A Legal Guide for Turkish Companies Buying from or Selling to China, Germany, the United States and Other International Markets

International sales transactions are no longer limited to multinational corporations.

A Turkish textile company ordering machinery from Germany, an Istanbul-based electronics importer purchasing components from China, a Turkish manufacturer exporting furniture to the United States, or a food producer supplying products to a European distributor may all become parties to an international sale of goods governed by a legal regime different from the one they expected.

A recurring mistake in international trade is to treat the transaction as if it were merely a domestic purchase conducted across a border.

It is not.

An international sale may simultaneously involve:

• an international sale contract;
• the United Nations Convention on Contracts for the International Sale of Goods — CISG;
• national contract law;
• Incoterms;
• international carriage rules;
• customs requirements;
• documentary payment mechanisms;
• foreign-exchange risks;
• product conformity standards;
• international jurisdiction; and
• arbitration or foreign-court proceedings.

Among these legal frameworks, the CISG is particularly important because it may apply automatically, even where the parties never expressly mention it in their agreement.

The Convention was designed to provide a uniform legal regime for international commercial sales and currently has 97 Contracting States. Turkey, China, Germany and the United States are all parties to the Convention. Turkey acceded to the CISG in 2010, and the Convention entered into force for Turkey on 1 August 2011.

For Turkish companies engaged in cross-border commerce, understanding the CISG is therefore not an academic exercise.

It is part of everyday commercial risk management.

1. What Is the CISG?

The United Nations Convention on Contracts for the International Sale of Goods, adopted in Vienna in 1980, establishes uniform rules governing many aspects of international sales contracts.

According to UNCITRAL, its purpose is to provide a modern, uniform and fair legal regime for international sales, thereby increasing legal certainty and reducing transaction costs.

The CISG deals primarily with:

• formation of the sales contract;
• obligations of the seller;
• obligations of the buyer;
• conformity of goods;
• delivery;
• payment;
• passing of risk;
• remedies for breach;
• damages;
• avoidance of the contract;
• anticipatory breach; and
• certain exemptions from liability.

However, it does not regulate every legal issue that may arise from an international sale.

For example, questions concerning the validity of the contract and the effect of the contract on ownership of the goods generally fall outside the CISG and remain subject to the applicable domestic law.

This distinction is extremely important.

A contract can therefore be partly governed by the CISG and partly by Turkish, German, Chinese, US or another national law.

2. When Does the CISG Apply?

The primary rule appears in Article 1.

The CISG generally applies to contracts for the sale of goods between parties whose places of business are in different states where:

1. both states are Contracting States; or
2. the applicable rules of private international law lead to the law of a Contracting State, subject to the declarations permitted by the Convention.

Turkey’s official text of the CISG expressly incorporates this structure.

The key connecting factor is therefore normally the place of business, not nationality.

Suppose a company incorporated in Turkey has its relevant place of business in Istanbul and purchases machinery from a company whose relevant place of business is in Munich.

Turkey and Germany are both CISG Contracting States.

The CISG will therefore ordinarily apply to the international sale without either party needing to insert a clause stating:

“CISG shall apply.”

The Convention applies because the legal conditions for its application are satisfied.

3. Turkish Company Buying Goods from China

Consider a common commercial transaction.

A Turkish company purchases USD 500,000 worth of industrial machinery from a manufacturer in China.

The contract contains:

• product specifications;
• price;
• delivery date;
• FOB Shanghai Incoterms® 2020;
• payment by 30% advance and 70% before shipment.

There is no clause mentioning the CISG.

Does the CISG apply?

In principle, yes.

Turkey and China are both CISG Contracting States. The Convention can therefore apply directly under Article 1(1)(a). China’s declaration concerning Article 1(1)(b) does not prevent direct application where both parties have their relevant places of business in Contracting States. UNCITRAL’s current status table identifies both China and the United States as states that declared they would not be bound by Article 1(1)(b), while Turkey has no corresponding reservation.

For an ordinary Turkey–China commercial sale, therefore, the key legal questions concerning delivery, conformity, inspection, notice and remedies may be governed directly by the CISG.

4. Turkish Company Trading with Germany

The same basic position applies to Germany.

Germany has been a CISG Contracting State since 1991, while Turkey has been bound since 2011.

Accordingly, a Turkish manufacturer purchasing production equipment from a German supplier will ordinarily be dealing under the CISG unless the Convention has been validly excluded.

This leads to an important drafting point.

If the parties write:

“This contract shall be governed by German law.”

that does not necessarily exclude the CISG.

Because the CISG forms part of the applicable law governing international sales in Germany, selecting German law may still lead to application of the Convention.

The same logic generally applies where the parties choose Turkish law.

If the parties genuinely wish to exclude the CISG, they should address the issue expressly.

For example:

“This Agreement shall be governed by the laws of the Republic of Türkiye, excluding the United Nations Convention on Contracts for the International Sale of Goods.”

