Introduction: The considerable increase in international commerce in recent decades has spurred efforts to unite international commercial law

. The United Nations Convention on Contracts for the International Sale of Goods (CISG) represents a major outcome of these hard works . The CISG reflects challenging interests in present-day international commercial relations. Trade often crosses legal and ideological boundaries common and civil law systems, capitalist and socialist governments and industrialised and developing nations; the effort to create international legal regimes must deal with these differences. The unification effort must accordingly make not only technical, but also fundamentally political choices .

Objectives of CISG and its achievements: The objectives of CISG are articulated in its preamble. CISG is predicated upon recognition that the development of international trade on the basis of equality and mutual benefit is an important element in promoting friendly relations among states and more particularly the recognition that the adoption uniform rules which govern contracts for the international sale of goods and take into account different social ,economic and legal systems would contribute to the removal of legal barriers in international trade and promote the development of international trade . The perfect and reasonable outcome of the process that led to the adoption of CISG would be the worldwide ratification of the convention by all states, with the result that, in the normal course, a common legal code of rules dealing with international sales contracts would be applicable to international sales contracts. Buyers and sellers on the global market therefore would have a comparatively simple and common uniform system governing their contracts and their performance. The alternative would be a potentially very complex latticework of individual State sales law regimes, resort to which was dictated by the rules of private international law applying in each jurisdiction .There would be ambiguity at two levels :which forums law applies, and the requirements of this law. Typically, in such case, one party would benefit from having his or her own jurisdictions law applied, and the other party would be in a less favourable position by the application of a foreign and possibly poorly understood law. The convention has not been universally adopted of course(e.g.: United Kingdom, India, Japan and Brazil etc), but to the extent that it is, the benefits of a uniform sales law regime in International Sales become more widespread .

Provisions of CISG, promoting its objectives: CISG, Uniformity, Internationality, other objectives and its application: Its very beginning, on the basis of Uniform Law of Sales and Uniform Law of Formation, makes it a natural device of uniform law. This is true with regard to the aim of the CISG, uniform law for international sales contracts to eliminate the trade barriers in international trade. Then its Preamble describes: The adoption of uniform rules, which govern contracts for the international sale of goods and take into account the different social, economic and legal systems, would contribute to the removal of legal barriers in international trade and promote the development of international trade. Then interpretation of Article 7(1) clearly explains, regard is to be had to its international character and the need to promote uniformity in its application . CISG ensured, systematic advancement of economic activities on a fair and equal basis because of lively participation of developing as well as industrialised nations. The predecessors of CISG were alleged to be in favour of the sellers of the developed nations, but CISG has additional buyer oriented provisions . In private commercial law field, the speciality of CISG is that, it is not dealing with procedure and conflicts ,but with substantive contract law .Once the sale is within the scope of CISG ,those who shop for forum cannot shop for law and if contracting parties are residents in a CISG states, the National Courts and International Arbitrators are no longer need to choose between different National Laws of sale . CISG deals with two aspects of the sales transaction, (I) the formation of contracts for international sale of goods, and (II) the rights and obligations of parties to these sales contracts .

Page 1

The CISG will apply, if the parties to the contract have their places of business in different Contracting States (Article 1(1) (a)). If a party has more than one place of business, the relevant place of business is the one most closely connected to the sales transaction (Article 10 (a)). The CISG will also apply, when the parties' places of business are in different States and conflict of laws rules point to the application of the law of a Contracting State (Article 1(1) (b)). Under article 1(1) (b), the CISG could apply where only one party has its place of business in a Contracting State and, possibly, where neither party has its place of business in a Contracting State. However, any Contracting State at its will can make a reservation under article 95, that it will not bind by article 1(1) (b) . The main theme of the CISG is the role of the contract made by the parties, i.e. CISG recognises the principle of freedom of contract, according to Article 6, and CISG parties are free to exclude the application of the Convention or derogate from or vary the effect of its provisions. In other words, the application of the CISG is increased by the recognition of the principle of freedom of contract. Within the scope of Article 7 (Interpretation of CISG), which is consistent with its nature and function. Since the CISG has an important function, i.e. to replace diverse domestic laws with uniform international law, with the observance of good faith in international trade. Then with regard to Article 9 (Trade usages and practices within the scope of CISG), which is considered as one the most significant characteristics of the CISG, because it gives legal effect to trade usages and practices through their application to the contracts of International Trade .

Instances of certainty in CISG : a) Receipt Theory and Dispatch Theory: Different legal systems have different rules regarding an offerees acceptance and its binding on the offeror. According to Anglo-American mailbox rule, a binding contract is established at the moment of dispatch and some other legal systems fix receipt as the operative moment. CISG also follows receipt rule (Article 15 and Article 18) .Through this CISG encourages certainty in this issue. b) Communication and Parties: Almost all the legal systems have common principles and policies regarding disclosure of information between contracting parties. The CISG provisions also impose a duty on contracting parties to disclose material information . c) Transfer of Risk: CISG adopted a straightforward rule, risk passes to the buyer when the goods are handed over to the carrier . This rule works against classic principle of documentary transactions. Even then, CISG promotes simple rule in international trade.

