JOHN C

JOHN C. REITZ

A History of Cutoff Rules as a Form of Caveat Emptor:

Part Il-From Roman Law to the Modern Civil

and Common Law

This two-part article is an attempt to understand why so many legal systems have adopted special cutoff rules that limit the buyer's remedies~specially the commercial buyer's remedies-for breach of implied or express warranties of quality, at least to the extent that the parties have not contracted out of these rules. As defined in Part I of this article, these cutoff rules include special limitations periods that are shorter than the limitations periods generally applicable to sales law, notice rules that cut Qff buyers' claims unless the buyer gives the seller notice within some short period after delivery, and acceptance rules that cut off buyers' remedies upon acceptance.1 Section I of Part I argued that functional rationales offered to justify special cutoff rules as a neutral accommodation of buyer and seller interests are not persuasive; the special cutoff rules should thus be regarded as reflecting a vestigial form of caveat emptor, a bias in favor of sellers over buyers.

Sections II and III of Part I then examined a political thesis, arguing that the pro-seller bias is the result of underrepresentation of buyer, especially commercial buyer, interests in the processes by which sales law has been formed. Because only the most recent chapter in the long history of special cutoff rules, the negotiations culminating in the 1980 U.N. Convention on Contracts for the International Sale of Coods (CISG), revealed an express conflict between representatives of commercial buyer and seller interests, Part I deferred the much lengthier history of the development of special cutoff rules in domestic sales law to this second part.

This concluding part further tests the political thesis by recounting in Section IV the historical evolution of special cutoff rules in the civil and common law from inception in Roman law, through development as part of the law merchant during the Middle Ages, and into the modern sales law of West Germany, France, Great Brit

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ain, and the United States.2 Section V argues that the earlier history provides at least indirect evidence to support the political thesis. But that section also considers an alternative explanation referred to as the conceptual thesis. The conceptual thesis posits that certain types of sales law and warranty conceptualizations which are shared by each of the legal traditions under examination have tended to prevent jurists in each tradition from casting a critical eye at special cutoff rules and reaching a fairer accommodation of buyer and seller interests. One of these conceptual factors is the long-standing ambivalence about the justification of the institution of the implied warranty of quality. The other is a strong tendency in all sales law from Roman times to the present to view the buyer's acceptance upon delivery as the time at which the buyer's rights with respect to the goods should first become fixed. Part II of this article concludes that these two conceptual factors, while not strong enough to serve as the sole explanation of the historical pattern, are also a necessary component of a full explanation for the persistence of this form of caveat emptor.

IV. ThE HISTORICAL DEVELOPMENT OF CUTOFF RULES IN

DOMESTIC LAW

The stories of both the implied warranty of quality and the cutoff rules that limit the buyer's quality protection start with Rome because the relevant rules of many modern civil law jurisdictions, including Germany and France, show a striking fidelity to their roots in Roman sales law, which developed an implied warranty of quality subject to a specially short limitations period.3 The Roman law development manifested several features that reappeared or as-

1989) REITZ: HISTORY OF CUTOFF RULES 249

serted an influence in the formation of the modern national laws:

(1) a chariness about imposing implied warranties of quality on sellers that led to marked limitations on remedies for breach of the implied warranty, (2) the tendency to counterbalance the extension or strengthening of the buyer's rights to quality with the development of new cutoff rules, and (3) conceptualization of the sales transaction in a way that necessarily made delivery and acceptance the decisive point for the determination of buyers' rights. Mter describing these aspects of the Roman law, this section will trace these features in the development of special cutoff rules in German and French law and then contrast that development with the history of cutoff rules in the common law jurisdictions of Great Britain and the United States, which have made far less use of special cutoff rules, but which, to the extent they have, demonstrate some of the same tendencies.

A. Establishment of the Implied Warranty of Quality and a Specially Short Limitations Period for Exercise of That Right in Roman Law

While the development of significant implied warranty protection for buyers was a major accomplishment of Roman law, it seems clear that Roman law began with the principle of caveat emptor.4' In the earliest period, sales transactions in personalty were undoubtedly chiefly cash-and-carry arrangements,5 so the buyer could protect himself against apparent defects by inspecting the available goods carefully before agreeing to buy. The chief risk caveat emptor imposed on the buyer was the risk of latent defects.

Dating back at least to the Twelve Tables (circa 450 B.C.8), there was a mechanism for creating express warranties of quality, but it required the use of the stipulation, a formalistic method of contracting in which the buyer had to state the promise of quality, ask the seller if he in fact promised that quality, and receive an affirmative response.7 Under this system, mere representations by the

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seller during the bargaining process would not create any liability. It is true that Roman law early came to enforce, on the grounds of consensualism alone, agreements to deliver or to pay as part of a contract of sale (emptio venditio),8 but the emptio venditio did not at first contain any quality terms. Therefore, in early Roman law, the only way to create a warranty of quality was to do so expressly and formally by stipulation.9 At least by the time of Justinian's Digest (completed in 533 A.D.10), express representations (dicta) and promises (promissa) made in entering into an emptio venditio also came to be regarded as binding even if not in the form of a stipulation,11 though the Romans may have been more ready than the moderns to excuse commendatory affirmations as mere "puffing."12

In the absence, however, of an express warranty created by stipulationes, dicta, or promissa, the chief protection the civil law of Rome gave the buyer against latent defects was against the seller who sold the goods with knowledge of the hidden defects. From fairly early on, Roman law came to regard the failure to disclose

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known defects as a violation of good faith amounting to a type of fraud.13 This rule, however, provided little protection for buyers because of the obvious difficulty of proving that the seller knew of hidden defects.

