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September 18, 2007

The UCC is not enough these days: meet the CISG.

If you buy and sell in the global market, the UN Convention on Contracts for the International Sale of Goods ("CISG") is your new friend.

Commercially, we live in a world that never sleeps. Every minute, deals are struck and goods change hands. If your day job is like WAC?'s, it's not unusual for a longstanding client to call on a Friday afternoon with a question about a clause in a 10-year old contract under which the client, a U.S. widget manufacturer, is selling widgets to a Norwegian distributor. "No problem," you say. "Let me grab my copy of the Uniform Commercial Code--and I'll have your answer in a flash. I'll call you back."

Sounds good, right? Well, maybe not.

In cases of international sales of goods, the Uniform Commercial Code--or UCC, adopted by 49 states to create a standardized law for commercial transactions in the U.S.--is often preempted by the federally-adopted United Nations Convention on Contracts for the International Sale of Goods (referred to as the "CISG"). The CISG, a multinational treaty that provides a uniform law for international sales of goods, was signed in 1980 and has been ratified by 70 countries.

While the CISG is similar to the UCC, there are differences, and some are major. For example, unlike the UCC, the CISG generally does not require any contract for the sale of goods to be in writing. More importantly, unless the terms of a sales contract between parties from participating countries expressly exclude the CISG, the CISG is deemed to govern the contract. The U.S. adopted the CISG in 1988. Australia, most of Europe and parts of Asia, Africa and South America have adopted the CISG. One notable holdout: the United Kingdom.

Posted by Tom Welshonce at September 18, 2007 11:12 PM


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