United Nations Convention on Contracts for the International Sale of Goods (CISG)

What is United Nations Convention on Contracts for the International Sale of Goods (CISG)?

The United Nations Convention on Contracts for the International Sale of Goods is the Japanese name for the United Nations Convention on Contracts for the International Sale of Goods.

Parties to United Nations Convention on Contracts for the International Sale of Goods (CISG)

Japan is a signatory to United Nations Convention on Contracts for the International Sale of Goods (CISG) (effective August 1, 2009), so when preparing a sales contract for an international transaction, it is necessary to consider the applicability of United Nations Convention on Contracts for the International Sale of Goods (CISG). Currently, most of the major industrialized countries are parties to United Nations Convention on Sales and Purchase (CISG), including the United States, Canada, China, Korea, Singapore, Germany, Italy, France, Australia, and Russia.

Scope of United Nations Convention on Sales and Purchase (CISG)

Article 1, Paragraph 1 of United Nations Convention on Contracts for the International Sale of Goods (CISG) states the scope of the CISG: “This Convention shall apply to contracts for the sale of goods between parties whose places of business are located in different countries, in any of the following cases (a) when both of these countries are contracting parties, or (b) when the application of the law of a contracting state is guided by the rules of international justice”. Since both Japan and the U.S. are parties to United Nations Convention on Sales and Purchase (CISG), United Nations Convention on Sales and Purchase (CISG) is applicable to contracts between parties having business offices in Japan and the U.S. pursuant to Article 1, Paragraph 1 (a) of the CISG. In addition, even in the case of a transaction between Japan and a party having a place of business in a country other than one of the Contracting Parties to United Nations Convention on Sales and Purchase (CISG), if Japanese law is applicable due to an election by the parties or other rules of application of law, United Nations Convention on Sales and Purchase (CISG) will apply by applying Article 1, Paragraph 1 (b) of the CISG. (b) of United Nations Convention on Sales and Purchase (CISG).

Possibility of Exclusion from the Scope of Application of United Nations Convention on Sales and Purchase (CISG)

The scope of application of United Nations Convention on Contracts for the International Sale of Goods (CISG) is extremely broad. However, the CISG may be applied (1) when the parties have agreed to exclude the application of the CISG (Article 6 of the CISG), (2) to the sale of goods purchased for personal, family or household use (Article 2(a) of the CISG), or (3) when the parties have agreed to apply customary practices, such as Incoterms (Article 2(a) of the CISG). (see Article 9 of the CISG), and (4) when the mandatory law of the jurisdiction is applied.

Clause excluding the scope of application of United Nations Convention on Sales and Purchase (CISG)

In order to exclude the application of United Nations Convention on Contracts for the International Sale of Goods (CISG), it is necessary to add a clause in the contract for the international sale of goods that excludes the application of United Nations Convention on Contracts for the International Sale of Goods.
(For example)
It is hereby explicitly agreed that the United Nations Convention on Contracts for the International Sale of Products (CISG/Vienna Convention) shall not apply to this Agreement and Individual Contracts.

Applicability of United Nations Convention on Contracts for the International Sale of Goods (CISG) by Japanese Courts

United Nations Convention on the International Sale of Goods (CISG) was drafted by the United Nations to establish standardized rules for the international sale of goods, but some of its provisions differ from Japanese law in certain respects. In the future, Japanese courts will also judge contracts governed by United Nations Convention on the International Sale of Goods (CISG), so it is important to be aware of this.

Provisions of United Nations Convention on Contracts for the International Sale of Goods (CISG) Principle of Reach

Acceptance of an offer shall become effective when the manifestation of consent reaches the offeror (Article 18(2) and Article 24 of United Nations Convention on Sales and Purchase (CISG)).

Provisions of United Nations Convention on Contracts for the International Sale of Goods (CISG) Obligations of the seller

Detailed obligations of the seller are stipulated, including delivery of the goods and delivery of documents (Article 30 et seq. of United Nations Convention on Contracts for the International Sale of Goods (CISG)).

Provisions of United Nations Convention on Contracts for the International Sale of Goods (CISG) Acceptance Inspection

Under the Japanese Commercial Code, the buyer must inspect the subject matter “without delay” after receiving it, and if the buyer discovers a defect in the subject matter of the sale or a shortage in quantity, the buyer must “immediately” notify the seller to that effect (Article 526 (Article 526, Paragraph 1 and 2 of the Commercial Code). United Nations Convention on Contracts for the International Sale of Goods (CISG) requires the buyer to give notice to the seller “within a reasonable time” from the time he discovers or should have discovered the non-conformity of the goods (Article 39, Paragraph 1) and to specify the nature of the non-conformity within two years from the date the goods are actually delivered to him (Article 39, Paragraph 2).

Provisions of United Nations Convention on Contracts for the International Sale of Goods (CISG) Buyer’s Remedies

If the goods do not conform to the contract, various remedies are provided for the buyer, including (1) a claim for delivery of substitute goods (Article 46, Paragraph 2), (2) a claim for correction of nonconformity (Article 46, Paragraph 3), and a claim for reduction of the price (Article 50).

Provisions of United Nations Convention on Contracts for the International Sale of Goods (CISG) Buyer’s Remedies

Cancellation of the contract is limited to cases where the non-fulfillment of obligations is material (Article 49, Paragraph 1 (a), Article 64, Paragraph 1 (a), etc.).