Critique of CISG Provisions: The convention seeks to maintain a delicate balance between the contrasting attitudes and concepts of the civil law and of the common law, and very often rules have to be blurred or omitted altogether in order to produce an acceptable compromise. It is certainly the case that the very restricted view of fundamental breach in Article 25, coupled with the vagueness of the provisions, is widely considered to make the convention unsuitable for use in documentary sales , where the doctrine of strict compliance, particularly in relation to letters to credit holds away, or in sale of commodities, which typically involve

Page 2

rapidly fluctuating markets, long chains of parties and potential exposure to huge amounts of damages, all of which necessitate a high degree of legal predictability . The convention governs only the formation of the contract and the rights and obligations of the seller arising from it. According to Article 4, CISG is not concerned with the validity of the contract or any of its provisions or of any usage, nor with the effect the contract may have on the property in the goods sold .

The Koblenz Oberlandesgericht has held that the convention does not apply to the validity of a retention of title clause. (Case No 5 U 534/91, [1992] Unilex D 92-4)

The convention is not concerned with the proprietary effects of the contract, nor with title conflicts between seller or buyer and a third party. Add to this the fact that CISG has nothing to say about CIF, FOB and combined transport transactions, and it will be apparent that the scope of the convention remains limited .

The weakness of CISG provisions are : 1. The contradictory provisions in Article 14 and 55 with regard to the determination of the price as a vital term of the contract. 2. The inconsistency between right to care and the right to avoid a contract for fundamental breach in Articles 48 and 49. 3. The doubtful status of good faith as a performance standard in CISG. 4. The implication of validity in Article 4 and impediment in Article 79. 5. Other concerns rose in opposition to CISG are validity of penalty clause, prescription period for determination of claims. Choice of forum for dispute resolution, the existence of a company, agency relationship, right of a party to counterbalance claims, currency in which payment should be made. 6. The right to interest without providing a rate formula leaves a gap in the CISG structure that creates uncertainty about how to compensate a creditor, when parties did not pick either a rate or a national law to cover gaps in the contract (Article.78) .

The compromises, during the legislative process of the CISG appeared in several forms : 1. A principle rule with exceptions. 2. A rule accommodating many types of doctrines or a rule consisting of conflicting or at least unresolved subparts.

The following examples reveal the significance of these issues : 1) Trade Usages : The Developing countries feared that the traditional concept of trade usages would favour industrialized western nations. The disputes were general versus local usages and traditional versus contemporary usages. On the issue of general versus local usages, CISG approved a standard of objective observance. However, it did not specified whose observance shall be the measure of objectivity or what prescriptive standard might guide that determination. Then on the issue of traditional versus contemporary usages , the drafters adopted a standard or regular observance. This standard did not specified, when a usage becomes regular.

Page 3

Dixon, Irmaos & Cia, Ltd v. Chase National Bank, 144 F.2d 759 (2d Cir. 1944)

The lack of guidance concerning whose usage matters is fatal, when a seller observes general usages and a buyer observes local usages. 2) Good faith : Different legal systems attach different meanings to common doctrinal terms. The good faith provision of the CISG represents an agreement to impose some requirement of good faith in international commercial dealings, but it reflects no deeper consensus on the meaning of the application of the term. Therefore, National Courts are free to draw on domestic lines and have diverse conceptions of good faith .This will lead to conflicting interpretations of the term from different National courts. 3) International and Domestic Law; The Problem of Gap Filling : The ability of CISG to provide general principles that could fill the gaps in the explicit provisions was always under suspicion. So to resolve these issues two-step procedure were adopted. Explicit provisions should be interpreted in the light of the CISGs international character, if it does not resolve the question; the adjudicator should seek an answer in the CISGs general principles. If no general principle apply to the case, the adjudicator should seek to fill the gap in the CISG on the basis of the law applicable by virtue of the rules of private international law. This again increased the uncertainty in CISG. 4) Excuses for Non-performance : The CISG provision on excuse is a compromise between the common law impossibility doctrine and the civil law force majeure doctrine (Article 79). The former doctrine views impossibility as an exception to absolute liability and a justification for automatic termination of the contract. The latter doctrine regards impossibility as an excuse for non-performance based on the lack of fault and therefore bars any claim for damages. This provision creates only an illusion of certainty, it gives parties an incentive not to fix a particular governing doctrine by private agreement, and hence it may ultimately undermine contractual relations. 5) Reduction of Price Remedy : Despite theories that the civil law and the common law are converging, the attempt to incorporate essentially civil law or common law doctrine into the CISG met with considerable difficulty in several cases. CISG adopts the civil law doctrine that if goods delivered do not conform to the contract, the buyers remedy is an appropriate reduction in the contract price. So considerable opposition from common law supporters, then it was made consistent with the CISGs other breach of contract provisions. This again brought uncertainty.

