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| Abstract | ||||||||||||||||||
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| An Ecuadorian buyer and an Italian seller concluded a contract for the sale of machinery to be used in the recycling of plastic bags. During the negotiations, the buyer sent a sample of the goods to the seller, so as the latter could be aware of the specific features of the goods to be processed; the buyer also informed the seller of the difficulties incurred by other companies previously entrusted with the recycling. The seller assured the buyer that the machinery would fit the particular purpose made known to seller and that it would reach a specific level of production. Upon installation, the machinery turned out to be defective and not capable of reaching the promised production level. The buyer notified forthwith the seller of non -conformity; however, the defects could not be repaired by the seller’s technicians even after several attempts. Since the seller, arguing that the buyer had not properly used the machinery and had used material other than that of the sample, declined any responsibility, the buyer brought an action claiming avoidance of the contract.
The Court held that the contract was governed by CISG (art. 1(1)(a) CISG). As to the merits, the Court found that the seller had failed to deliver conforming goods (art. 35 CISG). Indeed, as from the time it was installed, the machinery turned out to be totally unfit for the particular use made known to the seller before the conclusion of the contract; the machinery was also not capable of reaching the promised production volume, which was an essential condition for the conclusion of the contract. Furthermore, the Court rejected the seller’s argument that notice of non-conformity was untimely (Art. 39(1) CISG). Not only did the buyer give notice of the defects immediately after the installation of the machinery, but it continued to inform the seller or its agent of any additional defect it had discovered subsequently. The Court also held that the buyer’s notice was sufficiently specific (Art. 39(1) CISG), as it contained a description of the defects as they appeared. According to the Court the buyer was not under a duty to indicate also the cause of the defective functioning of the machinery, all the more so as it in the case at hand not even the seller could provide the necessary information. Finally, the Court held that the buyer had declared the avoidance of the contract within a reasonable time (Art. 49(2) CISG). In reaching this conclusion, the Court stated that the “reasonable time” ex Art. 49 CISG differs from the "reasonable time" ex Art. 39 CISG with respect to both its starting point and its lengh. Since in the system of the Convention the remedy of avoidance of contract represents a last resort as compared to all the other remedies available to the buyer, it follows that the the starting point of the time limit for declaring avoidance is not the same moment as that of the time limit for giving notice of non-conformity. In fact, whereas non-conformity has to be notified as soon as it is discovered or ought to have been discovered (in the case at hand: as soon as the machinery was put into operation), avoidance has to be declared only after it appears that the non-conformity amounts to a fundamental breach which cannot be otherwise remedied (in the case at hand: only after the buyer becoming aware that all the seller's attempts to make the machinery fit for the particular purpose had failed). In this respect the Court, though without mentioning Art. 7(1) CISG, expressly stated that the principle of good faith in the performance of the contract applies also "under international law", and that in in the case at hand to avoid the contract without waiting the outcome of the attemps to cure the defects would have been contrary to such principle. |