Cisg Based Contract Guidlines

Guide for Managers and
Counsel: Drafting CISG

Contracts and
Documents
Drafting CISG Contracts and Documents and Compliance Tips for
Traders
January 2004
Prepared by John P. McMahon [*]

Introduction
- Suggested procedures, contract clauses, documents
Suggestions regarding:
Part I. Sphere of Application and General Provisions

- Art. 1. Applying the CISG by contract
- Art. 2. Applying the CISG to contracts excluded by Art. 2
- Art. 3. Mixed contracts for goods and services
- Art. 6. Excluding the Convention or parts of it
- Art. 7. Filling gaps in the contract and the Convention
- Arts. 8, 11. Dealing with external evidence of intent
- Art. 9. Dealing with the applicability of trade usages
- Art. 10. Specifying place of business for CISG purposes
- Art. 11. Requiring a written contract
- Art. 13. Specifying the form of notices and writings for purposes of the contract
and the CISG
Part II. Formation of the Contract

- Art. 14. Preventing an indication from constituting an offer
- Art. 16. Revocable and irrevocable offers
- Art. 18. Dealing with acceptance by performing an act
- Art. 19. Dealing with acceptances containing additional or different terms
- Art. 21. Offeror's notice that late acceptance is effective or ineffective
Part III. Sale of Goods

- Arts. 25, 49, 64. Modifying the meaning of fundamental breach
- Art. 26. Notice of avoidance for breach
- Art. 27. Undelivered communications
- Art. 28. Ruling out or requiring a judgment or arbitral award mandating
performance
- Art. 29. Modifying and terminating contracts
- Arts. 30-32, 60, 66-69. Convention provisions governing delivery and acceptance
- Art. 35. Convention requirements concerning conformity of the goods
- Art. 39. Buyer's notice of lack of conformity
- Art. 43. Buyer's notice of right or claim of third party
- Art. 44. Buyer's excused failure to give notice
- Art. 46. Buyer's request for substitute goods
- Art. 47. Fixing additional time for performance
- Art. 48. Seller's right to cure
- Art. 50. Remedy of price reduction
- Art. 65. Seller's notice of specifications
- Art. 71. Notice of suspension of performance
- Art. 72. Notice of intent to declare contract avoided
- Art. 73. Avoidance of contracts for delivery of goods by installments
- Art. 74. Defining or limiting compensatory damages
- Art. 77. Mitigation of damages
- Arts. 78, 84(1). Dealing with interest
- Art. 79. Dealing with force majeure and hardship
- Art. 88. Notice of intention to sell
INTRODUCTION
This part of the Guide presents contract clauses and documents

suggesting an approach to dealing with contract issues and tips for
contract administration when the CISG applies. It provides a starting point,
not legal advice. You must determine whether the procedures, contract
clauses and documents included here suit your situation, before adopting
them.
We will re-evaluate, revise and expand what we say here from time to
time. You are welcome to suggest refinements and additional contract
terms and documents. If we adopt your suggestion, we will give you a "by-
line."
The focus here is on procedures, clauses and documents suggested by

the provisions of the CISG. This is not a manual on sales contract drafting.
There are numerous sources of model contracts and clauses and of
guidance on using them. Legal publishers, for example, Business Laws,
Inc.; West Publishing Co.; The Lawyers Co-Operative Publishing Co.;
Warren, Gorham & Lamont; Kluwer Law International; and Clark,
Boardman, Callaghan, publish sales contract forms and clauses. Often,
their products include checklists that will help you avoid overlooking
something that ought to be covered. Some are available on disk, so they
are easy to use. Visit the publishers' web sites or request their catalogues
to obtain more information. There are free and fee based sources of
contract forms on the Internet. The free forms are likely to be too basic for
your needs. For a list of web sites where you will find contract forms,
among others, see <http://www.findlaw.com/16forms/collections.html>.
Other sources of suggestions for drafting contracts falling under the
Convention include:
Albert Kritzer, Guide to Practical Applications of the United Nations

Convention on Contracts for the International Sale of Goods, Volume 1
International Contract Manual, Kluwer (1991);
Contract Checklists, Albert Kritzer, Editor, Volume 3, International Contract

Manual, (1991);
E. Allan Farnsworth, Review of Standard Forms or Terms Under the

Vienna Convention, 21 Cornell Int'l L.J. 439-447 (1988);
Peter Winship, Changing Contract Practices in Light of the United Nations

Sales Convention: A Guide for Practitioners, 29 Int'l Lawyer 525, 538
(1995);and
B. Blair Crawford, Drafting Considerations under the 1980 Convention on

Contracts for the International Sale of Goods, 8 J. Law & Com. 187, 192-
194 (1988);
The International Chamber of Commerce has published a model contract

designed for the international sale of manufactured goods intended for
resale in general commerce. It is available from the ICC in a package that
includes explanatory notes and a disk containing both the notes and the
contract making them easy to search, annotate and edit. For commentary
on the ICC form, see James M. Klotz, Critical Review of the ICC Model
International Sale Contract (1997). Mr. Klotz concludes that the ICC form
will fit very few transactions without serious consideration and revision.
There is an annotated export contract at the end of Professor Kritzer's

Guide to Practical Applications of the United Nations Convention on
Contracts for the International Sale of Goods. It consists of a contract for
the international sale of goods with comments and suggestions in the
margin. Professor Kritzer's suggestions follow the order dictated by the
form contract included in his text.
This material follows the outline of the Convention. We will not cover all of
its provisions. You can use the "find" command of your browser to locate
suggestions relating to a particular article, for example a form of notice of
lack of conformity under "Article 39." Clicking on the lead reference to the
article will take you to the IICL CISG Database annotated text of the
Article. The annotated texts contain links to, among other materials, the
relevant section of the UNCITRAL Secretariat's Commentary on a 1978
draft of the Convention. The Commentary contains useful practical
information on what the Convention's Articles were meant to achieve and
how they are to operate in practice. It can help you decide whether you
can live with the Convention's rules or ought to modify them by appropriate
language in your contract.
PART I. SPHERE OF APPLICATION AND GENERAL PROVISIONS
Article 1 - Suggestions regarding Applying the CISG by Contract.
Generally, the CISG applies only to contracts for the sale of goods
between parties whose relevant places of business are in different
Contracting States or when the rules of private international law lead to the
application of the law of a Contracting State. Nations adhering to the
Convention may exclude the latter basis of applicability, so you will have to
check for declarations and reservations. For information on declarations
generally, go to the Table of Contracting States.
Under the Convention, the fact that the parties to the contract have their
places of business in different States is to be disregarded whenever this
fact does not appear either from the contract or from any dealings
between, or from information disclosed by, the parties at any time before or
at the conclusion of the contract. Consequently, you should consider
identifying the parties' places of business in the contract in a way that
makes evident the applicability or non-applicability of the Convention.
"XYZ Corp. of ________________ [insert address, including country]

and
ABC S.A. of __________________ [insert address, including country]
agree as follows:"
See further discussion and forms under Article 10.
The CISG is the product of a long process of development by legal and

commercial experts. At this writing it has been adopted by 62 nations.
When you are negotiating a sales contract choice of law clause, even if the
Convention would not apply to your sales contract, it could be a suitable
neutral ground between the law of your contract partner's home and your
domestic law. The ICC model contract incorporates the CISG with the
intention that the Convention apply whether or not the countries of the
seller and buyer have ratified it. Consider adopting the CISG as part of
your contract, where it would not apply otherwise. You should be able to
make the CISG part of your contract by using a choice of law clause.
Domestic law will govern the validity of such a clause, but under usual
conflicts of law rules, most often, choice of law clauses are enforceable.
The language of Article 7 of the Convention suggests the following clause:
"Questions concerning the formation of this contract and the rights

and obligations of Seller and Buyer that are not settled by the terms
stated in this document shall be settled in conformity with those
provisions of the United Nations Convention on Contracts for the
International Sale of Goods that do not conflict with the terms stated
in this document."
The wording usually used in choice of law clauses suggests the following:
"Issues concerning the formation of this contract and the rights and
obligations of Seller and Buyer that are not settled by the terms set
out in this document shall be governed and controlled by those
International Sale of Goods that do not conflict with the terms agreed
by the parties."
"This contract shall be governed by and construed in accordance with

those provisions of United Nations Convention on Contracts for the
International Sale of Goods that do not conflict with the terms set
forth in this document."
If you do not want to adopt some of the Convention's provisions, you would
modify the suggested clause to exclude those that you do not wish to
adopt.

stated in this document shall be settled in conformity with those
by the parties. Article(s)... [insert Article number(s) of the Convention
is (are) excluded"
obligations of Seller and Buyer that are not settled by the terms set
by the parties. Article(s)... [insert Article number(s) of the
Convention]... is (are) excluded."

