A US seller (Appellant) and a French buyer (Respondent) entered into a contract for the sale and delivery of computer motherboards between May 1996 and December 1997. The contract provided for a seller's liability exoneration clause as well as a one year guarantee for the goods. The seller developed three prototypes of the motherboards, but only the first and the third one were commercialized. When the buyer placed an order with the seller in April 1997, the third generation of motherboards was already on the market but the buyer continued to purchase the first generation motherboards. Some of the items ordered in May 1996 and April 1997 turned out to be defective, as they were not compatible with the electricity voltage. The buyer gave notice to the seller of the alleged defects only in October 1998 and subsequently filed suit against the seller for damages. The Court of first instance allowed expert opinion on the matter, stressing the fact that the computer motherboards had to meet requirements of which the seller never informed the buyer. The Court ruled in favour of the buyer. The seller appealed the decision.
First, the Court of Appeal in Paris held that the contract was governed by CISG (Art. 1(1)(a)).
The Court also recognized that the seller’s liability exoneration clause and the one year guarantee for the goods provided for in the contract were valid under CISG (Art. 39(2) CISG). The Court rejected the buyer's argument that the seller, having knowledge of the defects (Art. 40 CISG), was not entitled to rely on Arts. 38 and 39 CISG despite the buyer's failure to give notice of the defective goods within one year. In the opinion of the Court, Art. 40 CISG does indeed restrict a seller’s right to limiting its liability where the alleged lack of conformity of the goods, as defined in Articles 35 and 36 of CISG, is grounded in facts known to the seller or facts which the seller could not have ignored and which were not revealed to the buyer at the time of the conclusion of the contract. However, as CISG does not impose on the seller any presumption of knowledge of lack of conformity, the burden falls on the buyer to prove that the seller had precise knowledge of the buyer’s intended use of the goods. Therefore, it was incumbent upon the buyer to seek information and counsel from the seller with respect to the motherboards' technical requirements. Having failed to do so, the seller was exonerated of all liability. Accordingly, the Court overturned the decision of the court of first instance and ordered the buyer to pay the contract price and costs.
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