minimizing transaction costs. So far, no consensus is
reached among legal instruments concerning this critical issue. Different
jurisprudences approached the matter from their perspectives thereby
making the process of harmonization hardly possible.
This short essay is aimed at critically examining the differences existing
among legal instruments with respect to withdrawal and revocation of offer
and acceptance. To contextualize the concepts, a glimpse will be made to
some theoretical frameworks. Throughout, I will make a brief comparison
among the United Nations Convention on International Sale of Goods,2 the
Chinese Contract Law3, the UNIDROIT Principles4 and the Ethiopian Contract
Law.5
2. Theoretical frameworks: Dispatch Vs Receipt
Withdrawal is barred where the dispatch theory is applied; the
declaration becomes effective on dispatch. This approach also applies
when assent is indicated by "performing an act." Here the offer cannot
be withdrawn, nor is there need to apply rules restricting revocation:
performance of the act is an acceptance of the offer, and a contract has
been made.
2

See United Nations Convention on Contracts for the International Sale of Goods, opened
for signature April 11, 1980, S. Treaty Doc. No. 98-9 (1980), 19 I.L.M. 668 [hereinafter
"CISG"].
3
The Contract Law of the Peoples Republic of China, Adopted at the Second Session of the
Ninth National Peoples Congress on March 15, 1997, entered in to force on 1st October
1999.
4
The UNIDROIT Principles of International Commercial Contracts, UNIDROIT (Rome), 1994.
5
The Civil Code of the Empire of Ethiopia, Proc. No. 165 of 1960, Arts. 1675 and the
following.
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Under the receipt theory, on the other hand, an offer or its acceptance is
not effective unless it reaches the other party. It can therefore be
withdrawn before it has reached the other party, and also, for similar
reasons, when the offer and its withdrawal or when the acceptance and
withdrawal reach the other party at the same time. Since an offer or
acceptance is not effective on dispatch it is still subject to withdrawal.
If therefore the offer has become effective, the question may be asked
whether it may be revoked. As we shall see later, the answer is in the
affirmative for the CISG and Chinese Contract law whereas it is in the
negative for the Ethiopian Contract law. This question cannot emerge in
connection with the acceptance, for once the acceptance has become
effective the contract is in being and a revocation is out of the question.
3. Withdrawal and Revocation of offer and acceptance under
the CISG
a. Withdrawal of Offer
Withdrawal of offer is regulated under Art 15 of the CISG. Sub article 1 of
the provision provides for the time at which an offer becomes effective to be
the time at which it reaches the offeree. Accordingly, an offer is of no effect
so long as it has not reached the offeree. This, in turn, enables the offeror to
take all measures it thinks fit with respect to changing its mind. Art 15(2) is
the effect of the first sub provision. It prescribes that an offer may be
withdrawn if the withdrawal reaches6 the offeree before or at the same time
as the offer.
Art 15 of the CISG follows the approach based upon Receipt Theory in terms
of effectiveness of declarations not only for offer but also for acceptance7
under contract formation. Therefore, according to Art 15 CISG, for an
effective offer, the offeree has to receive it so contrary to Dispatch Theory,
dispatching of proposal does not suffice to become an offer.

What constitutes reaching is provided for under Art 24 CISG. The full provision reads:
For the purposes of this Part (Part II) of the Convention, an offer, declaration of acceptance
or any other indication of intention reaches the addressee when it is made orally to him or
delivered by any other means to him personally, to his place of business or mailing address
or, if he does not have a place of business or mailing address, to his habitual residence.
7
Eorsi, in Bianca-Bonell Commentary on the International Sales Law, Giuffre, Milan(1987)
145-149 p. 146 available at: http://cisgw3.law.pace.edu/cisg/biblio/eorsi-bb15.html.
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Another consequence which arises from Art 15 CISG is related to the terms
withdrawal and revocation8 of an offer under the CISG.9 However
withdrawal and revocability are not differently daily used words, they have
different meanings under the CISG.10 Under the second sentence of Art 15
CISG, both terms revocability and withdrawal are used together.
Although the provision includes the irrevocability, Art 15 of the CISG
mainly governs the right to withdraw.11
Regarding Art 15, it is required to make a distinction between withdrawal
and revocation, because their consequences in terms of the CISG are not
corresponding.12 To explain the differences, Eorsi claims that this distinction
exists in different stages of formation of a contract. At first stage, as has
been written in Art 15(1) CISG, an offer needs to reach the offeree in order
to be effective. Accordingly, an offer can be withdrawn before or at the time
when it reaches the offeree i.e. before or at the time of its effectiveness.
Unless it is withdrawn, it goes to the second stage and here it becomes
already effective and under certain conditions may be revoked. A point to be
noted here is that the revocation of an offer under Art 16 CISG is separated
from the term withdrawal as used under its Art 15.
b. Revocation of Offer
Whether an offeror is bound by his proposal is a question, which has
different answers according to Common Law and Civil Law systems.13 It has
to be said that the CISG has reached a compromise on revocation of offer
between Common Law and German Law, which is predominantly Civil Law.
Art 16(1) CISG allows the offeror to revoke his offer, until the offeree
dispatches his acceptance.14 This provision indicates the principle that the
right to revoke an offer ceases at the time when an acceptance is dispatched
by the offeree. If the offeror enjoys his right to revoke, this revocation has
8