The development of implied warranty protection against hidden defects regardless of the seller's knowledge was the product of edicts issued by the curule aediles, magistrates with jurisdiction over the markets of Rome.14 From the time of Cicero (106-43 B.C.) or earlier,15 the aediles attempted to repress the sharp practices first of sellers of slaves and then also of beasts of burden and cattle16 be-cause these dealers were regarded as particularly likely to be deceitful.17 The aedilician edicts therefore began to provide that, in the markets over which the aediles had jurisdiction, sellers of slaves or livestock must at the time of sale disclose specific faults and give a stipulation that no defects existed othe~ than those declared. If the seller did not give the required stipulation at the time of sale, the edict gave the buyer the right to demand it within two months under threat of avoidance and within six months under threat of

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damages.18

Apparently as a subsequent development,19 the aedilician edict also began to provide that, if there were undisclosed defects, the buyer would be allowed virtually the same remedies even in the absence of a stipulatio: avoidance of the sale through an actio redhi~ itoria20 brought within six months of the sale or damages through an actio quanti minoris aestimatoria21 brought within one year.22

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253

By forcing sellers to give a stipulatory promise, the aediles apparently initially attempted to keep the non-fraudulent seller's liability for hidden defects within the bounds of express promise, but the results must not have been satisfactory. Perhaps too many buyers neglected to obtain the stipulatio, to their subsequent distress. At any rate, the aediles took the great leap that has marked warranty liability everywhere from many other aspects of contractual obligation. They imposed liability for hidden defects on sellers without regard to their knowledge of defects and even in the absence of the seller's express agreement to assume that liability. At least by Justinian 's time, these remedies for hidden defects had been extended to sales of land and all types of goods.23

The very limited range of the protection for buyers established by the aedilician edict, even as extended by the time of Justinian, bears emphasis. First, the aedilician warranties originally applied only to sales at markets under the aediles' jurisdiction, and when the warranties were extended, they were thought of as incidents to the emptio venditio contract type,24 which, like virtually all other ancient forms of sales contracts, applied primarily to sales concluded in the presence of the goods in question and generally at organized markets.25 Hence the implied warranties were not applicable to

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transactions excluded from emptio venditio.26 Commercially important sales transactions not covered by emptio venditio, such as sales of generic goods from unidentified masses (a category that would indude most sale contracts for future delivery27), were probably formed chiefly by stipulatio,28 in which case liability was limited to

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255

the express terms of the stiputatio though it appears likely that standard forms of express quality warranties for the common articles of commerce were in general use.29

Second, the implied warranty applied only to hidden defects be-cause the assumption was that the buyer in a market sale could protect himself against apparent defects by looking carefully at the goods before buying them. So strong was the view that the buyer should be responsible to use his eyes to protect himself as much as possible that even express warranties were construed, if possible, as not applying to obvious defects.~ Third, the damage remedy for breach of the implied warranties imposed by the aediles was limited to loss in the good's value due to the defect. Consequential damages for defective goods were not covered by the aedilician remedies though they apparently were available for other breaches by the seller, such as a failure to deliver or delay in delivery.31

Finally, from the start, the implied warranties to protect buyers were limited by special limitations periods. The aedilician edicts themselves limited the buyer to a six-month period in which to bring the actio redhibitoria and a one-year period to bring the actio quanti min~.32 The imposition of cutoffs is a striking departure from the general civil law of Rome, which did not have until quite late any general statutes of limitations, and which employed the long period of 30 years when it finally did adopt a general limitations period.33 Thus suit on an express promise of quality embodied in a stipulatio was not subject to any limitations period or at most,

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to a 30-year period.34

One need not look far to find the aediles' self-interest in developing implied warranty protections in favor of buyers of slaves or beasts of burden. The aediles were drawn from the ranks of the wealthy~ and were thus protecting their own interests as representatives of a major group of prospective buyers. The sellers subject to their regulation may not even have been Roman citizens.~ It is not as apparent, however, why the aedi~les would choose to undercut implied warranty rights by short limitations periods or why later Roman law maintained the restriction. Several pieces of evidence, however, suggest the influence of conceptual factors.

Some of the other special remedies created by magistrates, generally called "praetorian actions," were also governed by a short limitations period, almost always a one-year period (the annus utilis), though others were perpetual.37 It was argued by some of the Roman jurists that the praetorian actions subjected to the one-year cutoff were penal in nature as opposed to the perpetual ones that provided only compensation.~ That distinction does not fit a good many of the actions limited by one year,39 and it is debatable whether the aedilician remedies for hidden defects could have been thought of as penal since they provided the disappointed buyer at most with compensation.40

A more satisfactory explanation is the point of distinction offered already in Roman times between actions in furtherance of the

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civil law (that is, the non-praetorian Roman law), which were said to be perpetual, and actions in opposition to it, which were cut off by the annus utilis.41 If this was the operative criterion, the short cutoffs applied to the implied warranty causes of action highlight a concern that has bedeviled the development of warranty law ever since:

implied warranty protection for buyers is a departure from the principle of consensualism on which Roman contract law, and especially the sales contract (emptio venditio), was based.~ The beguilingly simple notion that contractual obligations are the product of agreement renders suspect the fairness of imposing quality obligations on sellers in the absence of express promises. The aedilician edict's implied warranty protection thus was probably subjected to the short cutoff because it was viewed as directly contrary to the preexisting Roman law.

