Graduating from Obscurity: The U.N.

International Sale of
Goods Convention
By: Tom McNamara
Davis Graham & Stubbs LLP
1550 Seventeenth Street
Suite 500
Denver, Colorado 80202
Telephone: (303) 892-9400
Facsimile: (303) 893-1379
tom.mcnamara@dgslaw.com

Presented at Second Annual Florida Bar

International Litigation Update Conference
International Litigation and Arbitration Committee
International Law Section
Florida Bar Association
June 24, 2004
Boca Raton, Florida

http://www.dgslaw.com/articles/565324.pdf
Davis Graham & Stubbs LLP

The United Nations Convention on Contracts for the International Sale of Goods
has been ratified in sixty-three nations (including the U.S.) and is the international
functional equivalent of Article 2 of the Uniform Commercial Code. This article
provides an overview of the Convention, contrasts the Convention with domestic
sales law, and offers a series of practice pointers.

Sixteen years ago, the United Nations Convention on Contracts for the International Sale
of Goods (CISG or Convention )1 entered into force between the United States and
ten other nations. The CISG, a multilateral treaty that governs the rights and obligations
of parties to international sales contracts, is the international functional equivalent of
Article 2 of the Florida Uniform Commercial Code (UCC).2 The Convention was
designed to foster foreign trade by making it easier and more economical to buy and sell
raw materials, commodities, and manufactured goods through a unified legal approach.
At its inception, diplomats, scholars, and even some practitioners hailed the Convention
as a monumental achievement and notable example of international legal cooperation.
The original expectation was that the CISG would achieve rapid acceptance and
essentially supplant domestic sales laws that were not specifically tailored to international
transactions.
The actual experience during the CISGs first decade was quite different as the optimism
and promise of the early years eroded. By and large, most American lawyers were
completely oblivious to the Conventions very existence. Traders continued to use preprinted forms with typical domestic American choice-of-law provisions. Those attorneys
who actually knew about the CISG almost uniformly tried to avoid it by opting-out.
The Convention suffer[ed] from neglect, as well as ignorance and even fear.3 More
charitably, the CISGs adolescent years were characterized, at least in the United States,
by only small, incremental steps toward grudging acceptance.
However, at the sixteen-year mark, the Convention is finally starting to graduate from
obscurity. Growing from an original group of eleven countries in 1988, the Convention
is now the law in more than sixty-three nations. CISG-signatory countries account for a
staggering two-thirds of all goods moving in international trade and encompass a
majority of the worlds population. In just the last three years, U.S. courts have issued
more published opinions concerning the CISG than in the previous thirteen years
combined. The trend is worldwide. From 2001-2003, the United Nations database of
Convention case abstracts doubled.4 Scholarly literature on the CISG is now quite
comprehensive. The leading American Internet resource for CISG materials has reported
explosive growth in the number of Internet hits from 100,000 hits per month during
early 1999 to 330,000 hits per month by late 2000.5
Now, more than ever, Florida practitioners should become familiar with the CISG. A
better understanding of the Convention is important for both Florida litigation and
transactional professionals.

Business lawyers need to be aware of the CISG and its nuances to properly counsel the
increasing number of Florida clients engaged in international commerce. Litigators
should be aware that transnational commercial disputes may be governed by an entirely
unfamiliar legal regime, which may affect the substantive outcome. Further, at least
rudimentary knowledge is necessary, if for no other reason than to satisfy professional
responsibility and to avoid the Convention traps for the unwary.6
The balance of this article briefly: (1) describes the history and development of the
CISG; (2) identifies the principal signatory nations; (3) provides an overview of the
Convention; (4) presents a substantive comparison of certain important differences
between the CISG and the Florida UCC; (5) explains the application of a companion
treaty governing the limitations period for international sales of goods; and (6) offers
some practical pointers and resources for CISG issues. The articles purpose is not to
provide comprehensive information on all aspects of the CISG, but rather to highlight (at
least superficially) the emerging importance of the Convention in keeping with the
theme, Learn the CISG, Whether You Like It or Not.7
HISTORY AND DEVELOPMENT OF THE CISG

The CISG is an extraordinary example of international legal cooperation that represents

the culmination of more than fifty years of work to construct a codified lex mercatoria
for transnational sales. The Conventions origins may be traced to the late 1920s when
scholars, lawyers and traders (primarily from Western Europe) began to explore the
possibility of creating a uniform law to govern international trade.8 Draft uniform sales
laws were presented and debated from 1926 through 1939 under the auspices of the
Hague Conference on Private International Law (Hague Conference) and the
International Institute for the Unification of Private Law (UNIDROIT). Interrupted at
various intervals by world events (including World War II), these efforts continued in the
1950s and 1960s.
The Hague Conference eventually adopted three conventions governing international
sales: Convention on the Law Applicable to International Sales of Goods (June 15, 1955);
Convention on the Jurisdiction of the Selected Forum in the Case of International Sales of
Goods (April 15, 1958); and Convention on the Law Governing Transfer of Title in
International Sales of Goods (April 15, 1958).9 Only one of these treaties (the
Convention on the Law Applicable to International Sales of Goods) ever actually entered
into force (and then only among one African and eight European nations).
Although the Hague Conference efforts had been partially successful, the resulting
treaties were criticized for their primarily Eurocentric approach and failure to address the
needs of the United States, the developing countries, and Eastern Europe.10 In 1965, the
United Nations General Assembly created the United Nations Commission on
International Trade Law (UNCITRAL) to address important trade law issues on a more
global basis. The development of an international sales law was at the forefront. The
drafting and negotiation process, for what ultimately became the CISG, was quite
inclusive. The United States and more than sixty-one other nations representing quite
different legal systems (common law, civil law, and other types of legal systems)
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participated in the working groups and provided their input. Academics, corporation,
traders, diplomats, and lawyers all played a role.
UNCITRAL unanimously approved the draft CISG and referred it to the United Nations
General Assembly. The Convention was finalized at a diplomatic conference in Vienna
in 1980, where it was again unanimously approved.11 The CISG is officially plurilingual
in six languages; Arabic, Chinese, English, French, Russian and Spanish.
PRINCIPAL SIGNATORY NATIONS

Since the 1980 Vienna conference, the Convention has received ever-widening
acceptance in the international community. Nineteen nations, including the United
States, originally signed the Convention in 1980 and 1981. The United States ratified the
treaty on December 11, 1986. All but two of the original signatory countries
subsequently ratified the CISG.12 Pursuant to Article 99(1) of the CISG (which required
ratification by at least ten nations prior to its effectiveness), the Convention entered into
force and became effective on January 1, 1988, among a diverse group of eleven nations
on five continents: Argentina, the Peoples Republic of China, Egypt, France, Hungary,
Italy, Lesotho, Syrian Arab Republic, United States, Yugoslavia, and Zambia. As of
May 5, 2004, sixty-three countries (including the United States) had signed and ratified
the CISG (Contracting States). The CISG is in force with respect to most (but not all)
of the United States principal trading partners.
Regionally, the CISG has been universally adopted in North America (the United States,
Canada, and Mexico). The Convention regime has achieved acceptance in most of
Western and Eastern Europe (including the Russian Federation). The United Kingdom
and Ireland are notable European exceptions and have not ratified the CISG. Latin
America and the Caribbean are split. Although Argentina, Chile, Columbia, Cuba,
Ecuador, Peru, and Uruguay have ratified the treaty, Latin Americas largest economy,
Brazil, has not. In the Middle East, the Convention has been adopted in Egypt, Israel,
Iraq, Jordan, Lebanon, and Syria. The CISG is in effect in only eight African nations.
Similarly, the Convention has achieved mixed acceptance in Asia. The CISG is in effect
in only two (but very influential) Asian countries: the Peoples Republic of China
(including Hong Kong) and Singapore. Notably, the Republic of Korea ratified the
Convention earlier this year and the CISG will enter into force in that nation in March
2005.
While many countries have ratified the CISG, the Convention permits Contracting States
to make certain reservations at their election. The reservations are deviations from the
standard provisions of the CISG. For example, at least nine nations (mostly in Eastern
Europe and Latin America) have declared that any provisions that would permit oral
contracts do not apply in those nations. The United States and several other countries
made a reservation stating that they will not be bound by a technical CISG provision that
makes the Convention applicable under a choice-of-law analysis, even if one or both
parties to the contract do not have a place of business in a Contracting State.

