UNITED NATIONS CONVENTION

ON CONTRACTS FOR THE

TOPIC PAGE NO.

Structure of CISG 4

Significant Provisions of CISG 5

A Contract Of International Sale 7

Formation of International 8
Contract of Sale

Obligation Of The Seller 11

Obligations Of The Buyer 16

Breach Of The Contract 18

Damages 21

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 INTRODUCTION
The United Nations Convention on Contracts for the International Sale of Goods (CISG) has

been recognized as the most successful attempt to unify a broad area of commercial law at the

international level. The Convention was prepared by the UNCITRAL and adopted by a

diplomatic conference on 11th April, 1980.

The preparation of a uniform law for the international sale of goods began in 1930 at the

International Institute for Unification of Private Law (UNIDROIT) in Rome. After a long

interruption in the work as a result of the Second World War, the draft was submitted to a

diplomatic conference in Hague, in 1964, which adopted two conventions, one on the

international sale of goods and the other on the formation of contracts for the international sale of

goods.

The CISG is the result of a legislative effort that started at the beginning of the twentieth

century. There was widespread criticism of the provisions of two conventions of Hague

conference. As a result, one of the first tasks undertaken by UNCITRAL on its origin in 1968

was to enquire of States whether or not they intended to adhere to Hague conventions and the

reasons for their positions. On the basis of responses received, UNCITRAL decided to study the

two conventions to ascertain which modifications might render them capable of wider

acceptance by countries’ different legal, social and economic systems.

The resulting text provides a careful balance between the interests of the buyer and of the seller.

It has also inspired contract law reform at the national level. he self-executing treaty aims to

reduce obstacles to international trade, particularly those associated with choice of law issues, by

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creating even-handed and modern substantive rules governing the rights and obligations of

parties to international sales contracts.

STRUCTURE OF CISG
The Convention is divided into four parts.

Part I deals with the scope of application of the convention and the general provisions.

Part II contains the rules governing the formation of contracts for the international sale of goods.

Part III deals with the substantive rights and obligations of buyer and seller arising from the

contract.

Part IV contains the final clauses of the convention concerning such matters as how and when it

comes into force; the reservations and declarations that are permitted and the application of the

convention to international sales where both States concerned have the same or similar law on

the subject.

The CISG governs international sales contracts if (1) both parties are located in Contracting

States, or (2) private international law leads to the application of the law of a Contracting State

(although, as permitted by the CISG (Article 95), several Contracting States have declared that

they are not bound by the latter ground). The autonomy of the parties to international sales

contracts is a fundamental theme of the Convention: the parties can, by agreement, derogate from

virtually any CISG rule, or can exclude the applicability of the CISG entirely in favor of other

law. When the Convention applies, it does not govern every issue that can arise from an

international sales contract: for example, issues concerning the validity of the contract or the

effect of the contract on the property in (ownership of) the goods sold are, as expressly provided

in the CISG, beyond the scope of the Convention, and are left to the law applicable by virtue of

the rules of private international law (Article 4). Questions concerning matters governed by the

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Convention but that are not expressly addressed therein are to be settled in conformity with the

general principles of the CISG or, in the absence of such principles, by reference to the law

applicable under the rules of private international law.

SIGNIFICANT PROVISIONS OF CISG

Among the many significant provisions of the CISG are those addressing the following

matters:

– Interpretation of the parties’ agreement;

– The role of practices established between the parties, and of international usages;

– The features, duration and revocability of offers;

– The manner, timing and effectiveness of acceptances of offers;

– The effect of attempts to add or change terms in an acceptance;

– Modifications to international sales contracts;

– The seller’s obligations with respect to the quality of the goods as well as the time and place

for delivery; 

– The place and date for payment;

– The buyer’s obligations to take delivery, to examine delivered goods, and to give notice of any

claimed lack of conformity; 

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– The buyer’s remedies for breach of contract by the seller, including rights to demand delivery,

to require repair or replacement of non-conforming goods, to avoid the contract, to recover

damages, and to reduce the price for non-conforming goods;

– The seller’s remedies for breach of contract by the buyer, including rights to require the buyer

to take delivery and/or pay the price, to avoid the contract, and to recover damages;

– Passing of risk in the goods sold;

– Anticipatory breach of contract;

– Recovery of interest on sums in arrears; 

– Exemption from liability for failure to perform, including force majeure;

– Obligations to preserve goods that are to be sent or returned to the other party.

