International Sale of Goods

Presenter: Upendra Raj Dulal

Advocate
 Concept
• The term ‘Sale of goods’ is an agreement
whereby the seller transfer or agrees to transfer
the property in the goods (ownership) to the
buyer for money consideration.
• A contract of sale of goods is deemed to have
been concluded if any seller agrees to handover
the goods to the buye either immediately (sale) or
in the future (agreement to sell) for price”
• It is a common commercial transaction that takes
place in various industries, including retail,
wholesale, and manufacturing.
 Opinion?

• E. Allan Farnsworth, a leading expert on commercial law,

"The sale of goods is an agreement between two parties
for the transfer of title to goods for a price."
• In the context of international sales of goods, legal scholar
John Honnold defines a sale of goods as "a contract by
which one party (the seller) transfers ownership of goods
to another party (the buyer) for a price, with the intention
that ownership is to pass from the seller to the buyer."
(Honnold, John O. "Uniform Law for International Sales
Under the 1980 United Nations Convention." Kluwer Law
International, 2009.)
• United States: The Uniform Commercial Code (UCC)
defines a sale of goods as "the transfer of ownership of
goods from a seller to a buyer for a price"
 How it is made?
• A contract of sale is made by an offer to buy or sell
goods for a price and the acceptance of such offer.
• The contract may provide for the immediate delivery
of the goods or immediate payment of the price or
both, or for the delivery or payment by installments,
or that the delivery or payment or both shall be in
future time.
• In most countries, sales of goods are regulated by
laws that outline the rights and obligations of both
the buyer and the seller. These laws may cover
various aspects of the transaction, including the
formation of the contract, the obligations of the
parties, the transfer of ownership, warranties, and
remedies for breach of contract.
 Example?

• In the United States, sales of goods are governed

by the Uniform Commercial Code (UCC), which has
been adopted by all states. The UCC provides a
standardized set of rules for sales of goods,
including provisions for the formation of contracts,
delivery of goods, and warranties.
• Similarly, in the United Kingdom, sales of goods
are governed by the Sale of Goods Act 1979, which
outlines the rights and obligations of both the
buyer and the seller. The Act covers various aspects
of the transaction, including the quality of goods,
delivery, and remedies for breach of contract.
 In Nepal?
• The National Civil Code, 2017 A.D, Chapter-6 Provisions
Relating to Contract of Sale of Goods
545. Contract of sale of goods:
• (1) A contract of sale of goods shall be deemed to have been
made if any seller agrees to transfer the property in goods
immediately or in the future to the buyer for a price.
• Explanation: For the purposes of this Chapter, the term
“goods” means any kind of movable property capable of being
purchased or sold other than currency in circulation for the
time being, security or actionable claim.
• (2) A contract of sale of goods may be conditional or
unconditional.
• (3) A contract may be concluded to sell the goods owned or
possessed by the seller for the time being or those to be
 Elements?
1. Two parties (buyer and seller) , Buyer is one who buys
or agrees to buy and seller is one who sells or agrees
to sell.
2. Goods
3. For price
4. Cash(cheques, promissory notes, bill of exchange etc)
5. Transfer of property (ownership): Not possession only
6. Sale and agreement to sell
7. Can be express and implied
8. All elements of valid contract
 Types of Goods
• Existing goods: These are the goods, which are owned or
possessed upon at the time a contract of sale is made. Goods
which are physically in existence and which are in seller’s
ownership and/ or possession, at the time of entering the
contract of sale are called existing goods.
• Specific goods/ Ascertained goods: Goods identified and agreed
upon at the time of the making of the contract. For eg Specified
watch, motorbike, T.V.
• Unascertained goods: Goods, which are not separately
identified or ascertained at the time of making contract.
• They are identified and defined only by description. For example
A wants television and he goes to shop where several sets of T.Vs
are displayed. He sees the performance of particular T,V. which he
agrees to buy. The set so agreed to buy is specific set. But if he so
agreed with one of them which is not separated is unascertained
goods.
• Future Goods: These are the goods which seller
doesn’t possesses at the time of the contract but
which will be manufactured or produced or acquired
by him after the making of the contract of sale
• For E.g. A agrees to sell all the milk to B that his cow
may yield coming year. This is a contract for sale of
future goods. X agrees to sell Y all the mangoes,
which will be produced in the garden next year.

