United Nations Convention on Contracts for the International Sale of Goods
Encyclopedia
The United Nations Convention on Contracts for the International Sale of Goods (CISG) is a treaty
offering a uniform international sales law
that, as of August 2010, has been ratified by 77 countries that account for a significant proportion of world trade, making it one of the most successful international uniform laws. Benin
is the most recent state to have ratified the Convention.
The CISG allows exporters to avoid choice of law
issues as the CISG offers ‘accepted substantive rules on which contracting parties, courts, and arbitrators may rely’.
The CISG was developed by the United Nations Commission on International Trade Law (UNCITRAL) and was signed in Vienna in 1980. The CISG is sometimes referred to as the Vienna Convention (but is not to be confused with other treaties signed in Vienna
). It came into force as a multilateral treaty on 1 January 1988, after being ratified by eleven countries. CISG has been regarded as a success for UNCITRAL as the Convention has since been accepted by States from ‘every geographical region, every stage of economic development and every major legal, social and economic system’. Countries that have ratified the CISG are referred to within the treaty as “Contracting States”. Unless excluded by the express terms of a contract, the CISG is deemed to be incorporated into (and supplant) any otherwise applicable domestic law(s) with respect to a transaction in goods between parties from different Contracting States. Of the uniform law conventions, the CISG has been described as having ‘the greatest influence on the law of worldwide trans-border commerce’.
The CISG has been described as a great legislative achievement and the ‘most successful international document so far’ in unified international sales law, in part due to its flexibility in allowing Contracting States the option of taking exception to some specified articles. This flexibility was instrumental in convincing states with disparate legal traditions to subscribe to an otherwise uniform code. A number of countries that have signed the CISG have made declarations and reservations as to the Treaty's scope, though the vast majority 55 out of the current 76 Contracting States has chosen to accede to the Convention without any reservations.
The CISG is the basis of the annual Willem C. Vis International Commercial Arbitration Moot
held in Vienna in the week before Easter (and now also in Hong Kong). Teams from Law Schools around the world take part. The Moot is organised by Pace University, who keep a definitive source of information on the CISG.
, Part II is not generally applied, unless the contract expressly specifies this (reservation authorized by Article 92 CISG). Instead, local law is applied, resulting in some slight differences. For example, a Finnish seller must give a "reasonable amount of time" for a foreign buyer to consider an offer; CISG allows the seller to retract the offer before the buyer has accepted the offer. However, the Nordic Countries are currently (2008) considering to withdraw their Article 92 CISG reservation.
In any case, Nordic countries
(i.e. members of the Nordic Council
) do not apply CISG in trade between each other, but local law. This is due to a reservation in accordance with Article 94 CISG.
The absence of the United Kingdom
, a leading jurisdiction for the choice of law in international commercial contracts, has been attributed to the government not viewing the ratification as a legislative priority, a lack of interest from business in supporting the ratification, opposition from a number of large and influential organisations, a lack of public service resources, and a danger that London would lose its edge in international arbitration and litigation.
Japan deposited its instrument of accession with the depositary of the CISG on 1 July 2008. The Convention thus entered into force for Japan on 1 August 2009.
The CISG is divided into four parts:
The CISG also applies if the parties are situated in different countries (which need not be Contracting States) and the conflict of law rules lead to the application of the law of a Contracting State. For example, a contract between a Japanese trader and a Brazilian trader may contain a clause that arbitration will be in Sydney under Australian law with the consequence that the CISG would apply. It should be noted that a number of States have declared they will not be bound by this condition.
The CISG is intended to apply to commercial goods and products only. With some limited exceptions, the CISG does not apply to domestic goods, nor does it apply to auctions, ships, aircraft or intangibles and services. The position of computer software is ‘controversial’ and will depend upon various conditions and situations.
Importantly, parties to a contract may exclude or vary the application of the CISG.
