Many California companies buying or selling goods internationally assume their contracts are governed by familiar American law — the UCC, plus whatever their governing-law clause says. Often they are wrong. The United Nations Convention on Contracts for the International Sale of Goods (CISG) applies automatically to many cross-border sales, displaces the UCC when it does, and is not excluded by the standard "governed by California law" clause. Here is what the treaty covers, how it differs, and how to opt out if you want to.
When the CISG applies — automatically
The United States has been a party to the CISG since 1988, along with roughly 90 other countries, including most major trading partners such as China, Canada, Mexico, Germany, Japan, and South Korea (though notably not the United Kingdom or India). Under Article 1(1)(a), the Convention applies to contracts for the sale of goods between parties whose places of business are in different Contracting States. No one has to choose it; it applies by default as U.S. federal law, preempting state law including the UCC.
The treaty does not cover everything. It excludes certain consumer purchases, sales of securities, ships, aircraft, and electricity, and auctions; it governs contract formation and the parties' rights and obligations but not questions like contract validity or title disputes; and contracts predominantly for services or for goods manufactured with a substantial part of the necessary materials supplied by the buyer fall outside it.
How the CISG differs from the UCC
The differences are not cosmetic — they change outcomes:
- No writing requirement. Article 11 generally eliminates a statute-of-frauds requirement: subject to reservations made by certain Contracting States, a CISG contract of any size can be formed and proved orally or by conduct, and witnesses can testify to its terms.
- No parol evidence rule. Courts may consider negotiations and all surrounding circumstances to interpret the deal, so a clean-looking final document does not shut out prior discussions the way U.S. practice expects.
- Battle of the forms. The CISG follows a modified mirror-image approach: a reply with material alterations is a counteroffer, which can flip whose terms govern compared to the UCC § 2-207 analysis.
- Avoidance requires fundamental breach. Instead of the UCC's perfect tender rule, a buyer may generally reject goods and avoid the contract only for a breach that substantially deprives it of what it expected — minor nonconformities lead to damages or price reduction, not rejection.
- Notice and cure mechanics. Buyers must examine goods promptly and give timely, specific notice of nonconformity or lose remedies, and either party may set an additional performance period (the "Nachfrist" mechanism) before avoiding the deal.
- Specific performance is more available in principle than under U.S. practice, subject to forum-court limits.
Opting out: the clause most contracts get wrong
Article 6 lets the parties exclude the Convention — but the exclusion must be clear. Here is the trap, confirmed by U.S. case law including Asante Technologies v. PMC-Sierra: a clause saying the contract "shall be governed by the laws of the State of California" does not exclude the CISG, because the treaty is self-executing federal law that preempts conflicting state law under the Supremacy Clause. Choosing California law does not displace the CISG for contracts within its scope.
Effective exclusion names the treaty. Working language: "This Agreement shall be governed by the laws of the State of California, including the Uniform Commercial Code as enacted in California. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement and is expressly excluded." Put the clause in the signed agreement — not just in purchase-order boilerplate that may never become part of the contract under the CISG's own formation rules.
Should you opt out?
Reflexively excluding the CISG is common but not always right. U.S. sellers sometimes benefit from the fundamental-breach standard, which limits a foreign buyer's ability to reject goods over minor defects, and the CISG offers a neutral, widely interpreted body of law that foreign counterparties may accept more readily than one side's domestic rules. Opting out tends to make sense when you rely on written-modification and integration clauses, want the UCC's familiar warranty and disclaimer framework, or your form contracts, insurance, and dispute playbooks are all built on domestic law. Whatever you choose, align the governing-law clause with your dispute-resolution clause — arbitration seat, forum, and enforcement strategy — which is where our international business practice spends much of its time, alongside the business contracts work of building export-ready templates.
Talk to a California business attorney
If your company buys from or sells to overseas counterparties, a free consultation can determine whether the CISG governs your current contracts — and whether it should. Schedule a free consultation or call (949) 418-2113.
This article is attorney advertising and provides general information only. It is not legal advice and does not create an attorney–client relationship. The law changes, and this article reflects the law as of its publication date. Every situation is different — contact us to discuss how the law applies to your exact circumstances. See our full disclaimer.
