The United Nations Convention on Contracts for the International Sale of Goods (CISG) is an international version of the UCC that governs commerce transactions involving goods that are conducted across national boundaries. Most nations have agreed to operate under CISG provisions regarding the trade of goods involving their country and other countries. One notable exception is the United Kingdom (UK). As the country that founded common law principles, the United Kingdom applies a UK domestic version of the UCC for internal UK transactions or common law principles to transactions involving the sale of goods rather than following CISG principles for international transactions.
Some CISG provisions differ from the UCC, so buyers and sellers must be aware of the differences when doing business with entities in other countries. The CISG uses uniform rules that take into account the different social, economic, and legal systems around the world. The creation of this set of uniform international rules allows for the removal of legal barriers that would otherwise discourage international trade.
Unlike the UCC, the CISG only governs the formation of the contract of sale and the rights and obligations of the seller and buyer that arise from that contract. The CISG does not govern the validity of the underlying contract or any of its provisions. In other words, the CISG does not determine whether the underlying contract is binding or valid. Countries that are signatories to the CISG will agree to let those rules govern commercial transactions across national boundaries involving their merchants. Countries still have to negotiate with one another individually as to what terms will govern other aspects of their trade relationships in areas such as intellectual property and tariff protections of certain industries or types of goods.
The CISG excludes sales of goods bought for personal, family, or household use, goods bought at auction, and goods that are stocks, bonds, or other forms of monetary alternatives. The CISG does not apply to the sale of ships, vessels, hovercrafts, or aircraft. It also does not govern the sale of electricity.
Key differences between the UCC and CISG include the fact that under the UCC contracts must be in writing per the guidelines of the statute of frauds, while the CISG allows for oral contracts. The UCC allows for non–mirror image acceptance of contracts while the CISG does not. The CISG requires quantity and price be spelled out in contracts while the UCC allows for some variance in that regard. The UCC also allows for most offers to be revocable while under the CISG any offer tendered is in most cases not revocable.
UCC versus CISG
| UCC | CISG |
|---|---|
| Acceptance may differ from the offer | Acceptance in general must mirror the offer |
| Written contracts are required under the statute of frauds | Oral contracts are acceptable |
| Quantity is an essential term, but price can be flexible | Both quantity and price are essential terms |
| The offer can be revoked unless it clearly states that it cannot be revoked once made | Offers in many circumstances are irrevocable |
The Uniform Commercial Code (UCC) and the Contracts for the International Sale of Goods (CISG) differ in key ways, and buyers and sellers doing business with entities in other countries will be expected to know what applies.