Corporate and Business Law (Global) · Introduction to the UN Convention on Contracts for the International Sale of Goods and ICC Incoterms

CISG Scope and Application for ACCA LW

Updated 11 October 2026 · Fact-checked

The CISG is a UN treaty with uniform rules for contracts for the international sale of goods. It applies when buyer and seller have their places of business in different states and those states are contracting states, or private international law leads to a contracting state's law. Consumer and some other sales are excluded.

Understand CISG Scope and Application

The UN Convention on Contracts for the International Sale of Goods (CISG) gives businesses in different countries one common set of sale rules. Without it, each side may fight over whose national law governs. The CISG removes much of that uncertainty.

The key test is internationality. The seller and buyer must have their places of business in different states. Their nationality does not matter. Whether the contract is civil or commercial does not matter. If a party has more than one place of business, use the one with the closest relationship to the contract and its performance. If a party has no place of business, use their habitual residence.

The second test is the link to contracting states. The Convention applies where both states are contracting states. It can also apply where the rules of private international law lead to the law of a contracting state. Be careful with the second route: a state can declare a reservation excluding it, so do not assume it always works.

The third test is the type of transaction. The CISG covers contracts of sale of goods. It also covers contracts to supply goods to be manufactured or produced, unless the buyer supplies a substantial part of the materials. It does not apply where the main part of the seller's obligation is to supply labour or other services.

Some sales are excluded. These include goods bought for personal, family or household use (unless the seller did not know, and ought not to have known, of that purpose), auctions, execution or other legal authority sales, stocks, shares, investment securities, negotiable instruments and money, ships, vessels, hovercraft and aircraft, and electricity. The Convention also does not deal with the validity of the contract, the effect of the contract on ownership of the goods, or the seller's liability for death or personal injury caused by the goods. The parties may also exclude the CISG or vary its provisions, for example by choosing another law expressly.

Key formulas to remember

Internationality test: Places of business in different states; Nationality of the parties and the civil or commercial nature of the deal are irrelevant.
Application test: Both states are contracting states, OR private international law leads to a contracting state's law; The second route is subject to any reservation a state has made.
Multiple places of business: Use the place with the closest relationship to the contract and its performance; Judge this by the circumstances known to or contemplated by the parties at or before the contract was made.
Goods to be manufactured: Covered unless the buyer supplies a substantial part of the materials; Also excluded if the preponderant part of the seller's duty is labour or services.
Excluded sales: Consumer, auctions, legal authority sales, securities, negotiable instruments, money, ships and aircraft, electricity; The consumer exclusion applies unless the seller neither knew nor ought to have known of the personal, family or household use.
Party autonomy: Parties may exclude the CISG or vary its terms; Exclusion should be clear. Naming another country's law may not be enough if that country is a contracting state.

How to solve CISG Scope and Application questions

Work through the scope tests in order. Stop as soon as one test fails.

1Identify the seller's and buyer's places of business, not their nationality.
2Check that those places are in different states. If not, the CISG does not apply as an international sale.
3Check whether both states are contracting states, or whether private international law points to a contracting state's law.
4Classify the transaction: is it a sale of goods, or mainly services?
5Check the excluded list: consumer use, auction, securities, ships or aircraft, electricity and so on.
6Check whether the parties excluded or varied the CISG in their contract.
7State the conclusion clearly and give the reason in one sentence.

Quickest way: Four-gate check

When to use it: Use in Section A and B objective questions where you have about a minute per question.

Gate 1: different states for places of business?
Gate 2: contracting states, or private international law pointing to one?
Gate 3: goods sale, not mainly services and not on the excluded list?
Gate 4: not excluded by the parties. If all four are passed, the CISG applies.

Common mistakes in CISG Scope and Application

Using nationality to decide internationality.
The word 'international' suggests different countries of citizenship.
Fix: Look only at the places of business of the parties.
Thinking the CISG applies to every consumer sale across borders.
Students focus on the cross-border element and forget the exclusions.
Fix: Check the purpose of the purchase. Personal, family or household use is excluded unless the seller neither knew nor ought to have known of it.
Assuming the CISG cannot be excluded.
It is a treaty, so it feels compulsory.
Fix: Remember party autonomy: the parties can exclude or vary it.
Applying the CISG to a contract that is mainly services.
Students see goods mentioned and stop reading.
Fix: Ask what the main part of the seller's obligation is. If it is labour or services, the CISG does not apply.
Expecting the CISG to decide ownership or validity.
Students assume it covers every aspect of a sale.
Fix: Remember that validity of the contract, passing of property in the goods and liability for personal injury are outside its scope.

Worked examples

Example 1

Alpha Ltd, with its only place of business in State X, sells machine parts to Beta Ltd, with its only place of business in State Y. Both X and Y are contracting states and the contract is silent on governing law. Does the CISG apply?

Show the solution

Places of business are in different states, X and Y, so the sale is international.
Both states are contracting states, so the application test is met.
Machine parts are goods and this is a sale, not mainly a service.
No excluded category applies, and the parties have not excluded the CISG.

Answer: Yes. The CISG applies automatically to this contract.

Example 2

A tourist from State P, a contracting state, buys a watch for personal use from a shop in State Q, also a contracting state. The shop did not know and could not have known the watch was for personal use. Does the CISG apply?

Show the solution

The tourist is a buyer, but the buyer's place of business or habitual residence is in State P and the seller's is in State Q, so the states differ.
Both states are contracting states.
The goods were bought for personal use, which is normally excluded.
The exclusion does not apply if the seller neither knew nor ought to have known of that purpose. Here the shop did not know and could not have known.

Answer: Yes. The consumer exclusion is lost because the seller had no knowledge, actual or constructive, of the personal use, so the CISG can apply.

Exam tips

Read for places of business, not nationality. Examiners often plant a nationality distractor.
Memorise the excluded list as groups: consumer, auction or legal sale, financial items, ships and aircraft, electricity.
If an option says the parties can never exclude the CISG, reject it.
Watch the words 'mainly services' and 'buyer supplies a substantial part of the materials'.
In Section B, answer from the scenario facts only. Do not import details that are not given.

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

CISG Scope and Application: frequently asked questions

When does the CISG apply to an international sale?

It applies when the parties' places of business are in different states and either both are contracting states or private international law leads to a contracting state's law. The sale must also be a sale of goods and not an excluded type. The parties may opt out.

Does the CISG apply to consumer sales?

Not normally. Goods bought for personal, family or household use are excluded. The exception is where the seller neither knew nor ought to have known of that purpose at or before the contract.

Can the parties exclude the CISG?

Yes. The parties may exclude it or vary the effect of its provisions. It is best to state the exclusion clearly in the contract.

Does the CISG cover who owns the goods?

No. The Convention does not deal with the effect of the contract on the ownership of the goods, or with the validity of the contract. These are left to the applicable national law.