The CISG also includes a provision eliminating written-form requirements for international sales

contracts within its scope – although the Convention authorizes Contracting States to reserve out

of this provision, and a number have done so. The CISG also includes “Final Provisions”

addressing such matters as ratification, acceptance, approval and accession; the interplay

between the CISG and other overlapping international agreements; declarations and reservations;

entry-into-force dates; and denunciation of the Convention.

No special tribunals were created for the CISG; it is applied and interpreted by the national

courts and arbitration panels that have jurisdiction in disputes over transactions governed by the

Convention. To achieve its fundamental purpose of providing uniform rules for international

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sales, the Convention itself requires that it be interpreted with a view to maintaining its

international character and uniformity. To that end, special research resources, often consisting

of databases available free of charge through the Internet, provide access to materials designed to

foster uniform international understanding of the rules of the CISG. These resources, including

several developed and maintained by UNCITRAL in the six official languages of the United

Nations, allow access to court and arbitral decisions applying the CISG from around the world,

the travaux préparatoires of the CISG, and commentary on the Convention by a global

community of scholars.

A CONTRACT OF INTERNATIONAL SALE OF GOODS

A Contract of International Sale is defined by the Convention as a contract of sale of goods

entered into by parties whose places of business are in the territories of “different States” in each

of the following cases:

(1) Where the contract involves the sale of goods which are at the time of the conclusion of

the contract in the course of carriage or will be carried from the territory of one State to

the territory of another;

(2) Where the acts constituting the offer and the acceptance have been affected in the

territories of different States;

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 (3) Where the delivery of the goods is to be made in the territory of a State other than that

within whose territory the acts constituting the offer and the acceptance have been

affected.

Where a party to the contract does not have a place of business, the habitual residence of the

party shall determine his situs. The nationality of the parties is irrelevant for the determination of

the international character of the contract. Further, the contracts of international sale are the

contracts of sale regardless of the commercial or private character of the parties.

The Convention, according to Article 2 of CISG, does not apply to the sales:

(1) Of goods bought for personal, family or household use, unless the seller, at any time

before or at the conclusion of the contract, neither knew nor ought to have known that the

goods were bought for any such use;

(2) By auction;

(3) On the execution or otherwise by the authority of law;

(4) Of stocks, shares, investment securities, negotiable instruments or money;

(5) Of ships, vessels, hovercraft or aircraft;

(6) Of electricity

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FORMATION OF AN INTERNATIONAL CONTRACT

OF SALE

 PROPOSAL/OFFER: A proposal for concluding a contract addressed to one or more

specific persons constitutes an offer if it is sufficiently definite and indicates the intention

of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it

indicates the goods and expressly or implicitly fixes or makes provision for determining

the quantity and the price. A proposal other than one addressed to one or more specific

persons is to be considered merely as an invitation to make offers, unless the contrary is

clearly indicated by the person making the proposal.

 REVOCATION: An offer becomes effective when it reaches the offeree. An offer, even

if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at

the same time as the offer. (Article 15). Until a contract is concluded an offer may be

revoked if the revocation reaches the offeree before he has dispatched an acceptance.

However, an offer cannot be revoked:

(a) if it indicates, whether by stating a fixed time for acceptance or otherwise, that is

irrevocable; or

(b) if it was reasonable for the offeree to rely on the offer as being irrevocable and the

offeree has acted reliance on the offer. (Article 16)

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(c) An offer, even if it is irrevocable, is terminated when a rejection reaches the offeree.

(Article 17).

 ACCEPTANCE: A statement made by or other conduct of the offeree indicating assent

to an offer is an acceptance. Silence or inactivity does not in itself amount to acceptance. An

acceptance of an offer becomes effective at the moment the indication of assent reaches the

offeror. An acceptance is not effective if the indication of assent does not reach the offeror

within the time he has fixed or, if no time is fixed, within a reasonable time, due account

being taken of the circumstances indicate otherwise.

