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What is the United Nations Convention on Contracts for the International Sale of Goods (CISG)?

By Venus D.
Updated May 23, 2024
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The United Nations Convention for Contracts on International Sale of Goods (CISG) is an international trade agreement adopted in 1980 at the Vienna Convention for the International Sale of Goods. Its purpose is to eliminate any ambiguity caused by different domestic laws concerning the international sales of goods. Through this agreement, international trade becomes increasingly hassle-free, and the potential for disputes is reduced. The CISG applies to contracts between companies located in different countries. Over two-thirds of the world’s countries have adopted this agreement.

The Convention for the Uniform Law of International Sales (ULIS) and the Convention for the Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF) were adopted in previous years, but were not accepted by many countries. The United Nations Commission on International Trade Law (UNCITL) received feedback indicating the lack of support for these agreements. Common reasons provided for this lack of support included the material deficiencies specified within the contracts, the lack of participation on the part of European countries in the ratification process, and the fact that the United States had not ratified either of the two conventions. Since the contracts were not widely accepted, the United Nations Commission on International Trade Law (UNCITRL) went on to use both ULIS and ULF as the basis for CISG.

ULIS and ULF were also criticized because they were too obscure. CISG is noted for its simplicity and was ratified by the United States in 1988, which in turn prompted other countries to ratify the convention. The laws within CISG supersede domestic trade laws. Even if CISG is not mentioned specifically within a contract between two companies in countries that have ratified the convention, the companies are bound by the agreement. In order to have parts of the convention excluded, the contract has to explicitly mention the convention or the parts of it that do not apply.

One of the main benefits of CISG is its unified code of rules and regulations, making importing and exporting and other facets of international trade easier. Instead of dealing with the domestic laws for international trade in several foreign countries, companies can readily apply CISG. The convention is also a great way to build trust. Domestic laws within a foreign country can be interpreted in different ways, while the interpretations of CISG are static.

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Discussion Comments
By anon954728 — On Jun 03, 2014

What are the consequences of doing business with someone who isn't a member of CISG?

By tkdrown — On Oct 23, 2013

What are the consequences of doing business with someone who isn't a member of CISG?

By anon259083 — On Apr 04, 2012

When a party is not the contracting State, and the contract does not state the jurisdiction and which state law to apply, when a party has to claim from another, where and which law applies?

By serenesurface — On Jun 12, 2011

@turquoise-- The CISG is a self-executing treaty, so I don't think that national governments need to do anything to make it applicable.

We also don't need to inquire whether US companies are using it, because they have no other choice. If they are not using parts of it, that will be stated in their contracts as the article mentioned. And the CISG is a very efficient treaty, it is benefiting companies, helping them grow and increasing their business. So I think that all US companies would gladly abide by it.

By turquoise — On Jun 12, 2011

So how does the application of CISG work domestically? I understand that when it was signed, it became applicable to all the countries that adopted it. But then those countries needed to make some legal changes back home to make it work right?

U.S. has adopted the CISG as well and I've honestly never heard of it being referred to in the media. I also don't think that any legal changes have been made to accommodate the convention.

So how do we know that US companies are using it? Does the UN oversee the trade that US companies engage in themselves? Doesn't the US need to be doing that?

By candyquilt — On Jun 10, 2011

I think that developing countries have benefited from this convention a lot.

I think when it comes to transnational trade between a developing and developed country, the developing country tends to get the short-end of the deal. Or they may not be as aware of their legal rights in these transactions.

I think that the CISG has made fair and equal treatment of all transnational companies possible because they all have to follow the same rules and regulations.

By anon14552 — On Jun 19, 2008

Purchase & sales tariff is same in purchase invoice & sales invoice

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