United States: The Law That Dare Not Speak Its Name In The USA: The CISG

Last Updated: September 8 2015
Article by Leonard N. Budow

Fashion is global; an often used truism which means the law applicable to a transaction involving a fashion house and a supplier, or even affiliated companies, may involve overlap with multiple countries.  The United Nations Convention on Contracts for the International Sale of Goods ("CISG") is a project of the United Nations Commission on International Trade Law designed to address this issue.  It is an attempt to create a uniform set of procedural and substantive rules for the international sale of goods.  One may say it is a revised Article 2 of Uniform Commercial Code for the international community.

The applicability1 of the CISG should obviate the concerns regarding local, jurisdictional law. So a purchaser located in California in negotiating his purchase order with a seller in China does not have to be concerned about the vagaries of Chinese law nor does the Chinese seller need be concerned about the anomalies in California law. Defaulting to the CISG permits the parties to move apace without recourse to the impediments created by different law and experiences.

However United States practitioners have been slow to adopt the CISG or to advise their clients to adapt their contracts to incorporate the CISG as applicable law.  This is at best nettlesome and to a degree a significant impediment to the expansion of trade.  A buyer in the United States of finished apparel from China should be able to arrange a negotiated contract, without an extensive negotiation or concern as to which law will apply.  But the dismal adaptation of the CISG by lawyers in the United States has been a barrier to the smooth adaption of a process facilitator effective in other jurisdictions.2

So why is it that the American bar has not jumped on the CISG bandwagon? There are five principal factors: ignorance, parol evidence, intent concerns, statute of frauds and perfect tender.

(1) Ignorance. When we speak of ignorance that relates to the actual status of the CISG in United States jurisdictions.  Many practitioners may still not realize that the CISG is United States law, not alien or foreign law. It was ratified as treaty by the Senate in 1986 and became law on January 1, 1988. This means that the CISG is American law as a self-executing treaty. For the avoidance of dout such a treaty is also the substantive law of the separate states.

Unless one affirmatively opts out of the CISG or  if one merely designates the choice of law as being any particular state, such as New York or California, in fact the CISG most likely will apply.3  For a party to opt out the language in the Contract should first state that "The parties agree that United Nations Convention on Contracts for the International Sale of Goods shall not apply to this contract and the transactions described herein; the laws of the State of ____ (or country of ________) shall apply." Unless the ritualistic formulation precedes the desired applicable law, the CISG may apply.

Most importantly, there are also cases in which two US domiciled corporations may enter into an agreement which can subject to the CISG. An example is when the principal business situs of contracting entities are in differing countries which are signatories to the CISG.  Therefore and inadvertently one may be subject to the CISG based upon an illusion created by the domicile of the parties to the contract.

(2) Parol Evidence.  Aside from just plain ignorance there are some substantive objections. US Courts applying the UCC will bar evidence that contradicts the specific terms of contract. The parol evidence rule4 presumes that a written contract encapsulates the parties' complete agreement. Therefore, under the UCC, oral evidence cannot be used to contradict the terms of a written contract.

However, such customary parol evidence rules do not apply when interpreting contracts governed by CISG5 and this causes some practitioners concern. Under the standard American parol evidence rule, in general, a writing intended by the parties to be the apotheosis of their concurrence as to the terms of their transactions cannot be varied by evidence of earlier agreements or negotiations.  So a contracting party cannot introduce evidence of negotiations that preceded the signing of the agreement. By contrast, under the CISG, when determining a party's intent, the CISG requires a courts and arbitrators to consider all relevant facts and circumstances which would include the negotiations preceding the contract execution, the course of conduct or on going practices of the parties, and any post contract actions of the parties.  This ability to traverse the four corners of a contract likely gives many American practitioners agita, that the unambiguous words of the contract might be varied by the parties' pre- or post-signing conduct.  However, such a rule could be useful if the course of negotiations were illuminative of the parties' intent, perhaps more so than a form contact, and when a client wishes to modify the terms of the agreement based on pre-signing negotiations. This is a judgment call dependent on the nature of one's client and the types of goods in question.

