United Nations Convention on Contracts for the International Sale of Goods

AuthorFranklin G. Snyder, Mark Edwin Burge
Unit 12
Part Three
Commerce is Global, and so are Contracts. Trade between nations has been
a major part of world history since at least the time of the Babylonian Empire. But
obvious problems arise when transactions cross national borders because laws and
commercial practices change. A merchant doing business in another country also has
a potential problem in that the courts of one country might tend to favor that
country’s own citizens in a dispute with merchants from other countries. Even if the
courts are completely unbiased, however, there is a more fundamental problem. If the
buyer is in the United States and the seller is in Italy and the goods are destined for
delivery in Russia, which body of law (U.S., Italian, Russian) will apply? And in which
jurisdiction can the suit be brought?
A body of law that goes under the name of conflict of laws
historically has tried
to deal with these issues by providing rules determining which jurisdiction’s law will
apply. Also, under an international notion of “comity,” courts of one country are
supposed to recognize and give effect to judgments from other countries. Still, despite
the best efforts of generations of lawyers, judges, and legal scholars, the system relies
a great deal on good faith and cooperation, as many more potential ways to evade
contract enforcement exist in a multinational setting than do with a domestic
Welcome to the United Nations CISG. To help bring more certainty, many of
the world’s largest trading nations—and a host of smaller onesnegotiated, signed,
[“Conflict of Laws” is sometimes the subject of its own law school course, and the topic of
multiple and conflicting laws otherwise comes up in courses with name s like “Private International
Law” or “International Business Transactions.” Both future commercial litigators and future business
transaction lawyers would benefit from a working knowledge of these areas. Eds.]
International Sale of Goods, or “CISG” in contract-law parlance. Unlike some United
Nations pronouncementsthe Universal Declaration of Human Rights, for
examplethe CISG is not an aspirational or advisory document. As you will see from
the cases below, it is a multilateral treaty that was signed by the President and
ratified by the United States Senate, which makes the treaty the domestic law of the
United States. When a contract refers to “the law of Michigan” or “the law of Texas,”
that law literally includes the CISG. While American cases involving the CISG most
often end up in federal courts, the law would be just as applicable in an American
state court.
The CISG is designed to be used as commercial law in a hundred different
jurisdictions. Because each of those jurisdictions has its own commercial lawsome
derived from English common law but most from other sources, especially Roman-
derived civil lawthe treaty is necessarily a compromise. Some of its rules are similar
to those in the United States; some are similar to those in other nations, including
those of the European Community. Thus the CISG tracks no single country’s
commercial law. This means that a significant population of lawyers tends to dislike
the CISG in pretty much every country. (Lawyers tend to prefer law that matches
their own local law.) Nevertheless, even for purely American businesses, some aspects
of the CISG may be superior for some clients over domestic contract regimes like the
UCC. If you wish to be a practicing business lawyer in an era of global commerce, you
would be wise to make the CISG as part of your legal toolkit.
When Does the CISG Apply? The CISG applies only to contracts between
parties that are residents of “Contracting States,” which is the term used for countries
that have ratified the treaty. As of this writing, nearly 80 countries have ratified it,
including most of the larger players in international trade. Some notable countries
have not ratified the CISG, however, including India, the United Kingdom, much of
Southeast Asia, and most of Africa. Importantly for lawyers with clients in North
America, the CISG has been ratified by Mexico, Canada, and the United States.
Thus, a contract between a business in Laredo, Texas and a business in Nuevo
Laredo, Mexico would be governed by the CISG if the contract does not otherwise
specify governing law. The CISG’s coverage is also generally limited to business-to-
business contracts, so as not to interfere with domestic consumer protection laws.
A very important aspect of the CISG is that parties are free to opt out of it.
Thus, an American seller might specify that its transactions will not be governed by
the CISG, but by the Uniform Commercial Code in a particular state. A German
manufacturer might want to specify the law of one of the German states. Unless
these parties opt out, however, the CISG applies, because both the United States and
Germany are CISG signatories.
Confusing Vocabulary: “State” and “Article.” Right off the bat, the CISG
refers to parties in “different States.” In this treaty context, the word “State” does

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