However, if by virtue of the offer or as a result of practice which the parties have established

between themselves or of usage, the offeree may indicate assent by performing an act, such

as one relating to the dispatch of the goods or payment of the price, without the notice to the

offeror, the acceptance is effective at the moment the act is performed, provided that the act

is performed within the period of time laid down.

 COUNTER OFFER: A reply to an offer which purports to be an acceptance but

contains additions, limitations or other modifications is a rejection of the offer and

constitutes a counter offer.

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 DURATION OF TIME OF ACCEPTANCE OF OFFER: A period of time of

acceptance fixed by the offeror in a telegram or a letter begins to run from the moment

the telegram is handed in for the dispatch or from the date shown on the letter or, if no

such date is shown, from the date shown on the envelope. A period of time for the

acceptance fixed by the offeror by telephone, telex, etc. begins to run from the moment

that the offer reaches. Official holidays or non-business days occurring during the period

for the acceptance are included in calculating the period. However, if a notice of

acceptance cannot be delivered at the address of the offeror on the last day of the period

because that day falls on an official holiday or non-business day at the place of business

of the offeror, the period is extended until the first business day which follows.

 WITHDRAWAL OF ACCEPTANCE: An acceptance may be withdrawn if the

withdrawal reaches the offeror before or at the same time as the acceptance would have

become effective.

 CONCLUDING CONTRACT: A contract is concluded at the moment when an

acceptance of offer becomes effective in accordance with the provisions of this

Convention.

 THE ACTUAL PERFORMANCE OF THE CONTRACT

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 OBLIGATIONS OF THE SELLER

Art. 30 of the CISG was designed as an introduction to the essential obligations of the seller.

These are summarized as: delivery of goods, handing over any documents relating to them and

transfer of property in the goods. The obligation of conformity is not made explicitly in this

Article; however, its concept is implied by the requirement of this obligation: "as required by the

contract and this convention".

 DELIVERY OF GOODS: Delivery is defined in the CISG as the transfer of possession

of goods by handing them over or even by placing them at the buyer's disposal. Delivery

can be defined as "the active transportation of the goods to the buyer". This definition

focuses on the actual or physical delivery rather than constructive means such as delivery

by document. The approach of the CISG Articles related to delivery intends to describe

how the seller can perform their obligations, rather than whether or not delivery actually

takes place. Therefore, delivery may involve some action by the seller, such as

transferring the goods to a carrier or at the buyer's place of business. On the other hand,

delivery may not need any positive action from the seller if for instance it is the buyer's

duty to come and collect the goods. In this case, the duty of the seller is to place the

goods at the buyer's disposal. It can be suggested that “delivery” is a broader term which

can be used to express the obligation of the seller as a party in the contract without any

additional pacification of how this obligation is to be performed or whether or not the

seller should take positive action.

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Since the CISG takes a clearly practical approach to the meaning of “delivery”, it takes into

consideration the seller's performance of the duty of delivery by placing the goods as

required by the contract and the CISG is enough for the purpose of fulfilling the obligation of

delivery, even where the goods are defective or do not meet the condition of conformity. On

this ground, defective delivery will be considered only under the obligation of conformity.

If the seller is not bound to deliver the goods at a particular place, then he is obliged to hand

the goods to the first carrier for the transmission to the buyer or to place the goods at the

buyer’s disposal. (Article 31).

 DELIVERY IN A REASONABLE TIME: A final gap filling provision permits the

seller to meet his obligation with respect to the time of delivery by delivery within a

reasonable time after the conclusion of the contract. The final paragraph of Art. 33

intends to cover cases that do not fall into the above circumstances. It states that: "(c) in

any other case, within a reasonable time after the conclusion of the contract". Reasonable

time is the time of delivery in these cases and it begins to run after the conclusion of the

contract. In order to determine "reasonable time" for performing delivery, acceptable

commercial conduct and practice in relation to similar circumstances as the case should

be introduced.

