Originally from: The Practitioner’s Guide to the CISG - Second Edition

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§ 10.1 Overview

Articles 66 70 of the CISG deal with the consequences of accidental loss or damage to the goods occurring between the conclusion of the contract and its performance. These provisions essentially determine which party bears the consequences of loss or damage to the goods involved in a transaction. As for other CISG rules those pertaining to the passing of risk apply only if the parties have not otherwise dealt with the issue. In international sales, it is not unusual for passing of risk to be taken into consideration by the parties by way of reference to the International Chamber of Commerce (ICC) INCOTERMS.  Therefore, the most likely issue that arises in connection with these concerns is the question of whether the parties intended the INCOTERMS terms to displace the CISG rules. In making such a determination, courts and practitioners should be aware that while “a discrepancy between the results under the INCOTERMS and under the CISG is possible,”  the ICC has tried to make INCOTERMS compatible with the CISG.  Another positive aspect about the INCOTERMS is that they are revised every ten years to stay abreast of developments in international contract law.

It is fair to say that courts, pursuant to Article 6 of the CISG, are quite open in recognizing the parties’ freedom to arrange their business relationship in accordance with their needs. However, courts should also pay attention to Article 8(3). If the parties set no specific terms, courts must carefully consider whether, pursuant to Article 9 (in conjunction with Article 8), the conduct in question has been the established practice between the parties or whether the conduct falls within the scope of trade usage.