ACCA Applied Skills · Corporate and Business Law (Global)

CISG and ICC Incoterms for ACCA Corporate and Business Law

The CISG is a UN treaty with uniform rules for international sales of goods between businesses in contracting states. Incoterms are ICC rules, used only if the parties choose them, that fix who arranges transport, who pays costs and when risk passes. In LW, decide which regime applies, then apply its rules to the facts.

What this chapter covers

This chapter covers two sets of rules for cross-border sales. The UN Convention on Contracts for the International Sale of Goods (CISG) sets default legal rules on scope, contract formation, the duties of seller and buyer, and remedies for breach. ICC Incoterms are standard trade terms that parties write into their contract. They deal with delivery, costs and risk of loss.

The two work side by side. The CISG is law that can apply automatically when its conditions are met, although parties can exclude it. Incoterms are contract terms and have effect only if the parties incorporate them. A good answer keeps this difference clear. The CISG says what the parties must do and what happens on breach. Incoterms say who does what with the goods and when risk moves.

The chapter links to the rest of the paper through contract law (offer, acceptance, breach, remedies), sale of goods and the global business setting. If you know the general rules of contract, you can learn the CISG mainly by comparing it with them. In LW, Section A tests definitions and short rule applications. Section B multi-task questions can test a scenario in which you must pick the right rule for each task.

LW is an objective exam, and the questions are marked all or nothing. This chapter suits that format. The rules are short, they have clear conditions, and examiners can set precise questions on them, such as whether the CISG applies, whether a reply is an acceptance, or which party bears risk under a given term. Students who learn the exact conditions pick up reliable marks. Students who rely on a general sense of contract law often fall for the distractors. Because the content is compact, it repays focused effort.

Introduction to the UN Convention on Contracts for the International Sale of Goods and ICC Incoterms: topics in the order to study them

1CISG Scope and ApplicationStart here, because every later CISG question first depends on whether the Convention applies at all.
2Formation of Contract under the CISGNext, learn how a contract is made, since obligations and remedies only arise once a contract exists.
3Seller and Buyer Obligations and Remedies under CISGStudy this third, as it builds on formation and is the largest part of the Convention.
4ICC Incoterms Purpose and StructureMove to Incoterms once the CISG is clear, so you can see how they fit alongside it and what they do not cover.
5Key Incoterms: Allocation of Cost, Risk and DeliveryFinish with the individual terms, which are easiest to learn once you understand the purpose and structure of the rules.

How to prepare Introduction to the UN Convention on Contracts for the International Sale of Goods and ICC Incoterms

This chapter rewards precise knowledge and practice on short questions. Use the steps below in order.

Learn the scope tests first: what kind of contract, what kind of parties, and the link to contracting states. Also learn what the CISG leaves out and that parties may exclude it.
Compare CISG formation with the general rules of contract you already know. Note each point where the rules differ, as these differences are what examiners test.
Build a two-column table on paper for seller duties and buyer duties, then list the remedies available to each side and the conditions for each.
Learn Incoterms by what they cover: delivery, costs, risk and who handles transport and export or import formalities. Then note what they do not cover, such as ownership of the goods and the effect of a breach.
For each key Incoterm, write one line stating where delivery occurs, who pays for main carriage and where risk passes. Test yourself until you can do it from memory.
Practise objective questions in short sessions on your phone. For every wrong answer, write down the rule or condition you missed.
In the last days, run a mixed set that combines the CISG and Incoterms, so you practise choosing the right regime for each fact.

Common mistakes in Introduction to the UN Convention on Contracts for the International Sale of Goods and ICC Incoterms

Assuming the CISG applies to every international sale.
Fix: Run a scope check each time: type of contract, type of goods, parties' connection to contracting states, and any exclusion by the parties.
Treating Incoterms as law that applies automatically.
Fix: Remember that Incoterms bind only when the parties choose to include them in the contract.
Using general contract law rules for CISG formation without checking for differences.
Fix: Learn the CISG rules as their own list, and mark each point where they differ from the general rules you know.
Believing Incoterms decide who owns the goods or what happens on breach.
Fix: Keep Incoterms to delivery, cost and risk. Look to the contract and the governing law for ownership and remedies.
Mixing up where delivery occurs, who pays for carriage and where risk passes for different Incoterms.
Fix: Learn each term with the three questions in the same order, and test yourself with short questions.
Choosing a remedy without checking how serious the breach is.
Fix: Link every remedy to its condition. Ask first whether the breach is serious enough, then pick the remedy.

Last-day revision: Introduction to the UN Convention on Contracts for the International Sale of Goods and ICC Incoterms

The CISG is a treaty on international sales of goods, with uniform default rules.
Always check first whether the CISG applies on the facts, and whether the parties have excluded it.
The CISG covers contract formation and the rights and duties of seller and buyer, not every sales issue.
Formation follows offer and acceptance, with its own rules on when a reply counts as acceptance.
The seller must deliver the goods, hand over documents and transfer the goods in conformity with the contract.
The buyer must pay the price and take delivery of the goods.
Remedies depend on how serious the breach is, and the most serious breach allows the contract to be avoided.
Incoterms are ICC rules that apply only if the parties incorporate them into the contract.
Incoterms deal with delivery, costs and risk, not with ownership of the goods.
For each Incoterm, state where delivery happens, who pays for carriage and where risk passes.
Incoterms can sit alongside the CISG, because they cover different ground.
Read the question's wording closely, since objective questions are marked all or nothing.

Introduction to the UN Convention on Contracts for the International Sale of Goods and ICC Incoterms practice questions

Introduction to the UN Convention on Contracts for the International Sale of Goods and ICC Incoterms: frequently asked questions

Do I need to learn every Incoterm for ACCA LW?

Focus on the key Incoterms named in the syllabus and on what each one says about delivery, costs and risk. Learn the purpose and structure of the rules too. Check the current study guide for the exact list.

Can the CISG and Incoterms apply to the same contract?

Yes. They cover different matters, so they can work together. The CISG supplies rules on formation, obligations and remedies. An Incoterm fixes the practical points of delivery, costs and risk of loss.

Can parties opt out of the CISG?

Yes, the parties can exclude the Convention or vary its terms in their contract. Always check the facts for any such exclusion before you apply CISG rules.

How should I practise this chapter for the objective test?

Use short sets of objective questions and review each wrong answer against the exact rule or condition. Mix CISG and Incoterms questions near the end so you learn to pick the right regime.