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United Nations convention on contracts for the international sale of goods (CISG) - Applicability of the CISG

6 important questions on United Nations convention on contracts for the international sale of goods (CISG) - Applicability of the CISG

When is CISG applicable?

CISG is applicable when the contracting parties have their place of businesses in different states at the time of the conclusion of the contract. If both parties have business in contracting state, the CISG is applied autonomously. (Art. 1(1)(a)) If the private international finds that the substantive law of a Contracting state is to be applied, then CISG applies. (Art. 1(1)(b))

On what goods are the CISG not applicable?

The CISG convention does not apply on sales of goods bought for e.g. personal use, auction, investments and money, ships, aircrafts and electricity.

What does it mean if the parties want to "opt out" according to article 6?

Opting out means that the parties wish to exclude the CISG from their contract. If they wish to do so they can either choose the law of a non-contracting country or choose an explicitly specified domestic code e.g the German Civil Code and German Commercial Code.

What are the obligations of seller and buyer according to CISG?

The obligations of the seller are to deliver the goods, hand over any relevant documents to the buyer and transfer the property (Article 30). The buyer is obliged to pay for the goods and take the delivery of them (Article 53).

What is a fundamental breach according to article 25 of the CISG? What can the other party do in case of a breach?

A breach is when one party does not fulfil its obligation of the contract. A breach according to article 25 of CISG is fundamental if one party deprives the other from what he would expect under the contract and where the other party would not have entered the contract if he would have known that the breach would happen. A breach is not fundamental if the breaching party and a reasonable person under the same conditions did not or could not have foreseen the breach.
The party that has been deprived by the breach can seek for remedies under CISG.

How much can seller or buyer claim damages for according to article 74 in the CISG? Why do the parties want to claim damages when the other party has made a breach on the contract?

The parties want to claim damages after a breach of contract to try and get back the money they lost from the breach. According to article 74 in CISG the party in breach can only claim back costs that could have been foreseen, which in most cases means the paid price and lost profit.