The contrast with the development of the warranty against eviction reinforces the suspicion that Roman jurists hesitated to impose nonconsensual liability on contracting parties. The warranty against eviction was not the product of aedilician edict and was therefore not subject to the special cutoff rules but rather evolved as customary stipulationes gradually came to be regarded as implied terms of the emptio venditio contract as a matter of good faith.43 By contrast, the Roman jurists may simply not have believed that all sellers acting in good faith necessarily promised even a minimum level of quality because the circumstances of each sale differed so greatly.44 They therefore regulated quality directly through the edict though their first impulse was to preserve the appearance of consensualism by requiring the giving of a stipulatio of quality. The limited damage remedy provided for breach of the implied warranty also evidences hesitation. The temporal cutoff on the aedilician remedies may reflect as much as any other factor this same lingering hesitancy about imposing on sellers liability for lack of quality in the absence of express agreement or bad faith.4~

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B. The Development of Special Cutoff Rules in the Modern Civil Law

The old Germanic law of sales warranties appears to have been quite similar to the rules of early Roman law before the introduction of the aedilician remedies: in the absence of express warranties, the buyer had no remedy for hidden defects unless the defects were substantial and the seller sold the goods with knowledge of the defects, and even then, the only remedy was avoidance, which the buyer had to claim within very short periods of when he could first have discovered the defect.46 The major difference was that the early Germanic law already used the technique of a short cutoff on the buyer's non-warranty remedy of avoidance, the remedy for which short cutoffs appear more strongly justified on functional grounds.47

By the time of the nineteenth century codifications, both German and French law had taken over the idea of implied warranty directly from Roman law. However, before describing the process of codification and the subsequent development of the codified law, it is instructive to examine briefly the long formative period from the Middle Ages up to the beginning of the nineteenth century, during which Germany and France gradually "received" the Roman law of implied warranty of quality. The reception period sheds light on the political and conceptual influences on the formulation of cutoff rules, especially the central role played by merchant support for the introduction of a new type of cutoff rule, the notice rule.

1. From the Medieval Period up to Codification in Western Europe in the Nineteenth Century

Despite the lack of an implied warranty of quality in Germanic law, by the thirteenth century the buyer's interests in general were vigorously protected by extensive police regulation of the city markets governing not only weights and measures but also, upon pain of criminal sanction, the standard of merchantability of goods offered for sale. This regulation was facilitated by an intrusive system of inspection.48 Moreover, virtually all sales were market sales because

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city ordinances generally forbade or refused to enforce trade outside of the designated market areas within the city, partly in order to maintain the trading monopoly for its own citizens, partly to ensure protection for and control over the transactions, and perhaps also to ensure for the city or its sovereign the taxes to be levied on the transaction.49 Thus even without implied warranties, buyers benefitted from extensive governmental regulation against defects that could be detected at purchase. They were lacking only implied warranties against latent defects.

From the latter part of the Middle Ages, the influence and the progressive reception of Roman law modified the Germanic law in favor of buyers by transplanting to Western Europe the aedilician remedies for hidden defects. The process of absorbing the new legal ideas and accommodating them with the old was certainly a long one and many of the specifics about the procegs are unclear.~ Nevertheless, it seems clear that two factors played an important role in the type of accommodation achieved in Western Europe, a steady im provement of trade conditions and the rise of a merchant class to exploit the improved opportunities for trade.

After the general reversion in Western Europe to an agricultural economy with very little trade following the fall of the West-

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ern Roman Empire,51 conditions for trade began to improve, starting in the tenth century in the Mediterranean and leading to a large-scale expansion of commerce along all the coasts of Western Europe and a great increase in the number of market fairs in the twelfth century.52 As trade conditions improved even more in the early modern period, sales at a distance, in which the seller promised to deliver generic goods the buyer did not see before delivery, became possible.53 Once there were no longer practical limitations restricting the transaction of trade to specified markets, the old detailed police regulation of the goods sold at a market was harder to maintain and the mechanisms for enforcing it began to crumble.54

The rising merchant class appears in some cases to have resisted the substance of the Roman implied warranty,55 but they also extended the basic principle of municipal regulation that generic goods must be "merchantable" (handelsfahig, de qualite lo~te et marchande) to international trade as a matter of customary law.M Typi cally, however, the merchants favored special cutoff rules that

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limited as much as possible their liability for latent defects.57 A number of medieval city statutes governing trade within the city laid down the rule that once the buyer had seen the goods and accepted them, the buyer lost all remedies against the seller,~ and elsewhere merchants adopted, by statute or custom, a short limitations or notice period to cut off implied warranties.59

The amelioration of conditions and security of trade over long distances in Europe also appears to have played an important role in the development of the notice rule. Several writers have postulated that, as sales at a distance became more prevalent, the notice rule was developed by analogy to the acceptance rule for apparent de