• Contingent goods: goods, the acquisition of which by

the seller depends upon an uncertain contingency
which may or may not happen are called contingent
goods
 History of International Sale of Goods
• History of International Business started with the
evolution of Human Civilization.
• The integration and Growth of economies and Societies
was the main reason for the first phase of International
Business and Globalization.
• Merchants in the Roman Empire engaged in
international trade, importing goods such as silk, spices,
and precious metals from the Far East and Africa.
• Similarly, Chinese merchants traded porcelain, silk, and
tea with their counterparts in Europe and the Middle
East.
• However, it wasn't until the Industrial
Revolution in the 18th and 19th centuries that
international sales of goods became more
widespread and organized.
• The rise of steamships and railways made it
easier and faster to transport goods over long
distances, and the growth of international
trade led to the development of new laws and
regulations to govern sales transactions.
• 19th Century: The broader concept of the
integration of economies and societies
evolved
• In the 20th century, the need for uniform laws
governing international sales of goods became
increasingly important as global trade continued to
expand.
• The first attempt to create a uniform international law
for sales of goods was the Hague Conventions of 1899
and 1906, which provided rules for the interpretation of
contracts and the settlement of disputes.
• However, it wasn't until the 1930s that the first
comprehensive international law governing sales of
goods was drafted.
• On 3 September 1926 the International Institute for
the Unification of Private Law (UNIDROIT) was
founded in Rome and inaugurated on 30 May 1928.
• The International Institute for the Unification of Private Law
(UNIDROIT) and the International Chamber of Commerce (ICC)
worked together.
• The effort leads to establish of two separate conventions for different
aspect of business.
• While the initiation of the ULIS Convention preceded that of the ULF
Convention, the commencement of both of them was in April 1964
through a diplomatic conference held at The Hague.
• 1. ULIS Convention: Convention on Uniform Law on the International
Sale of Goods
• 2. Ulf Convention: Convention concerning a Uniform Law on the
Formation of Contracts for the International Sale of Goods.
• In 1980, the United Nations Commission on International Trade Law
(UNCITRAL) adopted the United Nations Convention on Contracts for
the International Sale of Goods (CISG), which provides a
comprehensive framework for international sales of goods. The CISG
has been ratified by more than 94 countries and has become one of
• In the same year Ernst Rabel suggested pursuing the
unification of international sales law.
• On 21 February 1929 Rabel handed in his preliminary
report on the possibilities of sales law unification.
• On 29 April 1930 a committee consisting of
representatives from different legal systems was
instituted.
• The first draft of a uniform sales law was published in
1935.
• In 1936 Rabel published the first volume of his
seminal work “Das Recht des Warenkaufs” providing
an analysis of sales law at that time on a broad
comparative basis.
• In 1964 the Uniform Law on the Formation of
Contracts for the International Sale of Goods (ULFIS)
and the Uniform Law on the International Sale of
Goods (ULIS) were drafted and finalized at the
conference in The Hague.
• However, these first uniform sales laws did not fulfil
their high hopes and expectations.
• Although their practical relevance should not be
underestimated,7 only nine countries became
member states8 while important economies like
France and the USA did not participate.
• Furthermore, socialist and developing countries
perceived these uniform laws as favoring sellers from
• On 17 December 1966 the United Nations
Commission on International Trade Law
(UNCITRAL) was instituted.
• UNCITRAL continued the work on the
unification of sales law from 1968 onwards
using the Hague Conventions as a basis.
• The first draft of a uniform law was finalized in
January 1976.
• In 1978 UNCITRAL circulated a subsequent draft
containing rules on contract formation as well as
the substantive sales law amongst the
governments of the UN-members.
• Between 10 March and 5 April 1980 delegates
from 62 nations deliberated the CISG at the now
famous Vienna Conference.
• At its end 42 countries voted in favor of the
Convention.
• On 11 December 1986 the necessary number
of ten ratifications (Art. 99 CISG) was reached
and the Convention entered into force on 1
January 1988.
• The official languages are Arabic, Chinese,