Interpretation of the CISG is to take account of the ‘international character’ of the Convention, the need for uniform application and the need for good faith in international trade. Disputes over interpretation of the CISG are to be resolved by applying the ‘general principles’ of the CISG or where there are no such principles but the matters are governed by the CISG (a gap praeter legem
) by applying the rules of private international law.
A key point of controversy had to do with whether or not a contract requires a written memorial to be binding. The CISG allows for a sale to be oral or unsigned but in some countries, contracts are not valid unless written. In many nations, however, oral contracts are accepted and those States had no objection to signing, so States with a strict written requirement exercised their ability to exclude those articles relating to oral contracts, enabling them to sign as well.
The CISG is not a complete qualification by its own definition. These gaps must be filled in by the applicable national law under due consideration of the conflict of law rules applicable at the place of jurisdiction.
Generally, an offer may be revoked provided the withdrawal reaches the offeree before or at the same time as the offer or before the offeree has sent an acceptance. Some offers may not be revoked, for example when the offeree reasonably relied upon the offer as being irrevocable. The CISG requires a positive act to indicate acceptance; silence or inactivity are not an acceptance.
The CISG attempts to resolve the common situation where an offeree’s reply to an offer accepts the original offer but attempts to change the conditions. The CISG says that any change to the original conditions is a rejection of the offer – it is a counter-offer – unless the modified terms do not materially alter the terms of the offer. Changes to price, payment, quality, quantity, delivery, liability of the parties and arbitration conditions may all materially alter the terms of the offer.
The CISG defines the duty of the seller, ‘stating the obvious’, as the seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract. Similarly, the duty of the buyer is to take all steps ‘which could reasonably be expected’ to take delivery of the goods, and to pay for them.
Generally, the goods must be of the quality, quantity and description required by the contract, be suitably packaged and fit for purpose. The seller is obliged to deliver goods that are not subject to claims from a third party for infringement of industrial or intellectual property rights in the State where the goods are to be sold. The buyer is obliged to promptly examine the goods and, subject to some qualifications, must advise the seller of any lack of conformity within ‘a reasonable time’ and no later than within two years of receipt.
The CISG describes when the risk passes from the seller to the buyer but it has been observed that in practice most contracts define the ‘seller's delivery obligations quite precisely by adopting an established shipment term’ such as FOB and CIF.
Remedies of the buyer and seller depend upon the character of a breach of the contract. If the breach is fundamental then the other party is substantially deprived of what it expected to receive under the contract. Provided that an objective test shows that the breach could not have been foreseen, then the contract may be avoided and the aggrieved party may claim damages. Where part performance of a contract has occurred then the performing party may recover any payment made or good supplied; this contrasts with the common law where there is generally no right to recover a good supplied unless title has been retained or damages are inadequate, only a right to claim the value of the good.
If the breach is not fundamental then the contract is not avoided and remedies may be sought including claiming damages, specific performance and adjustment of price. Damages that may be awarded conform to the common law rules in Hadley v Baxendale but it has been argued the test of foreseeability is substantially broader and consequently more generous to the aggrieved party.
The CISG excuses a party from liability to a claim of damages where a failure to perform is attributable to an impediment beyond the party’s, or a third party sub-contractor’s, control that could not have been reasonably expected. Such an extraneous event might elsewhere be referred to as force majeure, and frustration of the contract.
Where a seller has to refund the price paid then the seller must also pay interest to the buyer from the date of payment. It has been said the interest rate is based on rates current in the seller’s State ‘[s]ince the obligation to pay interest partakes of the seller's obligation to make restitution and not of the buyer's right to claim damages’, although this has been debated. In a mirror of the seller’s obligations, where a buyer has to return goods the buyer is accountable for any benefits received.
The Part IV Articles, along with the Preamble, are sometime characterized as being addressed ‘primarily to States’, not to business people attempting to use the Convention for international trade. They may, however, have a significant impact upon the CISG's practical applicability, thus requiring careful scrutiny when determining each particular case.
