A New CISG Decision from Arizona
Length: • 3 mins
Annotated by D.C.
March 13, 2025
Many U.S. lawyers are unaware that the U.N. Convention on Contracts for the International Sale of Goods – or CISG – might apply to the contracts they negotiate on behalf of their clients. A recent federal district court decision from Arizona, Kümpers Composites GmbH v. TPI Composites (Judge Susan M. Brnovich), provides a nice occasion to go over some of the CISG’s basic features. It’s also a must-read for law students around the world working on the merits issues in this year’s Vis Moot.
Kümpers is a German company that makes carbon fabrics. TPI is a US company that uses carbon fabrics to make blades for wind turbines. The parties made two relevant contracts: a Master Agreement and a Supplier Agreement requiring Kümpers to supply TPI with fabrics between January 2022 and March 2023. They subsequently got into a dispute over price adjustments, and TPI eventually terminated the contract by invoking a termination-for-convenience clause in the Master Agreement. Kümpers then sued for breach of contract, contending that the termination was wrongful. Both parties moved for partial summary judgment, and both motions were partly successful.
The first issue for the court was whether the CISG applies at all to this case. Under article 1(1)(a), the CISG governs international sales contracts in U.S. courts where both parties are from Contracting States (e.g. the USA and Germany). But the CISG recognizes in article 6 that parties can exclude its application. Here, the Master Agreement said that any supply agreement between the parties would be “governed by the laws of the State of Arizona, without giving effect to any choice-of-law principles.” TPI argued that when the parties chose Arizona law, they meant to choose Arizona state law and to exclude the CISG. The effect of clauses choosing the law of one of the United States has been debated on this blog here and here, and a clause strikingly similar to the one in this case will be debated in Hong Kong and Vienna at this year’s Vis Moot. CISG enthusiasts will be relieved to learn that the court concluded that the parties hadn’t disclaimed the CISG by choosing Arizona law. That’s because the CISG is part of Arizona law through the U.S. Constitution’s Supremacy Clause.
A second point highlighted in Kümpers v. TPI is that the CISG’s coverage is limited even in cases where it does apply. The treaty’s drafters managed to agree on rules on formation, the parties’ performance obligations, and remedies. But a comprehensive sales law code wasn’t feasible. Issues not governed by the CISG are left to national law. The main issue in the case was whether TPI breached the contract by invoking the termination-for-convenience clause. Kümpers argued that TPI could only terminate where TPI could show (a) that the circumstances had changed, and (b) that TPI was acting in good faith. The court concluded that the CISG didn’t govern this issue, applied Arizona law, and found it was unnecessary for TPI to satisfy either of these preconditions before terminating the contract. Likewise, the court concluded that TPI’s defences of waiver, estoppel, and unclean hands weren’t governed by the CISG because the CISG doesn’t address those points.
A third issue discussed in the case and worthy of lawyers’ attention is that the CISG has no equivalent to the Statute of Frauds. Kümpers argued that the parties had made a supplemental contract in 2023. TPI argued that this alleged contract wasn’t sufficiently memorialized in writing, but that argument failed. Article 11 of the CISG states that “a contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form.” (The United States could have chosen to retain a writing requirement when it ratified the CISG, but it didn’t.)
Finally, the case discusses the CISG’s approach to finding and interpreting a contract’s terms. The CISG rejects the parol evidence rule and allows the admission of all relevant circumstances to interpret a written document (Article 8). The judge was openly uncomfortable with this civil-law-inspired approach. She seemed relieved that the parties had included an “entire agreement” or “merger” clause, which she construed as a decision by the parties to derogate from the CISG approach and to reinstate “general principles of contractual interpretation”—which, it turns out, are the principles of Arizona law.