United Nations Convention on Contracts for the International Sale of Goods

The United Nations Convention on Contracts for the International Sale of Goods (CISG; the Vienna Convention) (The Convention) acts as a standardized law in relation to international sales. The convention has been duly ratified by 89 countries which make up a considerable proportion to the world trading market. The purpose of the paper is to determine whether the convention is actually the most successful international trade treaty so far in terms of scope, application and acceptance.

Running head: CISG
United Nations Convention on Contracts for the International Sale of Goods
Name of the Student
Name of the University
Author Note

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The United Nations Convention on Contracts for the International Sale of
Goods (CISG; the Vienna Convention) (The Convention) acts as a standardized law in relation
to international sales. The convention has been duly ratified by 89 countries which make up a
considerable proportion to the world trading market. This feature of the convention as argued by
various commentators such as Bailey (1985) makes it one of the most successful uniform
international laws1. The United Nations Commission on International Trade Law (UNCITRAL)
had developed the convention which was signed in 1980 in Vienna. The convention has been
written through the use of plain language so that words which are in relation to legal nuances of
specific jurisdictions can be avoided. The Convention has been divided into four parts. The first
part deals with general provisions and area of application of the convention. The second parts
deals with provision related to formation of contracts through Articles 14-24. The third part deals
with provisions on relation to sale of goods through Articles 25-88 and the final part deals with
provisions such as declarations and reservations through Article 89-101.
It has been argued by Cook (1998) that the convention is “arguably the greatest
legislative achievement aimed at harmonising private international commercial law”2. On the
other hand it has been argued by Andersen that although there is little doubt in relation to the
success of the Convention there are still a few areas where improvement in relation to the
convention may be required3.
1 Bailey, D., The Vienna Convention: now made in Australia, sells to the World, Law Institute Journal 59 (3) March
1985, 198-201
2 Cook, V., CISG: From the Perspective of the Practitioner. Journal of Law and Commerce 17 (1998) 343-358
3 Andersen, C., Reasonable Time in Article 39 (1) of the CISG – Is Article 30(1) Truly a Uniform Provision?
Available at www.cisg.law.pace.edu/cisg/biblio/andersen.html

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The purpose of the paper is determine whether the convention is actually the most
successful international trade treaty so far in terms of scope, application and acceptance. The
paper initially examines the the aims and objectives of the Convention and then critically
analyzes the success of the convention after discussing the initial view which one have in
relation to it.
Through the convention an option is provided to the exporter to avoid the issue in relation
to the choice of law. This is because the convention provides for substantive rules which are
widely accepted and in relation to which a contractual parties, contracts and courts may rely
upon. In addition the convention is also deemed to be made a part of any domestic law applicable
otherwise in relation to transaction between parties from different states for goods, unless
otherwise excluded by express terms in a contract. The convention is considered as a success by
UNCITRAL with respect to its acceptability by various states belonging to all geographical
regions, all states of economic development and all primary social, economic and legal systems.
Those countries by whom the convention has been ratified are known as the contracting states.
Bonell (1996) have described the convention as emphasizing "the greatest influence on the law
of worldwide trans-border commerce" in relation to uniform law conventions4. It has also been
agued that the convention is the best legislative accomplishment and the “most successful
international document so far" in relation to uniform law of international sales. One of the
primary arguments which have been provided in support assertion is the flexible nature of the
convention with respect to the allowance provided to the contracting states towards getting
exception in relation to particular articles. The flexibility provided by the convention is a
4 Bonell, M. J., The UNIDROIT Principles of International Commercial Contracts and CISG – Alternatives or
Complementary Instruments? 26 Uniform Law Review (1996) 26-28

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primary factor with respect to convincing states having disparate legal traditions to take interest
and accept the uniform code. Even where there are few contracting parties which have asked for
a declaration (21 out of 89) the majority of states gave accepted and subscribed to the convention
without seeking any form of declaration.
It has been provided through the first part of the convention that it is applicable in
relation to contract between those parties who have their place of business in different states and
such states are those among the contracting states. As the number of contracting states are
significant, the provisions become a general path in relation to the applicability of the
convention. The convention is also applicable where the place of business of the parties are in
different countries who are not a part of the convention and the conflict of law provides for
applying the law of the contracting states. However there are significant states who have made a
declaration that they are not going to be bound to such laws. The application of convention is
applicable towards commercial products and goods only other than a few limitations which
include that the convention cannot be applied on family, personal or household goods as well as
aircrafts, ships, services, intangibles or auctions. In addition the position in relation to software is
different and is analyzed based upon the circumstances. However the parties to the contract have
the right under the convention to vary or exclude its application. While interpretation of the
convention is done the ‘international character’ of the convention, the requirement of good faith
as well as uniform application is to be considered. The general principles of the convention have
to be applied in order to determine its interpretation in situation where no such interpretation is
present and the issue is under the convention (a gap praeter legem) through the application of
public international law regulations.