French, English, Russian and Spanish. Austria,
Germany and Switzerland agreed on a German
translation in 1982 but could not, however,
agree on all terminologies.
• Contracts for the International Sale of Goods
(CISG), also referred to as Vienna Convention,
is a treaty that was formed by the United
Nation in order to create a uniform
international convention or model law.
• The resultant model law is commonly used to
govern international sales agreements.
 Importance of Unified International Sale of Goods
• 1. Promotes international trade: International sales of goods are a critical
component of international trade, which supports economic growth and
development. By providing a uniform framework for sales transactions, unified
international sales law helps to facilitate cross-border commerce and reduce
transaction costs.
• 2. Encourages international investment: Unified international sales law provides a
predictable and stable legal environment for international sales transactions,
which can increase investor confidence and encourage foreign investment.
• 3. Reduces transaction costs: International sales transactions often involve
complex legal issues and multiple legal systems, which can lead to high transaction
costs. A unified international sales law can reduce these costs by providing a
standardized set of rules for sales transactions.
• 4. Provides legal certainty: A uniform international sales law provides legal
certainty and predictability for parties involved in sales transactions. This reduces
the risk of disputes and helps to ensure that sales transactions are completed
smoothly.
• 5. Promotes fair trade: A uniform international sales law helps to promote fair
trade practices by providing a level playing field for all parties involved in sales
transactions. This reduces the risk of abuse or exploitation of weaker parties in the
transaction.
• 6. Resolves cross-border disputes: When disputes arise in international sales
transactions, parties may face difficulties resolving them due to different legal
systems and cultural differences. A unified international sales law can help to
resolve cross-border disputes by providing a neutral and consistent legal
framework.
• 7. Promotes harmonization of commercial law: Uniform international sales law is
part of a broader effort to harmonize commercial law across different countries.
This can help to reduce legal barriers to trade and make it easier for businesses to
operate across borders.
• 8. Enhances consumer protection: A uniform international sales law can help to
enhance consumer protection by providing clear rules for sales transactions. This
can help to reduce the risk of fraud, misrepresentation, and other unfair practices.
• 9. Facilitates technology-driven commerce: With the growth of e-commerce and
other technology-driven commerce, international sales transactions are becoming
increasingly complex. A unified international sales law can help to facilitate these
transactions by providing a legal framework that is adapted to the needs of
modern commerce.
• 10. Supports sustainable development: Unified international sales law can help to
support sustainable development by promoting fair trade practices, protecting the
environment, and encouraging responsible business conduct.
 United Nations Commission on
International Trade Law (UNCITRAL)
• The United Nations established the UNCITRAL in
1966.
• The move was in response to the rapid rise of global
trade that took place in the 1960s.
• At the time, national governments recognized the
need for harmonized global standards to replace the
various national and regional regulations which, until
then, largely governed international trade.
• UNCITRAL is headquartered in New York, which is
the same location as the U.N.'s headquarters.
 UNCITRAL
• It is the core legal body of the UN systems in the field of
International Trade Law.
• UNCITRAL was established in 1966 with a recognition that
international trade cooperation among states is an
important factor in the promotion of friendly relations and,
consequently, in the maintenance of peace and security
• The organization operates on the premise that
international trade has global benefits for its participants.
• With increasing economic interdependence globally,
UNCITRAL seeks to help expand and facilitate global trade
through the progressive harmonization and modernization
of the law of international trade.
• Through its several model laws, conventions, legislative
guides and robust debates in working groups, UNCITRAL has
provided a valuable platform for countries to compare,
examine, debate and adopt principles of international
commercial and trade law appropriate to their circumstances.