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The current list of countries that have ratified the CISG (and their respective reservations
and declarations) is published and updated periodically by the International Trade Law
Branch of the United Nations Office of Legal Affairs servicing UNCITRAL and is
available on the Internet.13 Almost every year, a few more nations join the CISG treaty
regime. For a private international law treaty, the CISGs sign-up rate has been
remarkable in a relatively short period of time. With respect to the thirty-six modern
Hague Conference conventions on private international law, only two have received more
ratifications than the CISG. Similarly, no UNCITRAL convention has more members
than the CISG. The only commercial-oriented private international law treaty more
heavily subscribed than the CISG is the United Nations Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, adopted in New York in 1958 (prior to
UNCITRALs formation).
Floridas Substantial Role in International Trade

Florida, of course, is a major international trade center. Annually, more than $70 billion
of products (exports and imports combined) flow through the State, making Florida one
of the top trade participants in the United States.14 Given Floridas geographic position,
many trade relationships are focused in the Americas. Approximately 65% of Floridas
foreign trade in merchandise (exports and imports combined) is with North America,
South America, Central America and the Caribbean. In South America, Central America
and the Caribbean, Floridas share of total United States trade ranges between 27-55%.15
For Florida, the volume of European and Asian trade lags behind.16
About half of Floridas principal trade partners have ratified the Convention. This
percentage is fairly low17 because of Floridas focus on the Americas, an area in which
the Convention has not achieved universal acceptance. The table below shows Floridas
main trade partners and identifies their positions with respect to the Convention.18
Total Florida Merchandise Trading
Principal Florida
Value of Florida
CISG
Trade Partners
Trade for 2002
Ratification?
(in $US Millions)
1.
Brazil
$9,537
No
2.
Japan
5,128
No
3.
Dominican Republic
4,796
No
4.
Germany
3,723
Yes
5.
Honduras
3,703
Yes
6.
Costa Rica
3,652
No
7.
Columbia
2,905
Yes
8.
Venezuela
2,720
No
9.
United Kingdom
2,663
No
10.
Guatemala
2,392
No
11.
Mexico
2,322
Yes
12.
El Salvador
2,037
No
13.
China (PRC)
1,656
Yes
14.
Chile
1,587
Yes
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Total Florida Merchandise Trading

CISG
Principal Florida
Value of Florida
Ratification?
Trade Partners
Trade for 2002
(in $US Millions)
15.
Italy
1,390
Yes
(Total) Trade
$70,137
OVERVIEW OF CONVENTION

The Convention is an international commercial legal code. According to a leading CISG

scholar, the jobs of the UCC and the CISG are substantially the same:
Both were designed to reduce the misunderstandings and controversies that can
arise when one law governs the seller and a different law the buyer. They do the
job in different areas: The UCC is designed to avoid the modest differences
among the domestic laws of our fifty states, while the CISG is designed to
overcome differences among the laws of the countries of the world.19
At the risk of gross over-generalization, the CISG can be characterized as generally
consistent with the UCC. The UCC and American input greatly influenced the
Conventions provisions and text. Most scholars, lawyers, and traders have agreed that
the CISG is well-drafted, fair, balanced, and generally reflects international business
expectations and norms.20
While similarities between the CISG and UCC predominate, the differences are quite
important. Obviously, as with any multi-lateral negotiation, the Convention ultimately
represents a series of compromises, including between common law and civil law
concepts. Further, the CISG has a number of gaps that, by design or otherwise, simply
were not addressed. As a consequence, the CISG corresponds to the pre-CISG law of
no country of the world.21 From the point of view of the Florida practitioner,
understanding the differences between the UCC and CISG, as well as the CISGs gaps, is
critical.
Scope of the Convention

The Convention is generally applicable to: (1) contracts of sale; (2) of goods;
(3) between parties whose places of business are in different [Contracting] States.22 In
these requirements, the CISG is more straightforward than the Florida UCC, which
somewhat cryptically provides: Unless the context otherwise requires, this chapter
applies to transactions in goods.23 Like the UCC, the Convention contains a series of
application exclusions. The CISG does not apply to sales: (1) of consumer goods (bought
for personal use and consumption by the purchaser); (2) by auction; (3) of securities or
negotiable instruments; (4) of ships, vessels, or aircraft; or (5) electricity.24 The
Convention also is not applicable to so-called assembly contracts where the party that
orders goods to be manufactured or produced undertakes to supply a substantial part
of the materials necessary for such manufacture or production of the goods.25

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Assuming that a particular transaction is not specifically excluded by the CISG, the
principal issues of applicability of the Convention revolve around the meaning of the
term goods and the phrase between parties whose places of business are in different
[Contracting] States. Unlike the UCC, the CISG does not specifically define the term
goods.26 However, by using the term goods, the CISG (like the UCC) clearly makes
a distinction between the sale of goods and the sale of services or labor. The
Convention does not apply to contracts in which the preponderant part of the
obligationsconsists in the supply of labour or other services.27 Thus, most agreements
solely for distribution,28 development, licensing,29 leasing,30 transportation, carriage
(shipping), insurance, and financing are likely not covered by the Convention. Certain
transactions may raise potentially difficult legal issues concerning the applicability of the
Convention in the same way that such transactions are subject to some uncertainty under
the UCC.31 These may include the development and sale of computer software32 or both
the sale of goods and services or gray areas (such as leases with purchase options).
The CISGs second primary scope requirement (that the sales contract be between
parties whose places of business are in different [Contracting] States) also merits close
scrutiny. Contrary to the gut reaction of many American lawyers, the focus of the
Convention is not on the nationality of the parties, but on the places of business of the
parties.33 This difference in approach may drive unexpected results.
Two illustrations make the point. Suppose a Delaware corporation that maintains its only
place of business in California contracts to sell computer equipment to a Canadian
corporation that maintains its only place of business in Vancouver. The CISG would
presumptively apply to such a transaction.
Modify the example and suppose that a Delaware corporation that maintains its only
place of business in California contracts to sell computer equipment to another Delaware
corporation that maintains its headquarters in Vancouver and an office in Oregon. Under
the CISG, even though the transaction is between two American companies (both
Delaware companies), the transaction nevertheless may be governed by the CISG if the
Canadian headquarters of the Delaware corporation (rather than its Oregon office) had
the closest relationship to the contract and its performance.34
This real-life example35 shows that lawyers and their clients must carefully consider the
scope of the CISG, especially in transactions involving multi-national corporations with
several places of business. The focus should be on place of business rather than
nationality of the parties.
Freedom of Contract Under the CISG

Many Convention commentators have argued that the most fundamental provision of the
Convention is the freedom of contract principle. CISG Article 6 permits the parties to
derogate from or vary the effect of any of its [CISG] provisions. Thus, the CISG does
not deprive buyers and sellers from the freedom to mold their contracts to their own
needs and to modify the presumptive CISG provisions. Instead, the Convention is
primarily designed to provide dependable solutions for things not specifically considered
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by the parties (that is, a default setting). The CISG provisions always should yield to
specific contrary contract terms. Accordingly, to the extent that parties desire provisions
different than the CISG, they simply need to agree by contract.
Automatic Application and Opting Out of CISG