The term withdrawal comes from Anglo Saxon origin whereas the term revocation is of
Latin origin. See Eorsi, p. 147.
9
Eorsi, p. 147.
10
Id. p. 147-148.
11
J Lookofsky, Understanding the CISG, Kluwer Law International, 3rd (Worldwide) Ed.
2008, p.52.
12
Eorsi, p. 147
13
Vural Belkis, Formation of Contract According to the CISG, Ankara Bar Review, 2013. P.
135.
14
P Schlechtriem/P Butler UN Law International Sales, Springer- Verlag Berlin Heidelberg,
2009, p. 73.
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to reach the offeree before the latter dispatches an acceptance in response

to the effective offer.15 Here, this result is accepted as a remarkable
consequence of Common Law Mailbox rule.16
Art 16(2) CISG provides for an exception to the revocability of offer. Firstly,
Art 16(2) lit. a shows irrevocability of offer where the offer fixes a time
period for acceptance or it explicitly indicates that it is irrevocable. There is
no consensus among legal scholars as to the legal consequences of a
premature revocation that violates the obligation not to revoke. It has been
suggested that the premature revocation is ineffective and that the offeree's
acceptance will thus form a contract for breach of which the offeror would be
liable for expectation damages.17 The other and more often expressed view
is that the premature revocation effectively precludes the formation of a
contract but subjects the offeror to delictual (tort) liability for the offeree's
reliance loss.18
Secondly, Art 16(2) lit. b provides that in case where the reasonably
believes that the offer is irrevocable and acts in reliance on it, the offer is
not revocable. The critical issue under paragraph (2) (b) is whether the
offeree reasonably relies on the offer's being irrevocable. Presumably, the
offeree (1) must have had a good reason for believing that the offer was
irrevocable and (2) must also have acted reasonably in relying on that belief.
Whereas Art 16(1) follows the Common Law approach, Art 16(2) exists as
an exception to that approach.
As illustrated above, the revocability of offer under the CISG is limited
because the offeror has no right to revoke the offer between the time the
offeree dispatches the acceptance and its arrival at the offeror. Art 16 CISG
is considered as a compromise between the Common Law and Civil Law legal
15

A Garro, Reconciliation of Legal Traditions in the UN Convention on Contracts for the

International Sale of Goods, 23 Intl Law. (1989), p. 443-483, p. 455, available at:
http://cisgw3.law.pace.edu/cisg/biblio/garro1.html.
16
According to this rule, if the offeree dispatches an acceptance before the revocation
reaches, the offer may not be revoked anymore.
17
Pierre Bonassies, Report of French Law, in 1 Formation of Contracts, 775-776 (Rudolf B.
Schlesinger ed., 1968).
18