5. Turkish Company Trading with the United States

The United States is also a CISG Contracting State and has been bound by the Convention since 1 January 1988.

Therefore, an export sale between a Turkish manufacturer and a US commercial purchaser can also fall directly within the CISG.

The fact that US domestic sales law may otherwise be governed by state-level rules such as Article 2 of the Uniform Commercial Code does not mean that the UCC automatically governs an international sale falling within the CISG.

The parties must first determine whether the CISG applies.

Only matters excluded from or not resolved by the CISG may require recourse to the applicable domestic law.

This is especially important where contracts contain broad clauses such as:

“This Agreement shall be governed by the laws of the State of New York.”

Without careful drafting, such a clause should not simply be assumed to exclude the CISG.

6. The Parties Can Exclude the CISG

The CISG is based strongly on freedom of contract.

Article 6 allows parties to exclude the application of the Convention or derogate from many of its provisions.

This gives international businesses considerable flexibility.

The parties may therefore decide:

• CISG applies in full;
• CISG applies with contractual modifications; or
• CISG is completely excluded.

However, exclusion should be deliberate.

A company should not discover for the first time after litigation begins that its contract was governed by the CISG.

The issue should be decided during contract drafting.

7. Which Transactions Are Not Covered?

The CISG is primarily designed for commercial sales of goods.

It generally does not apply to consumer purchases where goods are bought for personal, family or household use and the seller knew or ought to have known of that purpose.

UNCITRAL expressly identifies consumer transactions as outside the ordinary scope of the Convention.

Article 2 also excludes several specific categories of transactions, including certain sales by auction and sales of specified financial instruments, ships, vessels, aircraft and electricity.

The Convention should therefore not be assumed to govern every transaction involving something commercially described as a “sale.”

8. Services and Mixed Contracts

Modern commercial transactions frequently combine goods and services.

A Turkish factory may purchase a production line from Germany together with:

• installation;
• commissioning;
• employee training;
• maintenance; and
• technical support.

Does the CISG apply?

It may.

The legal analysis requires examination of the predominant character of the transaction.

Where the agreement remains substantially a sale of goods and the service component is ancillary, the CISG may still govern.

Where the supplier’s principal obligation is the provision of labour or other services, the transaction may fall outside the Convention.

For large EPC, technology or turnkey contracts, classification should therefore be performed carefully rather than relying solely on the title of the agreement.

9. What Must the Seller Do?

The seller’s central obligations under the CISG include delivering the goods, handing over relevant documents and performing in accordance with the contract.

But legally compliant delivery means more than simply placing a shipment on a truck or vessel.

The seller must deliver:

• the correct goods;
• in the correct quantity;
• of the agreed quality;
• with the agreed specifications;
• properly packaged;
• at the required place;
• at the required time; and
• with the documents required by the contract.

Failure in any of these respects may constitute breach.

The remedies available to the buyer will then depend on the type and seriousness of the breach.

10. Delivery Location Matters

International contracts should define delivery with precision.

Statements such as:

“Delivery: Istanbul”

may be insufficient.

Which warehouse?

Which terminal?

Who arranges carriage?

Who pays freight?

Who bears unloading cost?

When does delivery legally occur?

When does risk pass?

Who handles export clearance?

Who bears import customs obligations?

The CISG contains default rules for delivery, but sophisticated international contracts should not rely unnecessarily upon default rules where the parties can specify the commercial arrangement themselves.

Delivery provisions should therefore be coordinated with the selected Incoterm and transportation contract.

11. Incoterms and the CISG

Incoterms® rules are published by the International Chamber of Commerce and are widely used to allocate responsibilities, costs and risks associated with delivery.

The current version is Incoterms® 2020, containing eleven standard trade terms. ICC describes the rules as clarifying the parties’ respective tasks, costs and risks relating to delivery.

Common terms include:

• EXW;
• FCA;
• CPT;
• CIP;
• DAP;
• DPU;
• DDP;
• FAS;
• FOB;
• CFR; and
• CIF.

However, Incoterms should not be confused with a complete sale contract.

An Incoterm does not replace clauses concerning:

• product specifications;
• payment;
• warranty;
• applicable law;
• dispute resolution;
• title;
• termination;
• limitation of liability; or
• sanctions.

It primarily structures delivery-related responsibilities.

12. Passing of Risk Is Not the Same as Ownership

This distinction causes frequent disputes.

Risk asks:

Who bears the economic consequences if the goods are accidentally lost or damaged?

Ownership asks:

Who legally owns the goods?

They are not necessarily transferred at the same moment.

Under CISG Articles 66–70, the Convention contains rules concerning the passing of risk.

For transactions involving carriage, risk may generally pass when the goods are handed over to the relevant carrier in accordance with the contractual arrangement and Article 67.