Although not widely known within the international trade and legal communities, as a
general matter, the Convention presumptively and automatically governs all international
trade transactions within the CISGs scope (an international sales contract).36 Indeed,
U.S. courts are unanimous that the CISG preempts domestic sales law for covered
international transactions.37
However, after completing a careful analysis of the comparative benefits and detriments
of domestic law and the CISG with respect to a specific transaction, parties may
determine that they should opt-out of the CISG. The Convention permits the ultimate
freedom of contract deviation: complete exclusion of the Convention. Under CISG
Article 6, the parties may exclude the application of the Convention. Parties desiring
to exclude application of the CISG must be extremely cautious in fashioning the
exclusion provision. For example, simple (but common) domestic choice-of-law
provisions, such as the following, likely will not effect an exclusion of the Convention as
governing law:

The rights and obligations of the parties under this contract shall be governed
by and construed under the laws of the State of Florida.

The laws of the State of Florida shall govern in connection with the formation,
performance, and legal enforcement of this purchase order.

Any dispute arising out of this contract shall be determined in accordance with
the laws of the State of Florida.38

Even though the parties to such contracts specifically identified the laws of the State of
Florida, international treaties such as the CISG are the supreme law of the United States
and, therefore, would likely be construed as part of the law of the State of Florida.39
If the parties desire to effectively exclude application of the Convention, such exclusion
should be explicit and state the alternative applicable law.40 For example, the following
provision should effect an exclusion of the CISG:
The rights and obligations of the parties under this contract shall not be governed
by the United Nations Convention on Contracts for the International Sale of
Goods. Instead, the rights and obligations of the parties under this contract shall
be governed by the laws of the State of Florida (without regard to principles of
conflict of law), including the Florida Uniform Commercial Code.

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SUBSTANTIVE COMPARISON OF CISG AND UCC DIFFERENCES

This section identifies and analyzes some (but not all) of the most important differences
between the CISG and UCC. With respect to any particular international transaction,
competent legal advice should be obtained to assist in comparing the relative differences
between the CISG and UCC.
Statute of Frauds and Parol Evidence

One significant difference between the Convention and the UCC concerns the statute of
frauds or oral contracts. With respect to the domestic sale of goods, the UCC statute of
frauds generally provides that a contract for the sale of goods for the price of $500 or
more is not enforceable by way of action or defense unless there is some writing
sufficient to indicate that a contract for sale has been made between the parties and
signed by the party against whom enforcement is sought.41 Furthermore, any
amendment or modification to a contract must be in writing if the underlying contract is
required to be in writing.42
The UCC approach has historical roots going back several centuries to English law.43
The no oral contracts law represents a policy decision designed to avoid the
misunderstandings and differing recollections, which often are inherent in oral
transactions. Advocates argue that by requiring the parties to reduce their agreement to
writing, the terms of the agreement are more accurate and definite and less prone to
subsequent dispute. In actual practice, there are many exceptions to the statute of
frauds. As a result, while the UCC establishes a presumption against the enforcement of
oral contracts, such oral contracts may be enforced in certain circumstances (such as
reasonable reliance, promissory estoppel, and performance).
The Convention departs from the UCC formal requirement of a written agreement. CISG
Article 11 states: A contract of sale need not be concluded in or evidenced by writing
and is not subject to any other requirement as to form. It may be proven by any means,
including witnesses. Furthermore, in the absence of a specific clause otherwise, the
Convention generally permits oral amendments or modifications to contracts.44
The oral contract issue was quite divisive in the negotiations for the CISG. The United
States, certain other common-law nations, Latin American countries, and Eastern
European nations all pressed for a written agreement requirement. On the other hand,
many civil law countries has no such requirement and advocated the recognition of oral
contracts. In the end, the CISG followed the more liberal civil law approach and allowed
enforcement of oral agreements. Notably, however, several nations (mostly in Eastern
Europe and Latin America, but not the United Sates) have made Article 96 declarations
concerning oral contracts and continue to insist that international contracts for the sale of
goods must be in writing.45
The statute of frauds differences between the CISG and UCC are related to another
potential area of difference: the parol evidence rule. In the United States, oral
testimony of witnesses concerning the terms of a contract and intent of the parties that
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contradicts or varies from the terms of a written contract is generally inadmissible in

evidence. The CISG does not expressly address this issue. However, given the CISGs
willingness to endorse oral contracts, some courts and most commentators believe that
the CISG abandons the parol evidence rule in favor of a more liberal approach that
permits testimony, even if it contradicts or varies from the terms of a written contract.
The two United States appellate decisions that have considered the issue reached opposite
results concerning whether the parol evidence rule is applicable to CISG disputes.46
Florida practitioners should be aware that the Eleventh Circuit specifically addressed the
parol evidence issue in MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova
DiAgostino S.p.A., 144 F.3d 1384 (11th Cir. 1998). MCC-Marble is one of the most
important United States CISG decisions. In that case, the appellate panel reversed a
decision from the United States District Court for the Southern District of Florida and
applied CISG principles to hold that evidence of subjective intent of parties could be
considered and that the typical American parol evidence bar did not apply in CISG cases.
The current CISG trend regarding parol evidence follows MCC Marble.47
Battle of the Forms

The Convention and UCC also differ in their approaches to the battle of the forms.48
The typical battle of the forms (there are many variants) occurs when a buyer sends a
seller a purchase order that includes numerous terms and conditions (usually in small
print, legalese on the back side of the form) that the buyer desires to include in the
contract. The seller sends back an acknowledgement that adds a different series of terms
and conditions to the buyers original purchase order. These forms (the purchase order
and acknowledgement) usually conflict because each party (through its lawyer) has
developed form terms that are most favorable for that party. While the front sides of the
various forms may agree on important terms such as price, transportation, and quantity,
the back sides are in confusing disarray.
Before the advent of the UCC, most American (and English common law) jurisdictions
generally had followed a last shot doctrine or mirror image rule. This means that if
the terms of acknowledgement varied from the terms of the purchase order, the varied
acknowledgement became not an acceptance but a counter offer. As long as the parties
did not actually perform, no contract could be formed and either party could get out of
the arrangement. Normally, however, even in spite of the conflicting forms, the seller
would deliver and the buyer would receive the goods. When the transaction was thus
completed by performance, the common law assumed that a contract had been formed.
Subject to many exceptions, the terms of the contract generally consisted of the terms of
the original offer, subject to the modifications contained in the acceptance.
The UCC changed the common-law mirror-image rule. F.S.A. 672.207 creates a
default provision whereby a final form that is not intended specifically as a counter-offer
will act as an acceptance, even though it contains different or additional terms to those
contained in the prior form. The additional terms are considered as proposals for
additions to the contract and, as between merchants, become part of the contract, unless:
(1) the offer expressly limits acceptance to the terms of the offer; (2) the terms materially
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alter the offer; or (3) notification of objection to the terms already has been given or is
given within a reasonable time after notice has been received. The normal result under
the UCC is to reverse the common-law presumption that the last form governs and
replace it with the result that the second-to-last form usually governs.
Consider the following example. A Columbian company sends a purchase order to a
Florida company offering to purchase 100,000 pink flamingo lawn ornaments for
$1 million. The back of the purchase order states that the seller must provide a full tenyear warranty and that all disputes shall be resolved in Bogota in the Spanish language.
The Florida company responds by sending its acknowledgement sales order to the
Columbian company. In many respects (such as price and quantity), the
acknowledgement sales order and the purchase order are the same; however, on the back
side of the acknowledgement sales order, the Florida company has included a warranty
disclaimer and a provision requiring that all disputes shall be resolved in Miami in the
English language. No further forms, communications, or objections are exchanged. A
few weeks later, the Florida company ships the lawn ornaments to Columbia.
Under the common-law mirror image approach, no contract would have been
concluded (prior to performance) because the purchase order and acknowledgement sales
order were materially different with respect to warranties and dispute resolution.
However, after the lawn ornaments were sent to Columbia and received, a contract would
exist. The terms of the contract would likely follow the Florida companys
acknowledgement sales order form (the last shot). Dispute resolution would be in
Miami in English without any warranties because the Columbian company assented to
the last shot by accepting the lawn ornaments.
Under the UCC approach, a contract would have been concluded earlier when the
Florida company delivered its acknowledgement sales order. The terms of the contract
would likely follow the Columbian companys purchase order because the Florida
companys acknowledgement sales order materially altered the offer. Thus, dispute
resolution would be in Bogota in Spanish with full ten-year warranties.
The CISG departs from the UCC approach and, instead, is consistent with the old
common-law mirror image rule. CISG Article 19(1) states:
A reply to an offer which purports to be an acceptance but contains [material49]
additions, limitations or other modifications is a rejection of the offer and
constitutes a counter-offer.
Thus, (at least prior to performance), either party may be able to claim successfully that
no enforceable contract exists under the CISG. After delivery and acceptance, a contract
will undoubtedly be deemed to have existed. Although the terms of the contract may be
subject to dispute, the CISG generally favors the last party to submit materially different
terms.50 Put another way, the CISG retrogresses to a pre-UCC view that typically favors
the seller51 in the battle of the forms.