A contrary view is that the CISG is ‘written in plain business language’ which allows judges the opportunity to make the Convention workable in a range of sales situations. It has been said ‘the drafting style is lucid and the wording simple and uncluttered by complicated subordinating clauses’, and the ‘general sense’ can be grasped on the first reading without the need to be a sales expert.
Uniform application of the CISG is problematic because of the reluctance of courts to use ‘solutions adopted on the same point by courts in other countries’, resulting in inconsistent decisions. For example, in a case involving the export to Germany by a Swiss company of New Zealand mussels with a level of cadmium in excess of German standards, the German Supreme Court found that it is not the duty of the seller to ensure that goods meet German public health regulations. This contrasted with a later decision in which an Italian cheese exporter failed to meet French packaging regulations and the French court decided it is the duty of the seller to ensure compliance with French regulations.
These two cases were held by one commentator to be an example of contradictory jurisprudence. While another commentator saw the cases as not contradictory as the German case could be distinguished on a number of points. It is noticeable that the French court chose not to consider the German court’s decision in its published decision. In any event, it would seem that if there is room for contrary decisions on the obligation for a seller to conform to the regulations in force in the buyer’s State and the exceptions to that obligation then the Convention should be clarified to increase certainty, particularly if the reluctance to use foreign precedent continues.
CISG advocates are also concerned that the natural inclination of judges is to interpret the CISG using the methods familiar to them from their own State rather than attempting to apply the general principles of the Convention or the rules of private international law. This is despite the comment from one highly respected academic that ‘it should be a rare, or non-existent, case where there are no relevant general principles to which a court might have recourse’ under the CISG. This concern has been supported by research of the CISG Advisory Council which has said, in the context of the interpretation of Articles 38 and 39, there is a tendency for courts to interpret the articles in the light of their own State’s law and some States have ‘struggled to apply [the articles] appropriately’. In one of a number of criticisms of Canadian court decisions to use local legislation to interpret the CISG one commentator said the CISG was designed to ‘replace existing domestic laws and case law’ and attempts to resolve gaps should not be by ‘reference to relevant provisions of [local] sales law’.
Critics of the multiple language versions of the CISG claim it is inevitable the versions will not be totally consistent because of translation errors and the untranslatability of ‘subtle nuances’ of language. This argument, although with some validity, would not seem peculiar to the CISG but common to any and all treaties that exist in multiple languages. The reductio ad absurdum
would seem to be that all international treaties should exist in only a single language, something which is clearly neither practical nor desirable.
Other criticisms of the Convention are that it is incomplete, there is no mechanism for updating the provisions and no international panel to resolve interpretation issues. For example, the CISG does not govern the validity of the contract, nor does it consider electronic contracts.
Despite the critics, a supporter has said ‘[t]he fact that the costly ignorance of the early days, when many lawyers ignored the CISG entirely, has been replaced by too much enthusiasm that leads to … oversimplification, cannot be blamed on the CISG’.
Secondly, business people will increasingly pressure both lawyers and governments to make sales of goods disputes less expensive and reduce the risk of being forced to use a legal system that may be completely alien to their own. Both of these objectives can be achieved through use of the CISG.
Finally, UNCITRAL will need to develop a mechanism to further develop the Convention and to resolve conflicting interpretation issues. This will make it more attractive to both business people and potential Contracting States.
Many countries that have signed the CISG have made declarations and reservations as to the Treaty's scope.http://untreaty.un.org/ENGLISH/bible/englishinternetbible/partI/chapterX/treaty20.asp#participant
("UCC"). The UCC is similar to the CISG in most ways as a means for promoting contracts for the sales of goods. The UCC departs from the CISG in some areas, such as the following areas that tend to reflect more general aspects of the U.S. legal system:
Nevertheless, because the U.S. has ratified the CISG, it has the force of federal law and supersedes UCC-based state law under the Supremacy Clause
. Among the U.S. reservations
to the CISG is the provision that the CISG will apply only as to contracts with parties located in other CISG Contracting States, a reservation permitted by the CISG in Article 95. Therefore, in international contracts for the sale of goods between a U.S. entity
and an entity of a Contracting State the CISG will apply unless the contract's choice of law
clause specifically provides for non-CISG terms, or for the application of the law of a non-Contracting State. Conversely, in "international" contracts for the sale of goods between a U.S. entity and an entity of a non-Contracting State, to be adjudicated by a U.S. court, the CISG will not apply and the contract will be governed by the domestic law applicable according to private international law rules.