by the parties in this document. Article(s)... [insert Article number(s)
of the Convention]... of the Convention is (are) excluded.
To avoid any question about the meaning of the choice of law clause,
consider excluding articles that establish rules that could render the
Convention inapplicable. For example, if your contract covers the sale of a
vessel or both goods and substantial services, you should consider
excluding Articles 2 and 3, respectively.
Professor Albert Kritzer comments: "When the Convention applies to your

contract, either by the terms of your contract as above, or by the terms of
the Convention itself, it is important to recognize that the Convention does
not address certain questions that arise frequently in the area of sales law.
Unlike, for example, the U.S. Uniform Commercial Code, the CISG does
not contain provisions on letters of credit, methods of perfecting security
interests in goods and other commercial subjects, many of which can also
be relevant to sales of goods. It is helpful to address such subjects by
identifying the applicable gap-filling law. See the discussion under Article 7
below for suggested attention to this subject."
Article 2 - Suggestions Regarding Applying the CISG to Contracts

Excluded by Article 2. The CISG does not apply to the types of sales
contracts listed in Article 2. There does not seem to be any particular
reason why the gap-filling contract rules of the CISG would not suit
international contracts for the sale of ships, vessels and aircraft. While
well-drafted contracts for the sale of vessels will be written in sufficient
detail to leave little room for supplementation by the provisions of the
CISG, there may be gaps that the Convention would fill. It is unlikely the
Convention would be well suited for international contracts for the sale of
stock, investment securities and negotiable instruments. You should
consider, too, whether there are mandatory rules of national law that
prevent the application of the Convention to the categories of contracts
excluded by Article 2.
The choice of law clause suggested under Article 1 could be used to adopt
the Convention as the law of contracts for the sale of ships, vessel and
aircraft. Article 2 would be excluded.

contained in this document shall be settled in conformity with those
herein. Article 2 of the Convention is excluded."
obligations of Seller and Buyer that are not resolved by the terms set

International Sale of Goods that do not conflict with the terms set out
in this document. Article 2 of the Convention is excluded."
Article 3 - Suggestions regarding Mixed Contracts for Goods and

Services. Under Article 3, the Convention does not apply to contracts for
the supply of goods to be manufactured or produced if the party who
orders the goods is to supply a substantial part of the necessary materials.
Further, it does not apply to contracts in which the preponderant part of the
obligations of the party who furnishes the goods consists in the supply of
labor or other services.
Professor Albert Kritzer comments: "The CISG does not address issues
that should be dealt with in contracts for services. You should consider
preparing a separate contract for the services aspects of a mixed
transaction."
If you want the Convention to apply even though the buyer is to supply a
substantial part of the materials or to a mixed contract, it would be
advisable to state that the contract falls under the Convention and that
Article 3 of the Convention is excluded.

set out in this document shall be settled in conformity with those
obligations of Seller and Buyer that are not resolved by the terms
stated in this document shall be governed and controlled by those
International Sale of Goods that do not conflict with the terms set
forth in this document. Article 3 of the Convention is excluded."

by the parties in this document. Article 3 of the Convention is
excluded."
Article 6 - Suggestions regarding Excluding the Convention or Parts

of it. Article 6 permits the parties to exclude the application of the
Convention or, subject to Article 12, derogate from or vary the effect of any
of its provisions.
Clauses intended to exclude the application of the Convention altogether

must be drafted with care. The commentators suggest clauses that
specifically rule out the application of the Convention, e.g., "the law of
France, excluding the CISG "or "Article 2 of the U.C.C. as enacted in New
York." The issue is discussed, and a variety of suggested clauses may be
found, in Peter Winship, Changing Contract Practices in Light of the United
Nations Sales Convention: A Guide for Practitioners, and B. Blair
Crawford, Drafting Considerations under the 1980 Convention on
Contracts for the International Sale of Goods, 8 J. Law & Com. 187, 192-
194 (1988), both of which are available on this data base.
Exclusion of parts of the Convention may be achieved by adopting contract

terms that conflict with those in the Convention or by excluding the
unwanted provisions of the Convention.
"Article(s)... of the Convention on Contracts for the International Sale
of Goods shall not apply to this Contract."
"Article(s)... of the Convention on Contracts for the International Sale

of Goods is (are) excluded."
"The terms stated in this document shall govern the rights and
obligations of the parties, notwithstanding any provision of the
Convention on Contracts for the International Sale of Goods to the
contrary."
"Any provision in this document which conflicts with any provision of

the Convention on Contracts for the International Sale of Goods shall
be deemed to be a derogation from or variance of the effect of
Convention's provisions within the meaning of its Article 6."
When excluding provisions of the Convention, often, it will be wise to do

more that state that a designated part of the CISG does not apply to this
Contract. You should consider whether you will have to fill the gap created
by the exclusion. See by way of example, our suggestion regarding Article
27.
Article 7 - Suggestions regarding Filling Gaps in the Contract and the

Convention. The CISG is a gap-filler. When a contract deals with an
aspect of the transaction or its fallout, it trumps the Convention. When the
contract does not, the Convention applies. Inevitably, there will be
questions that neither the contract nor the CISG answer. In such cases,
Article 7 of the Convention provides that questions concerning matters
governed by the Convention which are not expressly settled in it are to be
settled in conformity with the general principles on which it is based or, in
the absence of such principles, in conformity with the law applicable by
virtue of the rules of private international law.
Is this a satisfactory way of achieving the degree of certainty and

predictability that is desirable in commercial affairs? A clause incorporating
domestic law or an accepted compilation of contract rules and principles
should help to achieve a greater degree of certainty and predictability.
"Questions which are not expressly answered in this Contract or in

the United Nations Convention on Contracts for the International Sale
of Goods are to be settled in conformity with those provisions of the
Uniform Commercial Code as adopted in the State of ... ... .. that do
not conflict with the provisions of this Contract or the Convention."
"Questions which are not expressly settled in this Contract or in the

United Nations Convention on Contracts for the International Sale of
Goods are to be settled in conformity with those provisions of the
Contract Law of the People's Republic of China adopted and
promulgated on March 15, 1999, that do not conflict with the
provisions of this Contract or the Convention."
Goods are to be settled in conformity with those rules stated in the
Unidroit Principles of International Commercial Contracts that do not
conflict with the provisions of this Contract or of the Convention."
Professor Albert Kritzer suggests:

Goods are to be settled in conformity with those rules stated in the
Principles of European Contract Law that do not conflict with the
provisions of this Contract or of the Convention."
He points out that "the Unidroit Principles and the European Principles are,
respectively, equivalents of 'restatements' for international commercial
contracts and international contracts. The text of the Unidroit Principles
may be found at <http://www.unidroit.org/instruments/commercial-
contracts/unidroit-principles-2016>. The text of the Principles of European
Contract Law may be found at
<http://www.cbs.dk/departments/law/staff/ol/commission_on_ecl/index.html
>."
Article 8 and Article 11 - Suggestions regarding Dealing with External

Evidence of Intent. Under Article 11, a contract of sale need not be
concluded in or evidenced by a writing and is not subject to any other
requirement as to form. It may be proved by any means, including
witnesses. Article 8 provides that, in determining intent or reasonable
understanding, due consideration is to be given to all relevant
circumstances of the case, including the negotiations, any practices which
the parties have established between themselves, usages and any
subsequent conduct of the parties. These provisions create the potential
for overriding the clear words of a signed written contract by testimony and
other evidence showing that the written contract is not consistent with what
is purportedly the real agreement between the seller and buyer. See MCC-
Marble Ceramic Center, Inc. v. Ceramica Nuova D'Agostina, S.p.A.,. This
situation suggests the use of a merger or integration clause suited to
contracts falling under the Convention.
"The parties agree and declare that it is their intention that this
document contains their entire agreement; that there are no
agreements, understandings or arrangements that are not set out in
it; that there is nothing contained in it that has not been agreed; and
that evidence contradicting what is said in this clause is
inadmissible."
"The parties agree and declare that it is their intention that this
document contains their entire agreement; that there are no
agreements, understandings or arrangements that are not set out in
it; that there is nothing contained in it that has not been agreed; that
evidence of prior expressions of intent, understandings or
agreements may not be used to explain what is said in this document
and that evidence contradicting what is said in this clause is
inadmissible."
"This document contains the entire agreement of the parties. There is

nothing contained in it that has not been agreed. The parties intend
and agree that evidence of other or different terms may not be
considered."
See also the suggestions regarding Article 9.
Article 9 - Suggestions regarding Dealing with the Applicability of

Trade Usages. Under Article 9, the parties are considered, unless
otherwise agreed, to have impliedly made applicable to their contract or its
formation a usage of which the parties knew or ought to have known and
which in international trade is widely known to, and regularly observed by,
parties to contracts of the type involved in the particular trade concerned.
Article 8(3) requires consideration of usages to determine intent or the
understanding a reasonable person would have had. When there is a
dispute, parties tend to discover trade usages and "experts" who will vouch
for their existence, as the need arises. Should they apply when you may
not have considered them at the time you entered into your contract?
"Article 8(3) and Article 9 (2) of the Convention on Contracts for the
International Sale of Goods do not apply to this Contract. The parties
have not agreed to any usage or made any usage applicable to their
contract. Practices which the parties have established between
themselves and course of performance shall not be considered in
determining their understanding, their intent or their rights and
obligations."
"Article 8(3) and Article 9 (2) of the Convention on Contracts for the
International Sale of Goods do not apply to this Contract. The parties
have not agreed to any usage or made any usage applicable to their
contract. When the terms stated in this document are unclear,
evidence of practices which the parties have established between
themselves may be considered in determining their understanding,
their intent or their rights and obligations."
Article 10 - Suggestions regarding Specifying Place of Business for