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Warranties and Disclaimers of Warranties

The UCC and the Convention have similar provisions for warranties, but differ with
respect to disclaimers of warranties. Under the Convention, the seller has a four-fold
warranty obligation and 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.52 Goods do not conform with the contract unless they are fit
for the purposes for which goods of the same description would ordinarily be used and
are fit for any particular purpose expressly or impliedly made known to the seller.53
Although the CISGs merchantability, fitness, and title warranties are not identical to the
UCC provisions,54 they are substantially similar and would likely lead to similar results.
However, the CISG contains no provisions comparable to the disclaimer procedures that
sellers are authorized to use under the UCC. For example, under the UCC, an effective
disclaimer of the implied warranty of merchantability must mention merchantability
and must be in conspicuous writing.55 Similarly, an effective disclaimer of an implied
warranty of fitness must be in writing and conspicuous. The UCC proposes language
such as: There are no warranties which extend beyond the description on the face
hereof.56 The Convention is less formalistic and appears to permit disclaimers of
warranties as long as the parties have agreed in writing or orally.57
Perfect Tender Rule

Under the UCC, a buyer is generally entitled to reject goods (under a one-delivery
contract of sale) that fail in any respect to conform to the contract.58 This is known as the
perfect tender rule. Under the rule, a buyer (subject to good faith and certain other
requirements) may reject goods and cancel the contract, even if a defect in tendered
goods is not serious and the buyer would have received substantially the goods for which
it bargained.
The CISG departs from the perfect tender rule and makes rejection, revocation of
acceptance, or cancellation more difficult. Under the Conventions provisions, a buyer
may declare the contract avoided only if the failure by the seller to deliver goods
constitutes a fundamental breach of the contract.59 A breach of contract is
fundamental only if it results in such detriment to the other party as substantially to
deprive him of what he is entitled to expect under the contract and even then, only if the
seller foresaw, or a reasonable party in the sellers position would have foreseen, such a
result.60
Notice of Non-Conforming Goods

The CISG provides that the buyer loses the right to rely on a lack of conformity of the
goods if he does not give notice to the seller specifying the nature of the lack of
conformity within a reasonable time after he has discovered it or should have discovered
it.61 The buyer bears the burden to establish that notice of non-conformity was given
within a reasonable time frame. Whether notice was given within a reasonable time
depends on the facts and circumstances of the transaction, including the type of goods
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(for example, notices concerning perishable goods should be given more promptly).
Disputes over the notice of non-conformity requirement (including timing and
specificity) have been the subject of almost 20 percent of the reported CISG decisions
worldwide.62
Although the analogous UCC provision63 also requires notice within a reasonable time,
the CISG approach has been construed far more narrowly and restrictively than the UCC.
Under the UCC, the buyer is afforded a reasonable opportunity to inspect the goods.64
However, under the CISG, the buyer must inspect the goods within as short a period as
is practicable under the circumstances.65 Based on these differences, the reasonable
time periods for notices of non-conformity have been construed as quite short under the
CISG. Further, the specificity mandated by the CISG appears more restrictive than under
the UCC (especially so in German decisions). As a result, effective notice of
nonconformity under the CISG should be timely and very detailed.
Unilateral Price Reduction

The CISG contains many of the same damages remedies as available under the UCC.
Generally, a buyer may claim damages if the seller fails to perform. Such damages
consist of a sum equal to the loss, including the loss of profit, suffered as a consequence
of the breach.66 These provisions resemble the direct, incidental, and consequential
damages under the UCC.67
However, the CISG includes a novel (for Americans), unilateral price reduction
remedy.68 Under CISG Article 50, [i]f the goods do not conform with the contract and
whether or not the price has already been paid, the buyer may reduce the price in the
same proportion as the value that the goods actually delivered had at the time of the
delivery bears to the value that the conforming goods would have had at that time. This
pro-purchaser, self-help remedy stems from civil law and generally has not been
available in common-law jurisdictions such as the United States and England. It is not
available if the seller is able to cure non-conformity without causing unreasonable delay
or inconvenience to the buyer.
CISG Gaps

Although the CISG was designed to create a general substantive law of sales governing
international contracts, the Convention does not cover all issues that may arise in such
transactions or subsequent dispute resolution. Gaps in the CISG include, the following,
among others:

trade terms

applicable interest rate

burden of proof

validity of penalty clauses

transfer of title
- 12 -

existence of agency relationship

forum selection clauses

limitations period

currency of payment.

For example, with respect to trade terms, the UCC contains some definitions of common
trade terms, such as F.O.B., F.A.S., C.I.S., and C.I.F.69 The CISG contains no express
provisions concerning specific trade terms. The parties may develop their own trade
terms to specify the obligations of the parties. However, in the international context
(given varying meanings and nuances), the parties may best achieve clarity by
incorporating trade terms from commonly accepted trade term regimes such as the
International Chamber of Commerce Official Rules for the Interpretation of Trade Terms
(Incoterms).70
Although the CISG contains specific provisions for the award of interest,71 the
Convention does not specify the rate of interest or which nations laws should apply to
selecting the applicable rate of interest. The interest issue, while relatively mundanesounding, has been the subject of up to 30 percent of total CISG cases worldwide.72 In
the absence of direction, courts have often awarded interest according to the applicable
law of the forum jurisdiction.73
The CISG does have substantial gaps. If the CISG will be the applicable sales law,
practitioners should consider supplementing the Convention with the domestic laws of
the American or foreign jurisdiction to fill in the gaps.
STATUTE OF LIMITATIONS UNDER CISG

