A Review of Incomplete Agreements and the Formation of a Sales of Goods Contract

Abstract

Purpose - This paper focuses on two issues that may arise from incomplete agreements in relation to the formation of contracts in international sales transactions, and explores national attitudes toward these issues. The first issue is whether a contract can be formed for an incomplete agreement. The second issue is the question of what criteria can be used to determine terms not agreed upon between the parties.
 Design/Methodology/Approach - This paper analyzes each country’s attitude toward incomplete agreement through case analysis. It explores the international trend towards incomplete agreements through analysis of the case of the UK and the cases of CISG member countries.
 Findings - Our findings may be summarized as follows. Even if an incomplete agreement is achieved, the courts tend to interpret it to allow the formation of a contract if the parties’ intentions to be bound by the agreement are clear. Whether or not a contract is formed depends on what terms the parties need to agree to in order to make the contract binding. If there is no agreement between the parties regarding the open terms, these are determined by applying objective criteria that consider the transaction process, trade usage, and purpose of the contract.
 Research Implications - This research is significant in that it analyzes the trends in the interpretation of incomplete agreements. This thesis found where it was clear that the parties intended to be bound, and to establish a legal relationship, it is permissible to imply terms that give business validity.