CISG Purposes. If a party has more than one place of business, for
purposes of the CISG, the party's place of business is that which has the
closest relationship to the contract and its performance. To avoid
questions, your contract should specify the place of business that bears
such relationship to the transaction.
"Seller's place of business in ... [city and country] ... and Buyer's
place of business in ... [city and country] ... have the closest
relationship to the contract and its performance for purposes of the
Goods."
It should be recalled that, for the CISG to apply, the designated places of
business must be in different countries. Moreover, where a country, e.g.,
the United States, has filed an Article 95 declaration, as a general rule,
unless both countries mentioned in the clause are Contracting States, the
CISG will not apply.
Article 11 - Suggestions regarding Requiring a Written

Contract. Under Article 11, unless Article 12 applies, a contract of sale
need not be concluded in or evidenced by a writing and is not subject to
any other requirement as to form. This opens the door to assertions that
mere negotiations have ripened into an enforceable contract. You should
consider whether it would be appropriate to include a requirement for a
signed writing when you communicate terms that could be treated as an
offer capable of acceptance or a response to an offer that could be treated
as an acceptance.
"There shall be no contract until each of us has accepted and signed

a writing stating that it contains all of the terms or incorporates by
reference to another writing all of the terms of a binding contract
between us."
It should be noted that the People's Republic of China has declared that it
does not consider itself bound by Article 11 and that the Russian
Federation, among other Contracting States, has made a declaration
under Articles 12 and 96.
Article 13 - Suggestions regarding Specifying the Form of Notices

and Writings for Purposes of the Contract and the CISG. Having been
drafted before fax and e-mail became the staples of business
communication, Article 13 says merely that for purposes of the Convention
"writing" includes telegram and telex. If the parties wish to permit or
prohibit fax and e-mail as a means of written communication, they should
eliminate doubt by saying so.
"For the purpose of this Agreement and the Convention on Contracts

for the International Sale of Goods, unless otherwise specified in this
Contract, "writing" includes telegram, telex, fax and e-mail."
"For the purpose of this Agreement and the Convention on Contracts

for the International Sale of Goods, unless otherwise specified in this
Contract, "writing" excludes fax and e-mail."
PART II. FORMATION OF THE CONTRACT
Article 14 - Suggestions regarding Preventing an Indication from

Constituting an Offer. Under Article 14, a proposal for concluding a
contract addressed to one or more specific persons constitutes an offer if it
is sufficiently definite and indicates the intention of the offeror to be bound
in case of acceptance. A proposal is sufficiently definite if it indicates the
goods and expressly or implicitly fixes or makes provisions for determining
the quantity and the price. To avoid ambiguity, if you do not intend to make
an offer you should say so.
"This is an indication of interest, not an offer to buy."
"This is an indication of interest, not an offer to sell."
"There shall be no contract concluded until each of us has accepted

and signed a writing stating that it contains all of the terms or
incorporates by reference to another writing all of the terms of a
binding contract between us."
Article 16 - Suggestions regarding Revocable and Irrevocable

Offers. Under the Convention, generally, until a contract is concluded, an
offer may be revoked if the revocation reaches the offeree before it has
dispatched an acceptance. Under Article 16(2), however, an offer cannot
be revoked if it indicates, whether by stating a fixed time for acceptance or
otherwise, that it is irrevocable or if it was reasonable for the offeree to rely
on the offer as being irrevocable and the offeree has acted in reliance on
the offer. If an offeror wishes to maintain control of its offer, it should
consider stating expressly that the offer is revocable.
"This offer is open for acceptance until ... [insert time and date] ... We
reserve the right to revoke the offer before then. Article 16(2) of the
Goods does not apply to this Contract."
Article 18 - Suggestions regarding Dealing with Acceptance by

Performance of an Act. Under certain circumstances, the offeree may
accept an offer by performing an act, such as one relating to the dispatch
of the goods or payment of the price, without notice of acceptance to the
offeror. The acceptance is effective at the moment the act is performed.
You should consider whether it is advisable to be bound by an acceptance
without notice.
"This offer shall be deemed to have been rejected unless we receive

your notice of acceptance in writing on or before ... [insert date]...."
"This offer shall be deemed to have been rejected unless you accept
by a notice in writing. Article 18(3) of the Convention on Contracts for
the International Sale of Goods does not apply to this offer."
"This offer shall be deemed to have been rejected unless you accept
by a notice in writing received by us no later than the 5:00 P. M. on ...
[insert date].... Article 18(3) of the Convention on Contracts for the
International Sale of Goods is excluded."
Article 19 - Suggestions regarding Dealing with Acceptances
Containing Additional and/or Different Terms. Generally, under the
Convention 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. Under Article 19(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 the offeror
does not so object, the terms of the contract are the terms of the offer with
the modifications contained in the acceptance.
"A reply to this offer which purports to be an acceptance but contains

additional or different terms shall be deemed to be a rejection. Article
19(2) of the Convention on Contracts for the Sale of Goods shall not
apply to this offer."
"Notice of Objection to Additional [and/or Different] Terms
Your reply to our offer of ... [insert date] ... purports to be an

acceptance, but contains additional [and/or different] terms. Please
accept this as our notice under Article 19(2) of the United Nations
Convention on Contracts for the International Sale of Goods that we
object to the discrepancy and regard your reply as a rejection of our
offer and a counteroffer, which we reject."
"Notice of Objection to Additional [and/or Different] Terms
Your reply to our offer of ... [insert date] ... purports to be an

acceptance, but contains additional [and/or different] terms. We
object to the discrepancy and regard your reply as a rejection of our
offer and a counteroffer, which we reject."
Date: _______________"
Article 21- Suggestions regarding Offeror's Notice that Late

Acceptance is Effective or Ineffective. Under the CISG, an acceptance
of an offer is not effective if it does not reach the offeror within the time
fixed by the offeror. This could mean that when an acceptance is late,
neither party is bound, even though the offeree intended to accept. Article
21 deals with two versions of this situation.
Article 21(1) deals with an acceptance which is dispatched late. Such an

acceptance becomes effective if without delay the offeror orally so informs
the offeree or dispatches a notice to that effect. Consider sending a written
notice, even if you inform the offeree orally.
"NOTICE THAT ACCEPTANCE IS EFFECTIVE
Date:
To:
On ... [date] ... we received your acceptance of our offer of ... [date] ...
Although the acceptance is late, please take notice that, pursuant to
Article 21(1) of the Convention on Contracts for the International Sale
of Goods, your acceptance is effective."
NOTICE THAT LATE ACCEPTANCE IS EFFECTIVE
Date:
To:
Please take notice; although it arrived late, it is effective as an
acceptance."
Article 21(2) deals with delays in delivery of a timely acceptance. It says

that, if a letter or other writing containing a late acceptance shows that it
has been sent in such circumstances that if its transmission had been
normal it would have reached the offeror in due time, the late acceptance
is effective as an acceptance unless, without delay, the offeror orally
informs the offeree that it considers its offer as having lapsed or dispatches
a notice to that effect.
"NOTICE THAT OFFER LAPSED BEFORE RECEIPT OF

ACCEPTANCE
Date:
To:
Your acceptance arrived late. Please take notice that, pursuant to
Article 21(2) of the Convention on Contracts for the International Sale
of Goods, we consider our offer to have lapsed and regard your
acceptance to be ineffective."
"NOTICE THAT OFFER LAPSED BEFORE RECEIPT OF

ACCEPTANCE
Date:
To:
Your acceptance arrived late. We regard our offer as having lapsed
and your acceptance to be ineffective."
PART III. SALE OF GOODS
Part III of the Convention deals with the performance of contracts for the
international sale of goods, i.e., the obligations of the parties and
remedies. This part of the Convention is not sufficiently detailed and
comprehensive to eliminate the need for carefully crafted clauses suited to
your transaction. It does not eliminate the need to consider whether to
incorporate a standard set of trade terms such as INCOTERMS 2000 (ICC
Publication No. 560, 1999).
Article 25, Article 49 and Article 64 - Suggestions regarding Modifying

the Meaning of Fundamental Breach. Under the Convention, a breach of
contract by one party is fundamental if it results in such detriment to the
other party as substantially to deprive it of what it is entitled to expect
under the contract, unless the party in breach did not foresee and a
reasonable person of the same kind in the same circumstances would not
have foreseen such a result. You will want to consider whether your
circumstances require strict compliance with contract obligations such as
the quantity, quality and description of the goods, the date of delivery, or
the terms of payment, and, if they do, say so in your contract. Consider
whether a provision requiring strict compliance with the Contract should
apply to the entire contract or to a specific part of its performance.
"Article 25 of the Convention on Contracts for the International Sale

of Goods is excluded. Non-compliance with any provision of this
contract shall be regarded as a fundamental breach."
"Non-compliance with any provision of this clause shall be regarded

as a fundamental breach."
"A party's failure to perform when due any of its obligations shall be a
fundamental breach, regardless of whether such party is able to
remedy its failure to perform after the date for performance."
"Time is of the essence. Seller's failure to deliver goods conforming in

every respect to the quantity, quality and description specified in this
contract by the date for delivery fixed by this clause shall be deemed
to be a fundamental breach."
"Buyer's failure to pay the price by the date fixed by this clause shall
be deemed to be a fundamental breach."
"Compliance in every respect with this clause is essential. If Seller

does not receive a confirmation from ... [insert name of bank]... of
buyer's letter of credit on or before the date and in the terms stated in
this clause, Seller shall be entitled to avoid this Contract."
Article 26 - Suggestions regarding Notice of Avoidance for Breach.
Article 26 provides that a declaration of avoidance of the contract, the

Convention's term for termination or cancellation for breach, is effective
only if made by notice to the other party. Article 26 does not require that
the notice be in writing, but you should consider protecting the record by
giving written notice or confirming oral notice in writing.
"NOTICE OF AVOIDANCE
Date:
To:
Re: ... [identify contract]...
You have committed a fundamental breach of our contract of ... .