For other transactions, Article 69 may link risk to the buyer taking over the goods or the goods being placed at the buyer’s disposal under the circumstances specified by the Convention.

The effect of the contract on ownership itself, however, is generally outside the CISG.

For this reason, an international contract should deal separately with risk and title.

13. Example: Goods Damaged During Shipment from China

Assume a Turkish buyer purchases 10,000 electronic components from China.

The goods are loaded onto a vessel in Shanghai.

During transportation, seawater enters a container and destroys the goods.

Who bears the loss?

The answer cannot be determined merely by asking:

“Who owned the goods?”

The parties must examine:

• the agreed Incoterm;
• the point at which risk passed;
• the carriage arrangements;
• cargo insurance;
• whether the seller committed a contractual breach before risk passed;
• whether packaging was adequate; and
• the CISG’s risk provisions.

If the goods were inadequately packaged by the seller, the seller may remain responsible for non-conforming performance even where certain transportation risks had otherwise passed to the buyer.

Risk allocation should therefore never be analysed in isolation from conformity obligations.

14. What Counts as Defective or Non-Conforming Goods?

Article 35 is one of the most important provisions of the CISG.

The seller must deliver goods corresponding to the quantity, quality and description required by the contract and with the contractually required packaging.

Unless otherwise agreed, the Convention also contains default conformity expectations relating to ordinary fitness for purpose, particular purposes made known to the seller in appropriate circumstances, samples or models, and adequate packaging.

This makes detailed product specifications extremely important.

A contract should not merely state:

“500 industrial pumps.”

It should, where commercially relevant, identify:

• model;
• capacity;
• materials;
• voltage;
• performance;
• applicable standards;
• certifications;
• tolerances;
• dimensions;
• packaging;
• testing procedures; and
• acceptance criteria.

The more precise the specification, the easier it becomes to determine whether the seller complied with Article 35.

15. Foreign Regulatory Standards Require Special Attention

One of the most important practical issues concerns regulatory conformity.

Suppose a Turkish company purchases electrical products from a foreign manufacturer.

The products function perfectly but cannot lawfully be marketed in Turkey because they do not satisfy mandatory technical standards.

Is that automatically the seller’s breach?

Not necessarily in every case.

CISG case law has generally approached compliance with the buyer’s local public-law standards cautiously. Whether the seller was required to know and satisfy those standards may depend on the contract, information provided by the buyer, common standards between the jurisdictions and the seller’s specific knowledge or experience in the buyer’s market. UNCITRAL’s Digest identifies these factors in its discussion of Article 25 and conformity disputes.

Therefore, an importer should not merely assume:

“The foreign seller knows Turkish regulations.”

The contract should expressly require the products to comply with the relevant Turkish or EU standards where necessary.

16. The Buyer Must Inspect the Goods

A buyer cannot simply receive goods, store them for months and later expect every defect claim to remain available indefinitely.

Article 38 requires the buyer to examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances.

Where carriage is involved, the structure of the rule may allow examination at the destination depending on the circumstances.

Article 39 then requires the buyer to notify the seller of the lack of conformity within a reasonable time after discovering it or when it ought to have discovered it.

This creates one of the most significant traps for buyers in international commerce.

The buyer may genuinely have received defective goods but nevertheless lose important remedies by failing to provide timely and sufficiently specific notice.

17. “The Goods Are Bad” May Not Be Enough

Article 39 requires notice specifying the nature of the lack of conformity.

A vague complaint such as:

“We are unhappy with the products”

may therefore create unnecessary legal risk.

A stronger commercial notice would identify:

• invoice;
• purchase order;
• delivery date;
• batch or serial numbers;
• quantity affected;
• exact defect;
• test results;
• photographs;
• inspection reports;
• consequences of the defect; and
• remedy requested.

The buyer should preserve evidence immediately.

Defective-goods litigation can become difficult where goods have subsequently been used, resold, modified or destroyed.

18. The Two-Year Rule Is Not a General Limitation Period

Article 39 also contains an important outer limit.

In general, the buyer loses the right to rely on a lack of conformity if it fails to notify the seller within two years from the date the goods were actually handed over, unless that period is inconsistent with a contractual guarantee.

This should not be confused with a general statute of limitations for bringing all legal claims.

Limitation periods are a separate legal issue and may be governed by domestic law or, in appropriate cases, the separate Convention on the Limitation Period in the International Sale of Goods. UNCITRAL itself treats the Limitation Convention as a distinct instrument complementing the CISG.

Companies should therefore distinguish:

notice periods,
contractual warranty periods, and
legal limitation periods.

They are not the same thing.

19. What Remedies Does the Buyer Have for Defective Goods?

Where the seller breaches its obligations, the CISG provides a range of remedies.

Depending on the circumstances, the buyer may seek:

• performance;
• repair;
• substitute goods;
• price reduction;
• damages; or
• avoidance of the contract.

