The U.N. Convention on the International Sale of Goods ("CISG") entered
into force in the United States on January 1, 1988. If applicable to a
given transaction, the CISG supplies "gap filling" rules that govern
contract formation and set forth the rights and obligations of the buyer
and seller. The CISG provides, however, that express contractual
provisions take precedence over the default provisions of the CISG. Thus,
contracting parties remain free to specify whatever law or terms they wish
to apply to their transaction, and may exclude altogether the application
of the CISG to their contractual relationship.
As of December 1993, the CISG had entered into force in the following 35
Bulgaria People's Republic of China
Chile Russian Federation
Czech Republic Slovakia
Guinea United States of America
The Treaty Section of the United Nations' Office of Legal Affairs (Tel.:
202/963-5467) maintains the most up-to-date listing of countries that have
ratified, acceded to, or otherwise adopted the CISG.
The CISG only applies to international commercial sales of goods. Each of
these elements constitutes an important limitation on the scope to the
CISG's applicability. First, the sale must be international in character.
A sale is considered "international" if it involves "parties whose places
of business are in different States." In ratifying the CISG the United
States stipulated that, absent express agreement to the contrary, the CISG
would not apply to contracts between a U.S. party and a party whose place
of business is in a state that has yet to adopt the CISG.
Second, the CISG covers the sale of goods, and does not automatically
apply to services contracts. Where a contract includes both goods and
services elements, the CISG will apply when the sale of goods constitutes
the "preponderant part of the [seller's] obligations... ." Contracting
parties are free to apply the CISG to services (or predominantly-services)
contracts, so long as this choice of law is made explicit in the contract
Finally, the CISG only applies to commercial transactions, i.e., sales
between merchants of goods. Among other limitations, it does not cover
consumer sales; auction sales; sales of negotiable instruments or
securities; or sales of ships, vessels, or aircraft.
Adoption of the CISG by the United States provides important benefits to
U.S. exporters. Parties negotiating international sales contracts often
find the "choice of law" issue to be among the most contentious. Each
party is familiar with its own domestic sales law, and prefers that its
local rules apply to the transaction. The CISG enables the parties to
avoid difficulties in negotiating "whose law will govern" by putting into
place internationally accepted substantive rules on which contracting
parties, courts, and arbitrators may rely.
The CISG's rules closely follow Article 2 of the Uniform Commercial Code
("UCC"), which is in force in 49 of the 50 states. Consequently, U.S.
practitioners will be familiar with most of its terms and rules. However,
several important distinctions between the UCC and the CISG should be
1. Specification of Price - Under the CISG, a sales contract does not
come into existence unless a price term or a provision for determining
price is supplied in the agreement. By contrast, the UCC allows a
contract to be formed even without specification of a sales price.
2. Revocability of Offer - Under the CISG, an offer becomes irrevocable
if the offeree relies on it; under the UCC, an irrevocable offer must be
3. Terms of Acceptance - Under the CISG, acceptance occurs upon receipt
thereof by the offeror; the majority of UCC jurisdictions hold that
acceptance occurs when it is mailed or transmitted by the offeree to the
4. "Battle of Forms" - If a written offer is modified by the offeree and
then returned to the offeror, the CISG deems this to be a rejection and
counteroffer; under the UCC, a contract will be formed irrespective of
whether the acceptance is a "mirror image" of the offer.
5. Writing Requirement - The CISG does not require that a sales contract
be reduced to a writing; under the UCC's statute of frauds, the existence
of many types of contracts may be proven only by reference to a writing.
It also should be noted that the CISG leaves questions relating to
validity of contract and the rights of "third party beneficiaries" to be
determined by applicable domestic law. For more information on the CISG,
contact the Office of the Chief Counsel for International Commerce, U.S.
Department of Commerce (Tel.:202/482-0937).
excepted from May, 1994, U.S. Commerce Dept. material
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