[date] ... in that ... ..... [describe breach] ... . Please take notice that,
pursuant to Article 26 and ...... [Article 49 for Buyer's notice or Article
64 for Seller's notice] ... of the Convention on Contracts for the
International Sale of Goods, we declare the contract avoided. We
reserve all other rights and remedies available to us."
Date:
To:
You have committed a fundamental breach of our contract of ... .

[date] ... in that ... ..... [describe breach] ... . Please take notice that
we declare the contract avoided. We reserve all other rights and
remedies available to us."
"CONFIRMATION OF NOTICE OF AVOIDANCE
Date:
To:
This will confirm the telephone conversation between our ... [insert
name and title] and your ... [insert name and title] at ... [insert time] ...
on [insert date] in which we notified you of our declaration of
avoidance. You have committed a fundamental breach of our
contract of ... [date] ... in that ... [describe breach] ... Pursuant to
Article 26 and ... [Article 49 for Buyer's notice or Article 64 for Seller's
notice] ... of the Convention on Contracts for the International Sale of
Goods, we have declared the contract avoided. We reserve all other
rights and remedies available to us."

Date:
To:
name and title] and your ... [insert name and title] at .... [insert time] ...
avoidance. You have committed a fundamental breach of our
contract of ... [date] ... in that ... [describe breach] ... We have
declared the contract avoided. We reserve all other rights and
Consider whether it would be preferable to deal with such matters in

writing exclusively. Oral notices leave room for conflicting recollections.
Article 27 - Suggestions regarding Undelivered Communications.
Under Article 27 of the CISG, unless otherwise expressly provided in Part

III of the Convention, any notice, request or other communication given or
made in accordance with Part III and by means appropriate in the
circumstances is effective despite a delay or error in the transmission of
the communication or its failure to arrive. Do you consider it acceptable to
have a communication that you do not receive have the same
consequences as if you receive it? Given the speed and reliability of
modern means of communications and the need for certainty in
commercial matters, you should consider whether to exclude this
provision.

of Goods is excluded. Any notice, request or other communication
required by this Contract or Part III of the Convention shall be
effective only if and when it reaches the addressee."

of Goods does not apply to this Contract. Any notice, request or other
communication required by this Contract or Part III of the Convention
shall be effective only if and when it reaches the addressee."
Article 28 - Suggestions regarding Ruling Out or Requiring a

Judgment or Arbitral Award Mandating Performance. Under the
Convention, often, a party is entitled to require performance of an
obligation by the other party, but, under Article 28, a court is not bound to
enter a judgment requiring performance unless the court would do so
under its own law in respect of similar contracts of sale not governed by
the CISG. Under some national or local laws, money damages are the
preferred remedy and the courts will not mandate performance unless the
contract states that such remedy is available. Further, under some national
arbitration laws, arbitrators may award specific performance, if at all, only
when an arbitration clause or submission agreement empowers them to do
so. Because Article 28 leaves the issue uncertain, the parties may wish to
authorize or prohibit a judgment or arbitral award requiring performance.
Provisions authorizing or requiring such judgments or awards would not be
effective in the face of mandatory rules or laws to the contrary. Such
obstacles may be avoidable by a forum-selection clause or an arbitration
clause requiring litigation or arbitration in a place where specific
performance is available, but enforceability of the judgment or award would
have to be considered.
"Article 28 of the United Nations Convention on Contracts for the

International Sale of Goods is excluded. A court rendering a
judgment relating to this Contract shall mandate performance of the
obligations of a party when the other party so requests and such
remedy is available to such party under the provisions of this
Contract or Part III of the Convention."
"Notwithstanding any provision of the Convention on Contracts for the

International Sale of Goods to the contrary, a court may render a
judgment for money damages only. Seller and Buyer waive any right
they may have to request or receive a judgment mandating
performance of the other party's obligations under this Contract."
"The arbitrators may render an award for money damages only. The
parties withhold from them the power to render an award mandating
performance of their obligations under this Contract."

International Sale of Goods is excluded. The arbitrators shall have
the power to mandate performance of the obligations of a party when
the other party so requests and such remedy is available to the
requesting party under this Contract or Part III of the Convention."
Article 29 - Suggestions regarding Modifying and Terminating

Contracts.
Under the CISG, a contract may be modified or terminated by the oral or

written agreement of the parties. A written agreement is more likely to
prevent misunderstandings. You should consider whether the termination
should provide for the survival of any pre-termination claims, rights or
obligations.
"Agreement to Terminate Contract
Date:
The undersigned agree that the Contract between them of ... [date] ...
is cancelled and that all rights and obligations of the parties arising
out of such agreement are waived and discharged."
"Agreement to Terminate Contract
Date:
is cancelled and that all executory rights and obligations of the parties
arising out of such agreement are waived and discharged. The
undersigned agree that such cancellation is without prejudice to ...
[describe claims, rights or obligations] ... which shall survive the
termination of the contract.
"Addendum No ___ to Contract Dated ___.
Date:
is amended and modified as follows ... [insert amendments] ... All
other terms and conditions remain in effect."
Under Article 29(2), a written contract requiring that any modification or

termination by agreement be in writing may not be otherwise modified or
terminated by agreement. However, a party may be precluded by conduct
from asserting such a provision to the extent that the other party has relied
on that conduct. Consider whether to use a clause that rules out waiver by
conduct.
"This Contract may not be modified or terminated except by an

agreement in writing signed by the party to be bound by the written
modification or termination."

modification or termination. Article 29(2) of the United Nations
Convention on Contracts for the International Sale of Goods
notwithstanding, conduct shall not constitute a waiver of this provision
and reliance on conduct shall not preclude assertion of this
provision."

modification or termination. Conduct shall not constitute, or be
construed as, a waiver of this provision. Reliance on conduct shall
not affect the application of this provision. Article 29(2) of the United
Nations Convention on Contracts for the International Sale of Goods
is excluded."
Article 30, Article 31, Article 32, Article 60, Article 66, Article
67 and Article 69 - Suggestions regarding Convention Provisions
Governing Delivery and Acceptance. As mentioned, the CISG does not
contain definitions of the usual trade terms or provisions governing the
permutations and combinations of seller's and buyer's obligations with
respect to delivery, documentation, import and export details, and
acceptance common in international sales transactions. So, under the
CISG, continue to incorporate Incoterms to establish details of
performance appropriate to your transaction. For guidance on the proper
use of Incoterms, see Jan Ramberg, "ICC Guide to Incoterms 2000-
Understanding and Practical Use," ICC Pub. No. 620 (1999). Often,
Incoterms are incorporated by using one of the Incoterms in the contract's
price provision and simply saying "Incoterms 2000," "Incoterms 2000 are
incorporated herein," or "Incoterms 2000 shall apply to this Contract"
elsewhere in the contract. It is good practice to state the version of
Incoterms that is to apply.
Article 35 - Suggestions regarding Convention Requirements

Concerning Conformity of the Goods. Article 35 (2) provides that,
unless the parties have agreed otherwise, the goods do not conform to the
contract unless they meet four categories of requirements.
"[T]he goods do not conform with the contract unless they:

(a) are fit for the purposes for which goods of the same description
would ordinarily be used;
(b) are fit for any particular purpose expressly or impliedly made
known to the seller at the time of the conclusion of the contract,
except where the circumstances show that the buyer did not rely, or
that it was unreasonable for him to rely, on the seller's skill and
judgement;
(c) possess the qualities of goods which the seller has held out to the
buyer as a sample or mode;
(d) are contained or packaged in the manner usual for such goods or,
where there is no such manner, in a manner adequate to prepare and
protect the goods."
For general comments on this provision, see John O. Honnold, Uniform

