Convention of 22 December 1986 on the Law Applicable to Contracts for the International Sale of Goods

General Information

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What is it about?

This instrument aims to unify the choice of law rules relating to contracts for the international sale of goods. The Convention determines the law applicable to contracts of sale of goods between parties having their places of business in different States and in all other cases involving a choice between the laws of different States. The Convention does not apply to certain categories of sales, such as sales by way of execution or otherwise by authority of law, consumer sales, or sales of stocks, shares, investment securities, negotiable instruments or money. It is a basic principle of the Convention, that international sales are regulated by the law chosen by the parties to the contract. In the event of an absence of choice, the sale is governed by the law of the state where the seller has his place of business at the time of conclusion of the contract. However, the contract is governed by the law of the state where the buyer has his place of business at the time of conclusion of the contract, if negotiations were conducted and the contract was concluded in that state by and in the presence of the parties, or if the contract provides expressly that the seller must perform his obligation to deliver the goods in that state, or if the contract was concluded on terms determined mainly by the buyer and in response to an invitation directed by the buyer to persons invited to bid. This Convention is designed to replace the Hague Convention of 15 June 1955 on the Law Applicable to International Sales of Goods.

Why is it relevant?

This Convention allows parties to a contract to foresee the applicable law related to the execution, or the non-execution of an international agreement. The Convention allows for increased legal predictability as well as prevents a conflict of laws related to sales. Its impact is nevertheless limited to the small number of States having ratified this instrument.

Additional Information

By ratifying this instrument, a State ceases to be a party to the Convention on the Law Applicable to International Sales of Goods (Hague, 15 June 1955). The application of a law determined by the Convention may be refused where such application would be manifestly incompatible with public policy (ordre public).

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