The appropriate remedy depends largely on the seriousness and curability of the defect.

Avoidance is not designed to be the automatic remedy for every minor problem.

This reflects one of the central philosophies of the CISG: international contracts should generally be preserved where the breach can adequately be remedied.

20. Repair and Replacement

Article 46 allows the buyer, subject to the Convention’s conditions, to require performance.

In cases involving non-conforming goods, this may include repair.

Replacement of the goods is treated more strictly and generally requires a sufficiently serious breach.

The commercial logic is understandable.

Returning and replacing equipment shipped thousands of kilometres may create enormous transportation and transaction costs.

Therefore, whether the defect can reasonably be cured is often significant.

Contracts involving sophisticated machinery should specify:

• repair procedures;
• response times;
• spare-parts obligations;
• on-site service;
• replacement thresholds;
• transportation costs; and
• technical acceptance procedures.

21. Price Reduction

Article 50 allows the buyer, in appropriate cases involving non-conforming goods, to reduce the price.

This can be particularly useful where:

• the goods remain usable;
• replacement is unnecessary;
• the buyer wants to retain the products;
• but the goods have lower value because of the defect.

For example, a Turkish importer purchases 20 tonnes of a product with a particular agreed quality level.

The delivered material can still be used commercially but is objectively inferior.

Rather than terminating the entire transaction, price reduction may provide a commercially proportionate remedy.

22. Damages

Damages are central to the CISG remedial system.

Article 74 is based broadly on compensating the loss suffered as a consequence of breach, including loss of profit, subject to foreseeability.

The injured party also has a duty to take reasonable measures to mitigate loss.

Therefore, a buyer cannot normally allow damages to increase unnecessarily and later demand that the seller pay the entire inflated amount.

If substitute goods are available at a reasonable price, purchasing replacements may in some circumstances form part of appropriate mitigation.

Likewise, a seller facing wrongful refusal by the buyer may need to take commercially reasonable measures concerning resale.

23. Consequential Losses Can Become Significant

Imagine a German manufacturer delivers a critical production component three months late.

The Turkish buyer’s factory stops operating.

The buyer claims:

• additional procurement costs;
• lost production;
• customer penalties;
• lost profits; and
• emergency transportation expenses.

The CISG does not automatically make every consequential loss recoverable.

Causation, foreseeability and mitigation remain critical.

The seller’s potential exposure therefore depends partly on what it knew or should have contemplated when the contract was concluded.

This is why sellers often negotiate:

• liability caps;
• exclusion of indirect loss;
• exclusion of lost profits;
• agreed damages for delay; and
• warranty limitations.

The effectiveness of such contractual limitations may also involve domestic-law questions outside the CISG, particularly where questions of validity arise.

24. When Can the Buyer Cancel or Avoid the Contract?

The CISG generally uses the concept of avoidance rather than treating ordinary termination as freely available for every breach.

Article 49 permits the buyer to avoid the contract where, among other circumstances, the seller’s failure amounts to a fundamental breach.

Article 25 defines fundamental breach by reference to a detriment that substantially deprives the innocent party of what it was entitled to expect from the contract, subject to the Convention’s foreseeability qualification. UNCITRAL’s Digest describes this concept as the line separating ordinary remedies from more drastic remedies such as avoidance.

Avoidance is therefore a serious remedy.

Minor defects do not automatically justify cancellation of an entire international transaction.

25. Fundamental Breach

Whether a breach is fundamental depends on the commercial importance of the obligation.

Examples may include:

• complete and final non-delivery;
• goods entirely unusable for the agreed essential purpose;
• serious defects that cannot reasonably be cured;
• delivery fundamentally different from the agreed specification;
• persistent refusal to perform essential contractual obligations; or
• final refusal to pay.

UNCITRAL materials emphasise that the seriousness of the breach, the contractual expectations and the possibility of cure are highly relevant when determining whether non-conforming goods justify avoidance.

Therefore:

defective goods do not automatically equal fundamental breach.

The question is whether the breach substantially deprives the buyer of the essential benefit of the bargain.

26. Nachfrist: Giving Additional Time for Performance

The CISG also uses a mechanism commonly described by the German expression Nachfrist.

A buyer may fix an additional reasonable period for the seller to perform certain obligations.

Similarly, the seller may give the buyer an additional period for payment or other required performance.

This can be extremely useful in practical commerce.

Instead of immediately declaring:

“The contract is cancelled.”

a party may provide formal notice:

“You must deliver the goods no later than 15 September. If delivery is not made within that additional period, we reserve all rights available under the CISG, including avoidance.”

A properly structured additional-performance notice can strengthen the innocent party’s legal position.

27. Late Delivery Does Not Always Permit Immediate Cancellation

Suppose delivery is due on 1 September.

The seller delivers on 5 September.

Can the buyer automatically avoid the contract?

Usually not simply because delivery was four days late.