The CISG has no general statute of limitations provision requiring that dispute resolution
be initiated within a certain time frame. However, a separate treaty governs the issue: the
United Nations Convention on the Limitation Period in the International Sale of Goods.74
That convention was originally completed in 1974, but was amended in 1980 through a
Protocol to make it consistent with the CISG (as amended, the Limitations
Convention). Fewer nations have ratified the Limitations Convention than have ratified
the CISG. As of May 2004, at least some version of the Limitations Convention (that is,
the 1974 version or 1980 Protocol) had been ratified in twenty-five nations, including the
United States (compared to sixty-three countries that have ratified the CISG).
Accordingly, if a CISG governed transaction is conducted with a non-signatory of the
Limitations Convention and the contract does not specify a limitations period, the
applicable statute of limitations may be uncertain.
The key limitations period under the Limitations Convention is four years75 after the
claim accrues usually the date of breach of the contract;76 under certain limited
circumstances, the period may be extended, but in no case beyond ten years.77 The
statute of limitations is shorter than the five-year period of limitations generally
applicable in Florida for actions on a contract, obligation, or liability founded on a
written instrument . . . .78 However, the Limitations Conventions four-year period is
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similar to Floridas limitations law for contracts not founded on a written instrument.79
As a general matter, the Limitations Convention operates in a similar fashion to the UCC
in terms of determination of the commencement of the limitations period and other
related matters.80 As with the CISG, application of the Limitations Convention is
automatic for covered transactions between signatory nations. Also similar to the CISG,
the Limitations Convention provides that the parties may expressly opt-out of the
Limitations Convention.81 Since the Limitations Convention is broadly similar to the
UCC, most American traders have not elected to routinely opt-out. From the
perspective of a Florida company, an opt-out would seem to make sense only if the
parties desired to have a limitations period greater than four years.82
PRACTICAL CISG ISSUES FOR FLORIDA PRACTITIONERS

The CISG is a complex code for international trade law that has advantages and
disadvantages for Florida businesses, depending on the unique international transaction
being considered and the special facts and circumstances of each case. The following are
general advantages and disadvantages.
CISG Advantages

The CISG reflects international business expectations.

The CISG is fair and, overall, does not appear to favor buyers at the expense
of sellers or vice-versa. The Convention is reasonably well drafted. To the
extent that parties have equal bargaining strength and are locked in a struggle
over the choice of substantive law governing sales, selection of the CISG may
be viewed as a constructive, neutral, and even-handed approach.

The CISG is good law in that it represents reasonable compromises on

difficult commercial issues acceptable to most of the important participants in
international trade.

The CISG is generally similar to the UCC on most issues.

The CISG promotes uniformity. The CISG may make international

transactions easier for heavy volume traders who trade with numerous
different foreign countries because the domestic sales laws of such other
foreign countries are less important if the CISG governs. Further, CISG
judicial decision-making continues to spread. There are now thousands of
reported CISG decisions worldwide and more every year.

CISG Disadvantages

After sixteen years, the CISG is only now graduating from obscurity. U.S.
lawyers and traders are somewhat unfamiliar with the CISG.

U.S. courts are generally unfamiliar with the CISG. As yet, no reported
decisions have been announced concerning the CISG in Florida state court.
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Only a handful of Florida federal court decisions on the CISG have been
entered. Nationwide, CISG reported cases are still quite few compared to the
UCC. Accordingly, the CISG is largely untested on most issues (through
legal proceedings) in the United States.

The UCC is more familiar to U.S. traders, lawyers, and courts than the CISG
and may better reflect the expectations of the United States business
community. The unfamiliarity of traders, lawyers, and courts with the CISG
may raise transactional costs and the costs of dispute adjudication.

Practical Transaction Issues

Each international transaction is different. The parties should carefully analyze whether
the CISG applies or should be excluded, based on the unique factors, facts and
circumstances of the trade. However, U.S. parties may wish to consider the following
practical issues.83

Consider opting out of the automatic application of the CISG and, instead,
specifying the law of Florida, including the UCC, as the applicable law for the
transaction. As noted above, most purchasers and lawyers are unfamiliar with
the CISG, and it has not been thoroughly tested in the United States. To the
extent that the Florida party has superior bargaining power, it appears there
would be little downside in initially requesting that the transaction exclude
the CISG. Such an opt-out provision must be carefully drafted, specify that
the CISG is excluded, and identify the chosen applicable law. Many major
U.S. companies have defaulted to such a position. Opting out avoids the
discomfort of the unknown.

If the CISG will govern, consider negotiating and executing a detailed

contract that will cover foreseeable issues and contingencies. The CISG
permits freedom of contract so that the specific terms of the contract will
generally trump the CISG. The CISG primarily is a default-setting.

If the CISG will apply, recognize the absence of the statute of frauds.
Consider formalizing in writing all matters with the foreign party and
including contractual statute of frauds provisions, merger and integration
clauses, and other means of ensuring that oral contracts or modifications will
not be enforced. In the early stages, consider announcing that oral statements
are not binding and only the final written agreement will govern. Try to
obtain acknowledgment from the foreign party.

If the CISG will apply, recognize battle of the forms issues. Consider
requiring a single written agreement signed by both parties rather than an
exchange of different and contradictory forms. If the parties sign a clear
agreement addressing all of the boilerplate, a battle of the forms should
not materialize. If that is not possible, carefully review the various forms

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exchanged and timely object to unacceptable provisions in the foreign partys

forms. Try to make the last shot before delivery of the goods.

If the CISG will apply, recognize that the seller may disclaim warranties
without following the formal requirements of the UCC. Consider and try to
reach agreement with the foreign party on the specific warranties and
disclaimers rather than through an exchange of different and contradictory
forms.

If the CISG will apply, recognize that the perfect tender rule will not.
Consider incorporating the perfect tender rule into the contract and
specifically address the issues raised by non-conforming goods.

If the CISG will govern, recognize the potential remedy of a unilateral price
reduction. Because this clause is pro-buyer, consider objecting if
representing a seller.

If the CISG will govern, recognize that there will be some uncertainty with
respect to the applicable statute of limitations, especially with nations that
have not signed the Limitations Convention. Consider incorporating a
limitations period in the contract consistent with Florida law.

If the CISG will govern, recognize that there will be some uncertainty with
respect to notice timing (including notice for non-conforming goods).
Consider specifying specific periods of time for certain types of notices.

If the CISG will govern, recognize that the Convention does not specify a
specific rate or formula for the calculation of interest on damages claims.
Consider incorporating a clause specifying a particular interest rate or method
of calculation, such as an index.

If the CISG will govern, recognize that there are important issues of
international commerce that are not addressed in the Convention, including,
for example: choice of forum; submission to jurisdiction; alternative dispute
resolution (mediation, conciliation, or arbitration); language of contract;
language of dispute adjudication; attorney fees for disputes (for example, loser
pays);84 and choice of law for any gaps in the CISG.85

Carefully consider the various unique international issues and tailor the
contract accordingly.