Hein Ktz, 1 European Contract Law, p. 22-23, (Tony Weir trans., 1997); Barry
Nicholas, French Law of Contract, p. 64-66, (1982); Konrad Sweigert and Hein
Ktz, Introduction to Comparative Law, p. 359-360, (3d rev. ed. Tony Weir trans.,
1998).
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systems understanding of revocation of offer. This inevitably will result in

interpretation problems concerning the issue at hand between parties from
the two different legal systems.
c. Withdrawal of Acceptance
The CISG permits the offeree to withdraw his acceptance in certain
conditions. According to the CISG, until the acceptance reaches the offeror,
the offeree is free to withdraw his acceptance which has already been
dispatched.19 Such right ceases to exist at the time when the acceptance
reaches the offeror. This conclusion is the result of the Receipt Theory.
Withdrawal of the acceptance (Art. 22 CISG) runs parallel with withdrawal of
the offer (Art. 15 CISG)20 because under both provisions, the withdrawal is
only possible between the dispatch of the declarations and their arrival.
d. Revocation of Acceptance
Unlike the case for the offeror, the offeree is not entitled to revoke his
acceptance. As said earlier, revocation of offer is permissible because there
is a time gap between the offers arrival to the offeree and the latters
dispatching of the acceptance. In other words, no valid contract is concluded
until the time when the offeree shows his assent to the offer. This is not the
case for acceptance. Once an acceptance is made, there is no need for the
offeror to give his blessing for the proposal to be effective. Accordingly, any
act of revocation by the offeree after the offeror came to know the
acceptance amounts to a breach of a legally binding contract.
4. Withdrawal and Revocation of Offer and acceptance under
the Chinese Contract Law and UNIDROIT Principles
a. Withdrawal of Offer
Under the UNIDROIT Principles and the new Chinese Contract Law an offer
becomes effective when it reaches the offeree.21 Accordingly, an offer may
be withdrawn if the withdrawal reaches the offeree before or at the same
time as the offer.22 This provision is definitely the same with Art. 2.3 of the
UNIDROIT Principles as both stipulate that an offer may be withdrawn if the
19

Art. 22, the CISG.

Vural, p. 147.
21
This is evident from Art. 2.3 of the UNIDROIT Principles and Art. 16 of the CL which
recognize the Receipt Doctrine.
22
Art. 17 of the Chinese Contract Law.
20

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withdrawal notice reaches the offeree before or at the same time as the offer
arrives.
b. Revocation of an Offer
Art 2.4 of the UNIDROIT Principles and Arts. 18 and 19 of the new Contract
Law set forth the same rule. An offer may be revoked if the revocation
reaches the offeree before it has dispatched an acceptance. It may not be
revoked if (a) the offeror indicates a fixed time for acceptance or otherwise
explicitly states that the offer is irrevocable; or (b) the offeree has reasons
to rely on the offer as being irrevocable and has made preparation for
performing the contract.
c. Withdrawal of Acceptance
Both the Chinese Contract Law and the UNIDROIT Principles provide that
acceptance may be withdrawn provided that acceptance may be withdrawn
provided that notice of withdrawal reaches the offeror before or at the same
time as the notice of acceptance.23 If the notice of the withdrawal reaches
the offeror after the arrival of the notice acceptance, a valid contract has
been conclude and, hence, the offeree cannot change its mind anymore.
Therefore, the offeree is precluded from revoking its acceptance and any
such act amounts to breach of contractual obligations calling for offerees
liability.
5. Withdrawal and Revocation of Offer and Acceptance under
the Ethiopian Contract Law24
a. Withdrawal and Revocation of Offer
The offeror is at liberty to withdraw the offer within a prescribed time limit.
Accordingly, an offer shall be deemed not to have been made where the
offeree learns that it is revoked before or upon learning of the offer.25 This
indicates that there is no offer before the intended offer is communicated to
the addressee. According to Krzeczunowich,26 what one really revokes under
Art. 1693(1) is not a true offer, but the declaration of intention of Art.

23

Art. 27 of the Chinese Contract Law and Art. 2.10 of the UNIDROIT Principles.
As part of the 1960 Civil Code, the Ethiopian general Contract Law is regulated under
Arts. 1675 and the following of the code.
25
Art. 1693(1) of the Civil Code.
26
Krzeczunowich, G. Formation and Effects of Contracts in Ethiopian Law, p. 40. Available
at: www.abyssinialaw.com.
24