But the answer may be different where time is commercially essential.

For example:

• goods are specifically required for a trade fair;
• seasonal products must arrive before a holiday;
• components are required for a scheduled factory shutdown;
• fresh food has a narrow commercial window.

The contract should therefore state where time is essential.

Instead of merely providing a date, parties can explain the consequence of failure to meet that date.

This can become highly important when assessing fundamental breach.

28. Non-Payment by the Buyer

The CISG also regulates the buyer’s principal obligations.

The buyer must pay the price and take delivery as required by the contract and the Convention.

Non-payment is therefore a breach.

But the seller’s appropriate response depends on the circumstances.

If the payment is merely a few days late, immediate avoidance may not always be justified.

The seller may:

• demand payment;
• claim interest;
• provide an additional period for payment;
• suspend certain future performance where the Convention’s requirements are satisfied;
• claim damages; or
• ultimately avoid the contract where the required legal threshold is met.

Final non-payment can constitute a fundamental breach in appropriate circumstances. UNCITRAL case-law materials recognise complete and final non-payment as capable of meeting the Article 25 threshold.

29. Seller’s Right to Avoid for Non-Payment

Article 64 provides the seller with an avoidance remedy in circumstances including fundamental breach by the buyer.

The seller may also benefit from the additional-period mechanism under Article 63.

Therefore, where goods have been delivered but the buyer refuses to pay, a seller should not simply send informal reminders indefinitely.

A legally structured notice should establish:

• the amount due;
• contractual payment date;
• invoice;
• banking details;
• default;
• any additional period granted;
• interest claimed; and
• remedies reserved.

UNCITRAL scholarship on Article 64 also emphasises that continuing non-payment can keep the buyer in continuing breach and may support avoidance depending on the circumstances.

30. Interest on Late Payment

Article 78 of the CISG provides a right to interest where a party fails to pay the price or another sum in arrears.

However, one of the well-known complexities of the Convention is that Article 78 does not itself establish a universal interest rate.

The applicable rate may therefore become a separate legal question.

This is another reason contracts should expressly state:

• payment date;
• contractual default interest;
• relevant benchmark;
• margin;
• currency;
• calculation method; and
• whether interest is simple or compounded where legally permissible.

A clear interest clause is preferable to arguing about the applicable rate after default.

31. Advance Payment Risk

Turkish importers frequently purchase goods using advance payments.

For example:

30% on order, 70% before shipment.

This creates obvious risk.

If the buyer pays 100% before physical delivery, its commercial leverage may be substantially reduced if:

• goods are not produced;
• goods are late;
• seller becomes insolvent;
• quality is defective;
• export becomes impossible; or
• documents are withheld.

The CISG provides contractual remedies, but obtaining an eventual judgment or arbitral award is not the same as recovering the money.

Therefore, transaction structure matters.

Depending on the deal, parties may consider:

• smaller advance payments;
• bank guarantees;
• standby letters of credit;
• documentary credits;
• payment against shipping documents;
• escrow mechanisms; or
• staged payment linked to inspection.

Legal remedies should complement commercial security rather than replace it.

32. Letters of Credit Do Not Replace the Sale Contract

Letters of credit are frequently used in international trade because they reduce counterparty-payment risk.

However, the bank’s obligation under a documentary credit is legally distinct from the underlying sale contract.

The bank deals principally with documents rather than physically determining whether the machinery or products inside the container actually conform to the commercial agreement.

Therefore, a seller may satisfy documentary requirements while a buyer later alleges that the physical goods are defective.

Conversely, a seller may have perfectly conforming goods but fail to present compliant documents and therefore encounter difficulties obtaining payment under the credit.

The sale contract and payment instrument must therefore be coordinated carefully.

33. Commercial Invoices Are Not Enough

Many SMEs conduct substantial international trade using little more than:

• WhatsApp correspondence;
• emails;
• pro forma invoices;
• purchase orders; and
• commercial invoices.

The CISG’s flexible approach to formation means that a sophisticated fifty-page signed contract is not always required before binding obligations can arise.

However, relying on fragmented communications creates evidentiary risk.

The parties may later disagree about:

quantity, specifications, delivery date, currency, inspection rights, warranty, applicable law or jurisdiction.

A properly prepared sales contract dramatically reduces this uncertainty.

34. Email and Electronic Communications Can Create Contracts

International business is increasingly conducted through email and online procurement systems.

The CISG’s general approach to contract formation is based on offer and acceptance and does not universally require a traditional paper contract, although certain states have made declarations concerning formal requirements. UNCITRAL specifically notes that the Convention generally recognises freedom of form subject to permitted state declarations.

Turkey has made no such formal-writing reservation in its accession.

Therefore, companies should treat commercial emails seriously.

A message saying:

“We accept your offer for 5,000 units at USD 20 each, delivery Istanbul 15 October”

may have much greater legal significance than the sender informally assumes.