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fects applied in both Germanic and Roman law to sales at a market.~ In a sale at a distance, the goods are not available for inspection by the buyer at the time of contracting. The earliest point in the transaction at which the buyer could possibly inspect for defects is delivery. Since both Roman and Germanic law treated acceptance of obviously defective goods in a transaction on a market as agreement to purchase goods with those defects, it apparently seemed appropriate by analogy to treat unqualified acceptance of obviously defective goods in a sale at a distance, at least after sufficient time had elapsed for the buyer to inspect, as agreement to purchase the defective goods even in the face of express warranties. Early codifications of the notice rule in Germany exhibit the force of the analogy by applying a notice rule only to sales at a distance.61

This bold analogy, which derives a questionable contract performance rule from a well justified rule of contract formation,82 has faded in significance, but the rule it was invoked to support proved to be popular with merchants, and new arguments were eventually developed for the rule. The next section will describe in some detail the century of efforts to codify the German law of sales that culminated in enactment of the German Commercial Code of 1897 and the German Civil Code of 1896. This chapter of the history provides considerable information about the evolution of modern arguments for the cutoff rules, as well as additional evidence for the political influence of commercial interests in favor of special cutoff rules.

2. Codification of Modern German Law

The Prussian Territorial Code of 1794 illustrates the acceptance that the Roman law of implied warranty of quality had gained by

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the end of the eighteenth century in Germany. The Code imposed liability on sellers for express and "normally expected" assurances of quality.~ In the event of defects, the buyer had the choice of avoidance or a damages remedy, that was limited to what we would call "direct damages, i.e., the loss in value due to the defect, but unlike the Roman law, the exclusion of consequential damages applied even for express warranties.~ The buyer could only recover consequential damages if the seller was gtiilty of deceit (Bert~g).~

Even though the phrasing of the Prussian Code's section on warranty suggested a general warranty against all defects, a separately drafted acceptance rule limited the warranty effectively to hidden defects: the buyer lost all implied warranty rights if it accepted goods with "obvious" defects without reserving its rights.~ This acceptance rule illustrates the continulng power of the analogy between sales at a market and sales at a .4istance. In the phrasing of the Code, it was not the buyer's knowledge of defects at the time of contact formation that prevented him from clajii~~g warranty rights, but his knowledge at the time of delivery and acceptance, whether a sale in place or at a distance was involved. The Prussian Territorial Code also applied the shortest of the aedilician limitations periods, the six-month cutoff, to both the remedy of avoidance and the remedy of damages, as well as to the buyer's cause of action for breach of express warranty.67

Most of these features of the warranty system of the Prussian Territorial Code survived intact in many of the various codes and draft codes promulgated in German-speaking countries during the next century of efforts to codify commercial and contract law and are effectively the rules that obtain today under the German Civil Code. The major substantive change in these rules has been the expansion of the damages remedy for breach of expres~but not also implied-warranties to include consequential damages.~ Thus by the start of the nineteenth century, one can say that both the aedilician warranty rights, the acceptance rule for defects known by

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the buyer at delivery,69 and the special six-month limitations period for buyer's remedies with respect to defects in goods were well established in German law.

The principal warranty issue which divided the code drafters in the nineteenth century was the notice rule. There was general agreement that some kind of notice rule should apply to sales at a distance between merchants. The debates concerned (1) the appropriate length of the notice period, (2) whether the notice rule should also apply to sales in place, and (3) whether the notice rule should be confined to the commercial code, and hence not apply to consumers.

The early codes stipulated very short notice periods. The earliest modern code to contain a notice rule was the Territorial Code for Baden, which came into force in 1808.70 Although primarily a translation of the French Civil Code of 180~4 and the French Commercial Code of 1807, neither of which contained a notice rule, Baden's Territorial Code did add a 14-day notice rule for merchants.71 The 1839 draft of a Commercial Code for the Kingdom of Wiirttemberg followed the Spanish Commercial Code of 1829 in shortening the notice period to eight days for sales at a distance, at least for defects that could be discovered merely by unpacking.72 The draftsman for the Wurttemberg Code opined that the 14-day period in Baden's Code was "clearly too long and dangerous for the seller."73 For hidden defects, the Wiirttemberg draft omitted any requirement for prompt

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inspection but required notice within 48 hours of discovery.74

Zurich's Law of Obligations (Obligationenrecht) of 1855 was the first civil code to adopt the notice rule and hence the first code to make the rule applicable to all buyers, including consumers. It was also the first to abandon a definite measure of time for the notice period. The buyer was required to inspect and give notice "without delay."75 The notice provision of Zurich's Law of Obligations served as the model for the drafting of the notice rule in the Swiss Obligationenrecht,76 which was adopted in 1881 and is still in force today.77

The Zurich notice rule was justified in part as a codification of merchant custom treating the buyer's silence as a waiver of warranty rights or ratification of the seller's misperformance.78 Like the analogy of sales at a distance to market-place sales, the waiver or ratification argument accords the buyer's reaction to the seller's performance a major role in determfrdng what the legal effect of the parties' agreement will be, just as if in performing a contract for a sale at a distance the buyer and seller were continuing to bargain over the quality requirements until acceptance.

