I. Introduction
The United Nations Convention on Contracts for the International Sale of Goods (CISG), also known as the Vienna Sales Convention, was adopted on April 11, 1980, and entered into force in January 1988. As of July 2024, 97 countries are parties to the CISG. Signed by Turkey on July 7, 2010, the convention became part of domestic law on August 1, 2011. The CISG was established to harmonize the legal systems of different countries in resolving commercial disputes and to set common rules for international sales of goods. The main subjects regulated under the convention include the formation and interpretation of contracts, the rights and obligations of the buyer and seller, remedies for breach of contract, transfer of risk in sales, and other general provisions.
II. Scope of the CISG
The CISG, currently accepted by over 90 countries, applies under certain conditions. The first requirement, as outlined in the first article of the convention, is the international character of the contract. This means that for the CISG to be applicable, the businesses of the parties involved in the sales contract must be located in different countries, or their habitual residences must be in different countries if they lack a business location. However, this alone is not sufficient; the countries of these parties must also be contracting states of the CISG. If one party is from a contracting state and the other is not, the CISG cannot be directly applied. Nevertheless, the principle of freedom of contract allows parties to agree that the CISG will govern their dispute.
The application of the CISG can be examined under the following headings:
A. International Sales: The CISG applies only to international sales where the parties’ places of business are in different countries. To determine if the parties’ businesses are in different countries, their places of business must be specified at the time of the contract. If a party has multiple places of business, the place most closely related to the contract and its performance, known or contemplated by the parties at the time of the contract, is considered (CISG 10/a). If a party has no place of business, their habitual residence is considered (CISG 10/b).
B. Contracting States: The CISG applies if at least one of the countries where the parties’ businesses are located has accepted the CISG. If both parties are from countries that have accepted the CISG, the contract is automatically subject to the CISG. However, if only one party is from a contracting state and the other is not, the CISG can still be applicable if the legal system chosen for the contract recognizes the CISG.
C. Specific Choice: Parties can explicitly exclude the CISG or modify certain provisions in their contract. In this case, the application of the CISG depends on the parties’ agreement. Parties can completely exclude the CISG or decide not to apply certain provisions.
III. Coverage of the CISG
Although the CISG uses the term “goods,” it does not provide a detailed definition. However, it is clear from the provisions of the convention that it applies only to movable goods. The inclusion of intangible goods like software technologies within the scope of the CISG is debated in the doctrine.
The first set of exclusions is found in Article 2 of the convention. According to this article, the CISG does not apply to the sale of goods bought for personal, family, or household use. Other exclusions include sales by auction, sales by authority of law, stocks, shares, investment securities, negotiable instruments, money, ships, vessels, hovercraft, aircraft, and electricity sales.
Under Article 3, contracts involving the production or supply of goods are covered by the CISG. Whether mixed contracts fall under the CISG depends on the nature of the contract; the sales aspect must be predominant for the CISG to apply.
To summarize the subject matter of the CISG:
A. Definition of Goods: The CISG applies only to the sale of movable goods. Real estate, ships, aircraft, and electricity are excluded. Additionally, goods bought for personal use and auction sales are not covered by the CISG.
B. Sales Involving a Service Element: Although the CISG primarily governs the sale of goods, if a contract involves a significant service element, the applicability of the CISG may be limited. For example, if the sale of machinery includes significant maintenance and repair services, the CISG may not apply if the service element is dominant.
C. Commercial Sales: The CISG applies to commercial sales of goods. Thus, personal or family use sales do not fall under its application. Determining whether a contract is for commercial purposes depends on the parties’ intentions and the nature of the contract.
D. Scope of the Contract: The CISG covers the contract’s formation, the parties’ rights and obligations, delivery of goods, defective goods and claims, breach of contract, and legal remedies. The rules set by the CISG play a crucial role in resolving disputes that may arise between parties.
IV. Conclusion
The CISG is a significant international convention governing international sales of goods. Its scope and coverage depend on the countries where the parties’ businesses are located and the terms of the contract. The CISG aims to make international trade more orderly and predictable, reducing legal disputes between parties. However, there are some difficulties and uncertainties in the application and interpretation of the CISG.
Understanding the provisions and applicability of the CISG helps parties involved in international trade establish more secure and effective commercial relationships.