35. Purchase Orders and General Terms Can Conflict

A particularly common problem is the battle of forms.

The Turkish purchaser issues a purchase order stating:

“Turkish law – Istanbul courts.”

The German supplier sends an order confirmation stating:

“German law – Munich courts.”

Goods are shipped and accepted.

Which terms apply?

The answer may become legally complex under the CISG’s contract-formation rules and applicable private international law.

This problem can often be avoided by using a master sales agreement that clearly determines which document takes precedence.

For example:

1. master agreement;
2. agreed specifications;
3. purchase order;
4. Incoterm;
5. other documents.

Contract hierarchy clauses are extremely valuable in recurring international trade.

36. Title Retention Requires Separate Analysis

A seller may want to retain ownership until full payment.

For example:

“Title to the goods shall remain with the seller until the purchase price has been paid in full.”

The CISG itself does not comprehensively determine the proprietary effect of such a clause because property consequences fall outside its principal scope.

Whether the clause is effective against:

• the buyer;
• creditors;
• insolvency administrators; or
• third-party purchasers

may therefore depend on applicable national property and insolvency law.

A retention-of-title clause copied from a German contract may not necessarily have identical effects in Turkey, China or another jurisdiction.

37. Anticipatory Breach and Financial Deterioration

Sometimes the problem arises before the contractual deadline.

A buyer may learn that its supplier is insolvent and cannot manufacture the goods.

A seller may discover that the buyer has stopped paying all major suppliers.

The CISG contains mechanisms addressing anticipatory non-performance.

Article 71 permits suspension of performance under defined circumstances where it becomes apparent that the other party will not perform a substantial part of its obligations.

Article 72 can permit avoidance before the performance date where it is clear that the other party will commit a fundamental breach.

These mechanisms are commercially valuable because an innocent party should not always be required to continue performing blindly where serious future default is objectively apparent.

38. Force Majeure Under Article 79

International trade can be disrupted by events outside either party’s control.

Examples include:

• war;
• export prohibitions;
• exceptional government restrictions;
• closure of transport corridors;
• natural disasters; or
• other serious impediments.

Article 79 contains the CISG’s principal exemption mechanism.

However, Article 79 should not be understood as automatically terminating a contract whenever performance becomes more expensive or difficult.

The party relying on the exemption must satisfy the Convention’s requirements concerning the relevant impediment, control, foreseeability and ability to avoid or overcome its consequences.

For significant transactions, the parties should therefore draft a detailed contractual force majeure clause rather than relying exclusively on the CISG default regime.

39. A Turkish Buyer Receiving Defective Machinery from China

Consider the following example.

A Turkish manufacturing company orders a CNC machine from China for USD 300,000.

The contract specifies that the machine must manufacture components within a tolerance of ±0.01 mm.

After installation in Istanbul, testing shows an actual tolerance of ±0.08 mm.

The machine therefore cannot be used for the buyer’s intended production process.

The legal analysis may involve:

1. whether the CISG applies;
2. whether the machinery conforms to Article 35;
3. whether the required performance tolerance was contractually clear;
4. whether the buyer inspected the machine appropriately;
5. whether timely and sufficiently specific notice was given under Articles 38 and 39;
6. whether the defect can be repaired;
7. whether replacement is appropriate;
8. whether the breach is fundamental;
9. whether avoidance is available; and
10. what damages can be recovered.

The correct approach is therefore not simply:

“The machine is defective, so return it.”

International sales law requires a structured legal analysis.

40. A Turkish Exporter Whose German Customer Does Not Pay

Now reverse the transaction.

A Turkish company exports EUR 400,000 of furniture to a German distributor.

The goods arrive in conformity with the contract.

The German purchaser accepts and resells them but does not pay the final EUR 150,000.

The Turkish seller may potentially rely on CISG remedies concerning:

• payment of the price;
• interest;
• damages;
• additional period for payment;
• and, depending on the circumstances, avoidance.

However, the commercial question is equally important:

Where can the resulting claim be enforced?

If the buyer’s assets are in Germany, the seller should consider jurisdiction and enforcement strategy before commencing proceedings.

The CISG determines substantive sales rights.

It does not by itself determine which national court has jurisdiction over the dispute.

41. CISG Does Not Determine Jurisdiction

This distinction must be emphasised.

The CISG answers questions such as:

Was the seller in breach?

Were the goods conforming?

Can damages be claimed?

Can the contract be avoided?

It does not generally answer:

Should proceedings be filed in Istanbul, Munich, New York or Shanghai?

Jurisdiction must be determined separately through:

• contractual jurisdiction clauses;
• arbitration agreements;
• national procedural law;
• applicable international jurisdiction rules; and
• relevant treaties or regional instruments.

A contract stating only:

“CISG applies”

is therefore incomplete from a dispute-resolution perspective.

