[Direct answer]In the Beijing area, whether the United Nations Convention on Contracts for the International Sale of Goods (which came into effect on January 1, 1988 and took effect in China on the same day) can be applied depends on three key factors: First, the subject and object of the contract. The convention applies to contracts for the sale of goods concluded between parties whose places of business are in different contracting states, and the subject of the contract must fall within the scope of goods regulated by the convention; Second, whether the parties have agreed to exclude its application. Article 6 of the convention stipulates that the parties may agree to exclude its application or choose another law; Third, the invocation of conflict rules. Article 1 of the convention stipulates that when the application of the law of a contracting state is determined by the rules of private international law, China made a reservation on this matter when ratifying the convention. In addition, sales for private and family use, sales in auction and enforcement procedures, and sales of ships, aircraft, and electricity are not subject to the convention. Therefore, whether the convention applies to foreign-related sales must be judged comprehensively based on the parties' places of business, the nature of the goods, and the contractual provisions. It is recommended to explicitly stipulate the applicable law and dispute resolution clauses in the contract to reduce uncertainties.

1. Problem background and typical scenarios

In foreign-related goods sales, where the transaction parties are located in different countries, the applicable law directly determines the contract's validity, breach of contract determination, and remedies, thus becoming the focus of negotiations. In practice, common situations include: export enterprises and overseas buyers failing to stipulate the applicable law in the contract, only discussing whether to apply the United Nations Convention on Contracts for the International Sale of Goods after quality or payment disputes arise; some parties mistakenly believe that as long as one party is located overseas, the Convention must necessarily apply, ignoring whether both parties' places of business are located in contracting states; and others, although they stipulate in the contract that Chinese law applies, fail to realize that the Convention itself is part of China's legal system and may still be applied preferentially under certain conditions. When handling such cross-border cases, courts and arbitration institutions will first review whether the parties have stipulated the applicability and whether the stipulation is valid, and then determine the rights and obligations in accordance with the Convention and relevant laws. Understanding the scope of application and exclusion clauses of the Convention is a prerequisite for designing foreign-related contract clauses.

II. Key points of contention

First, whether the parties' places of business are located in different contracting states, and how the places of business are determined. Second, whether the subject matter belongs to the scope of goods regulated by the Convention, and whether it falls into the exclusionary circumstances. Third, whether the parties expressly exclude the application of the Convention. Fourth, the application and retention issues when referring to the laws of the contracting states according to the rules of private international law. Fifth, the effectiveness of the declarations and reservations made by China to the relevant provisions of the Convention, and its relationship with international practice.

III. Professional analysis by Henglue Lawyers

Henglu Lawyers believe that when determining whether the Convention applies, the following three-step review process should be followed: first, review the subject matter; second, review the object of the contract; and third, review the contractual provisions. First, review the subject matter. The Convention uses the parties' places of business in different contracting states as the connecting point. If the company's registered address and actual place of business differ, the true regular place of business should be examined. For Chinese parties with branches or project departments abroad, it is inappropriate to simply identify the registered address as the place of business. Second, review the object of the contract. Article 2 of the Convention explicitly excludes sales for personal, family, or household use, sales in auction or enforcement proceedings, and sales of stocks, bonds, bills, currency, ships, aircraft, and electricity. Therefore, transactions involving complete sets of equipment, mineral products, and agricultural products require individual verification. Third, review the contractual provisions. Article 6 of the Convention allows parties to exclude its application by agreement or indirectly by selecting the law of a contracting state, but the provisions must be clear and specific to avoid ambiguous agreements such as applying international practices. It should be noted that when China ratified the Convention, it made a declaration under Article 95 of the Convention, reserving the application of Article 1, paragraph 1, subparagraph (2), and not extending the Convention's application in China through the invocation of private international law rules. Based on the experience of our firm in handling foreign-related contracts and cross-border disputes, it is often the case that parties find themselves in a passive position regarding the burden of proof, statute of limitations, and remedies after disputes arise. Therefore, it is recommended to design the application of law and dispute resolution clauses as core provisions of foreign-related contracts. The specific application should be based on the contract text, the parties' places of business, and current effective laws, regulations, and judicial rulings.

