The clause travels copied from one international contract to the next. It has almost never been decided which side the client is on.
International sale of goods contracts contain, with remarkable regularity, a clause excluding the application of the United Nations Convention on Contracts for the International Sale of Goods — the Vienna Convention of 1980, known by its English initials, CISG. It usually sits among the final provisions, next to governing law and jurisdiction, drafted in a single line.
That clause is rarely the outcome of a decision. It travels copied from one model to the next, and in particular from German framework contracts, where exclusion is settled practice for reasons that make sense there and do not necessarily make sense here. When a Spanish company signs such a contract, it is giving up a legal regime without having checked whether that regime suits it.
The answer turns on one thing: whether the Spanish company is buying or selling. And in a considerable proportion of cases, the exclusion operates against the client who signs it.
The Convention applies of its own force
The first point to establish is that the Convention is not a regime the parties opt into. It is default applicable law.
Article 1 makes it applicable to contracts of sale of goods between parties whose places of business are in different States, where both States are Contracting States or where the rules of private international law lead to the law of a Contracting State. Spain has been a party since 1991, as have Germany, France, Italy, the Netherlands, the United States, China and Mexico. The nationality of the parties is irrelevant, and so is the civil or commercial character of the contract or of the contracting parties.
So in a sale between a Spanish company and a German one, the Convention governs the contract even if the contract never mentions it. Silence does not leave it out: silence leaves it in.
Choosing “Spanish law” does not exclude it
This is the most frequently repeated error, and it is worth stating without qualification.
Article 6 allows the parties to exclude the application of the Convention or to derogate from any of its provisions. But the exclusion must be express and unequivocal, and a governing law clause does not produce it. Where a contract provides that it “shall be governed by Spanish law,” it is not excluding the Convention: it is confirming that the Convention applies, because the Convention is Spanish law for these contracts — a ratified and published international treaty, part of the domestic legal order.
The practical consequence is that there are contracts whose drafter believed he had subjected the transaction to the Civil Code and the Commercial Code and had in fact subjected it to the Vienna Convention. And there are contracts where the opposite was intended and the intended result was obtained by accident.
To exclude it, it must be said: subject the contract to Spanish law with the express exclusion of the 1980 Vienna Convention. Two lines rather than one.
What actually changes: the deadlines for claiming
Here lies the difference that decides most cases, and it is a difference of magnitude rather than of nuance.
The Spanish Commercial Code imposes extraordinarily short notice periods on the buyer. Article 336 gives it four days to claim for defects in quantity or quality where the goods are received in bales or packaging. Article 342 gives it thirty days from delivery to claim for internal defects. These are caducidad periods: once they expire the action is extinguished, and an extrajudicial demand does not interrupt them.
The Convention frames the same problem differently. Article 38 requires the buyer to examine the goods “within as short a period as is practicable in the circumstances,” which in a sale involving carriage may be deferred until arrival. Article 39 requires it to give notice of the lack of conformity, specifying its nature, within a reasonable time after it discovered or ought to have discovered it, with an outer limit of two years from the date on which the goods were actually handed over, unless the contract provides for a different guarantee period. And article 44 adds a safety valve the Commercial Code does not know: a buyer with a reasonable excuse for its failure to give notice in time retains the price reduction and damages, excluding loss of profit.
Compare the two scales. Four days against a reasonable time. Thirty days against two years. A manufacturing defect that manifests in the sixth month of a machine’s service life is, under the Commercial Code, a defect that can no longer be claimed for by this route; under the Convention it is in time if notice is given diligently once it appeared.
For a Spanish buyer, excluding the Convention may cost it the claim in its entirety. For a Spanish seller, keeping the Commercial Code deadlines is one of the best defences the legal system offers.
The other differences, in order of importance
Avoidance of the contract. To avoid the contract the Convention requires a fundamental breach: one that substantially deprives the other party of what it was entitled to expect (articles 25 and 49). That is a higher threshold than article 1124 of the Civil Code. It favours the party in partial breach and prejudices the party that wants out of the contract.
Damages. Article 74 covers loss suffered and loss of profit, capped by foreseeability at the time of conclusion. In substance this is the rule of article 1107 of the Civil Code.
Interest. Article 78 recognises the right to interest on sums in arrears, but fixes no rate and refers to no law for determining one. It is the Convention’s best known gap, and it should be covered in the contract whether or not the Convention is excluded.
Exemption. Article 79 exempts the party that proves its failure was due to an impediment beyond its control which it could not reasonably have foreseen or overcome. It sits closer to force majeure than to a hardship clause, and it does not resolve cases of changed circumstances.
What the Convention does not govern. Article 4 says so: it is not concerned with the validity of the contract or with the effect the contract may have on the property in the goods. Capacity, defects of consent, transfer of title and retention of title continue to be governed by the applicable national law. Excluding the Convention does not simplify the contract: it leaves the same renvois in place and worse deadlines.
When it does not apply even if nobody excludes it
Two rules are worth checking before arguing about the clause, because they may make the argument unnecessary.
Article 2 excludes certain sales: goods bought for personal, family or household use; sales by auction and on execution or otherwise by authority of law; sales of stocks, shares, negotiable instruments and money; sales of ships, vessels, hovercraft and aircraft; and sales of electricity.
Article 3 is the one that matters most in industrial contracting. Its first paragraph treats contracts for the supply of goods to be manufactured or produced as sales, unless the buyer undertakes to supply a substantial part of the materials necessary. Its second paragraph excludes contracts in which the preponderant part of the supplier’s obligations consists in the supply of labour or other services.
Hence, in an acquisition of machinery involving engineering, installation, integration and commissioning, the prior question is not whether the Convention is desirable but whether it applies at all. And the answer turns on where the weight of the performance lies, which is a question of fact and therefore arguable.
The decision
Reduced to essentials, the decision is this.
If the Spanish client is buying, the Convention usually suits it, principally because of the article 39 deadlines as against articles 336 and 342 of the Commercial Code. Signing an exclusion clause drafted by the foreign seller means signing the seller’s defence.
If the Spanish client is selling, exclusion usually suits it, for the symmetrical reason: the Commercial Code’s very short deadlines are a first-order defence — though the balance has to be struck here, because the Civil Code threshold for termination is less protective of the seller than fundamental breach.
If the position is mixed — buying from foreign suppliers and selling to foreign customers on the same contract model — then there is no single answer, and what cannot stand is an identical clause in both sets of general conditions.
What should never happen is what almost always happens: that the clause is there because it was in the template. It is one of the very few contractual decisions that is taken in a single line, costs nothing, and may determine whether a seven-figure claim is examined on its merits or dismissed as out of time.
Note: this analysis is general in nature and does not constitute legal advice on any particular contract. Characterising a specific contract under article 3 of the Convention, and choosing between its application and its exclusion, require examination of the clauses and of the party’s position.
Sources: United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980), official UNCITRAL text, articles 1 to 6, 25, 35, 38, 39, 44, 49, 74, 78 and 79; Spanish Commercial Code, articles 336 and 342; Spanish Civil Code, articles 1107 and 1124.