CISG can be further developed through Judicial Interpretation: The uniform application of a supposedly uniform text will correct the texts latent defects. The courts of different countries are the ultimate interpreters of international law. This is true in the case of CISG as well. By its character, CISG is a complex document to change or amended. Moreover, it is an international treaty. Amendments needs approval by each signatory state before it can become effectual. CISG cannot easily change, so it is identified as a weakness of CISG. However, these problems can be solved through greater dependence on courts . Uniform law requires a new common law in which foreign precedents would not be precedents of a foreign law but of uniform law. Governmental legislation sets in place uniform law, but in reality, uniform law is not the work of governmental legislation. It is a creation of jurists, a kind of

Page 4

jurisconsultorium. Courts have to develop their jurisprudence in company with the courts of other countries from case to case . Air France v. Saks (United States) Interpretation of an international convention by the courts of signatory states should be given considerable weight. They should be taken into account in a comparative and critical manner . Case law is one of several aids to interpretation and Uniform Law doctrine (scholarly writings) and legislative history should be considered. These observations are true in the case of CISG as an international treaty . Pratt & Whitney v. Malev Hungarian Airlines It involved many issues in CISG, contract interpretation (Articles 7 and 8), the sufficiently definite offer (Article 14), and the supply of an open price term (Article 55) . Therefore, once again the objectives of CISG are established.

Conclusion: The convention was drafted in light of common law and civil law concepts and principles, but it is intended to be a self - contained body of law to be interpreted without resort to common law or civil law precepts . The CISG is considered to be a considerable success, because it has been ratified by most of the major trading nations of the world, tested in thousands of cases and arbitral hearings in many world jurisdictions and became subject of exhaustive academic commentary. These exposures to practice and critical commentary exposed gaps and weaknesses of the convention, but the same can be found in any legal mechanism. Generally, CISG has proved to be a workable instrument in practice and produced reasonable results in majority of cases .

Bibliography: 1. Merryman , On the Convergence (and Divergence) of the Civil Law and the Common Law (1981) , Standard International Law Journal. 2. Hannold, A Uniform Law of International Sale. 3. Farnsworth, Developing International Trade Law (1979) 4. Graveson R, One Law On Jurisprudence and The Unification of Law (1979) 5. United Nations Convention on International Sale of Goods [1980] 6. Moens.G and Gillier , P , International Trade and Business Law ,Policy and Ethics, RoutledgeCavendish (2006) 7. Anderson, C.B , The Uniform International sale Law and the Global Jurisconsultorium 8. Dr. Ruangvichathoms Thesis 9. Joseph , M, Loose Ends of Contorts in International Sales : Problems in the Harmonization of Private Law Rules ,American Journal of Comparative Law. 10. Unification and Certainty: The United Nations Convention on Contracts for the International Sale of Goods, Harvard Law Review (1984). 11. Bridge, M , Uniformity and Diversity in the Law of International Sale.

Page 5

12. Goode ,R , Commercial Law ,Penguin Books (2004) 13. Jacob S.Ziegal, The UNIDROIT Contract Principles, CISG and National Law 14. Karin L.Kizer , Minding The Gap: Determining Interest Rates Under the UN Convention for the International Sale of Goods, University of Chicago Law Review. 15. Paul Amato , UN Convention on International Sale of Goods The open Price Term and Uniform Application: An Early Interpretation By the Hungarian Courts. 16. www. cisg. pace.edu/cisg/text/caseschedule.html 17. www. cisg.pace.edu/cisg/text/harvard-note.html 18. Goode ,R, et al Transnational Commercial Law , Oxford University Press (2007) 19. Indira Carr , International Trade Law, Cavendish Publishing Company. 20. John Felemegas, An International approach to Interpretation of the United Nations Convention on contracts for the International Sale of Goods as Uniform Sales Law, Cambridge University Press. 21. Albert H.Kritzer, Guide to Practical Applications of the UN convention on contracts, Kluwer Law & Taxation Publishers (1990) 22. Nina M. Glaston, International sales: The United Nations Convention on Contracts for the International Sale of Goods (1984).

INTERNET LAW - Can the UN Convention on Contracts for the International Sale of Goods Be Applied to E-commerce Contracts? Martha L. Arias, Immigration and Internet Law Attorney, Miami; IBLS Director Email Discuss Print

Although the United Nations Convention on Contracts for the International Sale of Goods ("CISG) was enacted in 1980 when e-commerce was still a distant prospect, its precepts are applicable international law for e-commerce nowadays. E-commerce involves contracts for the international sale of goods, among others. Thus, CISG is a significant international legislative tool for cross-border e-commerce contracts. This article explores the CISG precepts and its relevancy for e-commerce contracts. Join the Internet Law Forum (ILF) to... discuss, share information and knowledge, questions and doubts... regarding the legal aspects of the Internet. The ILF is ALL about the INTERNET... business, laws and regulations, social media... Sign up to enjoy the benefits of the Free Global membership in the IBLS international community! Although the United Nations Convention on Contracts for the International Sale of Goods ("CISG") was enacted in 1980 when e-commerce was still a distant prospect, its precepts are applicable international law for e-commerce nowadays. E-commerce involves contracts for the international sale of goods, among others. Thus, CISG is a significant international legislative tool for cross-border ecommerce contracts. This article explores the CISG precepts and its relevancy for e-commerce contracts. The United Nations Convention on Contracts for the International Sale of Goods ("CISG") applies to contracts for the sale of goods between parties whose businesses are located in different states, when the States are acting as Contracting States; or when private companies, applying private international law, choose the law of the Contracting State. CISG, art. 1. Therefore, e-commerce businesses transacting in goods on a large international scale may seek uniformity, if advantageous for them, on