Treaty
A treaty is an express agreement under international law entered into by actors in international law, namely sovereign states and international organizations. A treaty may also be known as an agreement, protocol, covenant, convention or exchange of letters, among other terms...
offering a uniform international sales law
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
that, as of August 2010, has been ratified by 77 countries that account for a significant proportion of world trade, making it one of the most successful international uniform laws. Benin
Benin
Benin , officially the Republic of Benin, is a country in West Africa. It borders Togo to the west, Nigeria to the east and Burkina Faso and Niger to the north. Its small southern coastline on the Bight of Benin is where a majority of the population is located...
is the most recent state to have ratified the Convention.
The CISG allows exporters to avoid choice of law
Choice of law
Choice of law is a procedural stage in the litigation of a case involving the conflict of laws when it is necessary to reconcile the differences between the laws of different legal jurisdictions, such as sovereign states, federated states , or provinces...
issues as the CISG offers ‘accepted substantive rules on which contracting parties, courts, and arbitrators may rely’.
The CISG was developed by the United Nations Commission on International Trade Law (UNCITRAL) and was signed in Vienna in 1980. The CISG is sometimes referred to as the Vienna Convention (but is not to be confused with other treaties signed in Vienna
Vienna Convention
Vienna Convention can mean any of a number of treaties signed in Vienna. Notable are:* several treaties and conventions resulted from the Congress of Vienna which redrew the map of Europe, only partially restoring the pre-Napoleonic situation, and drafted new rules for international relations*...
). It came into force as a multilateral treaty on 1 January 1988, after being ratified by eleven countries. CISG has been regarded as a success for UNCITRAL as the Convention has since been accepted by States from ‘every geographical region, every stage of economic development and every major legal, social and economic system’. Countries that have ratified the CISG are referred to within the treaty as “Contracting States”. Unless excluded by the express terms of a contract, the CISG is deemed to be incorporated into (and supplant) any otherwise applicable domestic law(s) with respect to a transaction in goods between parties from different Contracting States. Of the uniform law conventions, the CISG has been described as having ‘the greatest influence on the law of worldwide trans-border commerce’.
The CISG has been described as a great legislative achievement and the ‘most successful international document so far’ in unified international sales law, in part due to its flexibility in allowing Contracting States the option of taking exception to some specified articles. This flexibility was instrumental in convincing states with disparate legal traditions to subscribe to an otherwise uniform code. A number of countries that have signed the CISG have made declarations and reservations as to the Treaty's scope, though the vast majority 55 out of the current 76 Contracting States has chosen to accede to the Convention without any reservations.
The CISG is the basis of the annual Willem C. Vis International Commercial Arbitration Moot
Willem C. Vis Moot
The Willem C. Vis International Commercial Arbitration Moot is a prestigious international moot court competition for law students. Since 1994, it is annually being held in Vienna, Austria....
held in Vienna in the week before Easter (and now also in Hong Kong). Teams from Law Schools around the world take part. The Moot is organised by Pace University, who keep a definitive source of information on the CISG.
Countries that have ratified the CISG
As of 1 August 2010Reservations
A few countries have declared important reservations. For example, in the Nordic countriesNordic countries
The Nordic countries make up a region in Northern Europe and the North Atlantic which consists of Denmark, Finland, Iceland, Norway and Sweden and their associated territories, the Faroe Islands, Greenland and Åland...
, Part II is not generally applied, unless the contract expressly specifies this (reservation authorized by Article 92 CISG). Instead, local law is applied, resulting in some slight differences. For example, a Finnish seller must give a "reasonable amount of time" for a foreign buyer to consider an offer; CISG allows the seller to retract the offer before the buyer has accepted the offer. However, the Nordic Countries are currently (2008) considering to withdraw their Article 92 CISG reservation.
