Monday, 2 November 2015

Applicability of CISG

The CISG (UN Convention on Contracts for the International Sale of Goods) does not expressly define what constitutes a "contract of sale." 
There can be little doubt, however, that the Convention will have no application to contracts to buy cryptocurrencies with traditional currencies since the Convention is only applicable to sales of "goods" which are generally understood to mean tangible objects (e.g. Schlechtriem, Commentary on the UN Convention on the International Sale of Goods (1998) p. 23 [Herber]).
A separate question is whether the CISG is applicable to contracts to buy goods with cryptocurrencies. In the language of the Convention, the question is whether payment of cryptocurrencies should be interpreted as constituting "payment of the price." If not, such contracts would be barter contracts and accordingly fall outside the scope of the Convention (For barter contracts, see e.g. Schlechtriem.)
In this connection, it is worth recalling that the CJEU observed in its VAT judgment that bitcoins had no purpose other than to be a means of payment (para. 24). In other legal contexts, other purposes such as speculative investment purposes may be relevant. But in the context of CISG, a better interpretation seems to be that payment of bitcoins or other cryptocurrencies constitutes "payment of the price," since they have no intrinsic value of their own.

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