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However as argued by Baron (1998) there is a primary point of controversy in relation to
the question that whether a written memorial is required for making a contract binding on the
parties under the convention5. Through the convention a sale can be unsigned or oral and on the
other hand unless in writing a contract is not considered as valid in some jurisdictions and in
others oral contract s accepted. Such states depicted no objection in relation to ratifying the
convention and other states excluded such provisions. It has been stated by Eörsi (1983) that by
its own definition the convention is not a complete qualification and any gap has to be filled by
applying the national law along with the consideration of conflict of law provisions6.
Part II of the convention states that an offer for making a contract has to be directed to a
person, has to be adequately certain, must contain the description of the goods, the price,
quantity and must also depict an intention of the offeror to be binding legally when the
acceptance is made in relation to the terms of the offer. However common law unilateral
contracts are not recognized by the convention apparently, but where a clear indication by the
offeror is made any proposal which is not directed as a person is treated as an invitation to offer.
In addition were express price is not provided or procedures to determine the implied price are
not present than it is deemed that the parties have agreed to the price based upon ‘generally
charged when the contract is concluded for such goods sold under similar circumstances”
(Article 55). Under the convention the revocation of an offer can be given effect when the
information about the revocation is provided to offeree before the acceptance is made by him.
However under the convention there are certain offers which cannot be revoked such as those
5 Baron, G, Do the UNIDROIT Principles of International Commercial Contracts Form a New LexMercatoria?
PACE Database On The CISG and International Commercial Law (June 1998), available at
www.cisg.pace.edu/cisg/biblio/baron.html
6 Eörsi, G., A Propos The 1980 Convention on Contracts for the International Sale of Goods, 31 American Journal
of Comp. Law (1983) 333-335

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offers which the offeree believed to be reasonably irrevocable. In addition acceptance has to be
indicated via a positive action under the convention and a state of inactiveness or silence cannot
constitute offer7.
General issues such as situation where the offeree upon responding to the original offer
wants to alter is terms are attempted to be resolved by the convention. It is provided through the
convention that where there is any alternation in relation to the terms of the offer it results in a
counter offer if the alterations do not materially affect the terms of the offer. The terms of the
offer are said to be materially affected when a party seeks alternation in relation to delivery,
price, quality, quantity, payments, arbitration or liability of the parties.
Through the convention contacting states are provided an opportunity to file a reservation
which is also called “declaration” as per the simple language of the convention. A state may seek
declaration in relation to choosing not to abide by Article 1(1)(b) through which the allocation of
the convention in situation where the provisions of private international law direct at the Law of
a contracting State as the applicable law in relation to the sale of goods contract. In addition the
parties may also opt out of mandatory written contract for goods sale under Article 11, 12 and
96. The parties may also opt out of the application of part II and III of the convention. However
given such benefits of the convention there are a few major trading states who have restrained
from being a part of the convention such as Hong Kong, United Kingdom and India. This
situation clearly depicts that there are a few problems which are associated with the convention
and not all major trading nations want to be part of it.
7 United Nations Conventions on Contracts for the International Sale of Goods, Apr. 11, 1980, Preamble, U.N. Doc.
A/Conf.97/98, reprinted in 19 I.L.M. 668