Practical CISG Litigation Issues

The need for familiarity with the CISG is just as important for Florida litigators86 as for
transactional attorneys. While business counsel may put the international deal together
(and should be careful on the front end to assess the advantages and disadvantages of the
CISG for the particular transaction), trial counsel will need to work on the back end
prosecuting and defending the CISG-based claims.
- 16 -

CISG-governed transactions may raise interesting litigation questions concerning state

and federal jurisdiction. Florida state trial courts technically may have general
jurisdiction to entertain disputes under the Convention.87 However, almost all of the
reported U.S. jurisprudence is at the federal level. Since the Convention is a treaty of
the United States, federal courts likely have federal question jurisdiction over all
CISG-governed international sales disputes.88 While many CISG-oriented cases
undoubtedly would have been amendable to federal diversity jurisdiction anyway
because such disputes typically involve citizens of the United States and citizens or
subjects of a foreign state,89 the CISG has expanded and federalized jurisdiction in the
area of international transactions.90
After assessing the jurisdiction issues (and other threshold matters such as personal
jurisdiction, forum, and comity), litigation counsel will need to be (or become) familiar
with the substantive CISG sales law issues. Unfortunately, for a variety of reasons, the
application of CISG is often ignored. For example, a review of court records of several
disputes in state and federal courts concerning the international sale of goods between
CISG signatories reveals that, almost invariably, neither party has raised the CISG as
applicable law. Instead, counsel appear oblivious to the CISG and generally debate
whether domestic U.S. or foreign law should apply. Failure to identify the CISG as the
applicable law in appropriate circumstances (especially if differences between the CISG
and UCC may affect the ultimate result) could harm client interests and raise issues of
professional responsibility, ethics, and even legal malpractice. Generally, if the parties
do not raise the CISG as the applicable law in litigation, domestic courts will likely revert
to the law in their own jurisdiction.91
Assuming that the CISG is applicable to a dispute, Florida practitioners may be faced
with the issue of establishing or proving CISG law to the court through precedent or
otherwise. In the absence of any binding precedent in Florida state and federal courts,
lawyers will likely need to rely on other reported decisions in the United States and on
treatises, articles, and other commentary. Another interesting avenue of addressing CISG
issues that are novel in the United States is that of precedent from other CISG countries.
American courts have started to rely on such foreign decisions.92 This trend may lead to
a more unified approach to CISG legal issues. As with other international litigation,
CISG-governed cases will pose many other interesting challenges.
CISG Resources

Florida practitioners faced with CISG-related issues will be surprised at the breadth of
available resources. In addition to the numerous texts already cited in this article, there
are several English-language treatises and comprehensive practice-oriented materials.93
The Internet has revolutionized the spread of information about the CISG. The best
single source for information concerning the CISG is undoubtedly the website of the
Institute of International Commercial Law at Pace University School of Law (Pace
Website): http://www.cisg.law.pace.edu. The Pace Website contains a truly impressive
array of materials including: annotated texts of the CISG (in multiple languages); texts of
earlier international sales law conventions; a listing of current signatories; guides to each
- 17 -

CISG article; drafting histories; legislative histories, scholarly articles; practice-oriented

articles and guides; and comprehensive bibliographies listing hundreds of additional
articles.
The real gold mine is the jurisprudence portion of the Pace Website. The Pace Website
currently includes in excess of 1,250 cases and 5,000 case annotations from more than
thirty CISG signatory nations or international dispute resolution bodies (such as the
International Chamber of Commerce Court of Arbitration, the Arbitration Institute of the
Stockholm Chamber of Commerce and the European Court of Justice). The cases are
fully integrated with the UNCITRAL Case Law on UNCITRAL Texts database
(CLOUT). The Pace Website also contains a large collection of full-text CISG
decisions from English-language jurisdictions (United States, Australia, and Canada), as
well as original full-text decisions from other jurisdictions in their respective native
languages. A large (and ever-increasing) number of the decisions originally rendered in
foreign languages has been translated into English. The case presentations and full
English-language texts are searchable by country, topic, and CISG article.
In addition to the Pace Website, another excellent source for CISG materials is
UNCITRAL. The UNCITRAL Internet website, http://www.uncitral.org/, is a
plurilingual site (six languages) that includes official texts of the CISG and
comprehensive bibliographies. Further, UNCITRAL developed the CLOUT database,
which contains abstracts of almost 500 judicial decisions on the CISG. English-language
case abstracts are prepared by the UNCITRAL Secretariat and published through the
database. The Pace Website system links with CLOUT.
Various legal scholars from around the globe have coordinated in creating the
Autonomous Network of CISG Websites. This system is a worldwide collection of
Internet websites dedicated to the CISG and organized on a national basis. Each of the
respective participating jurisdictions is charged with collecting all CISG case law in the
jurisdiction and publishing the decisions through the network. To date, the Autonomous
Network contains websites with original materials from nineteen nations and three
geographic regions.94 Internet links to the Autonomous Network are available on the
Pace Website.
Finally, various stakeholders (mostly academics) have recently formed a private initiative
to promote uniform interpretation of the CISG through a CISG-Advisory Council. The
Advisory Council proposes to address various controversial and unresolved issues under
the CISG through the issuance of advisory opinions. The first CISG-Advisory Council
Opinion was issued last year and more are likely to be forthcoming.95
CONCLUSION

The Convention is finally graduating from obscurity. The CISG is now the international
sales law in sixty-three nations and presumptively governs almost two-thirds of the
worlds trade. An ever-increasing number of courts are applying CISG law. Now, more
than ever before, Florida lawyers, both transaction- and litigation-oriented, need to

- 18 -

become aware of the CISG and its nuances to properly advise their Florida and foreign
clients engaged in international transactions and dispute resolution.
NOTES
1

2
3
4

9
10

11

12
13
14

15
16

17
18

19
20

21

22
23
24
25

S. Treaty Doc. No. 9, 98th Cong. 1st Sess. 22 (1983), reprinted at 15 U.S.C. App. 52 (2002). The text
of the CISG also is readily available from electronic sources: http://www.uncitral.org (official text in
English, Arabic, Chinese, French, Russian, and Spanish); http://www.cisg.law.pace.edu. CISG
Articles, cited throughout this article, can be found by accessing these electronic sources.
F.S.A. 672.101 et seq.
Murray, The Neglect of the CISG: A Workable Solution, 17 J.L. & COMM. 365 (1998).
United Nations Commission on International Trade Law CLOUT database, available at
http://www.uncitral.org.
Guide to the Pace Database on the CISG and International Commercial Law, available at
http://www.cisg.law.pace.edu.
See Newman and Burrows, U.N. Sales Convention: Traps for Unwary? THE PRACTICE OF
INTERNATIONAL LITIGATION (New York, NY: Transnational Juris. Pub. 1992).
Del Duca and Del Duca, Practice Under the Convention on International Sale of Goods (CISG): A
Primer for Attorneys and International Traders (Part II), 29 U.C.C.L.J. 99, 157 (1996) (hereafter,
Del Duca Part II).
Many authors have documented the history of the Convention. See, e.g. Farnsworth, Formation of
International Sales Contracts: Three Attempts at Unification, 110 U. PA. L. REV. 305 (1962).
Copies of the texts of the treaties are available at http://www.hcch.net.
Hancock, ed., Guide to the International Sale of Goods Convention 101.002 (Chesterland, OH: Bus.
Laws, Inc., Supp. 2002) (hereafter, CISG Guide).
Thus, the CISG is sometimes referred to as the Vienna Sales Convention, especially by European
and Eastern European Parties.
Ghana and Venezuela signed but never formally ratified the CISG.
See http://www.uncitral.org.
Based upon 2000-2002 data from Enterprise Florida, Inc. www.eflorida.com. Enterprise Florida, Inc.
is a non-profit corporation created by Florida law. F.S.A. 288.901. Enterprise Florida, Inc. has
established a comprehensive trade database known as the International Trade Data Resource and
Research Center. F.S.A. 288.8155.
Id.
Id. European trade (exports and imports combined) accounts for only 19% for Floridas total trade.
Asian trade represents only 14% of Floridas total trade.
Generally, two-thirds of trade is between Convention signatories.
Based upon Enterprise Florida, Inc. data for total merchandise flows (both exports and imports) in
2002. www.eflorida.com.
Honnold, The Sales Convention: From Idea to Practice, 17 J.L. & COMM. 181 (1998).
See Cook, CISG: From the Perspective of the Practitioner, 17 J.L. & COMM. 343, 349 (1998) (CISG is
good law that promotes fair and honorable solutions without affording any obvious or hidden
advantages to either side.).
Del Duca and Del Duca, Practice Under the Convention on International Sale of Goods (CISG): A
Primer for Attorneys and International Traders (Part I), 27 U.C.C.L.J. 331, 337 (1994) (hereafter,
Del Duca Part I).
CISG Article 1(1), supra, note 1.
F.S.A. 672.102.
CISG Article 2, supra, note 1.
Id. at Article 3. Further, the CISG does not purport to govern personal injuries caused by goods. See
CISG Article 5, supra, note 1.