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1678(a),27 which one thus prevents from becoming the binding offer of Art.
1690(1)28 or 1691(1).29 This means that the withdrawal is timely if made
prior to, or at least simultaneous with, making the offer known.
A point to be noted here is that both withdrawal and revocation are
interchangeably used under this provision. Whereas the caption of Art. 1693
uses the term withdrawal; the texts of the sub provision employed the term
revocation. Krzeczunowich also used the two terms as if they connote the
same meaning.30 In the absence of a provision permitting revocation of offer
in the proper sense, the offeror is bound by his offer once the offeree came
to know the existence of the offer provided that there is no simultaneous
knowledge of the withdrawal. This gives rise to the conclusion that the
offeror is not entitled to revoke the offer even within the time gap between
the offerees receipt of the offer and his dispatch of the acceptance.
b. Withdrawal and Revocation of Acceptance
Under the Ethiopian Contract law, the Dispatch Theory and Receipt Theory
are recognized in a contradictory manner when it comes to acceptance. This
confusion is created between Arts. 1692(1) and 1693(2). The former
provision states that a contract made between absent parties shall be
deemed to be made at the place where and time when the acceptance was
sent to the offeror. The latter, on the other hand, makes Art. 1693(1)
applicable to withdrawal of acceptance. With this reference, acceptance shall
be deemed not to have been made where the offeror learns that it is
withdrawn before or upon learning of the acceptance.
The contradiction lies in that, by virtue of Art. 1692(1), a valid contract has
been made between the parties at the time when the offeree dispatched the
acceptance.31 Accordingly, the offeree would be in a position not to be
capable of changing his mind. Contrary to this, Art. 1693(2) allows the
27

Art. 1678(a) provides that no valid contract shall exist unless the parties are capable of
contracting and give their consent sustainable at law.
28
Art. 1690(1), on the other hand, states that whosoever offers to another to enter into a
contract and fixes a time limit for acceptance shall be bound by his offer until the time limit
fixed expires.
29
Art. 1691(1) reads whosoever offers to another to enter into a contract and does fix any
time limit shall be bound by his offer until the time when he can reasonably expect the
other party to decide on the offer.
30
Krzeczunowich, p. 40.
31
This provision acknowledges the Dispatch Theory as recognized under the Ethiopian
Contract law.
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offeree to withdraw the acceptance before or at the same time when the
offeror learns the acceptance.32
According to Krzeczunowich, practical reasons have induced the legislator to
borrow the rules of withdrawal of acceptance from the Reception Theory, in
which such withdrawal is logical, since no contract exists before reception of
the acceptance.33 Thus, in Ethiopian case, the sending of the acceptance
completes the contract, on the condition that the offeror does not learn that
the acceptance is withdrawn before or upon learning that it is made. A
withdrawal of offer only prevents its birth in law, while a withdrawal of
acceptance destroys a born valid acceptance and a completed contract.
Where not so destroyed, the contract is effective as from the date of the
sending of the acceptance.34
As noted earlier, the Ethiopian Contract law doesnt recognize the right to
revoke in the proper sense of the term. Accordingly, the offeror is bound
forthwith when the offer comes to the knowledge of the offeree. By the same
scenario, the offeree is bound once the offeror came to know the
acceptance.
6. Conclusion and Key Findings
Under the CISG, an offer becomes effective at the time when it reaches the
offeree. Hence, the offeror is free to withdraw the offer before or at the
same time when it reaches the offeree. This indicates the recognition of the
Receipt Theory. It has to be noted that the second sentence of Art. 15 CISG
used the terms withdrawal and revocation interchangeably. As per Art. 16(1)
CISG, the offeror can revoke the offer after it reached the offeree but before
the offeree dispatches acceptance. The CISG permits an acceptance to be
withdrawn before it reaches the offeror. Revocation of acceptance, however,
is not possible. The same works for the Chinese Contract Law and the
UNIDROIT Principles.
When it comes to the Ethiopian Contract Law, Art. 1693(1) of the Civil Code
provides that the offeror can revoke the offer before or at the same time
the offeree came to know about the offer. In the proper sense of the term,
this provision is talking of withdrawal not of revocation. Accordingly, the
32
33
34

This provision recognizes the Receipt Theory.

Krzeczunowich, p. 40.
Id. p. 40.
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offeror cannot revoke the offer even within the time gap after the receipt of
the offer by the offeree and his dispatch of acceptance.
Concerning acceptance, in principle, the Dispatch Theory is recognized under
Art. 1692(1) of the Civil Code which states that a contract between absent
parties shall be deemed to have been made at the place where and the time
when an acceptance was sent to the offeror. Art. 1693(2), on the other
hand, acknowledges the Receipt Theory when it permits the offeree to
withdraw the acceptance before or at the same time when the offeror knows
such withdrawal.

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