ARTICLE 3.2 - (Validity of mere agreement)

Article 3.2 - (Validity of mere agreement)

3. All contracts consensual

Illustration

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Article 3.2 - (Validity of mere agreement)

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A contract is concluded, modified or terminated by the mere agreement of the parties, without any further requirement.

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COMMENT

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The purpose of this article is to make it clear that the mere agreement of the parties is sufficient for the valid conclusion, modification or termination by agreement of a contract, without any of the further requirements which are to be found in some domestic laws.

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1. No need for consideration

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In common law systems, consideration is traditionally seen as a prerequisite for the validity or enforceability of a contract as well as for its modification or termination by the parties.

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However, in commercial dealings this requirement is of minimal practical importance since in that context obligations are almost always undertaken by both parties. It is for this reason that Art. 29(1) CISG dispenses with the requirement of consideration in relation to the modification and termination by the parties of contracts for the international sale of goods. The fact that the present article extends this approach to the conclusion, modification and termination by the parties of international commercial contracts in general can only bring about greater certainty and reduce litigation.

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2. No need for cause

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This article also excludes the requirement of cause which exists in some civil law systems and is in certain respects functionally similar to the common law "consideration".

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Illustration

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1. At the request of its French customer A, bank B in Paris issues a guarantee on first demand in favour of C, a business partner of A in England. Neither B nor A can invoke the possible absence of consideration or cause for the guarantee.

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It should be noted however that this article is not concerned with the effects which may derive from other aspects of cause, such as its illegality. See comment 2 on Art. 3.3.

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3. All contracts consensual

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Some civil law systems have retained certain types of "real" contract, i.e. contracts concluded only upon the actual handing over of the goods concerned. Such rules are not easily compatible with modern business perceptions and practice and are therefore also excluded by the present article.

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Illustration

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2. Two French businessmen, A and B, agree with C, a real estate developer, to lend C 300,000 French francs on 2 July. On 25 June, A and B inform C that, unexpectedly, they need the money for their own business. C is entitled to receive the loan, although the loan is generally considered a "real" contract in France.

UNIDROIT Principles of International Commercial Contracts with Official Commentary [1994]

PREAMBLE

CHAPTER 1 - GENERAL PROVISIONS

CHAPTER 2 - FORMATION