- 19 -

26

27

28

29

30

31
32

33

34

35

36
37

38

39

See F.S.A. 672.105(1) (Florida UCC definition of goods). For that matter, the CISG generally
does not include specific definitions of terms.
CISG Article 3(2), supra, note 1. The predominant part requirement under the CISG is quite similar
to the predominant purpose test used by most U.S. courts under the UCC. See CISG Guide at 103.1,
supra, note 10.
See Helen Kaminsky Pty. Ltd. v. Marketing Australian Products, Inc., 1997 WL 414137 (S.D.N.Y.
1997) (unpublished opinion) (CISG did not apply to distributorship agreement because lacked
expression of definite terms for sale of specified goods); AMCO Ukrservice v. American Meter Co.,
2004 WL 692233, __ F. Supp. 2d ___ (E.D. Penn. 2004) (same); Viva Vino Import Corp. v. Farnese
Vivi S.R.L., 2000 WL 1224903 (E.D. Penn. 2000) (unpublished opinion) (same).
See Lockhart and McKenna, Software License Agreements in Light of the UCC and the Convention on
the International Sale of Goods, 70 MICH. BAR J. 646 (July 1991).
The CISG does not purport to cover leases, and no other international treaty in force in the United
States exists with respect to leases. This gap is in contrast to UCC Article 2.5, a recent UCC addition
on the topic. See F.S.A. 680.1011 et seq.
CISG Guide at 103.1, supra, note 10.
See Primak, Compute Software: Should the U.N. Convention on Contracts for the International Sale of
Goods Apply? 11 COMPUTER L.J. 197 (1991).
CISG Article 1(3), supra, note 1 (Neither the nationality of the parties nor the civil or commercial
character of the parties or of the contract is to be taken into consideration in determining the
application of this Convention.).
CISG Article 10(a), supra, note 1 ([I]f a party has more than one place of business, the place of
business is that which has the closest relationship to the contract and its performance, having regard to
the circumstances known or contemplated by the parties at any time before or at the conclusion of the
contract.).
The modified example is based on Asante Technologies, Inc. v. PMC-Sierra, Inc., 164 F. Supp. 2d
1142 (N.D.Cal. 2001). In Asante Technologies, the court determined that the CISG governed the sales
transaction between two Delaware companies because one of the Delaware companies maintained its
headquarters in Canada and the Canadian headquarters had the closest relationship to the contract.
See also Note, Contracts for the International Sale of Goods: Applicability of the United Nations
Convention, 69 IOWA L. REV. 209, 224 (1983) ([A] contract between two American firms that is to be
negotiated and performed within the United States possibly could be subject to the Conventions terms
if one of the parties has a place of business in another country and the contract is to be performed in
that country.).
CISG Guide at 100.005, supra, note 10.
Geneva Pharmaceuticals Technology Corp. v. Barr Laboratories, Inc., 201 F.Supp.2d 236, 285-86
(S.D.N.Y. 2002); Usinor Industeel v. Leeco Steel Products, Inc., 209 F. Supp. 2d 880 (N.D. Ill. 2002);
Asante Technologies, supra, note 35 at 1151.
A review of form purchase orders routinely used by many American companies in their domestic and
international transactions shows that almost all of the purchase orders contained similar provisions
without specific reference to opting-out of the CISG.
U.S. Const. Art. VI(2) (This Constitution, and the laws of the United States which shall be made in
pursuance thereof; and all treaties made, or which shall be made, under the authority of the United
States, shall be the supreme law of the land.); see also Asante Technologies, supra, note 35 at 1150.
Asante Technologies involved two purchase orders. The American purchase order stated: The
validity and performance of this order shall be governed by the laws of the state shown on Buyers
address on this order [California]. The Canadian purchase order stated: The contract is made,
governed by, and shall be construed in accordance with the laws of British Columbia and the laws
of Canada. The Asante Technologies court determined that the choice of law clauses here do not
evidence a clear intent to opt out of the CISG. Id. Accordingly, the substantive law of the CISG was
applied to the transaction. More recently, in Ajax Tool Works, Inc. v. Can-Eng Manufacturing Ltd.,
2003 WL 223187 (N.D. Ill. 2003) (unpublished) the court found that CISG law controlled even though
the contract provided that the agreement shall be governed by the laws of . . . Ontario, Canada. The

- 20 -

40

41
42
43

44
45

46

47

48

49

50

51
52
53
54
55
56
57

58
59
60
61
62
63
64
65
66
67
68
69

Asante Technologies and Ajax Tool rationale was followed in BP Oil Intl, Ltd. v. Empresa Estatal
Petroleos de Ecuador, 332 F.3d 333, 337 (5th Cir. 2003) (applying CISG law to contract governed by
laws of Ecuador).
Possibly, a clause such as the following might work to effect an opt-out because the reference to the
UCC shows some intent for a specific applicable law of sales: The rights and obligations of the
parties under this contract shall be governed by and construed under the laws of the State of Florida
including the Florida Uniform Commercial Code. Nevertheless, the prudent course is to make the
opt-out more explicit by referring specifically to the CISG.
F.S.A. 672.201(1).
F.S.A. 672.209(3).
The United States adherence to the statute of frauds is a distinct minority position in the present
international legal community. Even Great Britain has rejected the doctrine.
CISG Article 29, supra, note 1.
CISG Article 96, supra, note 1, permits such declarations. The countries that have made CISG Article
96 declarations include Argentina, Belarus, Chile, Estonia, Hungary, Latvia, Lithuania, Russian
Federation, and Ukraine.
See MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova DAgostino, S.p.A., 144 F.3d 1384, 1389
(11th Cir. 1998) (parol evidence rule does not apply in CISG action); Beijing Metals & Minerals
Import/Export Corp. v. American Business Center, Inc., 993 F.2d 1178, 1183, n.9 (5th Cir. 1993)
(opposite).
See Calzaturificio Claudia S.n.C. v. Oliveri Footwear Ltd., 1998 WL 164824 (S.D.N.Y. 1998)
(unpublished opinion) (contracts governed by the CISG are freed from the limits of the parol evidence
rule, and there is a wider spectrum of admissible evidence to consider in construing terms of the
parties agreement.).
The battle of the forms issue is treated far more comprehensively than this article in Gabriel, The
Battle of the Forms: A Comparison of the United Nations Convention for the International Sale of
Goods and the Uniform Commercial Code, 49 BUS. LAW. 1053 (May 1994).
Material terms under the CISG include price, payment, quality and quantity of goods, place and time
of delivery, extent of liability, and dispute resolution. CISG Article 19(3), supra, note 1.
This conclusion makes broad-brush strokes and risks over-generalization. Specific results will depend
on the nuances of factual development. See Gabriel, supra, note 48 at 1062 (The CISG and the
common-law rules obviously favor the last party to submit terms.).
Murray, supra, note 3 at 372.
CISG Article 35(1), supra, note 1.
Id. at Article 35(2)(a) and (b).
F.S.A. 672.312 to 316.
F.S.A. 672.316(2).
Id.
CISG Article 35(2), supra, note 1. But see Supermicro Computer, Inc. v. Digitechnic, S.A.,
145 F. Supp. 2d 1147, 1151 (N.D.Cal. 2001) (court found issue of warranty disclaimer under CISG
Article 35 was unsettled, especially since one party claimed it was not aware of disclaimer).
F.S.A. 672.601.
CISG Articles 49(1) and 64, supra, note 1.
Id. at Article 25.
Id. at Article 39(1).
Del Duca Part II, supra, note 7 at 134 (notice issues were raised in twenty-seven of 142 CISG cases).
F.S.A. 672.607(3)(a).
F.S.A. 672.606(1)(a).
CISG Article 38(1), supra, note 1.
Id. at Articles 74-77.
F.S.A. 672.714 to 715.
CISG Article 50, supra, note 1.
F.S.A. 672.319 to 322.