With the next major German codification of contract law, the German General Commercial Code (Aligemeines Deutsches Handelsgesetzbuch or ADHGB), drafted in the late 1850s by a commission of lawyers and businessmen at Nuremberg for the German League and approved by the German Federal Diet in 1861,~~ the German notice rule began to take on its modern form. The notice rule adopted in Section 347 of the ADHGB explicitly embodied the ratification argument: it stated that if the buyer failed to inspect the goods without delay after delivery or to give notice immediately, the goods would be "deemed to have been approved as sent."80 The argumen

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tation about the rule was, however, on a political and functional level. For example, when doubt was expressed in the Nuremberg Commission debates about the fairness of the inspection duty in the notice rule,81 many of the business representatives emphasized that the buyer's duty of prompt inspection was so generally recognized in commerce 'that it would be impossible to disregard it in the Commercial Code."82 In addition, the view was very strongly put forth to the Commission that the normal distribution of goods by middlemen would not be possible without a notice rule because of the possibility that without receiving timely notice the middleman would lose his claim over against his supplier.83 Finally, some argued that lack of a notice rule would permit the buyer to speculate at the expense of the seller-an argument that justifies a short cutoff only on the remedy of avoidance~-and also advanced the partially related repose argument that businessmen have a strong need "to know quickly whether a particular transaction has been satisfactorily completed, in order to make further business arrangements."~

Like the notice rule in some of the earlier German-language codes, the ADHGB expressly limited the notice rule to sales at a distance, but in this case partly for reasons having to do with the politics of the German League.86 Like the Swiss codes, the ADHGB

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applied the notice rule to consumer buyers as well as to business buyers.87 While the expansion of the notice rule to non-business buyers also coincided with the political agendas of certain parties with respect to League politics,~ the matter was debated as one that pitted consumer buyers against merchant sellers. It was in this context that one member of the Commission made the revealing comment that the notice rule should be limited to transactions in which both buyer and seller were merchants because only in such cases will the disadvantages the rule imposes on buyers be fairly dissipated by the fact that the merchant buyer will profit from the same rule at other times when he acts as a seller.89 The minutes report laconically that "[t)his proposal met lively opposition on the part of the business representatives,"~ and it was rejected by a vote of 12 to

4~91

With the establishment of the German Roich in 1871, sufficient political unity at last had come to Germany to warrant a unified German Civil Code (Bundesgesetzbuch or BGB).92 The lengthy drafting process culminated with a new German Commercial Code (Handelsgesetzbuch or HGB), which supplanted the ADHGB as of 1897, and the BGB, which came into force on 1 January 1900. In view of the broad notice rule for all buyers in the ADHGB, which had become the law of the Reich in 1871 and which had been operative in much of German territory since at least 1866,~~ one might

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have expected the new civil code to adopt the ADHGB notice rule without debate. But it did not. Rather, after lengthy debate, the notice rule was excluded from the BGB and relegated to the HGB, where it was expanded to sales in place but limited to cases in which both the buyer and the seller are merchants.

The expansion of the notice rule in the HGB to cover sales in place did not arouse any opposition,94 but the exclusion of the notice rule from the BGB did. While there was general agreement that acceptance of goods with known defects without reservation of rights could only be seen as a waiver of remedies with regard to those defects,95 there was strong opposition-even in drafting sessions that contained strong representation of business interests~-to imposing any duty to inspect on non-commercial buyers, either at delivery or after.97

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Most of the reasons advanced for exempting consumer buyers from the notice rule would seem to have applied equally well to commercial buyers. For example, a notice rule for consumers was opposed to the grounds that it would be difficult to apply to latent defects because "symptoms of defects often are not at first recognized and treated as such, and only the appearance of several signals may give impetus to an inspection which would lead to the conviction that the goods are defective."98 It was also argued that the risk of loss of evidence was slight in view of the short limitations period.~ Similarly, the objection that retail sellers had as strong a need as wholesalers for prompt notice in order to prevent loss of claims back against suppliers was met with the assertion that most retailers sold from inventory and therefore would likely not have any claim back against suppliers anyway,1~ presumably because of the short limitations period. Nevertheless, the desirability of a notice rule for merchant buyers was nev~r debated. It was simply assumed to be necessary for trade.101

Since enactment of the HGB notice rule,102 a number of Ger

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man academic writers have criticized the failure to extend the notice rule to consumer buyers and have suggested that good faith may in some cases require treating the buyer's failure to give prompt notice as a waiver of remedies.103 Nevertheless, the only subsequent German legislative action on this issue has been passage in 1976 of the Law on the Regulation of Standardized Contract Terms, which invalidates express notice provisions in consumer sales contracts.1~' The notice rule of the HGB is, however, well established in sales botween merchants, and has been given a rigorous interpretation. In the case of obvious defects, it often has been held to cut off the buyer's remedies in the matter of a few days.105 Hidden defects must be reported "without delay after discovery,"1~ and the principal severity of the rule in this case lies in the "duty" it imposes on buyers to inspect "without delay after delivery, insofar as practicable according to orderly business practice."107

