Essential features of the CISG
The CISG is an international treaty. It applies when contracting parties established in different countries conclude a contract for the purchase of goods. The relevant states must both have ratified the CISG (art. 1 para. 1 lit. a CISG). Alternatively, applicability is given if the private international law – i.e. the laws that deal with the question of which law is applicable to a set of facts with an international element – refers to the law of a contracting state (art. 1 para. 1 lit. b CISG). “Goods” in the sense of the CISG are movable objects such as cars, machines, commodities such as wheat, etc., but not real estate. The CISG also applies to contracts for work and materials unless the customer has to provide a substantial part of the necessary materials.
The purchase of goods for personal use is excluded from the CISG. If a Liechtenstein resident purchases a car for private use from a Swiss dealer, the CISG is not applicable. The purchase of securities and means of payment, ships and aircraft, and purchases made as a result of foreclosure and other judicial measures, e.g. through a public auction by court order (art. 2 CISG).
The CISG contains substantive provisions on sale purchase contracts. If it is applicable, it supersedes the national provisions on sales law within its scope of application. This means that in case of the CISG being applicable in Liechtenstein, the relevant provisions of the General Civil Code do not apply. There are no provisions which (like private international law) deal with the question of the applicable law.
The applicability of the CISG is not mandatory: The contracting parties may exclude it, or deviate from individual provisions: However, it applies if it is not expressly excluded in the course of the conclusion of the contract. In the event of exclusion of the applicability of the CISG, the applicable law must be determined either through a choice of law or by applying the conflict rules of private international law. In practice, numerous contracts with an international component contain a wording within a choice of law that simultaneously, the applicability of the CISG is excluded.
The regulatory scope of the CISG exclusively covers the conclusion of the sale purchase contract and the seller’s and purchaser’s rights and obligations arising from it (art. 4 CISG). However, the Convention does not deal with other issues related to the validity of the contract, failure of intent and the transfer of ownership of the goods. In this regard, the applicable national law must be fallen back on.
Special provisions in the CISG
The seller is obliged to deliver the goods that are subject to the contract, and to provide the purchaser with ownership thereof (art. 30 CISG). Conversely, the purchaser is obliged to accept and pay for the goods (art. 53 and 58 CISG).
Moreover, the CISG also provides for claims and rights in the event of a breach of contract.
It must be distinguished between whether the seller or the purchaser has breached the contract. It is also important whether the breach of contract is fundamental in accordance with art. 25 CISG. A breach is fundamental if the breach of contract is foreseeable and substantial and concerns a part of the performance which is recognisably crucial for the contracting partner. This is the case if the breached party is no longer interested in the execution of the contract due to the breach. A fundamental breach of contract is given, for example, if the delivery of the goods is impossible or the delivery or payment is seriously and finally refused.
If the seller has not delivered the goods, the purchaser can either demand performance or – after setting a grace period – terminate the contract. In case of a fundamental breach of contract, the contract can be terminated immediately. If the seller does not adequately fulfil their contractual obligation (e.g. if the goods are defective), the purchaser may demand substitute goods or performance (art. 46 CISG). In case of a fundamental breach of contract, the purchaser may terminate the contract immediately. However, it must be noted that the purchaser must notify the seller of the breach of contract within a reasonable period of time (art. 39 CISG).
If the purchaser violates the contract, the seller can demand performance, i.e. payment of the purchase price, or cancel the contract in combination with setting a reasonable grace period. In case of a fundamental breach of contract, immediate termination of the contract is also possible. If the purchaser refuses to accept the goods, the seller can sue for acceptance.
Finally, the CSIG grants the aggrieved contractual partner a claim for compensation for damages to property and assets, regardless of culpability.
It remains to be seen whether and to what extent the CISG will endure in Liechtenstein practice. In any case, the fundamental applicability of the Convention must be taken into account when drafting sale purchase contracts with an international context.