Key Takeaways
- CISG automatically applies to your contract if both countries are signatories — you do not need to cite it
- Article 35 sets a broad conformity standard — including fitness for purpose and sample quality
- Article 50 price reduction is often the most practical remedy — keep goods, recover value difference
- Article 49 contract avoidance requires a "fundamental breach" — goods must be substantially worthless to you
- CIETAC tribunals routinely apply CISG — it is well-established in Chinese international trade practice
What Is CISG and Does It Apply to Your Dispute?
The United Nations Convention on Contracts for the International Sale of Goods (CISG) is a treaty that provides uniform rules for international sales contracts. China ratified CISG in 1986. It automatically applies to contracts for the sale of goods between parties with places of business in different CISG contracting states — unless the parties expressly exclude it.
| Question | Answer |
|---|---|
| Does CISG apply to my contract? | Yes — if you are in a CISG signatory country (including the US, Canada, Australia, most of Europe, Japan, Korea, Singapore) and the contract does not expressly exclude CISG |
| Do I need to cite CISG in my contract? | No — it applies automatically by operation of law |
| What if the contract says "governed by PRC law"? | CISG applies — because PRC law incorporates CISG as part of Chinese domestic law for international sales |
| Can CISG be excluded? | Yes — if the contract expressly states "CISG shall not apply" or chooses a non-CISG governing law with explicit exclusion |
Article 35: The Conformity Standard
CISG Article 35 sets out what "conforming goods" means. This is the foundation of any quality claim:
- The goods must be fit for the purposes for which goods of the same description would ordinarily be used
- The goods must be fit for any particular purpose you made known to the seller at the time of contract — unless you did not rely on the seller's skill and judgment
- The goods must possess the qualities of any sample or model the seller held out to you
- The goods must be contained or packaged in the usual manner or in a manner adequate to preserve and protect them
Practical implication: If the supplier showed you samples at the Canton Fair, those samples set the conformity standard under CISG Article 35(2)(c). If they sent you specifications by email, those specifications are the "particular purpose" under Article 35(2)(b). CISG gives you strong legal grounds that go beyond what many national laws provide.
The 4 CISG Remedies for Quality Defects
| Article | Remedy | When Available | Practical Example |
|---|---|---|---|
| Article 46 | Require performance — demand replacement or repair | Defects can be cured without unreasonable delay or inconvenience | Supplier delivered the wrong color — demand they replace at their cost |
| Article 49 | Avoid the contract — cancel and demand full refund | Fundamental breach only — goods are substantially worthless | Machinery does not function at all; goods are completely different from what was ordered |
| Article 50 | Reduce the price — proportional to reduction in value | Any non-conformity, whether or not fundamental | Defects reduce value by 30% — pay 70% of contract price |
| Article 74 | Claim damages — additional losses beyond the goods | Foreseeable losses caused by the breach | Defective goods caused you to lose a customer — claim lost profit |
Article 50 Price Reduction: The Most Practical Remedy
Article 50 is often the smartest remedy in practice. You keep the goods — which may still have some value — and recover the difference. This avoids the cost and complexity of returning goods to China. To use Article 50:
Quantify the value reduction
What are the defective goods actually worth? Get a third-party valuation, compare with market prices for similar defective goods, or calculate based on the cost to repair them.
Notify the seller in writing
Tell the supplier: "Under CISG Article 50, we are reducing the price by X amount due to the following defects [list]. The adjusted price is Y. We have already paid Z, so you owe us Z-Y." This notice is critical — without it, you cannot later claim the price reduction.
If the supplier disputes, proceed to arbitration or court
CIETAC tribunals are very familiar with CISG Article 50 claims. Provide your defect documentation, the value assessment, and your notice to the seller. The tribunal determines the appropriate reduction based on the evidence.
CISG vs Chinese Domestic Law: Which Is Better?
| Aspect | CISG | PRC Civil Code |
|---|---|---|
| Conformity standard | Broader — includes fitness for purpose, sample quality, packaging | Similar but less explicit on samples and packaging |
| Right to cure | Seller has right to cure even after delivery deadline | Seller's right to cure is more limited |
| Contract avoidance | Requires "fundamental breach" — higher threshold | "Fundamental breach" standard similar after 2021 Civil Code |
| Price reduction | Article 50 — explicit and well-developed | Available but less developed in case law |
| Damages | Article 74 — foreseeable losses | Similar foreseeability standard |
| International recognition | Applied globally — CIETAC, ICC, other tribunals | Only in Chinese courts; may require recognition abroad |
How to Invoke CISG in Your Dispute
Cite CISG in your demand letter
Your attorney's demand letter should explicitly reference: "Under CISG Article 35, the goods failed to conform to the contract. Under Article 46/49/50, the buyer is entitled to [specific remedy]." This signals legal sophistication and that international treaty law applies — not just Chinese domestic law.
In CIETAC arbitration, plead CISG as governing law
CIETAC tribunals routinely apply CISG. Your arbitration request should cite CISG provisions alongside any contractual provisions. CIETAC arbitrators are trained in CISG and will apply it — you do not need to educate the tribunal.
In Chinese court, CISG applies automatically
Chinese courts apply CISG as part of Chinese law in international sales cases. Your attorney cites both CISG provisions and the corresponding PRC Civil Code provisions. This gives you two legal bases for the same claim — strengthening your position.
Frequently Asked Questions
Yes. Under Chinese legal practice, "governed by PRC law" includes CISG for international sales contracts. CISG is part of Chinese domestic law — it has been incorporated through China's treaty ratification. To exclude CISG, the contract must explicitly state something like "The parties agree that the United Nations Convention on Contracts for the International Sale of Goods shall not apply to this contract." A general "governed by PRC law" clause does not exclude CISG. Many Chinese suppliers do not know this — giving you a legal advantage in disputes.
Yes — these remedies are cumulative. Example: you ordered goods for $20,000. The goods arrived defective and are worth only $12,000. Under Article 50, you reduce the price to $12,000, recovering $8,000. Additionally, the defective goods caused you to lose a customer worth $5,000 in profit — you can claim this under Article 74 as consequential damages. Total claim: $13,000 (price reduction + lost profit). The key is that the damages must be foreseeable at the time of contract and you must prove them with evidence.
It depends on the contractual structure. If your contract or invoice is directly with the Chinese supplier (not Alibaba), and both countries are CISG signatories, CISG applies to the underlying sale — regardless of the Alibaba platform. Alibaba's terms do not override CISG unless the contract explicitly excludes it. However, if your purchase is governed by Alibaba Trade Assurance terms, those terms may limit remedies to what Alibaba's system can provide (refund through platform). An attorney can review your specific documentation to determine whether CISG or platform terms govern. Get a case assessment.
You need: (1) the contract or purchase order — showing the agreed specifications, (2) your payment proof — showing you performed your obligation, (3) evidence of non-conformity — third-party inspection report (strongest), photos/videos, expert testimony on value reduction, (4) your notice to the seller — email or letter specifying the defects and the remedy claimed, (5) evidence of damages — if claiming consequential losses under Article 74. The strongest CISG cases combine a third-party inspection report with clear contractual specifications and timely notice to the seller. For guidance on evidence, see our quality inspection rights guide.