 HANDING OVER OF DOCUMENTS: Documents play an important role in the sale of

goods. Art. 30 includes the obligation of handing over documents as one of the main

seller's obligations. The approach of the CISG to delivery suggests that the obligation of

the seller to deliver the goods is independent of the obligation of the tender of documents

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 relating to the goods. Thus, Art. 34 addresses the handing over obligation separately from

the obligation of delivery of the goods, which is dealt with under Arts 31, 32 and 33. In

this regard, the seller's duties can be confined to the tender of documents. With regard to

the "handing over of documents" the CISG contains only one; very short rule (Art. 34).

This clause neither provides a definition of the required documents nor lists them. It

simply requires the seller to deliver the documents related to the goods. So the documents

which the seller has to hand over should be provided by the contract, by the chosen

clause of INCOTERMS, or by usages.

 CONFORMITY OF GOODS: In the CISG the buyer's expectations regarding the

features of goods are defined in Arts. 35 and 36 these include the parties' agreement, a

series of objective standards by which performance must be judged, and the period within

which these requirements apply. Other CISG provisions concerning conformity provide

procedures that apply when the goods are not in conformity; the seller's right to cure (Art.

37), as well as the buyer's excuse for failing to notifying the seller (Art. 44). In order to

determine whether the delivered goods are in conformity, a significant factor is the

contractual agreement. Therefore, standards of conformity are not based, in the first

place, on objective elements of quantity, quality and description, but rather on the

requirements of the parties in their contract. In this respect, the determination of

conformity in Art. 35 begins with the expressed contractual requirement. But this

provision does not contain any express rule on the allocation of the burden of proof.

Neither does it regulate explicitly who has to prove the relevant standard for conformity,

nor who has to prove that the goods were not conforming to the applicable standard at the

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 relevant time. The first part of Art. 35 makes this clear as follows: “(1) the seller must

deliver goods which are of the quantity, quality and description required by the contract

and which are contained or packaged in the manner required by the contract.” This article

requires the seller to deliver goods of the quantity, quality and description "required by

the contract."

 DELIVERY TO THIRD PARTY: The CISG regulates only the relations between the

seller and the buyer, not those between the buyer and the third party. In addition to the

seller's obligation in Art. 30 to deliver the property of the goods, the seller must also

deliver goods without there being any right or claim from third parties. Art. 41 provides

that: “The seller must deliver goods which are free from any right or claim of a third

party, unless the buyer agreed to take the goods subject to that right or claim.” However,

if such right or claim is based on industrial property or other intellectual property, the

seller's obligation is governed by article 42. The scope of this article is limited to

protecting the buyer's rights, in transferring the ownership of the goods, against the seller.

Therefore, the right of the buyer as a bona fide purchaser against the third party and the

nature of the property, which has been transferred, are not governed by the CISG.‘Thus,

issues related to the transfer of the title in goods and their acquisition in good faith or free

from hindrances are not dealt with by the CISG. Such instances are governed by domestic

law, pursuant to the private international law of the jurisdiction. Therefore, the applicable

law must be checked to determine whether or not the seller has fulfilled the obligations of

Art. 41. In addition, if the third party right or claim is based on industrial or other

intellectual properties, the relevant article is Art. 42. Art. 41 provides protection of the

buyer's right to transfer the ownership of the goods when the seller is not able to do so for

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 any reason, such as selling goods which they do not own, or when the goods sold are

encumbered by a third party right. Thus, the third party right must have an impact on the

buyer.

OBLIGATIONS OF THE BUYER

and this Convention. In addition, the buyer is obligated to examine the goods within as short as a

period as is practicable in the circumstances, and this examination may be deferred until shipped

goods arrive at their destination. (Article 38).

 PAYMENT OF THE PRICE: The CISG regulates international sale of goods, which

can be defined as a contract by which the seller agrees to deliver the goods and transfer

the property in the goods to the buyer, which for its part agrees “to pay the price for the

goods and take delivery of them". This approach is consistent with the understanding that

the seller and the buyer have reciprocal obligations toward concluding sales contracts. 

According to Article 6 CISG a buyer is obliged to pay the purchase price at the deadline

agreed and to take delivery of the goods. Where there is no express agreement in the

contract between the parties, Article 53 CISG provides that the “buyer must pay the price

for the goods and take delivery of them as required by the contract and this Convention".

Proof of delivery is established by means of seller testimony, or invoices as copies of an

export bill of lading, as well as communications and/or agreement between the parties.