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70

71
72

73

74
75
76

77
78

79
80

81
82

83

84

85

86

87
88

89
90

The Incoterms recently have been revised, and the most current version became effective on January 1,
2000. Information about the Incoterms is available at http://www.iccwbo.org. In a recent decision, St.
Paul Guardian Ins. Col. v. Neuromed Medical Systems & Support, GmbH, 2002 WL 465312 or 2002
U.S. Dist. LEXIS 5096 (S.D.N.Y. 2002) (unpublished opinion), the court determined that reference to
CIF in a CISG-governed transaction demonstrated the parties intent to incorporate Incoterms, even
though the contract itself did not refer to Incoterms. This rationale was subsequently followed by the
Fifth Circuit in BP Oil Intl, supra, note 39.
CISG Articles 78 and 84(1).
Del Duca Part II, supra, note 7 at 134 (interest issues were subject of forty-two of 142 reported CISG
decisions).
Id.; see Delchi Carrier, S.p.A. v. Rotorex Corp., 1994 WL 495787 or 1994 U.S. Dist. LEXIS 12820
(N.D.N.Y. 1994) (unpublished opinion), affd in part, revd in part, 71 F.3d 1024 (2d Cir. 1995)
(Because [CISG] Article 78 does not specify the rate of interest to be applied, the court in its
discretion awards prejudgement interest at the United States Treasury Bill rate.).
See http://www.uncitral.org.
Limitations Convention Article 8, supra, note 74.
Id. at Articles 1(3)(d) and 10(1) (breach of contract means the failure of a party to perform the
contract or any performance not in conformity with the contract; the claim shall accrue on the date
on which such breach occurs).
Limitations Convention Articles 13-23, supra, note 74.
F.S.A. 95.11(2)(b). Florida departed from the four-year limitations period suggested in the model
UCC. Thus, the Limitations Convention four-year period is different than Florida law but consistent
with UCC law in most other states in the United States.
F.S.A. 95.11(3)(k).
See Hill, A Comparative Study of the United Nations Convention on the Limitation Period in the
International Sale of Goods and 2-725 of the Uniform Commercial Code, 25 TEX. INTL L.J. 1, 3
(1990).
Limitations Convention Article 3(3), supra, note 74.
Should the parties agree to opt-out of the Limitations Convention, they should specify either a
specific limitations period applicable to the transaction or an alternative law of limitations, such as
Florida contract law. Florida practitioners should be aware of certain statutory provisions regarding
limitations periods for contract cases. See F.S.A. 95.03 (shortening statute of limitations in contract
may be void); and F.S.A. 95.10 (cause of action arising out of state).
Among the more useful sources of practical information concerning drafting contracts under the CISG
is Winship, Changing Contract Practices in Light of the U.N. Sales Convention: A Guide for
Practitioners, 29 INTL LAW. 525 (1995). Practitioners delving into international trade for the first
time also may benefit by considering model forms. See The ICC Model International Sale Contract
(Paris, France: ICC Publishing S.A., 1997).
See Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co., Inc., 313 F.3d 385, 388-89 (7th Cir.
2002) (CISG does not provide for award of attorneys fees).
See Schmitz-Werke GmbH + Co. v. Rockland Indus., Inc., 37 Fed. Appx. 687 (4th Cir. 2002) (applying
Maryland law to issues not addressed by CISG).
Florida is a center of international arbitration and the State has enacted legislation promoting
international arbitration. F.S.A. 648.01 et seq. (the Florida International Arbitration Act). The
practical issues described in this section also apply in the context of arbitration proceedings.
F.S.A. Const. Art. 5 1 to 6; F.S.A. 25 to 26.
28 U.S.C. 1331. This argument was made in Florida in Impuls I.D. Internacional, S.L. v. PsionTeklogix Inc., 234 F. Supp. 2d 1267, 1270-1272 (S.D. Fla. 2002). However, in that case, the court
found that the transaction was not governed by the CISG.
28 U.S.C. 1332(a)(2).
E.g., an illustration in the Scope of Convention section of this article involved a transaction between
a Delaware corporation with its principal place of business in California and a Delaware corporation
with its principal place of business in Canada. Almost certainly, federal diversity jurisdiction would

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be lacking because the parties are both Delaware corporations. See 28 U.S.C. 1332(a)(1) and (c).
However, because the transaction is CISG-governed, the case may be subject to federal question
jurisdiction. Thus, the CISG may expand the role of the federal courts into international transactions.
See Asante Technologies, supra, note 35 at 1150-51 (applying federal question jurisdiction to CISG
dispute).
See China Natl Metal Products Import/Export Co. v. Apex Digital, Inc., 141 F.Supp.2d 1013, 1022 n.6
(C.D.Cal. 2001) (court applied California law to U.S.-China transaction, in part, because parties never
presented to court how CISG would apply).
See AMCO Ukrservice, supra, note 28 (citing German precedent); Medical Marketing Intl, Inc. v.
Internazionale Medico Scientifica, S.R.L., 1999 WL 311945 or 1999 U.S. Dist. LEXIS 7380 (E.D.La.
1999) (unpublished opinion) (citing German precedent); St. Paul Guardian, supra, note 70 (citing
German precedent); Usinor Industeel, supra, note 37 (citing Australian precedent). Foreign courts
have often cited decisions from other nations in construing the CISG. See Mazzota, The International
Character of the UN Convention on Contracts for the International Sale of Goods: An Italian Case
Example, 15 PACE INTL LAW REV. 437 (2003).
The following materials on the CISG are useful resources: Lookofsky, Understanding the CISG in the
USA: A Compact Guide to the 1980 United Nations Convention on Contracts for the International
Sale of Goods (Kluwer Law Pub., 1995); Kritzer, Guide to Practical Applications of the United
Nations Convention on Contracts for the International Sale of Goods (Kluwer Law Pub., Supp. 1994);
Kathrein and Magraw, The Convention for the International Sale of Goods: A Handbook of Basic
Materials (Chicago, IL: American Bar Association, 1990).
Because Floridas export and import trade centers in the Americas, Florida practitioners may find
Autonomous Network coverage for Latin America especially useful.
See CISG-AC Publishes First Opinion, 15 PACE INTL LAW REV. 453 (2003).

Tom McNamara is a partner with Davis Graham & Stubbs LLP (303) 892-9400
and immediate past president of the Colorado Bar Association International Law
Section. His practice focuses on international litigation and dispute resolution.

LEGAL DISCLAIMER: This article is designed to provide general information concerning the
United Nations Convention on Contracts for the International Sale of Goods. It is provided with the
understanding that the author is not giving legal advice. This article should not be used as a
substitute for professional legal advice in specific situations. If legal advice is required, a legal
professional should be engaged to render such advice. Although this article is designed to provide
accurate information as of May 2004, the rules and laws described herein may change. Attorneys
dealing with specific legal problems should conduct independent legal research.

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