• UNCITRAL have been used for the settlement of broad range

of disputes, including disputes between private commercial
parties where no arbitral institution is involved, investor-state
disputes, state to state dispute and commercial disputes
administered by arbitral institutions.
• The organization is also responsible for coordinating the work of other
bodies active in international trade, both within and outside of the UN,
to enhance cooperation, consistency, and efficiency while avoiding
duplication.

• UNCITRAL aims to formulate modern, fair, and harmonized rules for

such commercial transactions.

• Its work includes conventions, model laws, and rules which are
acceptable worldwide; legal and legislative guides, and practical
recommendations; updated information on case law and enactments
of uniform commercial law; technical assistance in law reform projects;
and regional and national seminars on uniform commercial law.
• In 1930, International Institute for the Unification of Private Law
(UNIDROIT), an intergovernmental organization established by
the League of Nations initiated efforts on a uniform law for the
international sale of goods. The effort however was interrupted
due to the Second World War.

• UNIDROIT prepared the Convention relating to a Uniform Law on

the International Sale of Goods and the Convention relating to a
Uniform Law on the Formation of Contracts for the International
Sale of Goods which were adopted at a Diplomatic Conference in
the Hague in 1964.
• The Conventions were not widely accepted and faced many
criticism including that they reflected civil law tradition of
continental Western Europe.
• With the objective of creating international sales
rule that would attract increased acceptance of
the States, the United Nations Commission on
International Trade Law (UNCITRAL) began to
study the 1964 Conventions.
• It revised the two Conventions and prepared an
integrated Draft Convention on Contracts for the
International Sale of Goods.
• The Convention was adopted unanimously on 10
April 1980 at the UN Conference on Contracts for
the International Sale of Goods held in Vienna
that came into force on 1 January 1988.
• The Convention is divided into four parts.
• Part One (Articles 1-13) deals with the scope of application of
the Convention and the general provisions.
• Part Two (Articles 14-24) contains the rules governing the
formation of contracts for the international sale of goods.
• Part Three (Articles 25-88) deals with the substantive rights and
obligations of buyer and seller arising from the contract.
• Part Four (Articles 89-101)contains the final clauses of the
Convention concerning such matters as how and when it comes
into force, the reservations and declarations that are permitted
and the application of the Convention to international sales
where both States concerned have the same or similar law on
the subject.
 Obligation of the Seller

• Article 30

• The seller must –

– Deliver the goods that conform to the contractual
description,

– Hand over documents relating to the goods and

– Transfer the property in the goods.

 OBLIGATION 1
- Delivery of Goods

A. Actual delivery - transfer of possession from

one person to another

B. Constructive delivery – the goods themselves

are not delivered, but the means of obtaining
possession of the goods is delivered.
 Place of Delivery

• Article 31: Obligation to Deliver the Goods –

• If the seller is not bound to deliver the goods at any
other particular place, his obligation to deliver
consists:
• (a) in handing the goods over to the first carrier for
transmission to the buyer;
• (b) —in placing the goods at the buyer’s disposal at
that place;
• (c) in other cases—in placing the goods at the
buyer’s disposal at the place where the seller had
his place of business at the time of the conclusion of
the contract.
 Obligation to notify - Art.32
• The seller is obliged to notify to the buyer about the
consignment
• A) if the seller hands the goods over to a carrier and if the
goods are not clearly identified to the contract by markings
on the goods, by shipping documents or otherwise,
• B) If the seller is bound to arrange for carriage of the goods,
he must make such contracts as are necessary for carriage to
the place fixed by means of transportation appropriate in the
circumstances and according to the usual terms for such
transportation.
• C) If the seller is not bound to effect insurance in respect of
the carriage of the goods, he must, at the buyer's request,
provide him with all available information necessary to
enable him to effect such insurance.
 Time for Delivery: Art.33
 The seller must deliver the goods:

A. If a date is fixed by or determinable from the contract,

on that date;

B. If a period of time is fixed by or determinable from the

contract, at any time within that period unless
circumstances indicate that the buyer is to choose a
date; or

C. In any other case, within a reasonable time after the

conclusion of the contract.
 OBLIGATION 2
– The duty to hand over documents (Art 34)

• If the seller is bound to hand over documents relating

to the goods:
He must hand them over at the time and place and in the
form required by the contract.

