CISG application

 How does the CISG apply as a treaty?

o Applies to contracts of SOG between parties whose places of biz in different
places when (a) parties are contracting states and (B) rules of private international
law lead to application of law of contracting state
 Article 1(1)(a): between contracting state X and contracting state Y 
CISG applies
 Article 1(1)(b): applies when choice of law rules point to law of a
contracting state because private international law just refers to choice of
law rules.
 Example: between contracting state X with PPB in contracting
state and Xanadu (non-contracting state).
o Drafters extend scope of CISG by applying CISG when
choice of law rules point to rules of the contracting state
when the case is filed in germany
o Since Xanadu is not a part of cisg, if case is filed in xanadu,
and Xanadu’s choice of law points to Germany, then CISG
doesn’t apply because 1(1)(b) wouldn’t apply in this state.
 Case between Germany and U.S.,
o but U.S. has a reservation that article 1(1)b doesn’t apply but subject to
 States can only make reservations subject to what the treaty drafters has
allowed. Reservations to 1(1)(b) is allowed.
o Therefore, in case between Germany and U.S., 1(1)(a) applies.
 Hypo: Germany, U.S., Xanadu – not a 1(1)(a) problem because 2 CISG, 1non-CISG.
Case filed in Germany. Choice of law rules point to U.S. law. Which law applies?
o 1(1)(b) case, U.S. made a reservation, and Germany says will not treat U.S. as
contracting state in a 1-1-b situation, When German choice of law rules point to
u.s., then apply UCC.
o If Germany didn’t make the declaration, the law of CISG would apply.
o If case is filed in Germany
 If choice of law rules point to Xanadu, then Xanadu law applies because
Xanadu is not a cisg state
 If law points to Germany, then CISG applies since Germany made
declaration that countries that make 11b reservation will treat as non-
contracting state but since it has a 1-1-b reservation for its own state, and
did not make a reservation, therefore CISG will apply.
o If case is filed in u.s. and choice of law rules point to any of these countries, then
german commercial code, it would be Xanadu rule or US because no 11b in the
treaty.
o If case filed in Xanadu, always national law in question because Xanadu is a non-
cisg party.
 Step 1: same
 Step 2: same. Want disclaimer in the K + wants favorable warranty laws.
o Must make sure that the disclaimer language is effective because CISG talks
about warranties.
 Step 3: look at best substantive law to get the disclaimer in
 o Kansas law – UCC 2-207 applies.  BAD
o German law – German Commercial code: mirror image/counter offer rule 
GOOD
o CISG law- Article 19
 (1) A reply to an offer which purports to be an acceptance but contains
additions, limitations or other modifications is a rejection of the offer and
constitutes a counter-offer.  mirror image/ counter off rule
 (2) However, a reply to an offer which purports to be an acceptance but
contains additional or different terms which do not materially alter the
terms of the offer constitutes an acceptance, unless the offeror, without
undue delay, objects orally to the discrepancy or dispatches a notice to that
effect. If he does not so object, the terms of the contract are the terms of
the offer with the modifications contained in the acceptance.
 Hybrid modified deviant accepted rule
 under 2-207: different term falls off
 under article 19: if materially different term, then not an
acceptance but a counteroffer. If just a different term, then an
acceptance.
o More liberal than mirror –image counter offer
 (3) Additional or different terms relating, among other things, to the
price, payment, quality and quantity of the goods, place and time of
delivery, extent of one party's liability to the other or the settlement of
disputes are considered to alter the terms of the offer materially.
o Since we have a materially altering term, MAYBE GOOD
result when the last shot rule applies, as according to the CISG
(mirror image counter offer rule).
o But some courts don’t like a mechanical result and the modern
trend is to treat it as a knockout rule.
o Therefore, need to know about the tendency of the court
 Step 4: Difference in choice of law clause leads to potential opt out of CISG. If haven’t
opted out, CISG applies and disclaimer
o Issues:
1. Is the opt out successful? What language makes an effective opt?
 Analyze Universal’s K language: “this K will be governed by law of
Kansas”.
o Kansas’ law is not UCC because CISG is a treaty and is a
federal law, and federal law trumps UCC. Therefore, law of
state of Kansas is law of CISG.  Kansas’ attempt to opt out
fails. GOOD!
 German: “this K will be governed by the law of fed republic of
Germany”  CISG law applies.
 Therefore, neither country has adequately opted out by the language of
their K and CISG law governs this transaction. Disclaimer will be in
the contract.
2. Do we want the opt out to be successful?
 a. Our goal: (1) We want party opt out to fail so that parties are in the
CISG or (2) Parties opt out to choose German law.
3. How to argue for our outcome
o If no opt out problem, then CISG applies and choice of law issue is not relevant.
 Just analyze how Germany (tend to be more lenient), and U.S. courts (tend
to be more hardline, textbook approach to article 19) will apply.

SCENARIO 2 WITH CHANGED FACTS, assuming that the

 What would an effective opt out language look like?
o Belt and suspenders analogy: when you have 2 options, you wear both to prevent
your pants from falling off.
o “this K is governed by UCC of state of Kansas AND not the CISG”
o “this K is governed by German commercial code AND not the CISG”
 What would happen if the opt out language was successful? Decide whether the CISG
applies.
 Ex: If one party asked for Singapore, one asked for NY  did not opt out and CISG
applies.  MIGHT BE GOOD.
o Kansas court: If 2 contradictory choices, parties haven’t made a choice because
restatement 187 uses the principle of good faith to find that parties made no
effective choice. Therefore, did not opt out and CISG applies and MIGHT BE
GOOD
o German court: more likely to interpret that on principle of good faith of article 3
of rome regulation and parties have not opted out because no meeting of minds.
 no effective choice and no opt out.
o Why not allow opt out because both parties are still agreeing that they don’t want
to apply CISG? Because would undermine the predictability of CISG
o Therefore depends on whether the court in which this case is filed will apply the
knockout or the last shot rule