What is the U.N. Convention on Contracts for the the International Sale of Goods (CISG)? And, why do so many contracts state that it does not apply?
CISG is a international treaty that sets forth a uniform set of rules to govern an international sale. It automatically applies to contracts for the sale of certain goods between parties whose places of business are in different countries and (a) both countries are contracting states (see Article 1(1)(a)), or (b) the parties choose to apply the governing law of a contracting state (see Article 1(1)(b)). As 91 countries have signed the treaty, it applies by default to many international sale agreements.
Because CISG applies by default and it would upset how the parties have negotiated their agreement, parties must state that United Nations Convention on the International Sale of Goods shall not apply to this Agreement. For example, unless specifically excluded in a sale agreement for goods between a company in the US and Germany, the CISG will apply. Moreover, because CISG is an international treaty which was ratified by the U.S. Congress, it preempts the parties' decision to use a state law as governing law.
CISG applies to tangible goods. It also can apply to intangible goods, such as computer software.
If you are involved in an international sale of goods, it would behoove you to read up the CISG and to exclude it if you do not intend your agreement to be subject to it.
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