 Documents relating to the goods:

Bills of lading/ dock receipts/ warehouse receipts/
insurance policies/ commercial invoices/ certificates of
origin….
 OBLIGATION 3 -
Conformity of the goods
 Arts 35-44

 Article 35 –

The seller 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.
.
• Article 36: Liable of Non-Conformity - The seller is liable in
accordance with the contract and this Convention for any lack of
conformity which exists at the time when the risk passes to the
buyer, even though the lack of conformity becomes apparent only
after that time. If the goods do not conform to the contract, the
buyer may require the seller to remedy the lack of conformity by
repair, replacement, or price reduction. The buyer must give
notice of the lack of conformity to the seller within a reasonable
time after discovering it.

• Article 37: Cure of Non-Conforming Goods or damaged goods - If

the seller has delivered goods before the date for delivery, he
may, up to that date, deliver any missing part or make up any
deficiency in the quantity of the goods delivered, or deliver goods
in replacement of any non-conforming goods delivered or remedy
any lack of conformity in the goods delivered, provided that the
exercise of this right does not cause the buyer unreasonable
inconvenience or unreasonable expense. The basic obligation of
th
 The seller’s assurance of the quality of goods

 Except where the parties have agreed otherwise, the goods DO

NOT CONFORM with the quality mentioned in the contract
unless they:

1) Are fit for the purposes for which goods of the same description would
ordinarily be used;

2) Are fit for any particular purpose expressly or impliedly made known to
the seller at the time of the conclusion of the contract
Exceptions –
 Where the circumstances show that the buyer did not rely, or

 It was unreasonable for him to rely, on the seller's skill and

judgement;
 Seller’s Right (Articles 62 to 65)
• Require to Pay: The seller may require the buyer
to pay the price, take delivery or perform his
other obligations, unless the seller has resorted
to a remedy which is inconsistent with this
requirement. (Article 62)

• Fix Additional Time: The seller may fix an

additional period of time of reasonable length for
performance by the buyer of his obligations.
(Article 63)
Declare the contract is avoided
• If the buyer fails to perform any of his
obligations under the contract or this
Convention amounts to a fundamental breach
of contract
• If the buyer does not perform his obligation to
pay the price or take delivery of the goods, or
if he declares that he will not do so within the
period so fixed. (Article 64)
 Make the specification
• When the buyer fails to specify the form,
measurement or other features of the goods , the
seller may, without prejudice to any other rights,
make the specification himself in accordance with the
requirements of the buyer that may be known to him.

• If the buyer fails to make any changes to the

specification so made by the seller within the time so
fixed, the specification made by the seller is binding.
(Article 65)
 OBLIGATIONS OF THE BUYER
The general obligations of the buyer are:
• to pay the price for the goods
• take delivery of them as required by the
contract and the Convention. (Article 26)
 Other Obligations
• Pay the Price:
The Buyer must pay the price for the goods and take delivery of them as
required by the Sales Agreement and the CISG
(Article 53)

• Buyer fulfils all requirements.

It is for the buyer to take such steps and comply with such formalities as may be
required to effect payment of the purchase price.
(Article 54).

No price agreed
If no purchase price has been established (and no clear and unequivocal
parameters exist to establish the price), the purchase price is deemed impliedly
to be the price generally charged at the time of the conclusion of the contract for
such goods sold under comparable circumstances
(Article 55).
• Net weight. If the purchase price is based on the
weight of the goods, in case of doubt it is to be
determined by the net weight.
(Article 56).

• Place of payment.
The buyer must pay the purchase price at the
seller’s place of business or,
if the payment is to be made against delivery of the
goods or documents, at the place of such delivery
(Article 57(1)).
• When to pay?
• Failing a specified date of payment, the buyer must pay when
the seller places the goods (or documents controlling their
disposition) at the buyer’s disposal.
• The seller may make such payment a condition for handing over
the goods or documents
(Article 58(1)).

• Pay against delivery.

• If the sales contract involves transportation of the goods, the
seller may dispatch the goods on terms whereby the goods (or
documents controlling their disposition) will not be handed over
to the buyer except against payment of the full purchase price
(Article 58(2)).
• Pay after inspection.
The buyer is not bound to pay the price until it has had an
opportunity to examine the goods, unless the agreed procedures
for delivery or payment are inconsistent with its having such an
opportunity.
(Article 58(3)).

