An economic analysis of the United Nations Convention on contracts for the International Sale of Goods

The United Nations Convention on Contracts for the International Sale of Goods (CISG) is an important landmark in international trade. This Convention, which has been ratified by 71 countries (as of July 2008), contains many vital steps in standardizing business agreements throughout the world. The effect the CISG has had on reducing transaction costs and the volume of international trade has been recently analyzed. This article analyzes the CISG through the lens of law and economics. Considering the objectives of the Convention, the CISG has struck a relatively efficient balance between incentive creation and optimal risk allocation, providing a valuable set of default rules for international contracts of sale.