Page 6

their international contracts by applying CISG contract formation rules to their e-commerce contracts. Moreover, e-government procurement contracts between nations may also be subject to CISG if the Contracting States so agree. CISG rules are limited to the formation of contracts of sale and the sellers' and buyers" obligations and rights arising out of those international trade contracts. It is important to note that CISG rules may be more effectively applied to the formation of B2B (business to business) e-commerce contracts or B2G (business to government), or G2G (government to government) contracts rather than B2C (business to consumers) e-commerce contracts. The reason for this is that CISG is not applicable to the sale of goods bought for personal, family, or household use. Commonly, in B2C e-commerce contracts individuals buy goods online for their personal or family use. Also, CISG does not apply to good bought through auctions (like online auctions), stocks, shares, investment securities, ships, vessels, hovercraft, aircrafts (CISG, art. 2.), which are also mostly bought online by individual customers rather than businesses. CISG may be applied to e-commerce contracts involving both the manufacture or production and sale of goods (CISG, art. 3(1)). Yet, CISG does not apply to contracts whose main part is the supply of labour or other services (CISG, art. 3(2)). Thus, it could be noted that CISG cannot apply to e-commerce contracts involving the supply of online services or, subject to special analysis in a case by case basis, the transfer of digital products or services. As e-commerce allows businesses to have presence in multiple jurisdictions or just a 'web' presence, a basic question is: what would be the place of business for purposes of CISG rules? CISG, art. 10 says that when one a party has more than one place of business, the place of business, for purposes of CISG application, would be the place of business with the closest relationship to the contract and its performance' before the conclusion of the contract. Then, if the party does not have a place of business (e.i. Web presence'), the place of business is the habitual residency. CISG, art. 10(b). CISG does not say whose' habitual residency. Obviously, at the time this convention was drafted, they preconceived individual or corporate parties.' CISG, as most current legislations on e-commerce contracts, does not require any specific form for the contract to be valid; no writing is required. CISG, art. 11. This characteristic facilitates e-contracts accomplished through simple purchase orders or any other online form. Martha L. Arias, Immigration and Internet Law Attorney, Miami; IBLS Director [Reference 1] [Reference 2] [Reference 3] excerpt from Some introductory remarks on the CISG [*] Prof. Dr. Peter Huber, LL.M. (London), Mainz [...] VII. Usages and trade practices 1. Practices and usages by consent 2. Relevant international trade usages 3. Specific issues [...] VII. USAGES AND TRADE PRACTICES

Page 7

It is self-evident that trade usages and trade practices may play an important role in international sales contracts. Art. 9 CISG recognises this fact. In its two paragraphs the provision distinguishes between two different methods of making usages or practices binding on the parties. 1. Practices and usages by consent Art. 9(1) CISG states that the parties are bound by any usage to which they have agreed and by any practices which they have established between themselves. In short, the provision states that the parties are bound by usages and practices to which they have agreed (explicitly, implicitly or by conduct).[80] The provision therefore specifically formulates what would result from the application of Art. 6 CISG and Art. 8 CISG anyway.[81]As the "incorporation" of the usages under Art. 9(1) CISG is in the last resort based on the consensus of the parties and -- unlike under Art. 9(1) CISG -- not on their "international recognition", it does not matter whether the usages are local, regional, national or international.[82] It is submitted that the formation of the consensus required by Art. 9(1) CISG should be assessed according to the rules of Art. 8, 14 ff. CISG or according to the general principles deriving from these provisions.[83] 2. Relevant international trade usages Art. 9(2) CISG goes somewhat farther. It essentially states that, unless otherwise agreed, relevant international trade usages (which are defined more closely as being widely known to and regularly observed by parties to contracts of the type involved in the particular trade concerned) will be binding on the parties [84] if they knew or ought to have known of these usages. The provision may give rise to difficult problems: In fact, if the usage is widely known in the relevant trade, most parties doing business in that area ought to have known of that usage. It is, however, conceivable that this may not be so in exceptional cases so that the requirement of "know or ought to have known" is not redundant.[85] A further question arises with regard to regionally limited usages. The predominant opinion seems to be that as a rule only those parties can be bound by [page 237] those usages which either are located in that geographical area or which are continuously doing business there.[86] It is submitted that this rule will in most cases be correct, but that one should not "invent" a specific requirement in that respect. In fact, this rule will usually simply flow from the requirement that the usage must be recognised in the "particular trade" and from the requirement that the parties "knew or ought to have known" it. 3. Specific issues Whether a usage exists in the relevant trade and whether it is widely accepted will usually be a question of fact, not of law.[87] The burden of proof for the existence of the usage should be placed on the party that relies on it.[88] The "validity" of any usages that may be relevant is not governed by the CISG. This is clearly stated by Art. 4 lit. (a) CISG. The validity will therefore be a matter for the applicable domestic law (as determined by the private international law of the forum).[89] It is submitted, however, that validity problems will rarely arise with regard to trade usages; an example for such an issue is the case where the usage infringes mandatory rules of the applicable domestic law.[90] It should further be noted that as mentioned above -- the formation of the consensus that is required under Art. 9(1) CISG is not covered by the validity exception. If there is a binding usage or practice in the sense of Art. 9 CISG, it will usually take precedence over the provisions of the Convention.[91] It is further submitted that a usage or practice binding under Art. 9(1) CISG will usually take precedence over a usage binding under Art. 9(2) CISG as that provision explicitly states that it is subject to the parties' agreeing "otherwise".[92] For the same reason one should normally assume that usages or practices should give way to conflicting terms in the contract.[93] Several legal systems know a rule or a trade usage that silence as a response to commercial letters of confirmation (purporting to confirm the content of oral agreements) amounts to an acceptance of the content of those letters. The CISG does not contain such a rule. It is further submitted that one cannot find a general principle (Art. 7(2) CISG) to that effect as the basic rule under the CISG is that silence in itself does not amount to an acceptance (Art. 18(1) CISG). In the author's opinion therefore, any usage

