Taking an important step towards stimulating economic growth through international trade, Brazil recently became the 79th nation to agree to the United Nations Convention on Contracts for the International Sale of Goods (CSIG). The CISG will take effect for Brazil on April 1, 2014. With this ratification, Brazil joins a group of nations that is responsible for most of the trade throughout the world.
The purpose of the CISG is to provide a modern, uniform, and fair procedure to govern contracts for the international sale of goods. The practical impact of the CISG is to eliminate uncertainty in international commercial transactions while decreasing transaction costs. The CISG only applies to international transactions. Purely domestic sales contracts are not affected by the CISG and remain governed by domestic law.
Widely considered to be one of the most effective and successful uniform international laws, the CISG was originally adopted by the United Nations on April 11, 1980 in Vienna, Austria and went into effect on January 1, 1988.
The CISG Makes International Trade Easier
International sales contracts are the foundation of international trade for all countries. This is true regardless of a country’s legal tradition or level of economic development. Prior to the adoption of the CISG, contracting parties were often in dispute over which country’s laws would govern the international transaction. The CISG makes international trade easier because it provides a neutral set of laws governing transnational contracts.
The CISG Levels the Playing Field for Small Businesses
An extremely important aspect of the CISG is that it helps level the playing field for small and medium-sized businesses, as well as businesses located in developing countries. These businesses typically have less access to legal advice when negotiating complicated transnational contracts. As a consequence, their weaker bargaining position could result in them entering into a contract that contains unfair and burdensome terms.
The provisions of the CISG provide for a careful balance between the interests of the buyer and the seller. Smaller businesses benefit greatly from the default application of the fair and uniform procedures of the CISG to transnational contracts.
The CISG has been such a success over the years that its provisions have influenced the development and reform of contract law in many nations. For more information about the CISG, visit www.uncitral.org.