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The language of the HGB notice rule embodies the ratification rationale by providing that, if the buyer fails to give timely notice, "the good is deemed to be approved."108 Not surprisingly, the ratification argument still influences German thinking about the notice rule,1~ but it has not misled the courts into requiring the notice to contain assertion of a claim or even a legal position concerning the alleged defect,110 as United States courts have held with regard to the similar notice rule in the UCC.111 Current writers also cite prejudice arguments (primarily the evidence-gathering and cure rationales)112 and the business need for quick repose113 to justify the severity of the rule. Because the same notice rule cuts off the rem-

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edy of avoidance as well as the remedy of damages, it is unclear whether German writers and courts would value the planning benefits to be gained from early repose for damage claims highly enough to justify the cutoff rule if the much stronger benefits to be gained from a timely cutoff for the remedy of avoidance were not also involved. However, the severity with which the German notice rule has been interpreted and the already very short special limitations period (six months) suggest that German jurists and merchants place a high value on quick finality, independent of whatever value it may have for preventing prejudice.

3. French Law Developments After Codification

The relevant provisions of the French Civil Code of 1804, which are still in force today, evince an even greater fidelity to the Roman law of warranty than the analogous provisions of the German Civil and Commercial Codes, but under the aegis of the French courts, the French law of the warranty of quality has begun to depart rather dramatically from the explicit rules of the French Civil Code. The most recent product of this development is an acceptance rule for apparent defects. As in Roman and German law, the adoption of the new cutoff rule fits the pattern of counterbalancing resistance to the expansion and strengthening of buyers' warranty rights. The French example is also remarkable for the strong reliance French scholars currently place on the ratification argument to justify the acceptance rule.

Reflecting the emphasis in both Roman law and the pre-code law of Western Europe on the buyer's duty to make reasonable inspection of goods before purchasing them,114 the French Code Civil enactment of the aedilician remedies applies only to truly hidden defects (vices cache's),115 that is, defects that the buyer could not have discovered by the exercise of reasonable diligence.116 For vwes

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F;:9]

caches the French Code Civil provides the aedilician remedies of avoidance or a type of damages.117 Like Roman law, the French Code limits the buyer's damages in this case by excluding consequential damages so that full damages for defects can be recovered only in the case of failure to reveal a known but latent defect.118 The aedilician limitations periods and the medieval notice rule have been transmuted into a single "short period" (bref delai), which gives the courts considerable discretion subject to the nature of the defects and the local customs and usages.119 It has generally been interpreted to constitute a relatively short cutoff on buyers' rights120 once hidden defects have become discoverable.121

Unlike German law, which generally assimilated express war-

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ranty to the aedilician implied warranty at least for the purpose of subjecting it to the short limitations and notice periods,122 the French Civil Code preserved the distinction between express contractual obligations and the obligations imposed by the aedilician remedies for vice cache'. For breach of an express warranty the buyer has the ordinary contract remedies for breach, a type of avoidance (resoZution)123 and full damages,124 subject to the general limitations periods. For suits by merchant or consumer buyers against merchant sellers, the general ten-year period for commercial suits therefore applies.125 The French Code's preservation of the aedilician remedies as a regime of contract rights and remedies completely distinct from the generally applicable contract remedies thus has reproduced both of the major features by which the Roman law of warranty differed from the common law: (1) the buyer's damage

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remedy for the implied warranty against hidden "defects" is sharply curtailed by the exclusion of consequential damages, but her remedy for failure to deliver "conforming" goods is not, and (2) the buyer has far longer to exercise her rights against the seller in the case of delivery of a good that fails to conform to express contract requirements than in the case of a good with a hidden "defect."1~

The significant differences between "defects" and "nonconformities" with respect to both amount of potential recovery and limitations period could be expected to put heavy pressure on the courts to develop a clear test for the distinction between the two concepts. The distinction, however, cannot be planted on the tenuous line between warranties implied in law and implied in fact because a Code article that is not part of the section on vice cach~ has been interpreted to require a minimum standard of merchantability in any case.127 Moreover, the obvious overlap between the two concepts has been widened by a tendency, on the one hand, to treat as "defective" any good that is not suitable for the use for which it was offered for sale and, on the other hand, to consider delivery of goods that fail to conform to the contract requirements in any way as a breach of the seller's fundamental obligation to deliver.1~ Although the courts have at least at time attempted to ground the distinction on the difference between alterations or deterioration ("defects") and differences in quality, nature, or identity of the goods ("non-conformities"), French scholars have roundly attacked the distinction as impossible to maintain in any principled manner.1~

The French courts have relieved some of the pressure to maintain the distinction by judicially abolishing for merchant sellers the clear Code limitation on liability for breach of the implied aedilician warranty. The first step in this evolution was the adoption even before codification of a rebuttable presumption that the merchant seller knows all defects of his goods.130 For buyers who were not able to recover all damages on the strength of that presumption, the French courts also developed an extraordinarily expansive interpre

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tation of the damages covered by the Code section specifying the good faith seller's liability for breach of warranty so that injured buyers could recover virtually all damages except lost profits.131 Finally, since 1965, the highest French court for civil matters, the Cour de cassation, has consistently held that the presumption of knowledge on the part of a business seller is irrebuttable, thus enabling a buyer to recover, even from an innocent seller, lost profits due to defects.132 The development is all the more striking because as a consequence of the assimilation of the merchant seller to the bad faith seller, the courts have also held that all express contract clauses purporting to limit the liability of merchant sellers to consumer buyers for vice cache' are unenforceable,133 thus depriving sellers of any contractual way of disclaiming liability to consumers for vice cache', or even of limiting their liability in this regard.134 The courts have stuck tenaciously to these holdings in the face of vigorous criticism from merchants.1~