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Under part III of the convention, the goods are required according to the description,
quality and quantity as per the contract, which needs to be packed and made sure it fits the
purpose. The Person selling these goods is then asked to deliver only such goods which are not
been subjected to claim by any third party, regarding any action of limiting intellectual or
industrial property rights of the state, in which these products are listed to be sold. The person
buying is then asked to immediately examine the products and with the help of certain results,
must recommend the person selling it within a moderate time of any failure or refusal to conform
which needs to be presented within not more than two years8.
The United Nations Convention on Contracts for the International Sale of Goods (CISG)
mark out the risk which is passed from the person selling the good to the person buying it. But it
has been seen that most contracts in practice states the delivery obligation in exact terms of the
seller by bringing in an existing shipment term, Like CIF and FOB9.
A healthy interaction between the seller and the buyer depends on the type of character
being shown in the breach of contract. If the breach is seen to be fundamental, the other party to
a great extent is deprived of whatever it expects to be presented with in this contact. The
condition being, that the breach is not been predicted which have been mentioned by an objective
test, which could result in the contract being avoided and damages might be claimed by the
aggrieved party. The party performing can recover the goods supplied or payment made, when
the part performance of a contract occurs. It also differs slightly with the law which states no
8 United Nations Conventions on Contracts for the International Sale of Goods S. Treaty Doc. No. 98-9 (1983)
9 Castellet L., The Application of the Vienna Convention in the United States (CISG) International. Business. Law
Journal (1999) 582-594

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right to recuperate a good supplied if the damages are insufficient, or the title has been
recollected, only the value the good can be claimed10.
When the breach is seen not to be fundamental, the contract is then not avoided and thus
the remedies possibly sought including adjustment in price, specific performance and claiming
damages. Such damages are possibly being awarded imitate to the mutual law rules in Hadley v
Baxendale, It has been arguably brought to the test of foreseeability which to a great extent is
broader and as a result more substantial to the distressed party11.
The party is excused by the CISG from the liabilities to state the damages in which any
failure to accomplish is regarded to be caused by an obstruction beyond this party or any third
parties who might carry out work for the company’s control that will not be realistically
estimated. Such unimportant occasion may be somewhere else can also be mentioned as force
majeure, and Even result in prevention of the agreement.12
In case the seller is seen to be refunding the price paid by the buyer, then he must also
pay the amount of interest to the person buying from the day of compensation. The interest rate
is said to be based on the rates currently listed in the seller state subsequently the responsibility
to recompense interest partakes through the seller’s compulsion to make compensation and not
even the person buying it can claim damages, nevertheless it is seen to be a point of debate. The
10 Flechtner, H., The UN Sales Convention (CISG)and MCC-Marble Ceramic Centre Inc v
CeramicaNuovaD’Agostino, SpA: The Eleventh Circuit Weighs in on Interpretation, Subjective Intent, and
Procedural Limits to the Convention’s Scope and the Parol Evidence Rule ,Journal of Law and Commerce 23 (1999)
259-269
11 United Nations Conventions on Contracts for the International Sale of Goods, Apr. 11, 1980, Preamble, U.N. Doc.
A/Conf.97/98, reprinted in 19 I.L.M. 668
12 Gordon, M.Some Thoughts on the Receptiveness of Contract Rules in the CISG and UNIDROIT Principles Am. J.
Competition. Law (Supplement) 46 (1998) 361- 361

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person buying the good is accountable for any of the assistances acknowledged if the buyer has
to return the things he brought, as per a reflection of the seller’s Requirements13.
It has been provided by Ferrari (2000) that the convention depicts a flexible, relational
and practice based character. In addition very few if any limitations are imposed by the
convention in relation to adjustment or formation on contract. In situation of a non performance a
wide array of interim solutions before an affected party may chose to avoid the contract are
provided by it14. The convention also provides for suspension of performance, as a matter of right
the presence of cure in relation to the party making the default, option in relation to expectation
such as market based damages15. Moreover the operations of the convention are not based under
a “perfect tender” provision and it has functional criteria in relation to conformity rather than
formal16. The rules of the convention in relation to the interpretation are heavily reliant on
customs and also depicts actions instead of intention17. The convention also includes a rule which
is known as the Nachlass rule however the scope in relation to the rule is largely limited. The
good faith condition under the convention on the other hand as argued by Gleeson (1999) is also
relatively restricted and in all situations obscure18. All the communication under the convention
13 United Nations Conventions on Contracts for the International Sale of Goods U.N. Doc A/CONF.97/18, Annex 1
(1980)
14 Ferrari, F., The UNICITRAL Draft Convention on Assignment in Receivables Financing: Applicability, General
Provisions and the Conflict of Conventions, Melbourne Journal of International Law 1 (2000) 1-10.
15 United Nations Conventions on Contracts for the International Sale of Goods 19 I.L.M 668 (1980)
16 Castellet L., The Application of the Vienna Convention in the United States (CISG) International. Business. Law
Journal (1999) 582-594
17 Gehle, B., Export and Import: How International Law Can Make a Difference (November 2008) Clayton Utz :
International Arbitration Insights available at www.claytonutz.com
18 leeson, M., The State of the Judicature, The Law Institute Journal 2(2) (December 1999) 23-27