42. Arbitration in International Sales Contracts

International arbitration can be particularly useful where buyer and seller operate in different jurisdictions.

The contract may provide for arbitration under:

• ICC;
• ISTAC;
• LCIA;
• SIAC;
• HKIAC; or
• another agreed institutional or ad hoc framework.

A proper arbitration clause should identify:

• arbitral institution;
• seat;
• applicable rules;
• language;
• number of arbitrators; and
• scope of arbitrable disputes.

The governing-law clause should separately state whether the CISG is included or excluded.

For example:

“This Agreement shall be governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG). Matters not governed by the CISG shall be governed by the substantive laws of the Republic of Türkiye.”

That is far more precise than merely stating:

“International law applies.”

43. Avoidance Does Not Simply Erase Everything That Happened

Where the contract is validly avoided, restitution issues arise.

If the buyer has paid the price and the seller has delivered goods, avoidance may require the parties to restore what they received.

However, international restitution can itself become complicated.

Questions may arise concerning:

• transportation back to the seller;
• customs;
• deterioration;
• use of the goods;
• storage;
• benefits obtained;
• interest;
• insurance; and
• inability to return goods substantially in their original condition.

Therefore, avoidance should not be declared casually.

It is often commercially preferable to negotiate repair, replacement, price adjustment or damages where the contractual relationship can still be preserved.

44. Preservation of Goods

Another practical issue arises where a dispute develops while one party possesses goods belonging economically or contractually to the disputed transaction.

The CISG includes obligations concerning preservation of goods in certain circumstances.

This can become important where:

• the buyer rejects defective goods;
• the seller retains goods because payment has not been made;
• goods are perishable;
• warehouse charges accumulate; or
• deterioration threatens the value of the products.

A party cannot always simply abandon goods and later claim every resulting cost.

Reasonable preservation measures may be necessary.

45. Why Incoterms Must Be Written Precisely

A contract should not merely state:

“FOB.”

It should state, for example:

“FOB Shanghai Port, Incoterms® 2020.”

Similarly:

“CIF Ambarlı Port, Istanbul, Incoterms® 2020.”

The location matters because many Incoterms allocate obligations by reference to a specific place or port.

The version also matters because ICC periodically updates the rules; Incoterms® 2020 remains the current edition.

Precision prevents parties from arguing over which version and location govern the delivery arrangement.

46. Inspection Clauses Should Be Negotiated Before Shipment

For high-value international purchases, inspection should not be left entirely until goods arrive in Turkey.

Depending on the product, the parties may agree to:

• factory acceptance testing;
• pre-shipment inspection;
• independent surveyor certification;
• laboratory testing;
• sample approval;
• loading inspection; and
• destination inspection.

The contract should clarify whether an inspection certificate is:

• final and binding;
• prima facie evidence;
• or without prejudice to latent-defect claims.

This can significantly reduce Article 35–39 disputes.

47. Warranty Clauses and the CISG

Many international contracts contain express warranties.

For example:

“The goods shall remain free from manufacturing defects for 24 months from commissioning.”

Such contractual provisions can modify or supplement the default CISG framework.

However, the contract should determine:

• start date;
• duration;
• covered defects;
• excluded defects;
• response time;
• repair obligations;
• replacement obligations;
• labour cost;
• transportation cost;
• warranty extension following repair; and
• relationship between warranty remedies and CISG remedies.

Poorly drafted warranties frequently create more uncertainty rather than less.

48. Governing Law Should Cover CISG Gaps

Because the CISG does not regulate every issue, a complete governing-law clause should identify what happens to matters outside the Convention.

A sophisticated clause might provide:

“This Agreement shall be governed by the CISG. To the extent that a matter is not governed by the CISG, it shall be governed by the substantive laws of the Republic of Türkiye, excluding its conflict-of-laws rules.”

Alternatively, the parties may exclude the Convention entirely.

The important point is to make the decision consciously.

49. A Practical Checklist for Turkish Importers

Before purchasing goods from China, Germany, the United States or another country, a Turkish importer should determine:

1. Who exactly is the seller?
   Verify the legal entity, registration and authorised representative.
2. Does the CISG apply?
   Check the parties’ places of business and Contracting-State status.
3. Will CISG be retained or excluded?
   State the decision expressly where appropriate.
4. What exactly is being purchased?
   Prepare detailed technical specifications.
5. What is the Incoterm?
   Specify the place and Incoterms® 2020.
6. When does risk pass?
   Coordinate the sale contract with carriage and insurance.
7. When does title pass?
   Address ownership separately where necessary.
8. How will quality be verified?
   Establish inspection and testing procedures.
9. What happens if goods are defective?
   Define repair, replacement, price reduction and warranty mechanisms.
10. How is payment protected?
    Consider advance-payment risk and banking security.
11. What happens if delivery is late?
    Define whether time is essential and whether delay damages apply.
12. Which law governs CISG gaps?
13. Where will disputes be resolved?
14. Where does the seller have executable assets?

