This short article intends to introduce the Convention on the International Sale of Goods (CISG) and illustrate its common-law differences. Therefore, this article may be informative for foreign companies who engage in international contracts for the sale of goods with companies residing in common-law jurisdictions. Knowledge of the common-law implications of the CISG can help foreign companies better understand the contract-drafting process and why some clauses may be added or left out.
The CISG is an international agreement that regulates international sales contracts dealing with goods (Article 3). Several countries have adopted it, including among them countries from the European Union, the US, Mexico, and Canada. The CISG covers issues of contract formation and the rights and duties of the parties pursuant to contract formation.
One of the most significant rules from the CISG is that unless the parties opt out of it, it governs the sale of international goods.
Depending on the foreign jurisdiction, there may be differences between a country’s laws and the CISG. Specifically, in contrast to countries with the common-law system, the CISG does not have or include the following:
Parol evidence rule
The CISG does not have parol evidence rule, meaning that evidence evolving before an agreement is reached can be considered when interpreting an international sales contract;
Statute of Frauds:
- The CISG does not have a Statute of Frauds, meaning that some contract defenses may not apply and agreements can be oral. However, the Statute of Frauds Doctrine may still apply if the country adopting the CISG stipulates that its own Statute of Frauds will apply.
- Consumer goods:
- The CISG does not apply to consumer goods;
- Specific US nuance
- Most importantly, as the CISG is national law for those countries who sign on to it, it supersedes any non-national (i.e. state, provincial, etc.) commercial codes or rules that parties think they can be operating under in the US. This is important for foreign companies contracting with US companies to understand that US state law may not apply.
Furthermore, the CISG excludes coverage of products-liability issues (Article 5). It also does not address matters touching on contract validity like fraud, illegality, etc. These are important details to note because in some foreign jurisdictions, fraud, illegality, unconscionability, etc. are defenses against enforcement of contracts.
Bibliography: United Nations Convention on Contracts for the Sale of International Goods
This article is not considered as legal advice