Austrian Law Blog:


Which law applies to a cross-border sales contract?

If the parties have not made an express choice of law, a contract for the sale of goods shall be governed by the law of the country where the seller has his habitual residence pursuant to Article 4 1. (a) of the EU Regulation No 593/2008 on the law applicable to contractual obligations.

Sales contracts are then governed by the seller’s law or by the provisions of the UN Convention on Contracts for the International Sale of Goods (“CISG”). Pursuant to Article 1(1) of the CISG the convention shall apply to contracts between parties, whose places of business are in different States, when the States are contracting States. Austria is a party to the CISG.

If the parties do not wish the CISG to apply, they must explicitly exclude the application of the CISG in their sales agreement.

Certain aspects of a contract of sale are not regulated by the CISG. For example, the CISG does not specify the applicable interest rate for late payments or the limitation period. Here, recourse must be made to the applicable local law of the seller. Under Austrian law the statutory limitation period regarding a claim for payment of the purchase price is three years. Other jurisdictions may provide for longer periods, e.g. 10 years (Turkey).

Write us your comments