The scope of the United Nations Convention on Contracts for the International Sale of Goods (aka “CISG” or “Vienna Convention”) is well defined. It is limited to international sales contracts only. It does not apply to licences, service contracts, manufacturing agreements or loans, except to the extent that such contracts contain provisions related to the sale of movable goods. Furthermore, the CISG excludes certain sales contracts because of purpose (i.e. consumer contracts), particular nature (i.e. sales by auction, on execution or otherwise by operation of law) or the nature of the goods (i.e. shares, investment securities, negotiable instruments, money, ships, aircraft, or electricity). Therefore, it is nonsense to exclude its applicability in any of those cases.
Certain matters fall outside the Vienna Convention’s scope, such as for example the validity of the sales contract, and (passing of) ownership of the goods sold. These matters are typically covered by the law chosen in the sales contract. Whether that is indeed true is a question of ‘private international law’ (more adequately called ‘conflict of laws’ – see section 4.9). In any case, the Vienna Convention applies if the law of a contracting State[1] is chosen.
CISG and fundamental principles of contract law #
Party autonomy. A key aspect of the Vienna Convention is the recognition of ‘freedom of contract’ or ‘party autonomy’. The parties are free to exclude the application of the Vienna Convention and to modify the scope or effect of any of its provisions. The parties do not have to derogate explicitly from the Vienna Convention: they may instead provide a different rule from the corresponding provision found in the Vienna Convention.
Interpretation of CISG. The Vienna Convention was written to be as clear and easy to understand as possible. In cases involving disputes as to its meaning and application, courts and arbitral tribunals are admonished to observe its international character, to promote a uniform application and to observe good faith in international trade. Nevertheless, the Vienna Convention will respect (i) the statements and conduct of a party in the context of the formation of the contract or its implementation, (ii) usages agreed to by the parties, (iii) practices they have established among themselves, and (iv) industry usages and good practices (think of Incoterms or the UCP600 in support of L/Cs, Letters of Credit).
Legal ‘form’ of a contract. The Vienna Convention does not require that a sales contract be expressed in a certain form. A sales agreement can be entered into orally, in writing, by e-mail or in any other form. Accordingly, any amendment of the agreement does not require a certain form – except, if the contract itself requires that an amendment or a termination be notified in writing, such requirement prevails.[2] The only exception would be that a party may be precluded by its conduct from asserting such requirement to the extent that the other party has relied on that conduct.
Formation of a sales contract. The second part of the Vienna Convention deals with the formation of the contract, which is concluded by the exchange of offer and acceptance. It is outside the scope of this book to discuss aspects of ‘business proposals’, ‘withdrawal or revocation of offers’, ‘rejection of an offer’, ‘counteroffers’, ‘modified acceptance’, ‘acceptance’ and related topics, and aspects of the applicability of ‘general terms and conditions’ (also referred to as ‘general business terms’ or any other recombination of these words).
[1] A ‘contracting State’ means a country that has ratified the Vienna Convention. Note that CISG Article 1 contains a more accurate rule indicating its applicability.
[2] See CISG Article 29, and ITC Model Contract for the international commercial sale of goods (standard version) Article 18.2. However, note that ratifying States whose legislation requires sales contracts to be concluded in or evidenced by writing, may have set aside CISG Article 11, 29 or provisions in Part II, for a seller or buyer that has its place of business in that State (see Article 96).
Note: this chapter is also included in the e-book Cross-border contracting – How to draft and negotiate international commercial contracts, written by Weagree-founder Willem Wiggers and published by the ITC (the joint agency of the U.N. and WTO) and downloadable free of charge.