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needs reasonable time which has not been adequately defined by the convention itself and
therefore is largely based on the discretion of the court as it was done in the case of Schmitz-
WerkeGmbH & Co. v. Rockland Industries Inc19.
Even in situation where a large number of states have accepted the convention, they have
been significant criticism which has been directed towards it. For instance, the Nations who have
been involved in drafting of the convention have been accused that they are incapable of
agreeing upon codes which clearly and concisely provides Universal principles and relation to
law of sales. In addition the invitation of the convention for the purpose of integrating in the light
of the international character of the convention is also found to be inadequate and the judges are
provided then opportunity to come up with meanings which are not consistent with the
convention. According to Ziegel (2000) the convention is nothing more than an arrangement of
vague compromises and Standards which are not at all consistent with the principles of
commercial interest20.
On the other hand it has been argued by Gehle (2008) that the convention is written in
plain business language which provides an opportunity to the judges of making the convention
workable in various and diverse situations of sales21. It has also been argued that the convention
has a lucid drafting style and the wording is kept easy to understand and uncluttered without any
subordinate complicated classes. Any person on the first reading can get the general sense of the
19 Hartwig J., Schmitz-WerkeGmbH & Co. v. Rockland Industries Inc. and the United Nations Convention on
Contracts for the International Sale of Goods (CISG):Diffidence and Developing International Legal Norms,J.L.
Com. 22 (2002-2003) 77-89
20 Ziegel J., The Future of the International Sales Convention from a Common Law Perspective,New Zealand Bus.
L.Q. 6 (2000) 336-346
21 Gehle, B., Export and Import: How International Law Can Make a Difference (November 2008) Clayton Utz :
International Arbitration Insights available at www.claytonutz.com

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article or the provision without requiring a sales expert to interpret it. These arguments have been
stated to be vague by various counter arguments which are not in favour of the white flexibility
which is provided by the convention to the judges while integrating it clauses.
In addition to such flaws in the convention it has also been argued that the application of
the convention in a uniform manner is also problematic as the courts are reluctant to utilise
solutions which have been adopted by the courts in other countries on the same point and
therefore leads to unnecessary inconsistent decision making. In the case of Bundesgerichtshof
VIII ZR 159/94 where an export to Germany by a company based in Switzerland for New
Zealand muesli having a level of cadmium more then what is required by German standards it
was held by the German Supreme Court that the seller does not has the duty to ensure that the
goods are consistent with meeting the public health regulations of the country. On the other hand
in a later decision provided in the case of Caiato Roger v La Société française de factoring
international factor France (SA) (1995) 93/4126 where an Italian exporter was not able to satisfy
French packing criteria it was held by the pot that it is the duty of the seller to make sure that
they comply with French regulations.
These two cases can clearly be considered as a primary example of contradictory
jurisprudence which results out of the convention. However Reimann, (2001) held that these
cases are not contradictory to each other as there are a number of points which distinguishes the
German case and this is why the French Court did not choose to select the German case for
making its decision22. The critics of the convention in relation to its multiple language words and
provide that the versions are evidently not going to be totally consistent to one another because
22 Reimann, M., Parochialism in American Conflicts Law, American. Journal of Competition. Law 49 (2001) 369-
376

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the errors was result out of the process of translation along with the untranslatability of sublet
nuances in languages.
It has been argued by Cook (1998) that the convention is “arguably the greatest
legislative achievement aimed at harmonising private international commercial law”23. On the
other hand it has been argued by Andersen that although there is little doubt in relation to the
success of the Convention there are still a few areas where improvement in relation to the
convention may be required24. In relation to the arguments and from the above discussion it can
be stated that although there are lot of advantages which are provided by the convention it also
consists of several disadvantages because of which it has not been accepted by few of the major
trading Nations. Although it is a significant step taken in relation to International commercial
market it cannot be evidently provided that the convention is not actually the most successful
international trade treaty so far in terms of scope, application and acceptance as it is subjected to
various concerns which are yet to be adequately addressed.
23 Cook, V., CISG: From the Perspective of the Practitioner. Journal of Law and Commerce 17 (1998) 343-358
24 Andersen, C., Reasonable Time in Article 39 (1) of the CISG – Is Article 30(1) Truly a Uniform Provision?
Available at www.cisg.law.pace.edu/cisg/biblio/andersen.html

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