Our last blog post talked generally about the United Nations Convention on Contracts for the International Sale of Goods (CISG). The United States is a party to the CISG, as are most of our country’s major trading partners.
Because the CISG is a treaty, it is part of the federal law of the United States and preempts state laws (including the Uniform Commercial Code (UCC) as adopted by the various US states). If the parties to a purchase or sales contract have places of business in different countries which are parties to the CISG, the CISG generally applies to that contract, even if it is not mentioned. For example, if a Georgia buyer of industrial parts from a supplier in China has a contract with the supplier specifying that Georgia law will govern the contract, the CISG would apply to that contract and supersede the Georgia version of the UCC.
Despite its general applicability to international contracts, the CISG includes an article which allows international buyers and sellers to avoid it. The parties simply have to disclaim its application (in whole or in part). Wording like this should suffice: “The parties agree that the United Nations Convention on Contracts for the International Sale of Goods will not apply to this Agreement.” (NOTE: If a buyer or seller disclaims the CISG, please make sure still to specify a governing law!).
Instead of disclaiming the CISG, savvy buyers or sellers may want to make affirmative use of it in international contracts. For example, if a California seller of golf equipment and a German buyer of that equipment can’t agree on a governing law of California or Germany, they could elect to rely on the CISG as the basis for their contract. A US seller who does business around the world may find it easier to get to know the CISG, rather than worry about agreeing to the various local laws of other countries.
In upcoming posts about the CISG, we’ll talk about ways in which its provisions differ from the UCC. Stay tuned!