Page 8

that may exist in certain countries, regions or branches can only become relevant under the CISG by virtue of Art. 9 CISG.[94] In the case of Art. 9(2) CISG, this will usually require that the relevant usage is known both where the seller and where the buyer have their place of business (or continuously do business),[95] as mentioned above (b). Another issue arises where the parties used a trade term from the INCOTERMS without however explicitly referring to the INCOTERMS (e.g.: "CIF Rotterdam" instead of "CIF Rotterdam (INCOTERMS 2000)". It has been held in case law that as a rule such a clause should be construed as referring to the INCOTERMS.[96] This view has been criticised for not taking into account that national legal systems may ascribe different meanings to those terms than the INCOTERMS do.[97] It is submitted that the solution to this problem should be found by adhering to the rules of Art. 9 CISG. The applicability of the INCOTERMS in such cases would therefore depend either on the kind of "consensus" meant in Art. 9(1) CISG or on the requirements of Art. 9(2) CISG. The same principles should apply when considering whether the UNIDROIT Principles of International Commercial Contracts can be regarded as usages in the sense of Art. 9 CISG. The answer will therefore have to be found on a case-by-case basis.[98] [page 238] Go to full text of commentary by Huber

FOOTNOTES * The present article is based on the introductory chapter of Peter Huber / Alastair Mullis, The CISG -- A new textbook for students and practitioners, which will be published by Sellier, European Law Publishers in spring 2007. [...] Introductions to the CISG Primers on the CISG from common law and civil law perspectives An overlay

The United Nations Convention on Contracts for the International Sale of Goods is an overlay; it sits a top the national sales code or sales law of each country that has adopted it. In most cases, this is a domestic regime that is either civil law or common law -- cultures that have at times approached sales law challenges somewhat differently. How does the CISG sit a top different civil law and common law regimes? For an introduction to that, go to: Ulrich Drobnig, General Principles of European Contract Law, in: Sarcevic & Volken ed., International Sale of Goods: Dubrovnik Lectures, Oceana (1986) 305-332. His paper also helps us understand how some of the CISG's conflict-compromises came about.

A Spring 2009 update

Ingeborg Schwenzer and Pascal Hachem, The CISG - Successes and Pitfalls, 57 American Journal of Comparative Law (Spring 2009) 457-478

A December 2006 introduction to the CISG

Peter Huber, Some introductory remarks on the CISG, Internationales Handelsrecht (6/2006) 228-238

A view from South Africa

Analysis by Sieg Eiselen of South Africa. Analysis of: The need for unification of international sales law; Development of the CISG; Other methods to achieve legal unification or solve

Page 9

problems of international sales; The case for adoption; The case against adoption; Experience with the CISG thus far. Other analyses

The Vienna Sales Convention and the Lex Mercatoria: a good overview of the CISG prepared by a leading French authority. For another civil law perspective, see Silvia Ferreri, 25 Journal of Law and Commerce (2005-2006) 223-239 What is the Convention about and how does it impact upon English lawyers? For a superb introduction to this subject, see Barry Nicholas, The Vienna Convention on International Sales Law. 103 Law Quarterly Review (1989) 201-243 A brief overview of the CISG: Explanatory Note by the UNCITRAL Secretariat on the United Nations Convention on Contracts for the United Nations Convention on Contracts for the International Sale of Goods. A report on the CISG prepared by the Law Commission of New Zealand: an especially good general introduction to the CISG for persons from common law jurisdictions. Analyse de Dispositions de la C.V.I.M. du Point de Vue du Droit Civil Qubcois: [French text] prepared for the Uniform Law Conference of Canada. Uniform Sales Law - The Experience with Uniform Sales Laws in the Federal Republic of Germany, prepared by the editor of Germany's leading text on the CISG. Checklist on the CISG: excerpt from 1994 Guide to Practical Applications of the Untited Nations Convention on Contracts for the International Sale of Goods The Uniform International Sales Law, in: Dalhuisen on International Commercial, Financial and Trade Law, Hart Publishing (2007) 400-330 Analysis from a Provincial Common Law Perspective: also prepared by the Uniform Law Conference of Canada; in addition to comparisons of the CISG with Canadian law, includes many comparisons with the UCC and with common law sales rules in general. An introduction to the CISG: La Convencin de las Naciones Unidas sobre los Contratos de Compraventa Internacional de Mercaderas: [Spanish text] prepared by the authors of Argentina's leading text on the CISG. Luke Nottage, Who's Afraid of the Vienna Sales Convention (CISG)? A New Zealander's View from Australia and Japan, Victoria University of Wellington Law Review (2005/4) 815-845