Law for International Sales under the 1980 United Nations Convention,
paragraphs 222-240 (3rd ed. 1999).
A seller that wishes to exclude this provision should use a disclaimer that
tracks the language used in Article 35(2). In preprinted purchase order or
confirmation forms it would be advisable to use a font and color that makes
the disclaimer stand out. Consider drawing attention to the limitation of
warranties in or near the signature area of the form. While the Convention
says that its requirements apply unless the parties have agreed otherwise,
restrictions in national or local laws on the validity and reach of warranty
disclaimers may affect the validity of an agreement excluding the
application of part or all of Article 35(2).
Article 39 - Suggestions regarding Buyer's Notice of Lack of

Conformity.
Under Article 39, a buyer loses the right to rely on a lack of conformity of
the goods if it does not give notice to the seller specifying the nature of the
lack of conformity within a reasonable time after it has discovered it or
ought to have discovered it. There are cases that have manifested an
inclination to require that the buyer describe the lack of conformity with
precision and to treat a failure to satisfy this requirement as precluding
reliance on the lack of conformity. A mere notice of breach or assertion
that there is a lack of conformity may not suffice. Buyers should consider
whether to modify this provision by contract clause and how to comply with
the notice provision when presented with goods that do not conform to the
contract.
"Articles 39 and 44 of the United Nations Convention on Contracts for

the International Sale of Goods are excluded. Buyer shall have the
right to rely on a lack of conformity of the goods and reduce the
purchase price or claim damages, including loss of profit, regardless
of whether Buyer gives Seller notice of the lack of conformity."
"Notice of Lack of Conformity
Date:
To:
Please take notice that the ... [name the goods] ... that you delivered
under the contract between us of ... [insert date] ... do not conform to
the contract. The ... [name of the goods] ... fail to conform to the
contract in that ... [describe the lack of conformity in detail]...."
You should note that, under Article 46, the buyer must request repair or
substitute goods within a reasonable time after giving its Article 39 notice.
Article 39 sets a two-year outside limit on the time within which a buyer
must give notice of a lack of conformity. Sellers should consider whether to
reduce the two-year period by contract provision. Buyers should consider
whether to increase the period beyond two years.
"Article 39(2) of the United Nations Convention on Contracts for the

International Sale of Goods is excluded. Buyer shall lose the right to
rely on a lack of conformity of the goods if it does not give notice to
Seller at the latest within ... [insert time period] ... from the date the
goods were actually handed over to Buyer."
The CISG does not contain a statute of limitations, so you should consider
agreeing upon the time within which a court action or arbitration must be
brought, if such agreement is permissible under the law governing the
contract. The governing law may preclude modifications of the applicable
time bar in the sales contract. The 1974 Convention on the Limitation
Period in the International Sale of Goods establishes a four-year limitation
period for claims arising out of contracts for the international sale of goods
to which it applies. It came into effect in 1988. The provisions of the
Limitation Period Convention which determine its applicability to contracts
and issues were brought into line with the CISG by a 1980 protocol. See
generally, Peter Winship, The Convention on the Limitation Period in the
International Sale of Goods: The United States Adopts UNCITRAL's First
Born, 28 Int'l Lawyer 1071 (1994). The text of the Limitation Period
Convention, information concerning nations which have adopted it and
selected commentaries are available on this data base.
Consider whether adopting a contract provision that applies the Limitation

Period Convention to contracts to which it does not apply would be
appropriate.
"Articles 7 to 29 of The 1974 Convention on the Limitation Period in

the International Sale of Goods shall apply to claims of the Buyer and
the Seller against each other arising from this Contract or relating to
its breach in any court or arbitral proceeding relating to this Contract."
But, be aware that the Limitation Period Convention does not permit
contracts of sale to which it applies to modify the limitation period. It does,
however, permit the parties to exclude its application and permits
stipulations that arbitration must be commenced within a shorter period of
limitation.
"The Convention on the Limitation Period in the International Sale of

Goods shall not apply to claims arising from this Contract."
"The Convention on the Limitation Period in the International Sale of

Goods is excluded and shall not apply to claims arising from this
Contract or relating to its breach."
If the Limitation Period Convention applies by contract and the parties wish
to adopt a shorter or longer limitation period, consider whether its Article
22, which prohibits modification of the limitation period, should be
excluded.
"Articles 7 to 21 and Articles 23-29 of The 1974 Convention on the

Limitation Period in the International Sale of Goods shall apply to
claims of the Buyer and the Seller against each other arising from this
Contract in any court or arbitral proceeding relating to this Contract."
Further, the limitation period may, be modified after it has begun to run.
"Articles 7 to 29 of The 1974 Convention on the Limitation Period in

the International Sale of Goods shall apply to claims of the Buyer and
the Seller against each other which have arisen out of the Contract
between us dated ...[insert date of contract] ... in any court or arbitral
proceeding relating to this Contract."
If the Limitation Period Convention does not apply, the domestic statute of
limitations applicable to claims arising out of the contract may permit
clauses modifying the applicable limitation period. For example, UCC
section 2-725 permits a provision in the contract of sale to reduce the
period of limitation to not less than one year. (The CISG does not govern
the validity of any of the provisions of a contract to which it applies, Article
4(a)).
"Any proceeding to enforce a claim for breach of this Contract must

be commenced within ... ... [insert time period] ..... of the date upon
which the claim accrued."
"Any proceeding to enforce a claim for breach of or a right arising out

of this Contract must be commenced within ... [insert time period] ...
of the date upon which the breach occurred or the right accrued."
You should consider whether it would be appropriate and permissible to

establish different time bar periods for actions to compel performance as
opposed to actions for damages.
"Any proceeding to require performance of any obligation arising out

of this Contract must be commenced within ... [insert time period] ...
of the date upon which non-performance occurred. Any proceeding to
enforce a claim for damages for breach of this Contract must be
commenced within ... [insert time period] ... of the date upon which
the breach occurred."
Article 43 - Suggestions regarding Buyer's Notice of Right or Claim of

Third Party. A buyer expects to receive goods that are free of liens,
security interests and claims of ownership by third parties and of
infringement of patents or other proprietary rights. Under CISG Article 41
the seller must deliver goods which are free from any right or claim of a
third party, unless the buyer agreed to take the goods subject to that right
or claim. Article 42 governs rights or claims of third parties based on
industrial property or other intellectual property. Under Article 43, a buyer
risks losing the right to rely on the provisions of Articles 41 and 42 if it does
not give notice to the seller specifying the nature of the right or claim of the
third party within a reasonable time after it has become aware or ought
have become aware of the right or claim, unless the seller knew of the right
or claim and the nature of it. Buyers should be aware of the need to
comply with Article 43's notice provision and to do so with particularity.
Consider whether to modify Article 43(1) by a provision in your contract
and how to comply with the notice provision when a right or claim of a third
party is discovered or presented.

International Sale of Goods is excluded. Buyer shall have the right to
rely on a breach of Article 41 or Article 42 of the Convention
regardless of whether Buyer gives Seller notice specifying the nature
of the right or claim of a third party."
"NOTICE OF THIRD PARTY CLAIM

Date:
To:
Please take notice that we have become aware that ... [name of third
party] asserts a right or claim to the ... [name the goods] ... that you
delivered under the contract between us of ... [insert date] ... [name of
the third party] ... asserts that ... . [describe nature of the right or
claim]...."
Article 43 grants the buyer a reasonable time within which to give notice of
a right or claim of a third party. Sellers should consider whether to
establish a time within which buyers must give notice of a third party claim.
"Buyer shall lose the right to rely on a breach of Articles 41 and 42 if it

does not give notice to Seller specifying the nature of the right or
claim of the third party no later than ... [insert time period] ... from the
date when Buyer became aware or ought to have become aware of
the right or claim."
Article 44 - Suggestions regarding Buyer's Excused Failure to Give

Notice.
Article 44 of the Convention provides that, if there is a reasonable excuse

for a failure to give the notice required by Articles 39(1) and 43(1), the
buyer may reduce the price in accordance with Article 50 or claim
damages, except for loss of profit. A seller should consider whether it is
appropriate to exclude this provision.

of Goods is excluded."
Article 46 - Suggestions regarding Buyer's Request for Substitute

Goods.
If delivered goods do not conform to the contract, under Article 46(2), in

essence, the buyer may require delivery of substitute goods if the lack of
conformity substantially deprives it of what it is entitled to expect under the
contract. A seller should consider whether it would be appropriate to
contract out of an obligation to provide substitute goods. A buyer should
consider whether it would be appropriate to make substitute goods more
readily available.
International Sale of Goods is excluded. Buyer may not require
delivery of substitute goods."

