CISG GENERAL PROVISIONS

Parts of The CISG: 1. Sphere of application and general provisions 2. Formation of a contract 3. Sale of goods 4. Final provisions

TRANSACTIONS COVERED IN CISG Business contracts of international sale of goods INTERNATIONAL: - the buyer and seller must have their places of business in different states and either 1) Both of the states must be contracting parties to the CISG or 2) the rules of private international law must lead to the application of a contracting state SALE The prerequisite is that - the seller passes the title to the buyer - for a price GOODS Excluded 1) goods bought for personal, family or household use 2) auction sales 3) sales on execution or otherwise by authority of law 4) stocks, shares, investment securities, negotiable instruments, money 5) ships, vessels, hovercraft or aircraft MIXED SALES: Sales where a preponderant (=more than half) part of the obligations of the seller consists of the supply of labour or other services

Is applied if both parties are based in the CISG contracting states Can be opted in or out by the parties E.g. ”The parties expressly reject any application of the UN Convention on Contracts for the International Sale of Goods” Causes preemption of domestic law

CISG CONTRACTING STATES 1 Dec 2005  Argentina  Australia  Austria  Belarus  Belgium  Bosnia-Herzegovina  Bulgaria  Burundi  Canada  Chile  China (PRC)  Colombia  Croatia  Cuba  Cyprus  Czech Republic  Denmark  Ecuador  Egypt  Estonia  Finland  France  Gabon  Georgia  Germany  Greece  Guinea  Honduras  Hungary  Iceland  Iraq  Israel  Italy  Republic of Korea  Kyrgystan  Latvia  Lesotho  Lithuania  Luxembourg  Mauritania  Mexico  Moldova  Mongolia  Netherlands  New Zealand  Norway  Peru  Poland  Romania  Russian Federation  Saint Vincent & Grenadines  Singapore  Slovakia  Slovenia  Spain  Sweden  Switzerland  Syria  Uganda  Ukraine  United States  Uruguay  Uzbekistan  Yugoslavia  Zambia  USSR (superseded) 66 signatories

ISSUES NOT COVERED IN CISG Mixed sales Transactions where the buyer supplies a substantial part of the material Validity of the contract Property in the goods sold Seller’s liability for injury caused by the goods Form of the contract INTERNATIONAL: - the buyer and seller must have their places of business in different states and either 1) Both of the states must be contracting parties to the CISG or 2) the rules of private international law must lead to the application of a contracting state SALE The prerequisite is that - the seller passes the title to the buyer - for a price GOODS Excluded 1) goods bought for personal, family or household use 2) auction sales 3) sales on execution or otherwise by authority of law 4) stocks, shares, investment securities, negotiable instruments, money 5) ships, vessels, hovercraft or aircraft MIXED SALES: Sales where a preponderant (=more than half) part of the obligations of the seller consists of the supply of labour or other services

CISG DOES NOT APPLY TO SALES Of goods bought for personal, family or household use unless the seller neither knew nor ought to have known that the goods were bought for such use On execution or otherwise by authority of law Of stocks, shares, investment securities, negotiable instruments or money Of ships, vessels, hovercraft or aircraft Of electricity

transaction (each party’s SCOPE OF THE CISG Is it an International transaction (each party’s place of business is in a different country)? YES YES YES Have both countries ratified the CISG? Is the contract a sale of goods transaction? Is it a commercial (merchant- to-merchant) transaction? Did the parties opt-out of the CISG in a choice of law clause? NO YES CISG governs Modified from: Richards, E. 1994. Law for global Business. Irwin, USA

transaction (each party’s SCOPE OF THE CISG Is it an International transaction (each party’s place of business is in a different country)? YES YES YES Have both countries ratified the CISG? Is the contract a sale of goods transaction? Is it a commercial (merchant- to-merchant) transaction? Did the parties opt-out of the CISG in a choice of law clause? NO YES NO Has the country with the closest connection to the contract ratified the CISG? CISG governs NO YES Does the ratifying country exclude the CISG coverage unless both countries have ratified? Did the parties opt-in to the CISG in a choice of law clause? Modified from: Richards, E. 1994. Law for global Business. Irwin, USA YES

transaction (each party’s SCOPE OF THE CISG Is it an International transaction (each party’s place of business is in a different country)? YES NO YES YES Have both countries ratified the CISG? Is the contract a sale of goods transaction? Is it a commercial (merchant- to-merchant) transaction? Did the parties opt-out of the CISG in a choice of law clause? NO YES NO Has the country with the closest connection to the contract ratified the CISG? NO NO CISG governs YES Domestic law governs NO NO YES Does the ratifying country exclude the CISG coverage unless both countries have ratified? NO YES Modified from: Richards, E. 1994. Law for global Business. Irwin, USA Did the parties opt-in to the CISG in a choice of law clause? YES

International character of the convention => aim at uniformity INTERPRETING CISG International character of the convention => aim at uniformity Good faith in international trade General principles E.g. the parties’ duty to communicate, duty to mitigate damages Rules of Private International Law Plain meaning of the language in the CISG => the legislative history is not be taken into consideration PLAIN MEANING: The preparatory work of the legislator is ignored GENERAL PRINCIPLES: Loyalty requirement PRIVATE INTERNATIONAL LAW of the relevant country

INTERPRETING SALES CONTRACTS 1. Subjective approach ”Meeting of minds” => Acceptable if the other party knew or could not have been unaware of the intent of the speaker if not => 2. Objective intent ”The understanding that a reasonable person of the same kind as the other party would have had in the same circumstances” SUBJECTIVE APPROACH - rejected completely by some common law countries => ”The law has nothing to do with the actual state of the parties’ minds. In contract, as elsewhere, it must go by the externals, and judge parties by their conduct” CISG and many civil law countries accept it

DETERMINING THE INTENT OF THE PARTIES Practices and usages if impliedly made applicable widely known, regularly observed or otherwise the parties should have known Relevant circumstances Due consideration be given to all relevant circumstances including negotiations leading up to the contract the practices that the parties have established between themselves the parties’ conduct after they agree to the contract