The United Nations Convention on contracts for the International Sale of Goods

The United Nations Convention on contracts for the International Sale of Goods ( abbrev. CISG) was signed in Vienna in 1980 and came into force as a multilateral treaty on January 1, 1988. Growing from an original group of eleven countries in 1988, the CISG, as of 2 December 2006, is the law in 70 nations. CISG – signatory countries account for a staggering two – third of all goods moving in international trade and represent a majority of the world´s population.

Due to its flexibility in allowing Contracting States the option of taking exception to specified articles the CISG has become one of the most successful international conventions. According to CISG Articles 94, 95 and 96 Contracting States are free to make certain reservations at their election. The reservations are deviations from the standard provisions of the CSIG. For example In formerly communist countries contracts were not valid unless written, for which reason mostly Eastern European States (but also Latin American states like Argentina, Chile and Paraguay) have declared that any provision that would permit oral contracts do not apply in those nations.

In spite of its flexibility some important trading nations like the UK and Brazil are not among the countries that have ratified the CISG.

According to CISG Article 1 the Convention is generally applicable to: (1) contracts of sale; (2) of goods (3) between parties whose places of business are in different (Contracting) States. On the other hand according to CISG Article 2 the Convention doesn´t apply to sales (1) of consumer goods (bought for a personal use and consumption by the purchaser); (2) by auction; (3) of securities or negotiable instruments; (4) of ships, vessels and aircrafts; or (5) electricity.

By using the term “goods” in its Article 1 the CISG makes a clear differentiation between the “sale of goods” and the “sale of services”. The CISG doesn´t apply to agreements in which the predominant part of the obligations consists in the supply of labour or other services. Agreements solely for licensing, leasing, distribution or carriage and transportation are generally not within the scope of application of the Convention. Mixt transactions such as leases with purchase option or the development and sale of computer software constantly are complicated legal matters regarding the applicability of the CISG.

Also the CISG ´s third primary requirement of application – at least for some of the Contacting States - turns out to be a source of surprise. According to this the sales contract has to be concluded between parties whose places of business are in different States. The unexpected result of this rule is that even though the parties are of the same nationality the CISG applies to the contract in the event of the parties having their places of business in different states.

In order to avoid those (sometimes awkward) surprises parties sometimes use the opportunity to opt out the CISG. Under CISG Article 6 the parties may exclude the application of the Convention. But those exclusion preventions have to be designed extremely cautiously. Simple domestic choice –of-law provisions, such as the following, likely will not effect the exclusion of the CISG:

“The rights and obligations of the parties under this contract shall be governed by and construed under the laws of ……”

This is due to the fact that international treaties such as the CISG are considered as part of the law of every Contracting State and therefore not excluded by means of the forecited provision. If the parties wish to exclude the application of the Convention, such exclusion prevention must be fomulated unambiguously and state at the same time the alternative applicable law.
Based on the fact that the creation of the CISG was inspired by the idea of facilitating international trade connections especially international operating companies should learn to deal with the CISG – instead of avoiding it by means of (badly designed) exclusion preventions.


For further information on the CISG call us:

Streifler & Kollegen
Oranienburger Straße 69
10117 Berlin

Fon: 030 - 27 87 40 30
Fax: 030 - 27 87 40 59

e-Mail: internationalesrecht@streifler.de

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Letztes Update 06.09.2007 | Copyright© RA Dirk Streifler 2010 | |