In any case, Nordic countries
Nordic countries
The Nordic countries make up a region in Northern Europe and the North Atlantic which consists of Denmark, Finland, Iceland, Norway and Sweden and their associated territories, the Faroe Islands, Greenland and Åland...
(i.e. members of the Nordic Council
Nordic Council
The Nordic Council is a geo-political, inter-parliamentary forum for co-operation between the Nordic countries. It was established following World War II and its first concrete result was the introduction in 1952 of a common labour market and free movement across borders without passports for the...
) do not apply CISG in trade between each other, but local law. This is due to a reservation in accordance with Article 94 CISG.
Major absentees
Brazil, India, South Africa and the United Kingdom are the only major trading countries that have not yet ratified the CISG.The absence of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, a leading jurisdiction for the choice of law in international commercial contracts, has been attributed to the government not viewing the ratification as a legislative priority, a lack of interest from business in supporting the ratification, opposition from a number of large and influential organisations, a lack of public service resources, and a danger that London would lose its edge in international arbitration and litigation.
Japan deposited its instrument of accession with the depositary of the CISG on 1 July 2008. The Convention thus entered into force for Japan on 1 August 2009.
Language, structure, and content
The CISG is written using ‘plain language that refers to things and events for which there are words of common content’. This was a conscious intent to allow national legal systems to be transcended through the use of a common legal lingua franca and avoids the ‘words associated with specific domestic legal nuances’. Further, it facilitated the translation into six languages so all texts are equally authentic.The CISG is divided into four parts:
Part I: Sphere of Application and General Provisions (Articles 1 to 13)
The CISG applies to contracts of sale of goods between parties whose places of business are in different States when these States are Contracting States (Article 1(1) (a)). Given the significant number of Contracting States, this is the usual path to the CISG's applicability.The CISG also applies if the parties are situated in different countries (which need not be Contracting States) and the conflict of law rules lead to the application of the law of a Contracting State. For example, a contract between a Japanese trader and a Brazilian trader may contain a clause that arbitration will be in Sydney under Australian law with the consequence that the CISG would apply. It should be noted that a number of States have declared they will not be bound by this condition.
The CISG is intended to apply to commercial goods and products only. With some limited exceptions, the CISG does not apply to domestic goods, nor does it apply to auctions, ships, aircraft or intangibles and services. The position of computer software is ‘controversial’ and will depend upon various conditions and situations.
Importantly, parties to a contract may exclude or vary the application of the CISG.
Interpretation of the CISG is to take account of the ‘international character’ of the Convention, the need for uniform application and the need for good faith in international trade. Disputes over interpretation of the CISG are to be resolved by applying the ‘general principles’ of the CISG or where there are no such principles but the matters are governed by the CISG (a gap praeter legem
Praeter legem
In Legal Latin, the phrase praeter legem "refers to an item that is not regulated by law and therefore is not illegal"...
) by applying the rules of private international law.
A key point of controversy had to do with whether or not a contract requires a written memorial to be binding. The CISG allows for a sale to be oral or unsigned but in some countries, contracts are not valid unless written. In many nations, however, oral contracts are accepted and those States had no objection to signing, so States with a strict written requirement exercised their ability to exclude those articles relating to oral contracts, enabling them to sign as well.
The CISG is not a complete qualification by its own definition. These gaps must be filled in by the applicable national law under due consideration of the conflict of law rules applicable at the place of jurisdiction.
