The What? An Introduction to the CISG and its Applicability to International Sales of Goods. - ABA YLD 101 Practice Series

By Carie M. Jones

Although most American lawyers know what the Uniform Commercial Code is, and where it applies, few seem to have heard of the United Nations Convention on Contracts for the International Sale of Goods (commonly referred to as the “CISG”).  In simplistic terms, the CISG is the UCC for international sales contracts.  As a treaty, the CISG preempts inconsistent state-law, including the UCC. 1  Therefore, knowing whether the CISG applies is imperative when dealing with international sales contracts.

The CISG entered into force on January 1, 1988. 2  There are currently 71 signatories to the CISG, including the United States, Mexico, and Canada. 3 The CISG “establishes a comprehensive code of legal rules governing the formation of contracts for the international sale of goods, the obligations of the buyer and seller, and remedies for breach of contract and other aspects of contract.” 4  There are similarities between the UCC and the CISG, but they are not identical. Although courts may look to case law interpreting analogous provisions of the UCC when interpreting the CISG, those cases are not per se applicable. 5  Accordingly, if you are dealing with a contract for the international sale of goods, you need to determine whether it is governed by the CISG.

As explained by Article 1 of the CISG, the CISG “applies to contracts of sale of goods between parties whose places of business are in different States:  (a) when the States are Contracting States; or (b) when the rules of private international law lead to the application of the law of a Contracting State.” 6  Notably, internationality under the CISG exists when the parties have their places of business in two different countries; citizenship is irrelevant.  Moreover, both parties to the sale do not have to have their places of business in Contracting States, unless internationality can be established only under Article 1(1)(b) and the Contracting State whose law is applicable has an Article 95 reservation, which effectively deletes Article 1(1)(b) (the United States is such a State). 7

Below is a chart outlining when the CISG might be applicable considering the places of business of the buyer and seller, the applicable law, and the forum:

SELLER’S PLACE OF BUSINESS

BUYER’S PLACE OF BUSINESS

APPLICABLE LAW

FORUM

THE CISG IS APPLICABLE OR N/A

Contracting State

Different Contracting State

Irrelevant because Article 1(1)(a) is satisfied

Contracting State

Applicable by virtue of Article 1(1)(a)

Non-Contracting State

Contracting State

Contracting State

Contracting State

Applicable by virtue of Article 1(1)(b)

Non-Contracting State

Non-Contracting State

Contracting State

Contracting State

Applicable by virtue of Article 1(1)(b)

Non-Contracting State

Contracting State with an Article 92 reservation

Contracting State

Contracting State

Applicable by virtue of Article 1(1)(b), except for Part II

Non-Contracting State

Contracting State

Non-contracting State

Contracting State

Not applicable

Contracting State with an Article 95 reservation

Contracting Sate

 

Contracting State with an Article 95 reservation

Applicable by virtue of Article 1(1)(a)

 

 

Contracting State with an Article 95 reservation

Contracting State with an Article 95 reservation

Not applicable because of Article 95, but may be applicable because of private international law

Keep in mind that even if the CISG is applicable to an international sale of goods, the particular sale at issue may not be subject to the provisions of the CISG.  Article 2 of the CISG contains six specific exclusions such that the CISG does not apply to sales:   

  1. of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use;
  2. by auction;
  3. on execution or otherwise by authority of law;
  4. of stocks, shares, investment securities, negotiable instruments or money;
  5. of ships, vessels, hovercraft or aircraft;
  6. of electricity. 8

Please note that the purpose of this article is not to explain the intricacies of the CISG, but merely to alert you to its presence and its possible application.  If you are dealing with a contract for the international sale of goods that may be subject to the CISG, you are advised to read the CISG and cases interpreting it.  The following three online sources will be useful to you in researching the CISG: www.uncitral.org, www.unilex.info, and www.cisgw3.law.pace.edu or www.cisg.law.pace.edu.


1 See, e.g., Usinor Industeel v. Leeco Steel Prods., Inc., 209 F. Supp. 2d 880, 884 (N.D. Ill. 2002) (stating “the CISG
is a treaty, and thus federal law, and under the Supremacy Clause, it preempts any inconsistent provisions of state
law”).
2 15 U.S.C.A. App. at 332 (1998).
3 A complete listing of the signatories to the CISG can be found online at www.uncitral.org or at www.unilex.info.
4 See United Nations Commission on International Trade Law,
http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG.html.
5 Chicago Prime Packers, Inc. v. Northam Food Trading Co., 408 F.3d 894, 898 (7th Cir. 2005) (citing Delchi
Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1027-28 (2d Cir. 1995), quoting Orbisphere Corp. v. U.S., 13 C.I.T.866, 726 F. Supp. 1344, 1355 (Ct. Int’l Trade 1989)).
6 15 U.S.C.A. App. Art. 1(a).
7 There are other reservations in the CISG available to Contracting States. One other reservation of note is an
Article 92 reservation, which allows a county to opt-out of Part II on formation of contracts or Part III on the sale of
goods. Only Scandinavian countries have made Article 92 reservations, and then only with regard to Part II of the
CISG. No country has made a reservation with regard to Part III of the CISG.
8 15 U.S.C.A. App. Art. 2.

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About the Author

Ms. Jones is an associate in the Trial Department of Thompson & Knight LLP’s Dallas office. She earned a J.D. from Texas Tech University School of Law in 1999 and an LL.M. in International Legal Studies from New York University School of Law in 2005.

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