Topic 8 - UN Convention on Contracts for the International Sale of Goods (CISG) Flashcards
What are the three types of legal regimes governing international sales transactions?
National legal regimes (e.g., UK Sale of Goods Act 1979)
Factual uniformity (e.g., UCP 600, Lex Mercatoria)
Internationally uniform law (e.g., CISG)
What is the main objective of the CISG?
To create a uniform legal framework for international sale of goods contracts and reduce conflicts of laws.
When does the CISG apply to an international sales contract?
The CISG applies if both parties’ businesses are in member states or if conflict of laws leads to the application of a CISG member state’s law.
Can parties opt out of the CISG?
Yes, parties can expressly exclude the CISG in their contract.
What is the difference between FOB and CIF contracts?
FOB (Free on Board) transfers risk when goods are loaded onto the ship, while CIF (Cost, Insurance, and Freight) includes insurance and risk transfer upon shipment.
Under the CISG, when does risk pass from seller to buyer?
Risk passes when goods are handed over to the first carrier (Article 67) or when placed at the buyer’s disposal if no transport is involved (Article 69).
Does the CISG require contracts to be in writing?
No, under Article 11, a contract can be concluded orally unless a member state has made a declaration requiring written form
What is the role of bills of lading in international trade?
They serve as a receipt of goods, a document of title, and evidence of the contract of carriage.
What are the obligations of the seller under the CISG?
To deliver goods, hand over related documents, and ensure goods conform to contract terms (Articles 30-34).
What are the obligations of the buyer under the CISG?
To pay the price and take delivery of the goods as required by the contract (Article 53).
What are the remedies for breach of contract under the CISG?
Includes specific performance, contract avoidance, damages, and price reduction (Articles 45-52).
What is the ‘battle of the forms’ in contract law?
It refers to conflicts between standard terms in offer and acceptance, where the last-shot rule typically applies.
How does the CISG handle contract modifications?
Modifications require mutual agreement and need not be in writing unless a party’s state law mandates it (Article 29).
What is the significance of Article 79 in the CISG?
It provides for exemption from liability in cases of force majeure or unforeseen impediments.
What does the CISG say about good faith in contracts?
Article 7(1) requires interpretation of the CISG in light of good faith in international trade.
What is the Nachfrist principle under the CISG?
Under Article 47 CISG, the buyer may grant the seller additional time to perform before pursuing remedies.
What are the key differences between the CISG and the UK Sale of Goods Act 1979?
While the CISG focuses on contract obligations and remedies, the SGA also covers the passing of property.
Under the CISG, when can a buyer reject non-conforming goods?
If the non-conformity is fundamental and substantially deprives them of the contract’s benefit (Article 49).
What is a documentary credit in trade finance?
A bank guarantee ensuring seller payment upon presentation of compliant documents (governed by UCP 600).
How does a letter of credit (LC) function?
The issuing bank commits to pay the seller once documents proving shipment and compliance are presented
What role do inspection certificates play in international trade?
They verify that the goods meet contractual specifications and are required in many trade finance transactions.
What are the three main risk transfer rules under the CISG?
Article 67 (Risk passes when goods handed to carrier)
Article 68 (Goods in transit rule)
Article 69 (Goods placed at buyer’s disposal)
How does the CISG address frustration of contract?
Unlike English law, it suspends obligations rather than discharging them entirely (Article 79).
Can parties incorporate trade usages into their contracts under the CISG?
Yes, Article 9 states that trade usages known to both parties are considered part of the contract.
When does a contract become binding under the CISG?
When an acceptance becomes effective, which occurs upon receipt unless otherwise agreed (Article 18).
What is the main principle behind price reduction under the CISG?
A: If goods are non-conforming, the buyer may proportionally reduce the price (Article 50).
What is the primary remedy for late delivery under the CISG?
The buyer may avoid the contract if the delay constitutes a fundamental breach (Article 49).
How does the CISG handle contract termination?
Termination (avoidance) is possible for fundamental breach or non-delivery (Articles 49 & 64).
What is the key principle behind Article 35 of the CISG?
It establishes that goods must conform to the contract in terms of quantity, quality, description, and packaging.
How does the CISG handle partial delivery?
The buyer may seek remedies for the undelivered portion or terminate if it amounts to a fundamental breach (Article 51).
What happens if a buyer fails to pay under the CISG?
The seller may claim damages, require performance, or terminate the contract (Articles 61-64).
What is the role of promissory notes in trade finance?
They serve as formal debt instruments ensuring delayed payment security.
What happens if the seller delivers excess goods under the CISG?
The buyer can accept or reject the excess quantity (Article 52).
What is the duty to mitigate damages under the CISG?
The injured party must take reasonable steps to limit their loss (Article 77).
Under the CISG, can a seller correct a defective document?
Yes, if done within a reasonable time without causing significant inconvenience (Article 34).
What happens if a party fails to mitigate losses under the CISG?
Their damages claim may be reduced (Article 77).
How does the CISG treat loss of profit in damages claims?
Lost profits are recoverable if foreseeable at contract formation (Article 74).
What is the importance of the Hague Conventions of 1964?
They were early efforts at unifying international sales law, leading to the CISG.
Does the CISG cover consumer sales?
No, it applies only to commercial transactions (Article 2(a)).
How does the CISG treat trade customs?
Parties are assumed to have incorporated widely recognized trade usages (Article 9).
Under the CISG, can a buyer force the seller to deliver?
Yes, but only if specific performance is a permitted remedy in the seller’s legal system (Article 46).
What is the CISG’s stance on price determination?
If the contract is silent, the price is the usual market rate (Article 55).
Can a buyer reject an early delivery under the CISG?
Yes, unless they agree to take early delivery (Article 52).
What role does UNCITRAL play in the CISG?
It promotes and oversees its interpretation and application.
How does the CISG define ‘goods’?
The CISG does not define ‘goods,’ leading to debates over inclusion of software and digital assets
What happens if goods are sold while in transit under the CISG?
Risk passes to the buyer at the time of contract conclusion, unless otherwise agreed (Article 68).
What remedies does a seller have under the CISG if a buyer fails to take delivery?
The seller may claim damages or terminate the contract if it constitutes a fundamental breach (Articles 61-64).
How does the CISG treat the issue of contract formation in relation to counter-offers?
A reply modifying the offer is a rejection and counter-offer, unless changes are immaterial (Article 19).
What does the CISG say about force majeure and contract performance?
Article 79 exempts a party from liability if performance is prevented due to an unforeseeable and uncontrollable impediment.
