(1) The statements and other conduct of a party shall be interpreted according to that party's intention if the other party knew or could not have been unaware of that intention.
(2) If the preceding paragraph is not applicable, such statements and other conduct shall be interpreted according to the meaning that a reasonable person of the same kind as the other party would give to it in the same circumstances.
1. Interpretation of unilateral acts
By analogy to the criteria laid down in Article 4.1 with respect to the contract as a whole, this Article states that in the interpretation of unilateral statements or conduct preference is to be given to the intention of the party concerned, provided that the other party knew (or could not have been unaware) of that intention, and that in all other cases such statements or conduct are to be interpreted according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.
In practice the principal field of application of this Article, which corresponds almost literally to Article 8(1) and (2) CISG, will be in the process of the formation of contracts where parties make statements and engage in conduct the precise legal significance of which may have to be established in order to determine whether or not a contract is ultimately concluded. There are however also unilateral acts performed after the conclusion of the contract which may give rise to problems of interpretation: for example, a notification of defects in goods, notice of avoidance or of termination of the contract, etc.
2. How to establish the intention of the party performing the act or to determine the understanding of a reasonable person
In applying both the “subjective” test laid down in paragraph (1) and the “reasonableness” test in paragraph (2), regard is to be had to all the relevant circumstances, the most important of which are listed in Article 4.3.