- Lodz Court of Appeal
FAILURE TO INSPECT THE GOODS AS SOON AS PRACTICABLE UNDER THE CIRCUMSTANCES (ART. 38 CISG) AND TO GIVE TIMELY NOTICE OF NON-CONFORMITY (ART. 39 CISG) - BUYER'S CLAIM DISMISSED
[CLOUT Case no. 1678; abstract prepared by Karolina Scheller and Maciej Zachariasiewicz, National Correspondent]
The Polish buyer (the defendant) and the Italian seller (the plaintiff) concluded a contract for sale of meat seasonings. The goods were prepared for the delivery at the plaintiff’s premises in accordance with the parties’ arrangements. The Italian seller possessed all the quality certificates as regards the seasonings. The Polish buyer took over the seasonings at the Italian seller’s premises and did not raise any concerns regarding the quality or amount of the seasonings. Several months after the delivery, the buyer commenced the production process — the purchased seasonings were mixed with meat in order to produce hamburgers. Even though the buyer used the same quantity of seasonings as in hamburgers made with seasonings obtained from another supplier, the buyer’s customers complained about the flavour of the final product. As a result, the buyer decided to return the remaining seasonings to the Italian seller and refused to pay the outstanding price. The seller refused to accept the return of the seasonings. It argued that the goods possessed all the required quality certificates. After several reminders, the seller sued the buyer for the unpaid part of the contract price.
The Court of first instance stated that since the parties have their place of business in different countries, the contract shall be governed by the CISG. The Court underlined that the CISG takes priority over the national provisions by virtue of Article 91 of the Polish Constitution. Further, since the parties did not choose the applicable law to the contract, the court concluded that further to Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), a contract for the sale of goods shall be governed by the law of the country where the seller has its place of business, i.e. Italian law in the case at hand. On substance, the Court concluded that the seller complied with all its obligations as set forth by Article 30 CISG. Therefore, the buyer was obliged to pay the price of the goods as per Article 53 CISG. The Court also mentioned that this result is consistent with Article 1498 of the Italian Civil Code.
The defendant argued that it is not obliged to pay the price because of the alleged non-conformity of the goods. The Court found the buyer’s defence without merit and underlined that the buyer’s customers not enjoying the flavour of the hamburgers does not equal to the lack of conformity of the seasonings. The decisive criteria is not the taste of the customers but the objective features of the goods, which were not questioned by the buyer in the course of the transaction, in particularly after receiving the seasonings. The seller-plaintiff enclosed all relevant quality certificates and the quality of seasonings was also not contested by any expert evidence. The Court noted that the defendant, being a professional trader, should have examined the goods.
The Court further found that the defendant gave notice of the lack of conformity of the goods a few months after the goods were delivered. On this aspect, the reasoning of the Court was twofold, based both on Italian law and CISG. The Court noted that according to Article 1495 of the Italian Civil Code the buyer should have notified the seller of the non-conformity within 8 days from the moment it detected defects in the goods. The duty to examine the goods stems also from Articles 38(1) and (2) CISG according to which the buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances. If the contract involves carriage of the goods, examination may be deferred until after the goods have arrived at their destination. The buyer must also give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered or it ought to have discovered it (Article 39(1) CISG) — otherwise it loses its right to raise the lack of conformity of the goods, to require performance (Article 46 CISG), to declare the contract avoided (Article 49 CISG), to reduce the price (Article 50 CISG) and to claim damages (Articles 74-76 CISG), and above all, it is obliged to pay the price of the goods even if the goods are useless, constitute aliud or were provided in the insufficient quantity. The Court concluded that since the buyer received the goods and did not give any notice of lack of conformity within a reasonable period of time, it could no longer allege that the contract was not properly performed.
The defendant appealed. It argued, inter alia, that the court of first instance erred when it concluded that the defendant did not examine the quality of the purchased goods as per Article 38 CISG and did not raise objections on their quality within reasonable time. The buyer could only discover the non-conformity and raise objections only after commencing the production of the hamburgers. The Court of Appeals found the defendant’s arguments unpersuasive. It indicated that the defendant failed to meet the burden of proof as to the non-conformity and reiterated that the defendant did not comply with the obligation to examine the goods in due time.
The Court reaffirmed the reasoning of the lower court that if the customers do not enjoy the flavour of the final products, this does not mean that the goods were non-conforming (Article 35(2) CISG). The Court also noted that the seasonings were only one of the ingredients used in the production process, with the other ingredients coming from different sources, and that other factors might have influenced the customers not enjoying the flavour of the hamburgers.
Furthermore, the Court rejected the defendant’s argument that it could only examine the goods once it commenced producing the hamburgers. According to the Court, the defendant should have examined the goods before production consistently with article 38(2) CISG which does not allow to arbitrarily postpone the examination, thus dismissing the appeal of the defendant.
Abstract: CLOUT Case no. 1677, in A/CN.9/SER.C/ABSTRACTS/181}}