(3) The Parties' Intent. Related to the parol evidence rule is the treatment of parties' subjective intent6 by the CISG7 which also gives leeway to modify the apparent terms of a contract.   If evidence exists which may be admissible due to the obviation of the parol evidence rule discussed above, if the parties intent is inconsistent with the written terms of the contract, such evidence of intent would be admissible to in effect re-write the contract8. If one is concerned about a transaction accurately reflecting the intents of the parties, this rule makes sense and is desirable; if one views a contract as a battle of forms9 with the last draft prevailing, evidence of intent is anathema.

(4) Statute of Frauds  Following these gaping holes in the finality of a contract is the lack of a statute of frauds.  Recall under the UCC, a contract for the sale for goods over $500 must be in writing to be enforceable in the US court.  The CISG does not.10  This fits in with the CISG approach which fundamentally is a search for the truth, not the formalities of a lawyerly drafted document which might be too smart by half.11

(5) Perfect Tender Rule.  The next issue of distress to some practitioners is the upending of the perfect tender rule.12 Simply put a buyer has the right to insist upon perfect and fully compliant performance under the UCC. However the CISG13 states (1) The buyer may declare the contract avoided if the failure by the seller to perform any of his obligations under the contract or this Convention amounts to a fundamental breach of contract14 (Emphasis Added).

Notwithstanding all of the foregoing an adept practitioner would nonetheless still accommodate and implement the CISG for the purpose of facilitating a client's business processes.  Using Article 6 of the CISG the practitioner may selectively opt out of the applicability of any article of the CISG15; in other words it is the acme of freedom of contract.  Using the CISG as a malleable product subject to subtle or crude adaptation can give a client the upper hand in a negotiation process. It behooves any US practitioner engaged in multi-national contracts to speak the name of the CISG to clients when drafting or amending a contract for the sale of goods.


1. To be clear the applicability itself of the CISG is dependent not on multiple nationality of parties to a contract but of the residency of those multiple parties in a contracting state to the CISG. The convention on international sale of goods disregards nationality in favor of place of business.  So we have a US company or French company with a foreign subsidiary conducting business in a non-convention contracting nation the convention will not apply. So that's an important consideration to take into account if you've got an American company and its subsidiary is located within a non-contracting party  nation state then in that event the CISG will not apply.

2. To determine if a counterparty is resident, which is the key term not nationality, in a signatory to the CISG please see http://www.cisg.law.pace.edu/cisg/countries/cntries.html

3. See  Easom Automation Systems, Inc. v. Thyssenkrupp Fabco, Corp., 2007 U.S. Dist. LEXIS 72461 (E.D. Mich. 2007)

4. See UCC 2-202

5. See CSIG Article 8(3)– In determining the intent of a party or the understanding a reasonable person would have had, due consideration is to be given to all relevant circumstances of the case including the negotiations, any practices which the parties have established between themselves, usages and any subsequent conduct of the parties. (Emphasis Added)

6. See MCC Marble Ceramic Center, Inc. v. Ceramica Nuova D'Agostina, S.p.A., 144 F. 3rd 1384 (United States, 11th Cir. 1998) which is the seminal case dealing with both intent and the parol evidence rule under the CISG.

7. See 8(1): For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.

8. See TeeVee Tunes, Inc. et al v. Gerhard Schubert GmbH  http://cisgw3.law.pace.edu/cases/060823u1.html which held "the CISG, unlike American contract law, includes no Parol Evidence rule "

9. See UCC 2-207.

10. See CISG 11– A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses.

11. See also Articles  9  "any usage to which they have agreed and by any practices which they have established between themselves" and  11: "contract of sale need not be concluded in or evidenced by writing.

12. See UCC 2-601

13. See CISG Art.49 (1)

14. Clearly for a seller the CISG provides greater protection.

15. Art. 6 states: The parties may exclude the application of this Convention or, subject to article 12, derogate from or vary the effect of any of its provisions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Leonard N. Budow
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.