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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

Ekon Ltd (State P) agrees to sell cotton fabric to Fargo Ltd (State Q), both Contracting States to the CISG. A dispute arises because Fargo says the contract is void due to Ekon's misrepresentation about its own financial position. Which statement is correct?

The validity of the contract is outside the CISG, so the misrepresentation claim is decided under the applicable national law. The CISG covers formation and the parties' rights and obligations, but it does not govern the validity of the contract or its terms.

  1. AThe CISG governs the validity of the contract, so the claim must be decided under the CISG
  2. BThe CISG does not govern the validity of the contract, so this issue is decided under the applicable national lawCorrect
  3. CThe CISG applies only to the formation of contracts, so any dispute about performance falls outside it

Explanation

The CISG governs formation of the contract and the rights and obligations of seller and buyer, but it does not deal with the validity of the contract or of its terms. Validity issues such as misrepresentation go to the national law applicable under conflict rules. Option C is wrong because the CISG also covers performance and remedies.

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