Part II: Formation of the Contract (Articles 14 to 24)
An offer to contract must be addressed to a person, be sufficiently definite – that is, describe the goods, quantity and price – and indicate an intention for the offeror to be bound on acceptance. Note that the CISG does not appear to recognise common law unilateral contracts but, subject to clear indication by the offeror, treats any proposal not addressed to a specific person as only an invitation to make an offer. Further, where there is no explicit price or procedure to implicitly determine price then the parties are assumed to have agreed upon a price based upon that ‘generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances’.Generally, an offer may be revoked provided the withdrawal reaches the offeree before or at the same time as the offer or before the offeree has sent an acceptance. Some offers may not be revoked, for example when the offeree reasonably relied upon the offer as being irrevocable. The CISG requires a positive act to indicate acceptance; silence or inactivity are not an acceptance.
The CISG attempts to resolve the common situation where an offeree’s reply to an offer accepts the original offer but attempts to change the conditions. The CISG says that any change to the original conditions is a rejection of the offer – it is a counter-offer – unless the modified terms do not materially alter the terms of the offer. Changes to price, payment, quality, quantity, delivery, liability of the parties and arbitration conditions may all materially alter the terms of the offer.
Part III: Sale of Goods (Articles 25 to 88)
Articles 25 – 88; sale of goods, obligations of the seller, obligations of the buyer, passing of risk, obligations common to both buyer and seller.The CISG defines the duty of the seller, ‘stating the obvious’, as the seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract. Similarly, the duty of the buyer is to take all steps ‘which could reasonably be expected’ to take delivery of the goods, and to pay for them.
Generally, the goods must be of the quality, quantity and description required by the contract, be suitably packaged and fit for purpose. The seller is obliged to deliver goods that are not subject to claims from a third party for infringement of industrial or intellectual property rights in the State where the goods are to be sold. The buyer is obliged to promptly examine the goods and, subject to some qualifications, must advise the seller of any lack of conformity within ‘a reasonable time’ and no later than within two years of receipt.
The CISG describes when the risk passes from the seller to the buyer but it has been observed that in practice most contracts define the ‘seller's delivery obligations quite precisely by adopting an established shipment term’ such as FOB and CIF.
Remedies of the buyer and seller depend upon the character of a breach of the contract. If the breach is fundamental then the other party is substantially deprived of what it expected to receive under the contract. Provided that an objective test shows that the breach could not have been foreseen, then the contract may be avoided and the aggrieved party may claim damages. Where part performance of a contract has occurred then the performing party may recover any payment made or good supplied; this contrasts with the common law where there is generally no right to recover a good supplied unless title has been retained or damages are inadequate, only a right to claim the value of the good.
If the breach is not fundamental then the contract is not avoided and remedies may be sought including claiming damages, specific performance and adjustment of price. Damages that may be awarded conform to the common law rules in Hadley v Baxendale but it has been argued the test of foreseeability is substantially broader and consequently more generous to the aggrieved party.
The CISG excuses a party from liability to a claim of damages where a failure to perform is attributable to an impediment beyond the party’s, or a third party sub-contractor’s, control that could not have been reasonably expected. Such an extraneous event might elsewhere be referred to as force majeure, and frustration of the contract.
Where a seller has to refund the price paid then the seller must also pay interest to the buyer from the date of payment. It has been said the interest rate is based on rates current in the seller’s State ‘[s]ince the obligation to pay interest partakes of the seller's obligation to make restitution and not of the buyer's right to claim damages’, although this has been debated. In a mirror of the seller’s obligations, where a buyer has to return goods the buyer is accountable for any benefits received.
Part IV: Final Provisions (Articles 89 to 101)
Articles 89 to 101 (final provisions) including how and when the Convention comes into force, permitted reservations and declarations, and the application of the Convention to international sales where both States concerned have the same or similar law on the subject.The Part IV Articles, along with the Preamble, are sometime characterized as being addressed ‘primarily to States’, not to business people attempting to use the Convention for international trade. They may, however, have a significant impact upon the CISG's practical applicability, thus requiring careful scrutiny when determining each particular case.
