The Parties are often unaware that the UN Convention on the International Sale of Goods governs cross-border commercial transactions. This also applies should the Contracting Parties have not explicitly agreed to the application of the UN Convention on the International Sale of Goods. The UN Convention, an international treaty, (United Nations Convention on Contracts for the International Sale of Goods, or CISG) applies automatically, unless the Parties have contractually precluded the effectiveness of CISG.
The Contracting States of the UN Convention on the International Sale of Goods are the states which have ratified the treaty; currently more than 70 countries have adopted the UN Convention. The Federal Republic of Germany ratified the treaty in 1989. The list of the Contracting States of the UN Convention can be found under www.cisg.law.pace.edu
Contract for the Purchase of Goods
A case for the application of CISG is valid, if a Contract for the Purchase of Goods was concluded by the Parties. With regard to the UN Convention, it is negligible whether or not the purchased goods already exist or must be manufactured (Manufacturing Agreement). The UN Convention is not applicable to Consumer Businesses, i.e. if the goods are discernible to be for personal use.
International Purchase Agreement
A Purchase Agreement is to be considered as an International Purchase Agreement in accordance with Art. 1 of CISG, if the Contracting Parties have subsidiaries in various Contracting States; It is important to note that the location of the subsidiary and not the nationality of the Contracting Parties is decisive. The UN Convention unceasingly applies to German based Exporters as well as Importers, if the other Contracting Party has its subsidiary in a CISG Contracting State and the UN Convention has not been effectively precluded.
The UN Convention does not replace national law concerning Contracts for the Purchase of Goods with solely national relevance, but is applicable to cross-border, international matters. For this business, the UN Convention replaces national law. National law is augmentative and valid only to those aspects, which are not regulated by the contract.
Whether or not the administering of the UN Convention is advantageous for you, or whether it is worthwhile to exclude its application, requires thorough verification of the factual and legal situation. The benefit of the application of the UN Convention is that foreign Contracting Parties can trust International Uniform Law - such as the UN Convention - rather than trust a foreign legal system. Furthermore, the UN Convention offers, for example, more individual creative possibilities. The disadvantage of the UN Convention, in contrast however, is that a German company is often more familiar with German civil and commercial regulations, than those of International Trade Law.
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