March 06, 2012
What is the CISG?
March 06, 2012
You may or may not have heard of the United Nations Convention on the International Sale of Goods (also known as the CISG), a treaty that has been ratified by the U.S. and the vast majority of major trading countries. But, if you haven’t and you’re a buyer or seller of goods and ever deal with any company that has its place of business in a different country (which is more likely than not, given our global economy), you had better listen up.
The CISG’s provisions may very well govern your contract with your buyer or supplier, even if you have never heard of it. In fact, the CISG might apply even if you’ve specified that the law that should apply to your contract (e.g. “Michigan law will govern this contract”). That’s because the CISG automatically applies if it hasn’t been specifically excluded. Ok, so even if it does apply, what’s the big deal? There are some pretty important differences between the CISG and Article 2 of the UCC, which generally governs contracts for the sale of goods in the U.S. You should be aware of these differences before contracting with a company with its place of business in another contracting country.
The CISG and the UCC differ as to whether your contract needs to be in writing, how additional or different terms affect the contract formation process, the ability of a party to contradict a written agreement with outside evidence (maybe even one party’s subjective intent), when an offer is revocable, and the rules governing the rejection of goods and cancellation for breach (i.e. the “perfect tender” rule), to name just a few. Plus, there are some provisions that might be more or less beneficial to you than the UCC, depending on whether you are the seller or the buyer.
So, if you find yourself dealing with a company in another country, be sure to think about whether the CISG comes into play. If it does, it’s probably a good idea to check in with an attorney to determine which sales law -- the CISG or the UCC -- best fits your needs and what other changes are necessary to make sure you’re adequately protected.