CISG: The Contract You Never Signed

Every year I review contracts between foreign buyers and Chinese suppliers that are silent on governing law — and a surprising number that name "the laws of the People's Republic of China" while the buyer believes that kept some treaty out. Both are wrong in the same direction. The United Nations Convention on Contracts for the International Sale of Goods — the CISG — is the contract most buyers never read and never signed, and it is probably already governing their China purchases. This article explains how that happens, what the treaty changes in your favor and against you, and the drafting that fixes it.

1. The Treaty That Applies Itself

China has been a CISG contracting state since 1988. So have most of the countries that buy from it: the United States, Germany, France, Spain, Italy, the Netherlands, Australia, Brazil, Mexico and dozens more. Under Article 1(1)(a) of the CISG, when two businesses have their places of business in different contracting states and their contract does not choose a different regime, the CISG applies automatically. No signature required. No mention required. No notice to either party.

Run the test on your own purchases. Buyer in Houston, Hamburg or Sydney; supplier in Ningbo; contract silent on governing law: the CISG governs your conformity claims, your notice obligations, your remedies and your interest — alongside whatever national law fills the treaty's gaps.

The uncomfortable summary: silence never meant neutrality. Silence meant the treaty. The "contract you never signed" is a real legal instrument with real deadlines, and the first step to controlling it is knowing it exists.

2. "Chinese Law" Does Not Exclude It

The most common misconception I hear from buyers is some version of: "We chose Chinese law, so the CISG can't apply." It is exactly backwards. Article 6 of the CISG lets the parties exclude the Convention — but only expressly. A clause choosing "the laws of the People's Republic of China" is not an exclusion. Chinese courts treat the CISG as part of the applicable law when both parties are in contracting states, so a contract that says "governed by Chinese law" is, in a Chinese court, governed by Chinese law plus the CISG, with the treaty taking priority on every subject it covers.

Exclusion must say the word. Anything less keeps the treaty in — and keeps the buyer who never noticed it operating under deadlines they did not know they had.

3. What the CISG Changes — For You and Against You

The treaty is not hostile to buyers. Some of it is genuinely useful. Some of it is a trap for buyers who assumed their own national rules applied.

In your favor:

• Conformity (Article 35). Goods must match the contract in quantity, quality and description, be suitably packaged, and be fit for the ordinary purpose — or a purpose the seller knew about. Where your contract is thin on specifications, this default is a friend: the goods must be what a reasonable buyer of that description would expect. It also gives you an argument when the paper is silent and the goods are simply wrong.
• A workable termination path. The CISG lets you avoid the contract for "fundamental breach" — a breach that substantially deprives you of what you were entitled to expect, where the breaching party foresaw or should have foreseen that result. For rejected shipments and refusals to produce, that is a cleaner standard than many national codes give you.

Against you:

• The duty to examine (Article 38). The buyer must examine the goods within as short a period as is practicable in the circumstances. If your inspection process is loose, the treaty assumes diligence you did not perform.
• The notice bar (Article 39). You lose the right to rely on any non-conformity unless you give notice within a reasonable time after discovering it — and in no event later than two years from handover. The two-year cap is hard. Compare Article 621 of the PRC Civil Code, which has the same architecture: agreed inspection period, then reasonable time, then a two-year outside limit. If you assumed the Civil Code window would save you — it is the same size.
• Interest with no rate (Article 78). Interest accrues on sums in arrears — but the treaty says nothing about the rate, so the forum picks one, and in China it is commonly anchored to domestic benchmarks. A predictable obligation, an unpredictable number.

One more subtlety: your inspection and quality-control machinery interacts with all of this. A well-drafted AQL regime documents the examination duty the treaty imposes — how to draft one here — and a strong golden-sample and evidence protocol is what makes a conformity argument provable rather than merely plausible.

4. When the CISG Does Not Apply

Three exits exist, and each has a trap inside it:

• Subject matter. Contracts where the preponderant part is supply of labor or services, goods bought for personal or household use, and auctions or execution sales sit outside the Convention.
• Location. Article 1(1)(a) fires only when both parties are in contracting states. If only one side is — say a buyer in a Gulf state buying from a factory in Zhejiang — the automatic route does not trigger, though the Convention can still apply through other paths or by choice.
• Opt-in. Parties in non-contracting states can adopt the CISG by reference. Some sophisticated traders do this deliberately for its neutral, widely-commented rules.

The trap: mixed contracts and layered supply chains are exactly the fact patterns where parties guess wrong about whether the Convention applies — a supply contract with installation services attached, or a trading company in a non-contracting state supplying goods manufactured in China. Guessing wrong in either direction is how buyers end up governed by rules nobody read.

5. The Drafting Fix: Three Clauses

There is no single right answer — there are three defensible ones, and the mistake is having none of them. All three assume the governing-law question is settled; the full logic is in my article on choosing the governing law.

Option A — exclude the CISG. For buyers with their own quality regimes and notice timelines, the cleanest path: keep Chinese law, remove the treaty, write your own rules.

This Agreement shall be governed by the laws of the People's Republic of China, excluding the United Nations Convention on Contracts for the International Sale of Goods done at Vienna on 11 April 1980, and excluding the conflict-of-laws rules of any jurisdiction.

Option B — keep the CISG, expressly. For traders who want the treaty's neutrality and its widely-interpreted rules on purpose — and who can live with the two-year notice cap and court-set interest rates.

This Agreement shall be governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG) and, for matters not governed by the CISG, by the laws of the People's Republic of China, excluding its conflict-of-laws rules.

Option C — the hybrid. Chinese law, treaty excluded, plus a contract-specific notice regime matched to how you actually inspect:

This Agreement shall be governed by the laws of the People's Republic of China, excluding the CISG. Buyer shall notify Seller of any non-conformity in writing within thirty (30) days of discovery, and in any event within twelve (12) months of delivery; failure to give timely notice shall bar the relevant claim. Nothing in this clause limits Buyer's rights where Seller knew or should have known of the non-conformity at the time of delivery.

Calibration notes for Option C: an unreasonably short notice window invites the argument that it is abusive, while twelve to twenty-four months is a range courts take seriously. Set the window to your real inspection cycle — container arrival, AQL, production-line testing — not to an aspirational number. And preserving the "seller who knew" carve-out in writing removes an argument the supplier would otherwise have.

6. Neither Side Ever Read It Either

Here is the part I find genuinely strange after years of this work: most suppliers' standard contracts and proforma invoices never mention the CISG either. Neither side chose it. Neither side read it. Two companies with no common legal language are silently governed by a 1980 Vienna treaty because both happen to sit in contracting states. The PI you signed and the contract behind it are not neutral paper — the proforma-invoice problem is its own subject — and the treaty sitting underneath them has been setting your deadlines the whole time.

7. The CISG in Arbitration

Does arbitration let you escape the treaty? No. A CIETAC tribunal seated in China applies the CISG with the same automaticity a court would — arbitration changes who applies the law, not which law applies. Two practical differences, though, make arbitration worth understanding: in arbitration you can choose a non-CISG law cleanly and have it actually applied, and the resulting award travels across borders far better than a Chinese judgment. The full trade-off analysis is in arbitration clauses for China deals.

One last connection: the CISG itself sets no limitation periods — the clock comes from whatever national law the forum applies. So the deadlines in my article on limitation periods still govern how long you have, on top of the treaty's two-year notice bar. Two clocks, both real, neither of them paused by the fact that you never read either.

This article is general information, not legal advice, and does not create an attorney–client relationship. Treaty and code summaries here are simplified; courts decide on the full texts and the facts of each case. Nothing here is a guarantee of results.