Agreed sums in CISG contracts

Abstract

This paper addresses penalty and liquidated damages clauses in contracts governed by the CISG. The Convention does not expressly deal with such clauses. The practical problems arising from this fact stem from the traditional differences in domestic legal systems. Contrary to Civil Law, penalty clauses are unenforceable in Common Law. As the CISG for questions of validity refers to the applicable domestic law, this causes divergent and unpredictable results. Based on comparative research a uniform treatment of such clauses can be found which is that where the CISG applies clauses are not unenforceable because they deter breach of contract.