Convention on contracts for the international sale of goods (CISG), otherwise known as the Vienna Convention was commissioned by the United Nations Commission on International Trade Law (UNCITRAL) in 1968, drawing from the attempts made in the 1930s by the International Institute for the Unification of Private Law (UNIDROIT). CISG is a multilateral treaty that puts across uniformity in international trade. CISG has 94 ratified member states and 11 others awaiting ratification. Since it is designed to facilitate international trade, CISG has made it easier for participating states to conduct business by doing away with legal barriers and providing reasonable rules that regulate the duties of participants to commercial transactions, buying and selling of goods, contract formation and rectifies breach of contract.
CISG is considered one of the most successful international trade documents in matters of international trade and covers the most geographical regions of all kinds of economic development and even major legal development. CISG was formed to provide uniformity in the sales of goods and services between nations and also as a show of goodwill in the international market.
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CISG is divided into four parts:
1. Sphere of application and general provisions - applies to the commercial selling of good between different parties that are the Contracting States, it applies to parties that are in different geographical location but not necessarily Contracting States unless the CISG rule applies and it involves the sale of commercial goods and products only.
2. Formation of contract - CISG does not have clear rules set aside for the formation of the contract but once an offer is made to the buyer or seller, they have a chance to say no or negotiate the offer before decisions are made. CISG only accepts positive response as acceptance of a contract. Otherwise, silence or no response does not qualify as binding. A counteroffer can be made before the acceptance of the contract should there be any.
3. Sale of goods - defines the duty of the seller, and has to deliver goods and hand over all the documents accompanied by the goods. The buyer must check the goods conditions and tell whether they meet his satisfaction. If so, a successful transaction occurs.
4. Final Provisions - it is characterized by when and how the convention comes into force and the application of the convention to international sales where both parties are governed under the same rule of law.
In this case study, the CISG will be applicable because both parties are conducting international trade and may want uniformity and a show of goodwill. Why both states chose to use CISG maybe because they have different domestic laws concerning the sale of international goods as they are both different countries in different geographical regions.
The buyer and seller might have entered into a contract governed by CISG to do away with ambiguities caused by different laws concerning international sales of goods. The general principle of CISG is to resolve conflicts that may come up, for example, breach of contract by either party.
Both states, by using CISG create an open work environment but gain no profits as they still incur the cost of interpretations of the convention. Issues are dealt with by creating a public international law expected for states through their courts to interpret the convention and its need to promote uniformity while taking into account foreign case law. However, once states apply the convention, they cannot justify itself in its own courts, either implied or by default or compulsion, unless ratified.
Contractual Issues Excluded.
Contractual issues excluded can be deduced from express exclusion, choice of law of a non- Contracting State, or the choice of a widely specified domestic statute. It cannot be concluded from the following areas; Choice of the law of Contracting State and choice of law of territorial law of a Contracting State.
Here are a few examples of the issues:
1. If courts and tribunals already apply a strict standard of intent to exclude from the CISG then so will the State.
2. If the choice of law clause shows that the law of a Contracting State rules contracts, commentators, and tribunals a contract will be excluded as CISG forms part of the law of the Contracting State.
3. When a non-CISG member chooses envira for intent to exclude CISG.
4. There have been speculations whether certain parties might indicate an intention for non-CISG domestic law to be applied but courts have not resolved the effects of civil code and corresponding provisions.
5. Difference in party’s terms of exchange as one might prefer to exclude CISG and the other not.
CISG Definition of Terms
Sales
CISG does not define 'sales' in clear terms but comes up with obligations that need to be fulfilled for a sale to happen. The seller must ensure the delivery of all goods and transfer ownership and in turn, the buyer must confirm the reception of all goods and pay for the purchases made.
Goods
Yet again, CISG does not define the term 'goods' but it can be referred to as material things that are tangible and can be moved from one place to another. CISG does not govern tangible goods like real estate but it governs all electronic transactions and software.
Mixed Sales
This refers to the transaction of both goods and services. In most cases, courts anticipate transactions of goods and services in the future and therefore come up with predominant tests, contracts, and agreements to be applied as it is only logical.
Requirements for Buyers and Sellers
For a successful transaction to go through, it must involve two parties that are willing to conduct business. Both buyer and seller must be from the Contracting States. If not, and only one of them is, the other party must agree to be covered by the CISG rule of law. If both buyer and seller are from non-Contracting States and are in different geographical regions, they must both be willing to abide by CISG to provide uniformity and help them conduct a meaningful transaction.
References
Sun, Chun L. - Celebrating Success: 25 years United Nations 2014.
Felemegas, J. - Pace Review of the Convention on Contracts for the International Sale of Goods (CISG), 115 - 265.
Lookofsky, J. - International Encyclopedia of Laws, 1 - 224, 2012.