International Sale of Goods is excluded. Buyer may require delivery
of substitute goods if the goods delivered by Seller fail to conform in
any respect to the quality and description specified in this Contract."
Article 47 - Suggestions regarding Fixing Additional Time for

Performance.
Under the Convention the general rule is that only a fundamental breach
justifies avoidance, i.e., cancellation or termination, for breach. Under
Articles 47 and 49, the buyer and, under Articles 63 and 64, the seller may,
by fixing an additional period of time of reasonable length for performance,
obtain the right, in some circumstances, to declare the contract avoided,
i.e., cancelled, if the other party fails to perform before the expiration of the
additional period. These provisions are designed to apply where there has
been a delay in performance that may or may not constitute a fundamental
breach. You will recall that under the Convention, generally, time is not of
the essence and under Article 25 a delay in performance is a fundamental
breach only when it would substantially deprive the injured party of what it
is entitled to expect under the contract.
"NOTICE OF ADDITIONAL PERIOD FOR PERFORMANCE
Date:
To:
Re: ... [identify contract] ...
You have failed to ... [state the obligation which the other party failed
to perform] by ... [insert date]... as required by our Contract of ...
[insert date].... Please take notice that pursuant to ... [Article 47 for
Buyer's notice to Seller - Article 63 for Seller's notice to Buyer] of the
Convention on Contracts for the International Sale of Goods, we
hereby fix an additional period for performance expiring on ... [insert
date] ... If you fail to perform your obligations by that date, we will
declare the contract avoided."
The notice must clearly fix a deadline. The period fixed must be
reasonable in the circumstances. Relevant circumstances include the
consequences of delay to the injured party and the feasibility of the
breaching party performing within the period allowed. The notice should
clearly state the consequences of failing to perform within the period so
fixed. According to the UNCITRAL Secretariat Commentary, a statement to
the effect that the party giving notice hopes, wants or trusts there will be
performance during the period fixed is not sufficient to support avoidance
of the contract.
Article 48 - Suggestions regarding Seller's Right to Cure. Subject to

Article 49's provisions on a buyer's right to declare the contract avoided,
under Article 48, even after the date for delivery, the seller may, in certain
conditions, remedy at its own expense any failure to perform its
obligations. Among other things, the seller must be able to cure without
unreasonable delay and without causing unreasonable inconvenience to
the buyer. If the seller requests the buyer to make known whether it will
accept performance and the buyer does not comply with the request within
a reasonable time, the seller may perform within the time indicated in its
request. A notice by the seller that it will perform within a specified period
of time is assumed to include a request, under the preceding paragraph,
that the buyer make known its decision, but it would seem to be better
practice to request a response. Consider whether a right to cure after the
date for delivery is consistent with the commercial purpose of the contract.

of Goods is excluded. Time is of the essence. Any failure to perform
may be remedied up to the date for delivery, but may not be
remedied after the date for delivery. The second sentence of Article
50 of the Convention on Contract for the International Sale of Goods
shall not apply to this Contract. Buyer's refusal to permit Seller to
remedy any failure to perform shall not be or be treated as a failure to
mitigate the loss resulting from Seller's breach."
"The goods delivered and the delivery must conform in every respect
with the requirements of this Contract. After the date of delivery,
Buyer is not obligated to permit Seller to remedy any failure to
perform. Buyer may reject any offer to remedy any failure to perform
after the date of delivery. The second sentence of Article 50 of the
Convention on Contract for the International Sale of Goods shall not
apply to this Contract. Buyer's refusal to permit Seller to remedy any
failure to perform shall not be or be treated as a failure to mitigate the
loss resulting from Seller's breach."

of Goods does not apply. Buyer is not obligated to accept
performance after the date for delivery. The second sentence of
Article 50 of the Convention does not apply. Buyer's refusal to permit
Seller to remedy any failure to perform shall not be or be treated as a
failure to mitigate the loss resulting from Seller's breach"
"We have received your Notice of Lack of Conformity dated ... [insert
date].... Pursuant to Article 48 of the Convention on Contracts for the
International Sale of Goods, we intend to remedy the lack of
conformity by ... [describe what seller will do and when it will be
done].... You will not be requested to advance any expenses relating
to our remedying the lack of conformity. Please make known whether
you will accept our performance. If you fail to reply by.... [insert date,
allowing a reasonable time in the circumstances]..., we will perform in
the manner and in the time described above."
"We refer to your request of ... [insert date]...that we make known

whether we will accept the performance described in your request.
We will not accept such performance, because such performance
would cause us unreasonable inconvenience in that ... [describe
basis for asserting reasonable inconvenience]..."
"We refer to your request of ... [insert date]...that we make known

whether we will accept the performance described in your request.
We will not accept such performance, because we would be obliged
to incur the expense of ... [describe the occasion for the expense]...,
but you have not offered to reimburse us."
Article 50 - Suggestions regarding Price Reduction. Under Article 50, if

the goods do not conform with the contract, even if the price has already
been paid, the buyer has the right to reduce the price. However, if the
seller remedies any failure to perform its obligations in accordance with
Article 37 or Article 48 or if the buyer refuses to accept performance by the
seller in accordance with those articles, the buyer may not reduce the
price. Consider whether price reduction is acceptable in the circumstances.
Exclude Article 50, if it is not. If you derogate from or vary Articles 37 or 48
consider excluding the second sentence of Article 50. See suggestions
regarding Article 37 and Article 48.
Article 65 - Suggestions regarding Seller's Notice of Specification.
Where a seller's performance is to be preceded by the buyer's

specification of the form, measurements or features of the goods, Article
65 permits the seller to make the specification if the buyer fails to do so.
Article 65(2) requires that the seller inform the buyer of the details of the
seller's specification and fix a reasonable time within which the buyer may
make a different specification.
"NOTICE OF SELLER'S SPECIFICATION

AND
OPPORTUNITY TO MAKE A DIFFERENT SPECIFICATION
Date:
To:
Please take notice that, because you failed to.....[ insert

description of requirement]... by ...[insert date]...., pursuant to
Article 65(1) of the Convention on Contracts for the International
Sale of Goods, we have made the specification in accordance
with such of your requirements as are known to us. The details
of the specification we have made are as follows: .... [insert
details of the Seller's specification].... You may make a different
specification no later than... [insert date which is reasonable in
the circumstances].... If you fail to do so, pursuant to Article
65(2) of the Convention on Contracts for the International Sale
of Goods, our specification will be binding."
When it looks like there will be a problem, to set the stage for invoking
Article 65, a seller should consider the extra precaution of requesting
compliance before the contract deadline expires. Article 65(1) requires
such a request if the contract does not fix a date by which the buyer must
make the specification.
"Please note that under our Contract of ... [insert date] ... you are to
specify the ... [insert description of requirement] ... Please let us have
your specification at your earliest convenience. It is important that we
receive it no later than [insert date which is reasonable in the
circumstances]...."
"Please note that under our contract of ... [insert date]... you are to
specify the ... [insert description of requirement].... Please let us have
your specification at your earliest convenience. It is important that we
receive it no later than [insert date which is reasonable in the
circumstances]... If you fail to do so, pursuant to Article 65(1) of the
Convention on Contracts for the International Sale of Goods, we will
make the specification in accordance with such of your requirements
as are known to us."
"Please note that under our contract of ... [insert date]... you are to
specify the ... [insert description of requirement] ... by ... [insert
date].... If you fail to do so, pursuant to Article 65(1) of the Convention
on Contracts for the International Sale of Goods, we will make the
specification in accordance with such of your requirements as are
known to us."
Article 71 - Suggestions regarding Notice of Suspension of

Performance. Article 71 permits a party to suspend performance of its
obligations if, after the conclusion of the contract, it becomes apparent that
the other party will not perform a substantial part of its obligations as a
result of the circumstances specified in Article 71. A party suspending
performance, whether before or after dispatch of the goods, must
immediately give notice of the suspension to the other party and must
continue with performance if the other party provides adequate assurance
of its performance.
"NOTICE OF SUSPENSION OF PERFORMANCE

Date:
To:
"It has become apparent that you will not perform your obligation to ...
[describe substantial part of obligations] ... .under our contract
dated ... ... ...as a result of .....[describe circumstances falling within
Article 71(1) (a) or (b)]. Please take notice that, as permitted by
Article 71 of the Convention on Contracts for the International Sale of
Goods, we are suspending performance of our obligations."
Article 71 does not require a demand for assurance of performance, but

you should consider whether it would be appropriate to include such a
demand in the notice, if there is a form of assurance that you would regard
as adequate.
"NOTICE OF SUSPENSION OF PERFORMANCE
Date:
To:
"It has become apparent that you will not perform your obligation to ...
[describe substantial part of obligations] ... under our contract
dated ... as a result of ... [describe circumstances falling within Article
71(1) (a) or (b)]. Please take notice that we are suspending
performance of our obligations. We request that you provide
adequate assurance of your performance. We will regard ... [describe
reasonable acceptable form(s) of assurance] ... as adequate
assurance of your performance."
Article 71 does not give the suspending party the right to declare the type
of assurance that will be adequate, but mentioning acceptable forms of
assurance in the notice of suspension may be useful, so long as what is
said is appropriate and reasonable in the circumstances.
Article 71 does not state the consequences of a failure to provide adequate

assurance of performance. It seems that, absent a contract term providing
otherwise, a party suspending performance would not be entitled to
declare the contract avoided unless it is clear that the other party will
commit a fundamental breach.
"If a party is entitled to suspend and suspends its performance

pursuant to Article 71 of the Convention on Contracts for the
International Sale of Goods, the other party's failure to provide
adequate assurance of its performance shall be a fundamental
breach of contract."
"If a party is entitled to suspend and suspends its performance, the

other party's failure to provide adequate assurance of its performance
shall be a fundamental breach of contract."
Article 72 - Suggestions regarding Notice of Intent to Declare

