UN Convention on Contracts for the International Sale of Goods (CISG)
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The United Nations Convention on Contracts for the International Sale of Goods (CISG) is an international treaty that governs contracts for the sale of goods between parties located in different countries. It was adopted by the United Nations in 1980 and entered into force in 1988. The CISG is applicable to a wide range of international commercial transactions and aims to provide a harmonised framework for the formation and performance of such contracts.
Scope and application: The CISG applies to contracts for the sale of goods when the parties have their places of business in different countries that are signatories to the convention. It is important to note that the CISG only applies to the sale of goods and not to services or other types of contracts. Additionally, parties can opt out of the CISG by expressly excluding its application or by choosing the law of a non-CISG jurisdiction to govern their contract.
Formation of the contract: The CISG establishes rules for the formation of contracts. It recognises that contracts can be concluded through various means, including oral, written, or even by the conduct of the parties. The convention specifies requirements for the offer, acceptance, and revocation of an offer. It also addresses issues such as the time and place of contract formation, the use of standard terms, and the validity of contracts.
Obligations of the parties: The CISG sets out the general obligations of the buyer and seller in an international sales contract. These obligations include:
Packaging and labelling: The seller is responsible for properly packaging and labelling the goods, taking into account any specific requirements agreed upon by the parties.
Risk and passing of property: The CISG contains rules regarding the passing of risk and property from the seller to the buyer. It distinguishes between the transfer of risk and the transfer of property rights. Generally, the risk passes to the buyer when the goods are handed over to the first carrier for transportation. The transfer of property rights is governed by domestic laws unless the parties agree otherwise.
Exemptions and limitations: The CISG includes provisions that address situations where a party's performance is affected by events beyond their control or by unforeseen circumstances. These provisions include force majeure clauses and limitations on the liability of a party for certain types of damages.
Interpretation and gaps in the convention: The CISG follows a principle-based approach and encourages the interpretation of contracts in accordance with the general principles of the convention. In cases where the CISG does not provide specific guidance, courts and tribunals may turn to the general principles underlying the convention or the domestic laws of the relevant jurisdiction to resolve any gaps or ambiguities.
The CISG has been ratified by over 90 countries, including major trading nations, making it an essential instrument in international trade. It is important to note that the CISG does not cover all aspects of international sales contracts, and certain issues such as the validity of the contract, the effect of fraud, and the statute of limitations are typically governed by domestic laws.
Scope and application: The CISG applies to contracts for the sale of goods when the parties have their places of business in different countries that are signatories to the convention. It is important to note that the CISG only applies to the sale of goods and not to services or other types of contracts. Additionally, parties can opt out of the CISG by expressly excluding its application or by choosing the law of a non-CISG jurisdiction to govern their contract.
Formation of the contract: The CISG establishes rules for the formation of contracts. It recognises that contracts can be concluded through various means, including oral, written, or even by the conduct of the parties. The convention specifies requirements for the offer, acceptance, and revocation of an offer. It also addresses issues such as the time and place of contract formation, the use of standard terms, and the validity of contracts.
Obligations of the parties: The CISG sets out the general obligations of the buyer and seller in an international sales contract. These obligations include:
- Delivery of goods: The seller must deliver the goods, transfer the ownership rights, and hand over any required documents related to the goods.
- Payment of price: The buyer must pay the price for the goods as agreed upon in the contract.
- Inspection and acceptance: The buyer has the right to inspect the goods and must notify the seller of any defects or non-conformities within a reasonable time.
Packaging and labelling: The seller is responsible for properly packaging and labelling the goods, taking into account any specific requirements agreed upon by the parties.
Risk and passing of property: The CISG contains rules regarding the passing of risk and property from the seller to the buyer. It distinguishes between the transfer of risk and the transfer of property rights. Generally, the risk passes to the buyer when the goods are handed over to the first carrier for transportation. The transfer of property rights is governed by domestic laws unless the parties agree otherwise.
- Remedies for breach of contract: The CISG provides remedies for breaches of contract by either party. These remedies include:
- Damages: The injured party has the right to claim damages to compensate for the loss suffered as a result of the breach.
- Specific performance: In certain circumstances, the injured party can request the court to order the breaching party to perform its obligations under the contract.
- Avoidance of the contract: The injured party may also have the right to avoid the contract, meaning that the parties are released from their contractual obligations.
- Price reduction: If the goods delivered do not conform to the contract, the buyer may be entitled to a reduction in the price.
Exemptions and limitations: The CISG includes provisions that address situations where a party's performance is affected by events beyond their control or by unforeseen circumstances. These provisions include force majeure clauses and limitations on the liability of a party for certain types of damages.
Interpretation and gaps in the convention: The CISG follows a principle-based approach and encourages the interpretation of contracts in accordance with the general principles of the convention. In cases where the CISG does not provide specific guidance, courts and tribunals may turn to the general principles underlying the convention or the domestic laws of the relevant jurisdiction to resolve any gaps or ambiguities.
The CISG has been ratified by over 90 countries, including major trading nations, making it an essential instrument in international trade. It is important to note that the CISG does not cover all aspects of international sales contracts, and certain issues such as the validity of the contract, the effect of fraud, and the statute of limitations are typically governed by domestic laws.