Commentary upon the Convention
Although the Convention has been accepted by a large number of States, it has been the subject of some criticism. For example, the drafting nations have been accused of being incapable of agreement on a code that ‘concisely and clearly states universal principles of sales law’ and through the Convention’s invitation to interpret taking regard of the Convention’s ‘international character’ gives judges the opportunity to develop ‘diverse meaning’. Put more bluntly, the CISG has been described as ‘a variety of vague standards and compromises that appear inconsistent with commercial interests’.A contrary view is that the CISG is ‘written in plain business language’ which allows judges the opportunity to make the Convention workable in a range of sales situations. It has been said ‘the drafting style is lucid and the wording simple and uncluttered by complicated subordinating clauses’, and the ‘general sense’ can be grasped on the first reading without the need to be a sales expert.
Uniform application of the CISG is problematic because of the reluctance of courts to use ‘solutions adopted on the same point by courts in other countries’, resulting in inconsistent decisions. For example, in a case involving the export to Germany by a Swiss company of New Zealand mussels with a level of cadmium in excess of German standards, the German Supreme Court found that it is not the duty of the seller to ensure that goods meet German public health regulations. This contrasted with a later decision in which an Italian cheese exporter failed to meet French packaging regulations and the French court decided it is the duty of the seller to ensure compliance with French regulations.
These two cases were held by one commentator to be an example of contradictory jurisprudence. While another commentator saw the cases as not contradictory as the German case could be distinguished on a number of points. It is noticeable that the French court chose not to consider the German court’s decision in its published decision. In any event, it would seem that if there is room for contrary decisions on the obligation for a seller to conform to the regulations in force in the buyer’s State and the exceptions to that obligation then the Convention should be clarified to increase certainty, particularly if the reluctance to use foreign precedent continues.
CISG advocates are also concerned that the natural inclination of judges is to interpret the CISG using the methods familiar to them from their own State rather than attempting to apply the general principles of the Convention or the rules of private international law. This is despite the comment from one highly respected academic that ‘it should be a rare, or non-existent, case where there are no relevant general principles to which a court might have recourse’ under the CISG. This concern has been supported by research of the CISG Advisory Council which has said, in the context of the interpretation of Articles 38 and 39, there is a tendency for courts to interpret the articles in the light of their own State’s law and some States have ‘struggled to apply [the articles] appropriately’. In one of a number of criticisms of Canadian court decisions to use local legislation to interpret the CISG one commentator said the CISG was designed to ‘replace existing domestic laws and case law’ and attempts to resolve gaps should not be by ‘reference to relevant provisions of [local] sales law’.
Critics of the multiple language versions of the CISG claim it is inevitable the versions will not be totally consistent because of translation errors and the untranslatability of ‘subtle nuances’ of language. This argument, although with some validity, would not seem peculiar to the CISG but common to any and all treaties that exist in multiple languages. The reductio ad absurdum
Reductio ad absurdum
In logic, proof by contradiction is a form of proof that establishes the truth or validity of a proposition by showing that the proposition's being false would imply a contradiction...
would seem to be that all international treaties should exist in only a single language, something which is clearly neither practical nor desirable.
Other criticisms of the Convention are that it is incomplete, there is no mechanism for updating the provisions and no international panel to resolve interpretation issues. For example, the CISG does not govern the validity of the contract, nor does it consider electronic contracts.
Despite the critics, a supporter has said ‘[t]he fact that the costly ignorance of the early days, when many lawyers ignored the CISG entirely, has been replaced by too much enthusiasm that leads to … oversimplification, cannot be blamed on the CISG’.
Future directions
Greater acceptance of the CISG will come from three directions. Firstly, it is likely that within the global legal profession, as the numbers of new lawyers educated in the CISG increases, the existing Contracting States will embrace the CISG, appropriately interpret the articles and demonstrate a greater willingness to accept precedents from other Contracting States.Secondly, business people will increasingly pressure both lawyers and governments to make sales of goods disputes less expensive and reduce the risk of being forced to use a legal system that may be completely alien to their own. Both of these objectives can be achieved through use of the CISG.
Finally, UNCITRAL will need to develop a mechanism to further develop the Convention and to resolve conflicting interpretation issues. This will make it more attractive to both business people and potential Contracting States.