• No request required.
The buyer must pay the full purchase price without the need for
any request or compliance with any formality on the part of the
seller
(Article 59).
 Taking Delivery
The buyer's obligation to take delivery
consists:
(a) in doing all the acts which could
reasonably be expected of him in order to
enable the seller to make delivery; and
(b) in taking over the goods.

(Article 60)
 Buyer’s Right

• The right to demand delivery of goods (Article 31). The seller is

required to deliver the goods at the agreed place of delivery, or if
no place is specified, at the seller's place of business.
• The right to receive goods of the contracted quality (Article 35).
The seller is required to deliver goods that conform to the quality,
quantity, and description specified in the contract.
• The right to examine the goods (Article 38). The buyer has the
right to inspect the goods within a reasonable time after they are
delivered, to determine if they conform to the contract.
• The right to claim damages for non-conforming goods (Article 45).
If the goods are not of the quality specified in the contract, the
buyer may be entitled to claim damages from the seller. In
accordance with article 45 If the seller fails to perform any of his
obligations under the contract or this Convention, the buyer may
• (a) exercise the rights provided in articles 46 to 52;
• (b) claim damages as provided in articles 74 to 77
• The right to demand substitute goods (Article 46). If the goods delivered do
not conform to the contract, the buyer may require the seller to provide
substitute goods that do conform.
• The right to avoid the contract for fundamental breach (Article 49). If the
seller fails to perform its obligations under the contract, the buyer may avoid
the contract and seek damages.
• The right to demand a reduction in the price (Article 50). If the goods
delivered do not conform to the contract, the buyer may be entitled to a
reduction in the contract price.
• Article 52: Right to refuse to take delivery: If the seller delivers the goods
before the date fixed, the buyer may take delivery or refuse to take delivery.
• The right to withhold payment (Article 71). If the seller fails to perform its
obligations under the contract, the buyer may be entitled to withhold
payment until the seller has performed.
• The right to claim damages for delay in delivery (Article 74). If the seller fails
to deliver the goods within the agreed timeframe, the buyer may be entitled
to claim damages.
• The right to terminate the contract (Article 73). If the seller fails to perform
its obligations in a way that amounts to a fundamental breach of the
contract, the buyer may terminate the contract.
Remedies for breach of contract
Relevant CISG Articles.
The remedies of the buyer for breach of contract by the seller are
addressed in connection with CISG Chapter II obligations of the
seller (CISG Articles 45-52),

and the remedies of the seller for breach of contract by the buyer
are addressed in connection with CISG Chapter III obligations of the
buyer (CISG Articles 61-65).

The same principles apply for both: if all required conditions are
fulfilled, the aggrieved party may require performance of the other
party’s obligations, claim damages, or avoid (terminate) the contract.

In addition, the buyer may reduce the price if the delivered goods do
not conform to the contract.
 Specific performance.
• The foremost principle in case of breach of contract is that the
buyer is permitted to require specific performance (unless it has
resorted to a remedy that is inconsistent, such as termination of
the contract –
• (Articles 28 and 46).

• Specific performance means that the seller must perform in kind:

deliver the goods.

• Replacement. A buyer can require the delivery of substitute

goods only if the goods delivered were not in conformity with the
contract and the lack of conformity constituted a fundamental
breach of contract (Article 46(2)).
 Remedies for Breach of Contract by the
Buyer
• The Seller may provide the Buyer a reasonable time extension
to perform its obligations (CISG Art. 63)

• The Seller may force the Buyer to perform its obligations,

including payment of the price and taking of delivery (CISG
Art.62)

• The Seller may declare the Sales Agreement avoided:

– If the failure by the Buyer to perform any of its obligations
amounts to a fundamental breach of Sales Agreement; or
– If the Buyer fails to perform its obligations after the
expiration of the additional period of time granted by the
Seller (CISG Art. 64)
 Parties’ Anticipatory Breach
• Any party may suspend the performance of its obligations if it
becomes apparent that the other party will fail to perform a
substantial part of its obligations as a result of:
– A serious deficiency in its ability to perform or in its
creditworthiness; or
– Its conduct in preparing to perform or in performing the
contract (CISG Art. 71)

