This contract tip is about governing law provisions in international sale of goods contracts.
The governing law provisions must always exclude the U.N. Convention on Contracts for the International Sale of Goods (CISG).
If you aren't familiar with it, CISG is a U.N. convention that establishes default rules for cross-border commercial contracts, similar to the way the Uniform Commercial Code (UCC) does in the U.S. There are 96 countries have signed CISG, including the U.S., Canada, Mexico, Australia, China, and Russia.
While I appreciate that CISG exists, it is a gap filler and not needed in contracts governed by U.S. law. We cover all the essential concepts in the contract or indirectly through the UCC.
What some do not know is that CISG's default provisions AUTOMATICALLY apply to ALL contracts for the sale of goods between parties from different signatory countries.
The ONLY way to have CISG not apply to these contracts is to add an exclusion and say it does not apply.
While the CISG exclusion is only needed if both parties are from signatory countries, I typically include it in all my international contracts for the sale of goods. If the contract is later assigned, the exclusion is already there.
I also appreciate that lawyers drafting contracts governed by other laws may want to use CISG as the default terms. My advice is really for U.S. contracts.
What's your approach to CISG in your contracts?
