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| A US seller and a French buyer 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 exemption 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 latter for damages. The Court of first instance ruled in favour of the buyer. The seller appealed the decision.
The Court of Appeal (see Cour d’Appel de Paris, 25.02.2005, in UNILEX) held that the contract was governed by CISG and recognized the validity of both the seller’s liability exemption clause and the one year guarantee for the goods provided for in the contract (Art. 39(2) CISG). The Court also 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. Accordingly, the Court overturned the decision of the First Instance Court and ordered the buyer to pay the contractual price plus costs. The buyer appealed before the Supreme Court. The Supreme Court considered that the Court of Appeal had wrongly applied CISG, since the Convention does not deal with the validity of the contract or its clauses but only governs the formation of the sale contract and the rights and obligations deriving thereof. Accordingly, the Supreme Court invalidated the lower Court’s decision. |