Contract Avoided. When it is clear from the circumstances that one party
will commit a fundamental breach of the contract, if time allows, the other
party must give reasonable notice of its intent to declare the contract
avoided in order to permit the provision of adequate assurance of
performance.
"NOTICE OF INTENT TO DECLARE CONTRACT AVOIDED
Date:
To:
"It has become clear that you will not perform your obligation to ...
[describe prospective breach of a kind which would constitute a
fundamental breach within the meaning of Article 25] ... . under our
contract dated ... ... . Such failure to perform will constitute a
fundamental breach. Please take notice that we intend to declare the
contract avoided, unless you provide adequate assurance of your
performance no later than... [insert a date that is reasonable in the
circumstances]... We will regard..... [describe acceptable, reasonable
form(s) of assurance]... as adequate assurance of your performance."
Consider whether the circumstances call for combining an Article 71 notice

of suspension of performance and an Article 72 notice of intent to declare
the contract avoided.
"NOTICE OF SUSPENSION OF PERFORMANCE AND

OF INTENTION TO DECLARE CONTRACT AVOIDED
Date:
To:
It has become clear that you will not perform your obligation to ...
[describe prospective breach of a kind which would constitute a
fundamental breach within the meaning of Article 25] ... under our
contract dated ... [insert date] ... Such failure to perform will constitute
a fundamental breach. Please take notice that we are suspending
performance of our obligations and intend to declare the contract
avoided, unless you provide adequate assurance of your
performance no later than ... [insert a date that is reasonable in the
circumstances]... We will regard ... [describe acceptable, reasonable
form(s) of assurance] ... as adequate assurance of your
performance."
Article 72 does not give the notifying party the right to declare the type of
assurance that will be adequate, but mentioning acceptable forms of
assurance in the notice may be useful, so long as what is said is
appropriate and reasonable in the circumstances.
It should be noted that Article 72 does not require a notice if the other party
has declared that it will not perform its obligations. Whether it would be
appropriate to
to send such a notice anyway depends on the circumstances of the case.

Failure to declare the contract avoided when it is clear that there will be a
fundamental breach may create questions for resolution in litigation or
arbitration which would not arise if there is a declaration of avoidance.
Article 73 - Suggestions regarding Avoidance of Contracts for

Delivery of Goods by Installments. Under Article 73(1), where a contract
provides for delivery of goods by installments, the injured party may not
declare the contract avoided with respect to an installment unless the
failure of the other party to perform any of its obligations in respect of such
installment constitutes a fundamental breach of contract with respect to
that installment. Consider whether such a rule suits your commercial
transaction.

International Sale of Goods is excluded. Failure of either party to
perform any of its obligations in respect of any installment shall
constitute a fundamental breach of contract with respect to that
installment."

International Sale of Goods does not apply. Buyer may reject any
installment that does not conform in every respect to the contract
quantity, quality and description or is delivered late."

International Sale of Goods is excluded. Delivery of each installment
must conform in every respect with the requirements of this
Contract."
Date:
To:
You have committed a fundamental breach of our contract of ... [date]

... in respect of the installment delivered on ... [insert date] ... in
that ... [describe a breach that meets the standard in Article 25] ...
Please take notice that, pursuant to Article 73(1) of the Convention
on Contracts for the International Sale of Goods, we declare the
contract avoided with respect to that installment. We reserve all other
Date:
To:
Our Contract dated ... [insert date] ... declares that time is of the
essence. You have committed a fundamental breach of our contract
of ... [date] ... in that you have not delivered the installment due ... [on
or by] ... [insert date] ... Please take notice that we declare the
contract avoided with respect to that installment. We reserve all other
Date:
To:
avoidance with respect to the installment delivered on ... [insert
date] ...
You have committed a fundamental breach with respect to that

installment in that ... [describe a breach that meets the standard in
Article 25]... We have declared the contract avoided with respect to
that installment pursuant to Article 73(1) of the United Nations
Convention on Contracts for the International Sale of Goods. We
reserve all other rights and remedies available to us."
Article 73(2) permits the injured party to declare an installment contract

avoided if the other party's failure to perform any of its obligations in
respect of any installment gives the injured party good grounds to conclude
that a fundamental breach of contract will occur with respect to future
installments. Avoidance must be declared within a reasonable time. See
the section regarding Articles 25, 49 and 51.
Date:
To:
"The installment delivered on ... [insert date] ... under our contract
of ... [date] ... fails to conform to the contract in that ... [describe the
problem] ... This failure to perform your obligations has given us good
grounds to conclude that a fundamental breach will occur with
respect to future installments in that ... [describe detriment which
substantially deprives you of what you are entitled to expect under
the contract] .... Please take notice that, pursuant to Article 73(2) of
the Convention on Contracts for the International Sale of Goods, we
declare the contract avoided. We reserve all other rights and
Date:
To:
"The installment delivered on ... [insert date] ... under our contract
of ... [date] ... fails to conform to the contract in that ... [describe the
problem] ... This failure to perform your obligations has given us good
grounds to conclude that a fundamental breach will occur with
respect to future installments in that ... [describe detriment which
substantially deprives you of what you are entitled to expect under
the contract] .... Please take notice we declare the contract avoided.
We reserve all other rights and remedies available to us."
Date:
To:
avoidance. As stated in that conversation, the installment delivered
on ... [insert date] ... under our contract of ... [date] ... fails to conform
to the contract in that ... [describe the problem]... This failure to
perform your obligations gave us good grounds to conclude that a
fundamental breach will occur with respect to future installments in
that ... [describe detriment which substantially deprives you of what
you are entitled to expect under the contract] ... . Please take notice
that, pursuant to Article 73(2) of the Convention on Contracts for the
International Sale of Goods, we have declared the contract avoided.
We reserve all other rights and remedies available to us."
Finally, under Article 73(2) a buyer who declares the contract avoided in
respect of any delivery may, at the same time, declare it avoided in respect
of deliveries already made or of future deliveries if, by reason of their
interdependence, those deliveries could not be used for the purpose
contemplated by the parties at the time of the conclusion of the contract.
This provision applies only when the installments are interdependent in
some way. It seems the unstated purpose of the injured party would not be
sufficient. According to the UNCITRAL Secretariat Commentary, failure to
make the declaration regarding past or future deliveries at the same time
as the declaration of avoidance of the current delivery constitutes a waiver
of the right to make such declaration.
Date:
To:
You have committed a fundamental breach of our contract of ... [date]

... in respect of the installment delivered on ... [insert date] ... in
that ... [describe breach meeting the standard in Article 25].... Please
take notice that, pursuant to Article 73(1) of the Convention on
Contracts for the International Sale of Goods, we declare the contract
avoided with respect to that installment. Please take further notice
that ... [describe past and/or future delivery or deliveries] ... cannot be
used for the purpose contemplated at the time of the conclusion of
the Contract, because ... [describe why the past and/or future delivery
or delivery cannot be used for the purpose contemplated by the
parties at the time of the conclusion of the contract] ... and that,
therefore, pursuant to Article 73(3) of the Convention on Contracts for
the International Sale of Goods, we declare the contract avoided in
respect of such ... [delivery or deliveries].... We reserve all other
Date:
To:
Our Contract of ... [insert date] ... provides that time is of the essence.
You have committed a fundamental breach of the Contract in that you
have not delivered the installment due ... [on or by] ... [insert date] ....
Please take notice that we declare the contract avoided with respect
to that installment. Please take further notice that ... [describe past
and/or future delivery or deliveries] ... cannot be used for the purpose
contemplated at the time of the conclusion of the Contract, because...
[describe why the past and/or future delivery or delivery cannot be
used for the purpose contemplated by the parties at the time of the
conclusion of the contract]... and that we declare the Contract
avoided in respect of such ... [delivery or deliveries] .... We reserve all
other rights and remedies available to us."
Date:
To:
on ... [insert date] ... in which we notified you of our declaration of
avoidance with respect to the installment delivered on ... [insert
date] ... and ... [describe past and/or future deliveries] ... You have
committed a fundamental breach with respect to the installment
delivered on ... [insert date] ... in that ... [describe breach meeting the
standard in Article 25] ... We have declared the contract avoided with
respect to that installment pursuant to Article 73(1) of the United
Nations Convention on Contracts for the International Sale of Goods
and have informed you that ... [describe past and/or future delivery or
deliveries] ... cannot be used for the purpose contemplated at the
time of the conclusion of the Contract, because ... [describe why the
past and/or future delivery or delivery cannot be used for the purpose
contemplated by the parties at the time of the conclusion of the
contract] ... and that we have declared the contract avoided in
respect of such ... [delivery or deliveries] .... We reserve all other
Article 74 - Suggestions regarding Defining or Limiting

