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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

Altus Ltd, based in State A, agrees to sell industrial machinery to Brevin Co, based in State B, for use in Brevin's factory. Both states are Contracting States to the UN Convention on Contracts for the International Sale of Goods (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 and the contract is for the sale of goods. No minimum value or written form is needed, and the commercial use of the goods is not the test.

  1. AThe parties have their places of business in different Contracting States and the contract is for the sale of goodsCorrect
  2. BThe goods will be used for commercial purposes, whatever the location of the parties
  3. CThe contract is in writing and exceeds a minimum value set by the CISG

Explanation

The CISG applies to contracts for the sale of goods between parties whose places of business are in different Contracting States. No writing or minimum value is required, and commercial use alone does not trigger it. Option B is wrong because location of the parties, not use of goods, is the test.

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