The distinction between non-conformity and defect remains important, however, because it still controls (1) the amount of recovery

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by professional buyers and by buyers from non-professional sellers and (2) the length of cutoff period.1~ A number of French scholars have advocated eliminating the chief remaining significance of the issue by adoption of an acceptance rule for apparent defects, whether covered by express warranties or only the implied one.137 In their view, defects and non-conformities that could be detected at acceptance should give rights to avoidance or damages only if reserved expressly at acceptance, and defects and non-conformities not detectable at acceptance should be covered only by the rules pertaining to vices caches, including the short limitations period of the bref deiai rule. Although the Cour de cassation had rejected the acceptance rule for apparent non-conformities in a series of decisions from 1878 to 1934,138 there were two decisions earlier in this century that implied support for the acceptance rule,139 and in a 1980 decision the Cour de cassation squarely adopted the scholars' recommendation by applying a judicially created acceptance rule to a business buyer.140 A number of lower courts had already adopted the acceptance rule for apparent non-conformities and defects,141 and the Cour de cassation reaffirmed the rule in a 1981 decision.142

Justifications offered for the French acceptance rule include invocation of some of the usual functional arguments for short cutoffs, chiefly protection of the seller's opportunity to cure,143 but also the evidence gathering rationale.144 A sort of repose argument appears

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to be alluded to in the argument that the acceptance rule contributes to the "security of transactions,"145 but since the acceptance rule cuts off both damages and avoidance remedies, it is no clearer than in Germany that adoption of short cutoffs indicates endorsement of the relatively weak repose arguments for a short cutoff on the damage remedy alone. French scholarly writing also appears to attribute considerable normative importance to the widespread in clusion of acceptance rules in standard contract terms146 despite a recognition that the standard terms may simply reflect seller dominance in the relevant market.147

What is most striking about the French justifications is the central role played by the ratification rationale. The scholars who advocate the acceptance rule in effect start with the premise that a buyer who fails to object to obvious or readily discoverable defects should be understood to approve or ratify the seller's defective performance. For them, the possible functional benefits of the rule appear to be less important than the potential they see for creating a theoretically coherent distinction between "defects" and "non-conformities." They would thus explain warranty liability for hidden defects, whether based on express or implied standards of quality, as resting on the notions that (a) the buyer's acceptance without reservation of defective goods normally constitutes a ratification of the seller's defective performance, but (b) the buyer's apparent ratification by acceptance is the product of excusable mistake and can therefore be rescinded if the goods were latently defective at the time of acceptance.1~

The acceptance rule is thus seen as a vehicle for integrating the disparate buyer's remedies bequeathed by Roman law, the general remedies for breach of the contractual duty to deliver and the aedilician remedies for hidden defects. The rule is touted as provid

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ing the only sensible distinction between "defects" and "non-conformities." However, the Cour de cassation has continued to manipulate that distinction to evade the bref de~i requirement for hidden breaches of warranty,149 so the integration of remedies has not been completely successful, and it seems reasonable to expect further evolution,1~ especially because of the relative severity of the acceptance rule for buyers.

The adoption of the acceptance rule also fits the pattern of counterbalancing imposition of cutoffs after expansion of buyers' substantive warranty rights. The bold judicial elimination of code limitations on the buyer's damage recovery for vice cache; as well as the concomitant invalidation of express disclaimers and limitations of at least the consumer's remedy, has already been described. The French courts have also enlarged the scope of the buyer's protection against vice cachd by relaxlng the standard of care to which the buyer is held in determining whether a given defect was really "hidden." As late as 1962, it had been held that "before buying' a used car, the non-professional should take the precaution of having the vehicle examined by a specialist,"151 but the courts have now abandoned that rigorous standard and hold the buyer only to the standard of a similarly situated buyer of medium diligence.152 This standard is, of course, much more lenient to consumers than to merchants, at least insofar as they are purchasing items which they normally purchase in the course of their business affajr~~153 The adoption of the acceptance rule thus comes after over a century of judicial expansion of buyers' warranty rights, especially but not exclusively for the benefit of consumers.

The French example of the recent development of a new cutoff rule is unusual in several respects. First, in most of the other post-Roman developments, the tendency has been to limit or eliminate the acceptance rule and replace it by a form of notice rule, which is more lenient to the buyer. In France, the acceptance rule for apparent defects has been introduced where formerly only the regular

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limitations period applied.1~ It seems reasonable to expect that the extreme swing from limitation cutoff to acceptance rule may eventually by compromised by adoption of some kind of notice rule, especially inasmuch as the present French limitations rule has some of the chief characteristics of a notice rule.155 Second, in the other in-stances studied, the establishment or expansion of warranty rights has benefitted the same class of buyers that is disadvantaged by the new cutoff rule. Here consumer buyers have been the primary, though not exclusive, beneficiaries of the judicial expansion of French warranty law; the new cutoff so far has only been applied to a business buyer though in principle it would appear to apply to consumers, too.1~ Nevertheless, it seems reasonable to view the French experience as fitting the general pattern pursuant to which cutoff rules are used as a procedural counterweight to the strengthening of substantive warranty rights in the face of active commercial hostility to the expansion of sellers' liability.