Seminal text

For a seminal text on the CISG prepared by the individual we regard as Europe's leading authority on the subject, go to: Peter Schlechtriem, Uniform Sales Law: The UN-Convention on Contracts for the International Sale of Goods, Vienna: Manz (1986) 120 pages.

Other primers on the CISG have been prepared by law revision commissions or authorities from many countries. For citations to them, see the Bibliography on the CIS Explanatory Note by the UNCITRAL Secretariat on the United Nations Convention on Contracts for the International Sale of Goods This note has been prepared by the Secretariat of the United Nations Commission on International Trade Law for informational purposes; it is not an official commentary on the Convention. It is reprinted from United Nations document V.89-53886 (June 1989) with the permission of UNCITRAL. Introduction 1. The United Nations Convention on Contracts for the International Sale of Goods provides a uniform text of law for international sales of goods. The Convention was prepared by the United Nations Commission on International Trade Law (UNCITRAL) and adopted by a diplomatic conference on 11 April 1980. 2. Preparation of a uniform law for the international sale of goods began in 1930 at the International Institute for the Unification of Private Law (UNIDROIT) in Rome. After a long interruption in the work as

Page 10

a result of the Second World War, the draft was submitted to a diplomatic conference in The Hague in 1964, which adopted two conventions, one on the international sale of goods and the other on the formation of contracts for the international sale of goods. 3. Almost immediately upon the adoption of the two conventions there was widespread criticism of their provisions as reflecting primarily the legal traditions and economic realities of continental Western Europe, which was the region that had most actively contributed to their preparation. As a result, one of the first tasks undertaken by UNCITRAL on its organization in 1968 was to enquire of States whether or not they intended to adhere to those conventions and the reasons for their positions. In the light of the responses received, UNCITRAL decided to study the two conventions to ascertain which modifications might render them capable of wider acceptance by countries of different legal, social and economic systems. The result of this study was the adoption by diplomatic conference on 11 April 1980 of the United Nations Convention on Contracts for the International Sale of Goods, which combines the subject matter of the two prior conventions. 4. UNCITRAL's success in preparing a Convention with wider acceptability is evidenced by the fact that the original eleven States for which the Convention came into force on 1 January 1988 included States from every geographical region, every stage of economic development and every major legal, social and economic system. The original eleven States were: Argentina, China, Egypt, France, Hungary, Italy, Lesotho, Syria, United States, Yugoslavia and Zambia. 5. [As of 31 January 1997, an additional thirty-seven States, Australia, Austria, Belarus, Belgium, BosniaHerzegovina, Bulgaria, Canada, Chile, Cuba, Czech Republic, Denmark, Ecuador, Estonia, Finland, Georgia, Germany, Guinea, Iraq, Lithuania, Luxemburg, Mexico, Moldova, Netherlands, New Zealand, Norway, Poland, Romania, Russian Federation, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Uganda, Ukraine, and Uzbekistan, had become a party to the Convention.] 6. The Convention is divided into four parts. Part One deals with the scope of application of the Convention and the general provisions. Part Two contains the rules governing the formation of contracts for the international sale of goods. Part Three deals with the substantive rights and obligations of buyer and seller arising from the contract. Part Four contains the final clauses of the Convention concerning such matters as how and when it comes into force, the reservations and declarations that are permitted and the application of the Convention to international sales where both States concerned have the same or similar law on the subject. Part One. Scope of application and general provisions A. Scope of application 7. The articles on scope of application state both what is included in the coverage of the Convention and what is excluded from it. The provisions on inclusion are the most important. The Convention applies to contracts of sale of goods between parties whose places of business are in different States and either both of those States are Contracting States or the rules of private international law lead to the law of a Contracting State. A few States have availed themselves of the authorization in article 95 to declare that they would apply the Convention only in the former and not in the latter of these two situations. As the Convention becomes more widely adopted, the practical significance of such a declaration will diminish. 8. The final clauses make two additional restrictions on the territorial scope of application that will be relevant to a few States. One applies only if a State is a party to another international agreement that contains provisions concerning matters governed by this Convention; the other permits States that have the same or similar domestic law of sales to declare that the Convention does not apply between them. 9. Contracts of sale are distinguished from contracts for services in two respects by article 3. A contract for the supply of goods to be manufactured or produced is considered to be a sale unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for their manufacture or production. When the preponderant part of the obligations of the party who furnishes the goods consists in the supply of labour or other services, the Convention does not apply.