Courts have concluded that this evidence in the field of commerce and general life

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 experiences confirms that it is very likely that the buyer received exactly the goods that

were ordered and for which the invoice was sent.

Furthermore, it can be said a buyer’s obligation to pay the price of the goods also includes

taking such steps and complying with such formalities as may be required under the express

terms of the contract as well as any laws and regulations to enable payment to be made

(Article 54 CISG). As such, failure to establish a letter of credit, make payment, or comply

with terms of a contract is failure by the buyer to meet its primary “obligation to pay the

price" as prescribed by Article 54 CISG.

 TAKING DELIVERY: In parallel with a buyer’s duty to pay, a buyer also has a duty to

take delivery. This obligation consists in carrying out all the acts that could reasonably be

expected of a buyer in order to enable the seller to make delivery and in taking over the

goods. Further, preparatory measures ‘such as the provisions of plans or data, are also

part of the cooperation required of the buyer since ultimately they serve to enable the

seller to make delivery". Should the buyer fail to possession of the goods when delivered,

the seller is required to care for the goods until the buyer takes delivery. The buyer is

thereafter liable to reimburse the seller for all reasonable expenses relating to the upkeep

of the goods (Articles 85 & 87 CISG).

 BUYER’S OBLIGATION UPON DELIVERY: Pursuant to the provisions of the

CISG, a buyer must examine or have goods examined within a period as short as practical

under the circumstances and if defects are found it must notify the seller about them

within a reasonable period of time, exactly stating the kind of deficiency (Article 38(1) &

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 39(1) CISG). The CISG requires “examination and notice to be distinguished and kept

separate, even when the facts of the case would permit them to be combined into a single

period for giving notice". Further it must be stressed that “the close link between Articles

38 and 39 CISG does not, however, lead to the conclusion to recover for defective goods,

the buyer must previously inspect them. In fact, lack of inspection by the buyer does not

necessarily involve the loss of the right to rely on the lack of conformity of the goods, as

long as the defects are notified (to the seller) in a timely manner, that is, before ‘a

reasonable period’ has elapsed". Finally, it must be noted, “It is up to buyer, who

received the goods without reservation, to provide evidence of the alleged

nonconformity," as well of the fact that this nonconformity existed before the risk passed

to the buyer. Where the buyer has failed to provide evidence and notice of non-

conforming goods, he will lose the right to rely on lack of conformity.

BREACH OF CONTRACT
The concept of fundamental breach is central to the Convention of Contract for the International

Sale of Goods. Article 25 provides:

“A breach of contract committed by one of the parties is fundamental if it results in such

detriment to the other party as substantially to deprive him of what he is entitles to expect under

the contract, unless the party in breach did not foresee and a reasonable person of the same kind

in the same circumstances would not have foreseen such a result.”

REMEDIES FOR BREACH OF CONTRACT

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Understanding the rules on remedies and uniform application of them are considered as the

backbone of unifying the law of sale internationally. ‘The remedial system of the CISG provides

a separates action on remedies for each party set forth after the obligations of the other party and

then it followed by the common provisions for both parties. This study attempts to explore the

section which specifically looks at buyer remedies to provide a clear understanding of their

approach. For the seller's breach of contract obligations, Art. 45 summarize all the buyer's

remedies and the links between them:

(1) If the seller fails to perform any of his obligations under the contract or this Convention, the

buyer may:

(a) exercise the rights provided in articles 46 to 52;

(b) claim damages as provided in articles 74 to 77.

(2) The buyer is not deprived of any right he may have to claim damages by exercising his right

to other remedies.

(3) No period of grace may be granted to the seller by a court or arbitration tribunal when the

buyer resorts to a remedy for breach of contract.

As the discussion of Article 45(1) of the Convention in the UNCITRAL Digest of Case Law on

the CISG indicates, this provision is as much informational as substantive. It is designed as an

overview or guide to the remedies available to a buyer for breach by the seller. For example,

Article 45(1)(a) merely catalogues the performance-oriented remedies (as opposed to damages)

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available to an aggrieved buyer, and Article 45(1)(b) provides guidance through the damage

measures available when the seller breaches.