Differences with country legislation relating to the sale of goods
Depending on the country, the CISG can represent a small or significant departure from local legislation relating to the sale of goods, and in this can provide important benefits to companies from one contracting state that import goods into other states that have ratified the CISG.Many countries that have signed the CISG have made declarations and reservations as to the Treaty's scope.http://untreaty.un.org/ENGLISH/bible/englishinternetbible/partI/chapterX/treaty20.asp#participant
Differences with legislation in the United States of America
In the USA all 50 states have adopted common legislation referred to in the U.S. as the Uniform Commercial CodeUniform Commercial Code
The Uniform Commercial Code , first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America.The goal of harmonizing state law is...
("UCC"). The UCC is similar to the CISG in most ways as a means for promoting contracts for the sales of goods. The UCC departs from the CISG in some areas, such as the following areas that tend to reflect more general aspects of the U.S. legal system:
- Terms of Acceptance - Under the CISG, acceptance occurs when it is received by the offeror, a rule similar to many civil law jurisdictions which contemplate for service to be effective upon receipt; by contrast the U.S. legal system often applies the so-called "mailbox" rule by which, acceptance, like service, can occur at the time the offeree transmits it to the offeror.
- "Battle of Forms" - Under the CISG, a reply to an offer that purports to be an acceptance, but has additions, limitations, or other modifications is generally considered by the CISG to be a rejection and counteroffer. The UCC, on the other hand, tries to avoid the "battle of forms" that can result from such a rule, and allows an expression of acceptance to be operative, unless the acceptance states that it is conditioned on the offeror consenting to the additional or different terms contained in the acceptance.
- Writing Requirement - Unless otherwise specified by a ratifying state, the CISG does not require that a sales contract be reduced to a writing. Under the UCC's statute of frauds, oral contracts selling goods for a price of $500.00 or more are generally not enforceable unless in writing.
Nevertheless, because the U.S. has ratified the CISG, it has the force of federal law and supersedes UCC-based state law under the Supremacy Clause
Supremacy Clause
Article VI, Clause 2 of the United States Constitution, known as the Supremacy Clause, establishes the U.S. Constitution, U.S. Treaties, and Federal Statutes as "the supreme law of the land." The text decrees these to be the highest form of law in the U.S...
. Among the U.S. reservations
Reservation (law)
A reservation in international law is a caveat to a state's acceptance of a treaty. By the 1969 Vienna Convention on the Law of Treaties , a reservation is defined as a...
to the CISG is the provision that the CISG will apply only as to contracts with parties located in other CISG Contracting States, a reservation permitted by the CISG in Article 95. Therefore, in international contracts for the sale of goods between a U.S. entity
United States entity
United States entity is a designation given to some entities , e.g. for International Traffic in Arms Regulations purposes:For purposes of the preceding paragraph, a U.S. entity is a firm incorporated in the United States that is controlled by U.S. citizens or by another U.S...
and an entity of a Contracting State the CISG will apply unless the contract's choice of law
Choice of law
Choice of law is a procedural stage in the litigation of a case involving the conflict of laws when it is necessary to reconcile the differences between the laws of different legal jurisdictions, such as sovereign states, federated states , or provinces...
clause specifically provides for non-CISG terms, or for the application of the law of a non-Contracting State. Conversely, in "international" contracts for the sale of goods between a U.S. entity and an entity of a non-Contracting State, to be adjudicated by a U.S. court, the CISG will not apply and the contract will be governed by the domestic law applicable according to private international law rules.
External links
- Text of the CISG
- Pace Law School database on the CISG and International Commercial Law.
- Online Commentary on the CISG ccisg.org
- US Department of Commerce Commentary
- International Commercial Terms (Incoterms)IncotermThe Incoterms rules or International Commercial terms are a series of pre-defined commercial terms published by the International Chamber of Commerce widely used in international commercial transactions...
- Uniform Commercial Code (UCC)
- CISG online Database of the University of Basel, Switzerland
- CISG-France Application of the CISG by French courts