The Vienna Convention (CISG): when it applies and how to exclude it

In Spain, the international sale of goods is governed by default by a treaty that most companies never mention in their contracts: the United Nations Convention on Contracts for the International Sale of Goods, signed in Vienna on 11 April 1980 and known as the Vienna Convention or CISG. It determines when the contract is formed and what remedies are available in the event of breach. It is therefore worth knowing when it applies and deciding deliberately whether to keep it or exclude it.

What the Vienna Convention is

The Convention unifies the substantive rules governing the international sale of goods. Spain acceded to it by the Instrument of Accession published in the Boletín Oficial del Estado of 30 January 1991, and it has been in force in Spain since 1 August 1991. According to the treaty status data published by UNCITRAL — the United Nations Commission on International Trade Law — more than ninety States are party to it, including most of the trading partners of a Spanish company.

Its status as a treaty officially published in Spain has a consequence that is often overlooked: under article 96.1 of the Spanish Constitution and article 1.5 of the Civil Code, it forms part of Spanish domestic law. Where it applies, the Convention is Spanish law for that sale, and it displaces the ordinary rules of the Civil Code and the Commercial Code.

When does it apply to your contract?

Under its article 1, the Convention applies to contracts of sale of goods between parties whose places of business are in different States, in two situations: where those States are Contracting States, or where the rules of private international law lead to the application of the law of a Contracting State. The connecting factor is therefore each party's place of business, not its nationality: its article 1.3 expressly rules out any consideration of the nationality of the parties or of the civil or commercial character of the contract.

It follows that, where a company with its place of business in Spain sells to a company with its place of business in Germany, the Convention applies by default even if the contract does not mention it, because both States are party to it. Its article 1.2 adds a sensible qualification: the fact that the places of business are in different States is disregarded where that fact does not appear from the contract, from any dealings between the parties, or from information disclosed by them before or at the conclusion of the contract.

Which sales are excluded?

Its article 2 leaves six categories outside its scope: goods bought for personal, family or household use — unless the seller neither knew nor ought to have known of that purpose — sales by auction, sales on execution or otherwise by authority of law, sales of stocks, shares, investment securities, negotiable instruments or money, sales of ships, vessels, hovercraft or aircraft, and sales of electricity.

Its article 3 draws the boundary with the supply of services in both directions. Contracts for the supply of goods to be manufactured or produced are treated as sales, unless the party ordering them undertakes to supply a substantial part of the materials; and the Convention does not apply where the preponderant part of the obligations of the party supplying the goods consists in the supply of labour or other services.

What does the Convention govern, and what does it leave out?

Its article 4 defines the material scope precisely: the Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from that contract. In particular, it is not concerned with the validity of the contract or of any of its provisions or usages, nor with the effect the contract may have on the property in the goods sold. Those two questions — validity and transfer of title — are governed by whichever national law applies, so no international contract is ever exhausted by the Convention alone.

Within its scope, its articles 14 to 24 govern offer and acceptance, and its article 30 onwards set out the obligations of the parties and the remedies for breach: avoidance for fundamental breach, defined in its article 25 as a breach that substantially deprives the other party of what it was entitled to expect; the reduction of the price for non-conformity under its article 50; damages under its article 74, covering loss suffered and profit lost, subject to the foreseeability limit; and the right to require performance, substitute delivery or repair under its article 46.

The Convention also operates alongside the Incoterms 2020 rules: those rules fix delivery, the passing of risk and the allocation of costs, while the Convention supplies the general regime of obligations and remedies. Nor does it replace the governing law, jurisdiction and arbitration clauses, which remain necessary for everything the Convention does not cover.

How is it excluded — or kept — deliberately?

Its article 6 gives effect to party autonomy: the parties may exclude the application of the Convention or, subject to its article 12, derogate from or vary the effect of any of its provisions.

Any exclusion must be express and unequivocal. It is not enough to agree that the contract is governed by Spanish law, because the Convention is Spanish law for these contracts; far from excluding it, such a clause confirms it. To disapply it, the contract must say so, referring for instance to the Civil Code and the Commercial Code with the express exclusion of the Vienna Convention.

That said, exclusion is not always the better option. In many transactions the Convention offers a balanced and predictable regime, neutral for both parties and well known to the courts of more than ninety States, preferable to imposing or accepting an unfamiliar national law. The decision should be taken by comparing the Convention regime with the alternative, not out of habit. And it is precisely that comparison that is rarely made.

How we help with international sales at RCM Legal

There are two recurring points of friction. The first is not realising that the Convention governs the contract and finding out only when, faced with a breach, its rules apply — the time limits for examining the goods and giving notice of non-conformity, the threshold of fundamental breach — rather than the Civil Code rules that had been assumed. The second is believing that the Convention has been excluded simply because Spanish law was chosen, when that clause has the opposite effect. In both cases, the gap between what the company thought it had agreed and what actually governs surfaces at the worst possible moment, in a dispute, and it also shapes any subsequent recovery of the unpaid invoice.

At RCM Legal we assess whether your transaction is better served by keeping or excluding the Vienna Convention, and we draft the contract accordingly, aligning it with the governing law, the forum and the chosen Incoterm. As commercial lawyers in Murcia with experience in international contracts, if your company buys or sells goods abroad, tell us about the transaction and we will advise which regime protects you best.