Compensatory Damages. Under Article 74, damages for breach of
contract consist of a sum equal to the loss reasonably foreseeable at the
time of the conclusion of the contract, including lost profits, suffered by the
injured party as a consequence of the breach. It is not unusual for buyers
and sellers to agree on liquidated damages, to specify heads of damages
that are or are not recoverable, or to preclude the recovery of
consequential damages. Often, liquidated damages take the form of an
agreed amount per day for each day of delay or further delay after a delay
of specified duration or a percentage of the purchase price. Keep in mind
that Article 6 permits you freedom of contract regarding damages, but the
Convention is not concerned with the validity of liquidated damages
provisions. Some national or local laws impose restrictions on liquidated
damages clauses that may limit freedom of contract in your situation.
Review standard contract forms for appropriate liquidated damages or
damages limiting or expanding clauses appropriate for your transaction
that are enforceable under the national or local law that may govern the
validity of your liquidated damages provision.
In a case in which the United States Supreme Court refused to hear an

appeal from a federal appellate court's ruling that the injured party's
attorneys' fees are not recoverable as damages for breach under Article
74, the United States Department of State stated its agreement with the
appellate court's ruling. There are cases in the courts of other contracting
States in which attorneys' fees have been allowed as damages for breach.
Consider dealing with the issue in your contract. It is not unusual for
contracts to provide that reasonable attorney's fees are recoverable by the
party that prevails in a litigation or arbitration relating to the contract. The
Convention does not govern the validity of such a clause.
Article 77 - Suggestions regarding Mitigation of Damages. A party

relying on a breach of contract must take such measures as are
reasonable in the circumstances to mitigate the loss, including loss of
profit, resulting from the breach. If it fails to so, the party in breach may
claim a damages reduction to offset the amount by which the loss should
have been mitigated. Consider whether, when a contract derogates from or
varies the effect of the Convention's provisions on remedies or avoidance,
it would be appropriate for the contract to clarify the impact on the Article
77 rule requiring mitigation of damages.
"Action or inaction that is permitted under the provisions of this

Contract or under the Convention on Contracts for the International
Sale of Goods shall not be or be treated as a failure to mitigate the
loss resulting from a breach."
Remember that while the Convention does not prevent the parties from
modifying its provisions on mitigation of loss, it does not validate limitations
on the obligation to mitigate. The obligation to avoid where possible the
consequences of a wrong implements a public policy against waste.
Consider whether clauses that eliminate or unreasonably narrow the
obligation to mitigate are enforceable under the national or local laws that
may govern the transaction.
Article 78 and Article 84(1) - Suggestions regarding Dealing with
Interest.
By design, Articles 78 and 84(1) of the Convention provide little guidance

on the assessment of interest. It is good practice for contracting parties to
deal with interest. The CISG does not specify the rate at which interest
must be paid.
"Interest payable under the terms of this contract or the provisions of

the Convention on Contracts for International Sale of Goods shall
accrue and be payable at the rate of ... [insert percent] ... per ...
[insert period]."
Article 79 - Suggestions for Dealing with Force Majeure and Hardship.
Generally, form contracts contain provisions that forgive a breach that

results from consequences beyond the breaching party's control. Under
Article 79, a party is not liable for a failure to perform any of its obligations
if it proves that the failure was due to an impediment beyond its control and
that it could not reasonably be expected to have taken the impediment into
account at the time of the conclusion of the contract or to have avoided or
overcome it or its consequences. If the party's failure is due to the failure of
performance by a third party engaged to perform the whole or a part of the
contract, the breaching party is exempt from liability only if it is exempt
under the terms of Article 79(1) and the third party so engaged would be
so exempt if the provisions of Article 79(1) were applied to it. A party who
fails to perform must give notice to the other party of the impediment and
its effect on its ability to perform. If the notice is not received by the other
party within a reasonable time after the party who fails to perform knew or
ought to have known of the impediment, the breaching party is liable for
damages resulting from such non-receipt. Article 79 does not prevent
either party from exercising any right other than the right to claim damages
under this Convention. See generally, Jennifer M. Bund, Force Majeure
Clauses, Drafting Advice for the CISG Practitioner, 17 Journal of Law and
Commerce 381 (1998), which is available on this database and which
discusses Article 79 and the rules applicable to force majeure in other
bodies of law.
"NOTICE OF IMPEDIMENT BEYOND OUR CONTROL
Please take notice that we are not able to ... [describe obligation that
cannot be performed] ..., because ... [describe event that is causing
failure to perform] ... has ... [describe consequences of the event] ...."
Professor Albert Kritzer comments: "Article 79 relief is limited to relief from

damages claims. If UCC commercial impracticability applies relief is
broader. Do you want broader relief? Also, most people say that Article 79
does not cover hardship situations. Do you want a hardship clause in your
contract?"
Article 88 - Suggestions regarding Notice of Intention to Sell. Articles
85 and 86 establish obligations regarding preservation of undelivered or
rejected goods. In certain circumstances, Article 88 permits or requires the
party who is bound to preserve the goods to try to sell them, but requires
reasonable notice of intention to sell.
In the case of a sale under Article 88(1) it seems advisable to state the
grounds that justify selling the goods.
"NOTICE OF INTENTION TO SELL

on Contracts for International Sale of Goods, we intend to sell the ...
[describe the goods and their location] ... on [insert date], because
you have failed and refused to pay the cost of preserving them.
Dated.........................."

[describe the goods and their location] ... on [insert date], because
you have unreasonably delayed paying the cost of preserving them.
Dated.........................."

[describe the goods and their location]... on [insert date], because
there has been an unreasonable delay in taking possession of them.
Dated.........................."

[describe the goods and their location]... on [insert date], because
there has been an unreasonable delay in taking them back.
Dated.........................."

[describe the goods and their location]... on... [insert date]..., because
there has been an unreasonable delay in paying for them.
Dated.........................."
Remember that the party selling the goods may withhold from the
proceeds of sale an amount equal to the reasonable expense of preserving
the goods and of selling them, but must account to the other party for the
balance, Article 88(3).
Remember, too, that we welcome your suggestions for refinements and

new contract terms and documents. Send them to vrogers@law.pace.edu.
- John P. McMahon August 2003

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Guide for Managers and

Counsel: Drafting CISG

Prepared by John P. McMahon [*]

Part I. Sphere of Application and General Provisions

Part II. Formation of the Contract

Part III. Sale of Goods

This part of the Guide presents contract clauses and documents

The focus here is on procedures, clauses and documents suggested by

Albert Kritzer, Guide to Practical Applications of the United Nations

Contract Checklists, Albert Kritzer, Editor, Volume 3, International Contract

E. Allan Farnsworth, Review of Standard Forms or Terms Under the

Peter Winship, Changing Contract Practices in Light of the United Nations

B. Blair Crawford, Drafting Considerations under the 1980 Convention on

The International Chamber of Commerce has published a model contract

There is an annotated export contract at the end of Professor Kritzer's

Article 1 - Suggestions regarding Applying the CISG by Contract.

"XYZ Corp. of ________________ [insert address, including country]

See further discussion and forms under Article 10.

The CISG is the product of a long process of development by legal and

The language of Article 7 of the Convention suggests the following clause:

"Questions concerning the formation of this contract and the rights

"This contract shall be governed by and construed in accordance with

"Questions concerning the formation of this contract and the rights

"This contract shall be governed by and construed in accordance with

Professor Albert Kritzer comments: "When the Convention applies to your

Article 2 - Suggestions Regarding Applying the CISG to Contracts

"Questions concerning the formation of this contract and the rights

"This contract shall be governed by and construed in accordance with

Article 3 - Suggestions regarding Mixed Contracts for Goods and

"Questions concerning the formation of this contract and the rights

"This contract shall be governed by and construed in accordance with

Article 6 - Suggestions regarding Excluding the Convention or Parts

Clauses intended to exclude the application of the Convention altogether

Exclusion of parts of the Convention may be achieved by adopting contract

"Article(s)... of the Convention on Contracts for the International Sale

"Any provision in this document which conflicts with any provision of

When excluding provisions of the Convention, often, it will be wise to do

Article 7 - Suggestions regarding Filling Gaps in the Contract and the

Is this a satisfactory way of achieving the degree of certainty and

"Questions which are not expressly answered in this Contract or in

"Questions which are not expressly settled in this Contract or in the

Professor Albert Kritzer suggests:

"Questions which are not expressly settled in this Contract or in the

Article 8 and Article 11 - Suggestions regarding Dealing with External

"This document contains the entire agreement of the parties. There is

See also the suggestions regarding Article 9.

Article 9 - Suggestions regarding Dealing with the Applicability of

Article 10 - Suggestions regarding Specifying Place of Business for

Article 11 - Suggestions regarding Requiring a Written

"There shall be no contract until each of us has accepted and signed

Article 13 - Suggestions regarding Specifying the Form of Notices

"For the purpose of this Agreement and the Convention on Contracts

"For the purpose of this Agreement and the Convention on Contracts

Article 14 - Suggestions regarding Preventing an Indication from

"This is an indication of interest, not an offer to buy."

"This is an indication of interest, not an offer to sell."

"There shall be no contract concluded until each of us has accepted

Article 16 - Suggestions regarding Revocable and Irrevocable

Article 18 - Suggestions regarding Dealing with Acceptance by

"Addendum No _ to Contract Dated _.