IV. Practical suggestions and legal basis

Action list: First, verify whether the other party's place of business is located in a contracting state of the Convention before signing the contract, and keep the supporting documents; Second, clarify whether the subject matter belongs to the scope of goods regulated by the Convention and avoid the exclusionary circumstances; Third, if you do not wish to apply the Convention, you should explicitly exclude it in the contract; Fourth, if you wish to apply the Convention, you should simultaneously agree on the dispute resolution method and relief rules, and pay attention to the relationship with our country's declaration of reservation; Fifth, keep the correspondence, formal invoices, and contract annexes as evidence of the applicable law and transaction conditions. For foreign and cross-border affairs, you can refer to the relevant provisions of the Convention.Finance and cross-border affairsAndBusiness and contract disputes in enterprisesLegal basis: Articles 1, 2, 6, 7, and 9 of the United Nations Convention on Contracts for the International Sale of Goods (which came into effect on January 1, 1988, and was implemented in China on the same day), and the relevant provisions on the application of law to foreign-related civil relations in the Civil Code of the People's Republic of China (which came into effect on January 1, 2021). The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Advice

Firstly, the Convention does not automatically apply to all foreign-related sales. It requires that both the subject and the object of the transaction meet the applicable conditions. Secondly, China has made a reservation to Article 1, paragraph 1, subparagraph (2), which excludes the application of the Convention when conflict rules are invoked. Thirdly, the provisions excluding the application of the Convention must be clear and avoid using ambiguous language. Fourthly, the applicable law and the dispute resolution clauses should be designed together at the contract signing stage, as it is costly to make amendments afterwards. For foreign-related and cross-border transactions, it is advisable to use arbitration clauses to resolve disputes.Financial and cross-border affairsThe service obtains a comprehensive solution, which involves the integration of contract terms and compliance requirements.Business and contract disputes in enterprisesAndSpecial servicesComprehensive judgment.

VI. Frequently Asked Questions

Q1: Which contracts are subject to the Convention on Contracts for the International Sale of Goods?

It applies to contracts for the sale of goods concluded between parties whose places of business are located in different contracting states, and the subject matter does not fall within the scope of exclusion specified in Article 2 of the Convention; the parties may also apply it in other circumstances that comply with the provisions of Article 1 of the Convention. When making the determination, the parties' places of business and the nature of the subject matter should be checked item by item. It is not appropriate to assume that foreign-related sales must necessarily apply the Convention.

Q2: The contract stipulates that Chinese law shall apply. Can the convention still be applied in this case?

It's possible. After the convention comes into effect in our country, it becomes an integral part of our legal system. If the parties do not explicitly exclude the convention and meet the applicable conditions, the convention may still be applied preferentially. If they really don't want to apply it, they should explicitly state in the contract that they exclude the convention, rather than just stipulating the application of Chinese law to express it indirectly.

Q3: Which sales are not subject to the Convention?

The Convention does not apply to sales for personal, family, or household use, sales in enforcement proceedings, and sales of stocks, bonds, bills, currencies, ships, airplanes, electricity, etc. For transactions falling within the above scope, the rights and obligations of the parties shall be determined directly in accordance with the applicable domestic law.

Q4: Can the parties agree to exclude the application of the Convention?

Yes. Article 6 of the Convention allows the parties to agree to exclude its application or reduce its effect, but the exclusion statement should be clear and specific, for example, stating that the contract does not apply to the United Nations Convention on Contracts for the International Sale of Goods, to avoid using ambiguous or inconsistent terms.

Q5: How should we handle issues that are not covered by the convention?

According to Article 7 of the Convention, the dispute shall be resolved in accordance with the general principles on which the Convention is based. Where there are no corresponding principles, the dispute shall be resolved in accordance with the law applicable under the rules of private international law. This is also the reason why foreign-related contracts need to clearly stipulate the applicable law and dispute resolution clauses to avoid leaving ambiguities regarding the applicable law.

The above Q&A is mainly based on judicial practices in the Beijing area. There may be differences in the adjudication opinions in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials to avoid missing the statutory time limit.Financial capital legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.