CISG: opportunities and pitfalls for Dutch exporters

What is the CISG?

The CISG (United Nations Convention on Contracts for the International Sale of Goods) is the UN Convention on Contracts for the International Sale of Goods, also known as the Vienna Sales Convention. This convention, established in 1980, aims to simplify international trade and make it legally more predictable.

The treaty applies to sales agreements between business-to-business (B2B) parties established in countries that have ratified the treaty. It also applies if one of the parties is not from a contracting state, but the rules of private international law (IPR) do result in the application of the law of a contracting state.

The CISG regulates, among other things, the formation of the contract, the rights and obligations of buyer and seller, the assessment of non-conformity, termination, and compensation. Consumer purchases and the provision of services are outside the scope of the convention.

The CISG has been ratified by nearly 100 countries, including virtually all major trading nations. Both the Netherlands and Germany are parties to the convention. As a result, the CISG automatically applies to many cross-border sales agreements, unless the parties have explicitly agreed otherwise.

When does the CISG apply?

The CISG automatically applies to B2B sales of movable property between parties in different Member States, unless its application is expressly excluded. It does not matter whether the contract is drafted in Dutch or German, or whether the parties are familiar with the Convention.

Think about:

• a Dutch manufacturer that supplies machines to a German distributor;
• a Dutch supplier that supplies prefabricated elements to a German contractor.

The CISG defines "movable property" as physical, movable goods, such as machinery, parts, or materials. Services generally fall outside the scope of the Convention. However, in the case of mixed contracts, such as supply and installation, the CISG may apply.

Benefits for the selling party

For sellers established in the Netherlands, the CISG offers several clear advantages over national Dutch law:

• The treaty contains stricter conditions for the buyer's termination of the contract. It also sets shorter deadlines for the buyer to report non-conformity. This increases legal certainty and reduces the risk of late or unjustified claims.
• The seller's liability is more limited than under Dutch law. This means the seller is better protected against claims for damages. Note, however, that compared to German law, the seller's liability is actually broader, so excluding the CISG can be useful in this case.
• The CISG primarily focuses on compensation for defects, rather than immediate termination or a price reduction. In many cases, the buyer cannot therefore rely on immediate termination, but only on compensation for damages.
• In addition, the CISG contains clear rules for payment terms and default, which contributes to predictability in international transactions.
• The treaty also provides ample scope for compensation if the buyer fails to perform, without a notice of default always being required.

For many suppliers it is therefore not necessarily desirable to exclude the CISG as standard.

Benefits for the buyer

The treaty also contains protective provisions for purchasing parties:

• Delivery must be timely and in accordance with the agreement. The CISG explicitly stipulates that delivered goods must conform to the agreement. This provides clarity for buyers and strengthens their legal position in the event of defects.
• In the event of non-conformity, the buyer is entitled to compensation or, if the conditions are met, termination of the agreement. The CISG also offers concrete alternatives such as replacement delivery, repair, or a price reduction, depending on the situation.
• The treaty obliges the seller to be transparent: important information about the product or delivery must be proactively shared. This prevents surprises later on.
• The buyer may withhold payment until the goods have been delivered or inspected. This limits the risk of payment for defective or undelivered goods.
• Finally, the CISG entitles the buyer to compensation for breach of contract by the seller, with clear rules for determining the extent of the damage.

Because the CISG does not give preference to either buyer or seller, in practice it often provides a balanced and workable basis for international transactions.

When is exclusion wise?

However, there are situations in which excluding the CISG is desirable, namely if parties:

• want to deviate from the CISG system;
• wishes to contract exclusively under Dutch or German national law.

Please note: an exclusion via general terms and conditions is also possible, but there are strict rules on how this should be done.

How do you correctly exclude the CISG?

In practice, it often happens that parties want to exclude the CISG, but do so incorrectly. A statement like "Dutch law applies to this agreement" is insufficient. The CISG is part of Dutch law and therefore remains applicable. To actually exclude the treaty, an explicit and unambiguous clause stating that the CISG does not apply is required.

Correct formulations are, for example:

“This agreement is exclusively governed by Dutch law, to the exclusion of the CISG.”

Or in English:

“The legal relationship between the parties shall be governed exclusively by Dutch law, excluding the CISG.”

Five practical points of attention

1. Assess the contract type. Does it concern the supply of movable property? Then the CISG likely applies.
2. Have your general terms and conditions reviewed. Do they align with the CISG or not? If not, which provisions do you prefer?
3. Make an explicit choice of law. Indicate whether the treaty is excluded.
4. Use fixed clauses. For example, in quotes, order confirmations, and contracts.
5. Have your documents reviewed. A single sentence can determine which regime applies.

Have your contract and conditions checked

Do you want to do business with German customers? Then have your contracts and general terms and conditions assessed in a timely manner for compliance with the CISG.

The specialists at Heisterborg International advise you in your own language, and with knowledge of both legal systems.