• Any party may suspend the performance of its obligations if it

becomes apparent that the other party will fail to perform a
substantial part of its obligations as a result of:
– A serious deficiency in its ability to perform or in its
creditworthiness; or
– Its conduct in preparing to perform or in performing the
contract (CISG Art. 71)
 Répudiation of the Sales Agreement and
Damages
• If it is clear that one of the parties will commit a fundamental
breach of the Sales Agreement, the other party may declare
the contract avoided (CISG Art. 72)

• The party who suffered from the breach of the Sales

Agreement is entitled to damages. Such damages may not
exceed the loss reasonably foreseeable at the time of the
conclusion of the contract (CISG Art. 74)

• A party who relies on a breach of a Sales Agreement must

take any reasonable measure to attempt to mitigate the loss
resulting from the breach. If it fails to do so, the damages
granted by the Court may be reduced in the amount by which
the loss should have been mitigated (CISG Art. 77)
 Force majeure.
• A party in breach of its obligations might excuse itself (and be exempted from liability)
on the basis of an event of force majeure (CISG Article 79).

• To be excused successfully, the failure must be due to an impediment beyond its

control (external) that the party could not reasonably have been expected to take into
account (reasonably unforeseeable) at the time of the conclusion of the contract, and
that it could not have avoided or overcome (no alternative for due performance).

• Such event of force majeure exempts that party from the consequences of its failure
to perform, including the payment of any damages. This exemption may also be
invoked by a subcontractor. Furthermore, a successful claim of force majeure does
not preclude either party from invoking any other remedy (e.g. a reduction of the
purchase price if the goods contained defects)

• A key criterion to benefit from the force majeure exemption is that the party notifies
the other party within a reasonable period of time. Otherwise, the other party is
entitled to compensation of its damages to the extent that these could have been
prevented but for the lapse of such additional time.
 Passing of Risks
• The two situations contemplated by the Vienna Convention are
when the sales contract involves carriage of the goods (CISG
Article 67) and when the goods are sold while in transit (CISG
Article 68).
• In all other cases, the risk passes to the buyer when it takes over
the goods or from the time when the goods are placed at its
disposal and it commits a breach of contract by failing to take
delivery, whichever comes first (CISG Article 69).
• In the frequent case when the contract relates to goods that are
not then identified, they must be identified as covered by the
contract before it can be considered that they have been placed at
the disposal of the buyer and that the risk of their loss has passed
to the buyer (CISG Article 69(3) and 69(2)).
 Passing of Risks
• The CISG provides that the risks pass to the Buyer at the time of the shipment

• Unless a loss or damage to the goods is imputable to the Seller, after the risks have
passed, the Buyer may not invoke such loss or damage after the passing of risks, in The
CISG provides that the risks pass to the Buyer at the time of the shipment

• Unless a loss or damage to the goods is imputable to the Seller, after the risks have
passed, the Buyer may not invoke such loss or damage after the passing of risks, in order
to discharge itself from its obligation to pay the price (CISG Art. 66)

• When the contract of sale involves carriage of the goods and the seller is not bound to
hand them over at a particular place, the risk passes to the buyer when the goods are
handed over to the first carrier for transmission to the buyer in accordance with the
contract of sale.

• When the seller is bound to hand the goods over to a carrier at a particular place, the risk
does not pass to the buyer until the goods are handed over to the carrier at that place.

• The risk does not pass to the buyer until the goods are clearly identified to the contract,
whether by markings on the goods, by shipping documents, by notice given to the buyer
or otherwise. (CISG Art. 67)
 Revision
• Since the CISG allows you to opt out of or modify its provisions, it enables
you to draft a unique Sales Agreement responsive to your specific needs

• The provisions of the CISG will allow you to prove your rights under an
oral agreement, and enforce it against the Buyer

• Being a neutral set of rules, the CISG will prevent you or your Buyer from
benefiting from the application of your respective national laws

• Choosing the CISG will provide you with a single set of rules applicable to
all your foreign sales

• Because the CISG was designed to promote international trade, it was

designed to be a flexible legal instrument, allowing each party to protect
their interests and conduct business efficiently, without excessive
restraints