As the UNCITRAL Digest points out, tribunals apparently have had little difficulty with the

substantive aspects of Article 45(1). Several decisions rendered after the Digest was assembled

have confirmed what a large number of decisions cited in the Digest had already recognized: that

a buyer's right to claim damages for a seller's breach is grounded in Article 45(1)(b). Recent

decisions have cited Article 45(1)(b) as the foundation for a buyer's claim to damages for, in

particular, a seller's late delivery,430 and delivery of non-conforming goods.

The main remedies under the CISG can be divided into three basic types: specific performance,

which includes repair and the delivery of substitutes in cases of non-conformity (Art. 46);

avoidance of the contract (Art. 49); and reduction in price (Art. 50). The other provisions

referred to in the buyer's remedies section are merely supplementary rules. Art. 47 deals with an

additional period of time for performance and Art. 48 governs the right of the seller to cure

defects. Partial breaches are dealt with in Art. 51; early delivery in Art. 52(l) and the delivery of

extra quantities in Art. 52(2).

In addition, claiming damages is a supplementary remedy for both buyer and seller. Art. 45(1)

(b) forms the basis of the right of the buyer to claim damages and according to its language, the

buyer may claim damages even if the seller is not at fault for failing to perform his obligations.

The calculation of damages, and their limitations, and mitigation arc then dealt with in Arts. 74-

77.

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Under Para 45(2) it is expressly indicated that an aggrieved buyer's right to damages is

cumulative with its other remedies. Although the UNCITRAL Digest does not cite any cases that

have applied Article 45(2), it does note that, where a buyer has availed itself of other remedies,

the amount of damages the buyer may recover "depends on which other remedy has been

resorted to by the buyer."

The aim of Para 45(3) is to exclude the influence of various domestic national laws. When a

buyer "resorts to a remedy for breach of contract," Article 45(3) forbids a court or arbitral

tribunal to grant the seller a "period of grace." Once again, the Digest does not cite any cases

applying Article 45(3). Although it does not cite Article 45(3), a very recent case may in fact

illustrate the application of this rule it is consistent with the rule. In the decision, the court held

that, under Article 45(1)(b), a buyer was entitled to damages for the seller's late delivery without

requiring the buyer to have given the seller a "reminder" (referring, presumably, to a reminder

that delivery was past due).

As stated above, the CISG system of remedies covers all failures, and thereby each remedy can

serve every breach of the obligations even if the failures differ in nature from one another.

However, in order to be practically applied, some remedies require more criteria to be satisfied

than others.

DAMAGES
In addition to contract remedies, the seller can claim damages from the breaching party as

provided in Articles 74 to 77.

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RESTITUTION: In addition to money damages, if the contract has been avoided, the buyer or

seller who has performed the contract may claim restitution of an amount equivalent to whatever

he has supplied or paid under the contract. (Article 81).

If the buyer has received the goods and is unable, due to his own act or omission, to make

restitution of them in substantially the condition he received them, he loses the right to declare

the contract avoided. (Article 82).

The buyer does not lose the right to avoid, however, if the goods have perished or deteriorated,

as a result of the buyer’s exercise of his right of inspection, or if the goods have been sold in the

normal course of business or have been consumed or transformed by the buyer in the course of

normal use before he discovered or ought to have discovered the lack of conformity. [Article

82(2)(e)]. Finally, in making restitution, the buyer must account to the seller for all benefits

which he has derived from the goods.

If he cannot return the goods under an avoided contact, he must account to the seller for the

disposition of the goods. Similarly, the seller who is bound to refund the price of goods in

restitution must pay interest from the date on which the price was paid. [Article 84(1)].

The remarkable success of the Convention can be seen as a major effort at unification of

international trade law across economic, legal, developmental, and political barriers. The goal of

the Convention is to reduce the uncertainty inherent in contracting for the sale of goods among

international traders who do not understand or accept one another’s substantive trade law.

Reducing uncertainty in trade law should reduce the cost of international transactions and

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promote efficient world trade. To this end, the Convention established a common body of

national law for certain international sales transactions. It also provides a common basis for

interpreting contract provisions and it provides substantive law for ‘filling the gaps’ left by

contract drafters.

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