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

Aldara Ltd, based in Spain, agrees to sell industrial machinery to Brenmor Inc, based in Canada. Both Spain and Canada are Contracting States to the CISG, and the contract does not exclude it. Which of the following best explains why the CISG applies?

The CISG applies because the buyer and seller have their places of business in different Contracting States, which is the basic test under the Convention. Value, transport method and the form of the contract do not decide whether it applies.

  1. AThe parties have their places of business in different Contracting StatesCorrect
  2. BThe goods are of high value and are transported by sea
  3. CThe contract is in writing and is governed by a national sale of goods statute

Explanation

The main test for the CISG applying is that the parties' places of business are in different Contracting States. Value and mode of transport are irrelevant. A national statute does not trigger the CISG, and the Convention does not require writing.

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