Page 11

10. The Convention contains a list of types of sales that are excluded from the Convention, either because of the purpose of the sale (goods bought for personal, family or household use), the nature of the sale (sale by auction, on execution or otherwise by law) or the nature of the goods (stocks, shares, investment securities, negotiable instruments, money, ships, vessels, hovercraft, aircraft or electricity). In many States some or all of such sales are governed by special rules reflecting their special nature. 11. Several articles make clear that the subject matter of the Convention is restricted to formation of the contract and the rights and duties of the buyer and seller arising from such a contract. In particular, the Convention is not concerned with the validity of the contract, the effect which the contract may have on the property in the goods sold or the liability of the seller for death or personal injury caused by the goods to any person. B. Party autonomy 12. The basic principle of contractual freedom in the international sale of goods is recognized by the provision that permits the parties to exclude the application of this Convention or derogate from or vary the effect of any of its provisions. The exclusion of the Convention would most often result from the choice by the parties of the law of a non-contracting State or of the domestic law of a contracting State to be the law applicable to the contract. Derogation from the Convention would occur whenever a provision in the contract provided a different rule from that found in the Convention. C. Interpretation of the Convention 13. This Convention for the unification of the law governing the international sale of goods will better fullfill its purpose if it is interpreted in a consistent manner in all legal systems. Great care was taken in its preparation to make it as clear and easy to understand as possible. Nevertheless, disputes will arise as to its meaning and application. When this occurs, all parties, including domestic courts and arbitral tribunals, are admonished to observe its international character and to promote uniformity in its application and the observance of good faith in international trade. In particular, when a question concerning a matter governed by this Convention is not expressly settled in it, the question is to be settled in conformity with the general principles on which the Convention is based. Only in the absence of such principles should the matter be settled in conformity with the law applicable by virtue of the rules of private international law. D. Interpretation of the contract; usages 14. The Convention contains provisions on the manner in which statements and conduct of a party are to be interpreted in the context of the formation of the contract or its implementation. Usages agreed to by the parties, practices they have established between themselves and usages of which the parties knew or ought to have known and which are widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned may all be binding on the parties to the contract of sale. E. Form of the contract 15. The Convention does not subject the contract of sale to any requirement as to form. In particular, article 11 provides that no written agreement is necessary for the conclusion of the contract. However, if the contract is in writing and it contains a provision requiring any modification or termination by agreement to be in writing, article 29 provides that the contract may not be otherwise modified or terminated by agreement. The only exception is that a party may be precluded by his conduct from asserting such a provision to the extent that the other person has relied on that conduct. 16. In order to accommodate those States whose legislation requires contracts of sale to be concluded in or evidenced by writing, article 96 entitles those States to declare that neither article 11 not the exception to article 29 applies where any party to the contract has his place of business in that State. Part Two. Formation of the contract

Page 12

17. Part Two of the Convention deals with a number of questions that arise in the formation of the contract by the exchange of an offer and an acceptance. When the formation of the contract takes place in this manner, the contract is concluded when the acceptance of the offer becomes effective. 18. In order for a proposal for concluding a contract to constitute an offer, it must be addressed to one or more specific persons and it must be sufficiently definite. For the proposal to be sufficiently definite, it must indicate the goods and expressly or implicitly fix or make provisions for determining the quantity and the price. 19. The Convention takes a middle position between the doctrine of the revocability of the offer until acceptance and its general irrevocability for some period of time. The general rule is that an offer may be revoked. However, the revocation much reach the offeree before he has dispatched an acceptance. Moreover, an offer cannot be revoked if it indicates that it is irrevocable, which it may do by stating a fixed time for acceptance or otherwise. Furthermore, an offer may not be revoked if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance on the offer. 20. Acceptance of an offer may be made by means of a statement or other conduct of the offeree indicating assent to the offer that is communicated to the offerer. However, in some cases the acceptance may consist of performing an act, such as dispatch of the goods or payment of the price. Such an act would normally be effective as an acceptance the moment the act was performed. 21. A frequent problem in contract formation, perhaps especially in regard to contracts of sale of goods, arises out of a reply to an offer that purports to be an acceptance but contains additional or different terms. Under the Convention, if the additional or different terms do not materially alter the terms of the offer, the reply constitutes an acceptance, unless the offeror without undue delay objects to those terms. If he does not object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance. 22. If the additional or different terms do materially alter the terms of the contract, the reply constitutes a counter-offer that must in turn be accepted for a contract to be concluded. Additional or different terms relating, among other things, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or settlement of disputes are considered to alter the terms of the offer materially. Part Three. Sale of goods A. Obligations of the seller 23. The general obligations of the seller are to deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract and this Convention. The Convention provides supplementary rules for use in the absence of contractual agreement as to when, where and how the seller must perform these obligations. 24. The Convention provides a number of rules that implement the seller's obligations in respect of the quality of the goods. In general, the seller must deliver goods that are of the quantity, quality and description required by the contract and that are contained or packaged in the manner required by the contract. One set of rules of particular importance in international sales of goods involves the seller's obligation to deliver goods that are free from any right or claim of a third party, including rights based on industrial property or other intellectual property. 25. In connection with the seller's obligations in regard to the quality of the goods, the Convention contains provisions on the buyer's obligation to inspect the goods. He must give notice of any lack of conformity with the contract within a reasonable time after he has discovered it or ought to have discovered it, and at the latest two years from the date on which the goods were actually handed over to the buyer, unless this time limit is inconsistent with a contractual period of guarantee. B. Obligations of the buyer

