CISG (UN Convention on Contracts for the International Sale of Goods)

The United Nations Convention on Contracts for the International Sale of Goods (CISG) is a unified international sales contract law formulated under the auspices of the United Nations Commission on International Trade Law (UNCITRAL) in 1980 and entered into force in 1988. China is one of the contracting states. The CISG applies to contracts for the sale of goods between parties whose places of business are in different contracting states. It applies automatically unless the parties expressly exclude it. It mainly governs the formation of the contract, the rights and obligations of the buyer and seller, and remedies for breach of contract, but it does not deal with the validity of the contract, the transfer of ownership, or product liability. Unlike the International Commercial Terms (Incoterms), the CISG is a legal convention, whereas Incoterms are trade usages used to determine delivery, transfer of risk, and allocation of costs. The CISG is also different from the Principles of International Commercial Contracts (PICC), as the PICC are soft law and not legally binding. Foreign trade practitioners should note: if they wish to apply the CISG, no special provision in the contract is required; if they wish to exclude it, they must expressly state that "the CISG does not apply." In addition, the CISG allows the parties to derogate from its provisions or vary their effect.