International contracts and agreements
Choice of law – which law is applicable to the contract
The choice of law and the choice of forum are an important part of your international contract. Opting for foreign law is often a leap of faith that can complicate the commercial legal protection in the future. Opting for a specific national law usually gives you something to hold on to. No choice is also a choice. In that case, it is often international treaties (e.g. the so-called Rome I Regulation and the Vienna Sales Convention) which imperatively determine which law is applicable and which stipulations cannot be deviated from.
United Nations Convention on Contracts for the International Sale of Goods (CISG)
The CISG (United Nations Convention on Contracts for the International Sale of Goods) applies to international sales contracts between parties in different member states, unless explicitly excluded. It provides a uniform framework for contract formation, performance, and remedies, reducing legal uncertainty and transaction costs for cross-border business, effective when both parties agree.
Article 1 CISG:
- This Convention applies to contracts for the sale of goods between parties who are established in different States:
- where those States are Contracting States; or
- when, according to the rules of private international law, the law of a Contracting State applies.
- The fact that parties have their establishments in different States should be disregarded if it does not appear from the contract, or from transactions between, or information provided by, the parties at any time before or at the time of the conclusion of the contract.
- For the purposes of the Convention, the nationality of the parties, whether they are traders and whether the contract is civil or commercial in nature are irrelevant.
The CISG is particularly protective of sellers. Its application can be excluded by agreement. This can be advantageous for buyers and disadvantageous for sellers.
It is therefore important to decide whether the CISG should or should not be excluded out from your contract.