Only available on StudyMode
  • Download(s) : 114
  • Published : April 18, 2011
Open Document
Text Preview
The Impact of the CISG

International Business Transaction and CISG

What is CISG?
CISG stands for Contracts on International Sale of Goods and it is a United Nation Convention. It was adopted in 1980 in Vienna convention as an international trade agreement. The main purpose of this convention was to eradicate any uncertainty, which was caused by distinct local laws, which concerned international trade. With the help of this agreement international trade became easy and hassle free. This convention is being applied in over two-thirds of the world countries. CISG is very simple to understand and United States approved it in 1988. This led to its approval in other countries as well. Domestic trade laws were overtaken by CISG. The companies located in countries where CISG is approved are bound by its principle even if their contracts don’t mention CISG. If the companies want few part of the law to be excluded from the contract, they have to mention in white and black in order to avoid any misunderstanding. Although there are many benefits of CISG but the basic advantage is that it is uniform in nature, which has made business transactions easier for the companies. Now the companies do not have to apply the party’s country law instead they can simply apple the CISG law and take benefit from it. This helps in building the trust among the countries too, which will open doors for more trade opportunities. The best thing about CISG is that its explanation of the articles is same in all the countries and that helps a lot in applying it. (Kunkel 2002)

European Perspective
The CISG is the outcome of global effort to harmonize the international trade law and business transaction. It is very difficult for different countries to understand the party local laws. CISG has created a uniform platform for European countries so that they do uniform business and get advantage of it. Through CISG all countries have a neutral legal system, which does not give benefit to one party only. It is uniform and applies to all the communities. Europeans find it easy and convenient and they think that the best part of it is that it is available in many languages with same explanation and context. European firms need a neutral legislation because they lack authority to impose their local law into the market hence a uniform and neutral law is required all over the Europe. This applies to local and international firms both. Small and medium enterprises are also included in this perspective. On other hand the foreign companies, which do business in European market, also need a uniform law for trading to avoid conflict with their party. Europeans and other nations agree that the CISG law is comprehensive in nature and covers everything from sale to formation of contract. Hence it is acceptable in most of the places. CISG helps the companies to work in same frame of reference for Europe. Even the comparison of CISG and international law shows that the CISG has an advantage over other laws of sale. Off course it may have some problems and defects but when compared to its advantage, the business men have an advantage over it. Few countries like Denmark have reserved few articles of CISG in their own laws too. In Europe it is better to stick to the principle of CISG as it has more advantage to the international client. This can be explained through an explanation that under CISG law, it is possible to change some rules if and when necessary by the both parties. Although such chances are rare but still they exist nevertheless. (Mullis 2007)

South African perspective
CISG in South Africa is widely implemented. It is well known that harmony in law takes place only when the countries agree to uniform laws. Hence with the help of CISG the South Africans have made CISG vital things in international business transaction. CISG has created a platform for South African for commercial trade. Eiselen said that as...
tracking img