The legal review should ideally occur before the advance payment is transferred, not after the goods fail to arrive.

50. A Practical Checklist for Turkish Exporters

A Turkish exporter should focus on the opposite risks.

Before shipping goods abroad, it should determine:

• buyer creditworthiness;
• payment security;
• currency;
• sanctions exposure;
• export documentation;
• product specifications;
• destination-country standards;
• Incoterm;
• risk transfer;
• insurance;
• inspection mechanism;
• notice procedures;
• limitation of liability;
• interest for late payment;
• retention of title where legally effective;
• dispute-resolution mechanism; and
• location of the buyer’s assets.

A profitable export on paper may become a loss if the goods are delivered but the price cannot be collected.

International trade law should therefore be integrated with credit-risk management.

51. The Five Most Common CISG Mistakes in Everyday Business

Several mistakes appear repeatedly in international sales.

First: assuming Turkish law automatically applies because one party is Turkish.

Second: assuming a choice of Turkish, German or US law automatically excludes the CISG.

Third: receiving defective goods without conducting timely inspection and notice.

Fourth: assuming every defect allows immediate cancellation.

Fifth: winning the substantive legal argument without considering where the counterparty’s assets are located.

Each mistake can turn a commercially manageable problem into expensive cross-border litigation.

52. The Contract Should Be Designed Around the Failure Scenario

Parties often negotiate only the successful transaction:

price, quantity and delivery date.

Sophisticated drafting examines what happens when things go wrong.

What if the seller delivers late?

What if 30% of the goods are defective?

What if the buyer refuses inspection?

What if the seller cannot obtain raw materials?

What if the buyer cannot pay?

What if a bank blocks the payment?

What if customs rejects the goods?

What if transportation destroys the cargo?

What if the parties disagree about whether the defect is repairable?

What if one party declares the contract terminated and the other claims that termination was unlawful?

These questions should be answered when commercial relations are good.

After a dispute begins, every contractual ambiguity becomes expensive.

Conclusion

The international sale of goods is one of the most common forms of cross-border business, but it is also one of the most frequently underestimated areas of international commercial law.

For Turkish companies trading with China, Germany, the United States and many other major markets, the United Nations Convention on Contracts for the International Sale of Goods — CISG may constitute the principal substantive law of the transaction.

Turkey, China, Germany and the United States are all CISG Contracting States, and the Convention currently has 97 parties worldwide. Turkey has been bound by the Convention since 1 August 2011.

This means that a Turkish company purchasing machinery from Germany, importing electronics from China or exporting manufactured products to a US purchaser may find its contractual rights governed by the CISG even though the agreement never expressly mentions the Convention.

The CISG regulates central commercial questions including:

• delivery;
• conformity of goods;
• buyer inspection;
• notification of defects;
• payment;
• damages;
• passing of risk;
• fundamental breach;
• additional periods for performance; and
• avoidance.

Yet the Convention does not regulate everything.

Questions concerning contractual validity, ownership, insolvency, limitation periods, international jurisdiction and enforcement may require separate legal analysis under national or international law.

Likewise, Incoterms must be distinguished from the CISG.

Incoterms® 2020 provide internationally recognised rules allocating delivery-related tasks, costs and risks, but they do not replace the underlying sales contract.

For buyers, perhaps the most important practical rule concerns defective goods.

Article 35 requires contractual conformity, but Articles 38 and 39 also impose important inspection and notification responsibilities on the buyer. A company that receives defective products and remains silent may lose remedies it would otherwise have possessed.

For sellers, non-payment presents the corresponding risk.

The CISG provides remedies including payment claims, damages, interest and—in sufficiently serious circumstances—avoidance. Final non-payment can constitute a fundamental breach, but the appropriate remedy must still be determined within the Convention’s structured system.

The most important practical lesson is therefore not simply that businesses should know the CISG.

They should design their international sales contracts around it.

A well-structured cross-border sales agreement should identify the goods precisely, select the appropriate Incoterm, determine delivery and risk, regulate inspection and notice, protect payment, allocate defective-goods risk, establish warranty procedures, determine whether the CISG applies, select supplementary governing law and provide an enforceable dispute-resolution mechanism.

In everyday international business, the decisive legal question is rarely only:

“Who is right?”

The more useful questions are:

“Which law applies, what evidence exists, what remedy is available, where can the claim be pursued, and can the resulting judgment or award actually be enforced?”

Answering those questions before goods are shipped or money is transferred can transform international sales law from a litigation problem into an effective tool of commercial risk management.

This article reflects the general legal framework as of August 2026 and is intended for informational purposes only. The application of the CISG may vary according to the parties’ places of business, contractual terms, state declarations, governing-law provisions and individual facts of the transaction. Transaction-specific legal advice should be obtained for significant cross-border sales.