Legal Aspects of International Trade and Contracts
Legal Aspects of International Trade and Contracts tests whether you can build an enforceable cross-border contract and predict how disputes will be resolved. Expect questions on the CISG, choice of law and forum, arbitration enforcement, and the correct use of force majeure and limitation clauses.
The CISG (Vienna Convention 1980)
Applies to sales of goods between parties in different Contracting States, unless the parties exclude it, and applies automatically rather than by opt-in. Article 2 excludes consumer sales, auctions, securities, negotiable instruments, ships, aircraft, and electricity. The CISG governs formation and remedies but not validity of the contract, title, or liability for death and personal injury.
- Offer must be sufficiently definite; acceptance takes effect on receipt; material modifications are counter-offers.
- Buyer must examine goods and give notice of non-conformity within a reasonable time (Articles 38–39) or lose the right to rely on it.
- Avoidance requires fundamental breach or failure to cure after notice; damages include lost profit, subject to foreseeability and mitigation.
Contract architecture
Choice-of-law clause, jurisdiction or arbitration clause, trade-term incorporation (Incoterms 2020), specification and quality standards, delivery and inspection, payment security, force majeure versus hardship, liquidated damages versus penalties, limitation of liability, confidentiality, IP ownership, termination, and language of the contract.
Arbitration under the New York Convention 1958 is preferred because awards are enforced in over 170 states, subject to limited grounds for refusal.
Worked example
A Canadian seller ships machine parts to a German buyer; both states are CISG Contracting States and the contract is silent. The buyer discovers defects three months after delivery and sues for the full price. Under Article 38 the buyer should have examined the goods promptly, and under Article 39 notice within a reasonable time is required. Late notice may defeat the claim even though the goods were genuinely defective. The seller should also check whether the defect was latent, since that extends the reasonable period.
Traps that cost marks
- Assuming the CISG applies only when expressly chosen.
- Forgetting the Article 2 exclusions.
- Confusing force majeure with mere hardship or with frustration.
- Assuming an arbitral award enforces itself without the New York Convention.
- Treating Incoterms as a substitute for contract terms on title and remedies.