Page 13

26. Compared to the obligations of the seller, the general obligations of the buyer are less extensive and relatively simple; they are to pay the price for the goods and take delivery of them as required by the contract and the Convention. The Convention provides supplementary rules for use in the absence of contractual agreement as to how the price is to be determined and where and when the buyer should perform his obligations to pay the price. C. Remedies for breach of contract 27. The remedies of the buyer for breach of contract by the seller are set forth in connection with the obligations of the seller and the remedies of the seller are set forth in connection with the obligations of the buyer. This makes it easier to use and understand the Convention. 28. The general pattern of remedies is the same in both cases. If all the required conditions are fulfilled, the aggrieved party may require performance of the other party's obligations, claim damages or avoid the contract. The buyer also has the right to reduce the price where the goods delivered do not conform with the contract. 29. Among the more important limitations on the right of an aggrieved party to claim a remedy is the concept of fundamental breach. For a breach of contract to be fundamental, it must result in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the result was neither foreseen by the party in breach nor foreseeable by a reasonable person of the same kind in the same circumstances. A buyer can require the delivery of substitute goods only if the goods delivered were not in conformity with the contract and the lack of conformity constituted a fundamental breach of contract. The existence of a fundamental breach is one of the two circumstances that justifies a declaration of avoidance of a contract by the aggrieved party; the other circumstance being that, in the case of non-delivery of the goods by the seller or non-payment of the price or failure to take delivery by the buyer, the party in breach fails to perform within a reasonable period of time fixed by the aggrieved party. 30. Other remedies may be restricted by special circumstances. For example, if the goods do not conform with the contract, the buyer may require the seller to remedy the lack of conformity by repair, unless this is unreasonable having regard to all the circumstances. A party cannot recover damages that he could have mitigated by taking the proper measures. A party may be exempted from paying damages by virtue of an impediment beyond his control. D. Passing of risk 31. Determining the exact moment when the risk of loss or damage to the goods passes from the seller to the buyer is of great importance in contracts for the international sale of goods. Parties may regulate the issue in their contract either by an express provision or by the use of a trade term. However, for the frequent case where the contract does not contain such a provision, the Convention sets forth a complete set of rules. 32. The two special situations contemplated by the Convention are when the contract of sale involves carriage of the goods and when the goods are sold while in transit. In all other cases the risk passes to the buyer when he takes over the goods or from the time when the goods are placed at his disposal and he commits a breach of contract by failing to take delivery, whichever comes first. In the frequent case when the contract relates to goods that are not then identified, they must be identified to the contract before they can be considered to be placed at the disposal of the buyer and the risk of their loss can be considered to have passed to him. E. Suspension of performance and anticipatory breach 33. The Convention contains special rules for the situation in which, prior to the date on which performance is due, it becomes apparent that one of the parties will not perform a substantial part of his obligations or will commit a fundamental breach of contract. A distinction is drawn between those cases in which the other party may suspend his own performance of the contract but the contract

Page 14

remains in existence awaiting future events and those cases in which he may declare the contract avoided. F. Exemption from liability to pay damages 34. When a party fails to perform any of his obligations due to an impediment beyond his control that he could not reasonably have been expected to take into account at the time of the conclusion of the contract and that he could not have avoided or overcome, he is exempted from paying damages. This exemption may also apply if the failure is due to the failure of a third person whom he has engaged to perform the whole or a part of the contract. However, he is subject to any other remedy, including reduction of the price, if the goods were defective in some way. G. Preservation of the goods 35. The Convention imposes on both parties the duty to preserve any goods in their possession belonging to the other party. Such a duty is of even greater importance in an international sale of goods where the other party is from a foreign country and may not have agents in the country where the goods are located. Under certain circumstances the party in possession of the goods may sell them, or may even be required to sell them. A party selling the goods has the right to retain out of the proceeds of sale an amount equal to the reasonable expenses of preserving the goods and of selling them and must account to the other party for the balance. Part Four. Final clauses 36. The final clauses contain the usual provisions relating to the Secretary-General as depositary and providing that the Convention is subject to ratification, acceptance or approval by those States that signed it by 30 September 1981, that it is open to accession by all States that are not signatory States and that the text is equally authentic in Arabic, Chinese, English, French, Russian and Spanish. 37. The Convention permits a certain number of declarations. Those relative to scope of application and the requirement as to a written contract have been mentioned above. There is a special declaration for States that have different systems of law governing contracts of sale in different parts of their territory. Finally, a State may declare that it will not be bound by Part II on formation of contracts or Part III on the rights and obligations of the buyer and seller. This latter declaration was included as part of the decision to combine into one convention the subject matter of the two 1964 Hague Conventions. Further information can be obtained from UNCITRAL Secretariat

Page 15