The French development also demonstrates that French law places a considerable value on quick finality though not as high a value as German law appears to do. The French acceptance rule obviously imposes the shortest type of cutoff period, but only for apparent defects, and the bref de~i has not proven to be as strict a cutoff as the German six-month limitations period.. Thus in comparison to German law, French law is apparently willing to sacrifice speed in reaching repose in order to preserve buyers' rights with respect to latent defects, but is willing to burden the buyer more to spot apparent defects at acceptance.

C The Common Law

The history of caveat emptor has run a somewhat different course in the common law jurisdictions. English law has never adopted short cutoffs for the buyer's damage remedy, but the United States sales law did, as part of a distinct resistance to warranty. Because the general resistance to warranty appears to have had its gen

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esis in England, the British development of warranty law will be sketched first.

1. Origin of Warranty in English I-aw

Although undoubtedly beginning with the same lack of buyer protection as the early Roman and Germanic law, English law did not borrow the aedilician remedies~r their special cutoff rulea--from Rome but rather from the same strong tendency evident in medieval Germany and France toward buyer protection in the form of an extensive governmental regulation of the markets. The English courts, from the local "courts of custom, of manor and baron, of leet and tolsey,"157 to the "pie-powder"158 courts of the law merchant and the royal court of Marshalsea159 that began to claim jurisdiction for the sovereign over markets, all developed a law that held the seller liable for hidden defects.1~

But the emerging common law of the king's courts, which began to administer the law merchant in the early seventeenth century,161 approached the question of the seller's liability for defects in goods with the rigid requirements for proving a warranty in the sale of real property in mind.182 Moreover, by the late eighteenth century,

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when the common law courts first began hearing a sufficient number of mercantile sales cases to leave an appreciable volume of case reports on sales,163 and especially in the nineteenth century, liberalism with its emphasis on individualism was beginning to exercise a strong influence on all of the Western world,1~ and English law became increasingly hostile to the notion of protecting the buyer who was so foolish as to fail to obtain express warranties with the care and formality required by the common law.1~ The hostility was expressed chiefly through crabbed constructions of what statements constituted an express warranty and a refusal to find generous implied warranties or trade usage to save an unfortunate buyer.1~

The British hostility was not long ascendant, however.167 The British Sale of Goods Act (SGA) of 1893 contained implied warranties of title,1~ fitness for a particular purpose169 and, at least for goods bought by description from a dealer, the implied warranty of merchantability.170 Breach of these warranties gave the buyer a right to full damages171 and, if the warranty was made a condition of the contract either expressly or because of its seriousness, the right to avoid.172 The British developed only one special cutoff rule, namely that acceptance of the goods cuts off the right to avoid, even for latent defects.173 These provisions were said to codify the English common law prevailing at the time.174 Only slightly modified, they are the English law today.175

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2. Development of Notice Rule in the United States

Nineteenth century Americans embraced the principle Qf caveat emptor with even more enthusiasm.176 Mid-nineteenth century judges and commentators in our country praised the doctrine as one that promoted trade and properly restrained the courts.177 They, like their English brethren, therefore favored rigid definitions of warranty and fraud in order to "avoid at least a pilgrimage of litigation, if not a total subversion of the common law rule.'~78 In 1870, the United States Supreme Court declared that caveat emptor was of "such universal acceptance" that, with the exception of South Carolina, "the courts of all the States in the Union where the common law prevails, sanction it."179

When, however, Professor Samuel Williston almost singlehandedly codified United States sales law in the early twentieth century by drafting the Uniform Sales Act (U.S.A.), he modelled the implied warranty sections on the British SGA even though he recognzed that the British warranties were somewhat more generous to buyers than the prevailing doctrines in the United States at that time.180 By 1930 the U.S.A. had been adopted in over half of the states,181 thus turning U.S. law also away from the most obvious forms of caveat emptor.

As in pre-codification Germany and France, an acceptance rule that cut off all remedies for apparent defects constituted a significant part of the resistance to the warranty of quality in some of the United States during the late nineteenth century. According to Williston, the "New York rule," which had achieved a strong following, provided that "taking title to the goods indicates assent to accept the goods in full satisfaction of the seller's obligations as to the quality

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critical of the acceptance rule.191

Williston's chief purpose in drafting Section 49 of the Uniform Sales Act was thus to eliminate the acceptance rule in all its Byzantine forms. The bulk of the twenty pages devoted to Section 49 in his 1909 treatise on sales law is a refutation of the chief rationale for the acceptance rule, the ratification argument. "There seems no ground," he wrote, "for saying that the mere fact that (the buyer] has taken the goods indicates . . . an assent [to waive all rights)."192 In the first sentence of Section 49 he therefore expressly eliminated the acceptance rule, liberating buyers from the risk of losing rights not explicitly reserved at acceptance. Yet in the second sentence of Section 49 Williston undermined that reform significantly by introducing a notice rule that released the seller from liability "if, after acceptance of the goods, the buyer failto give notice to the seller of the breach of any promise or warranty within a reasonable time after the buyer knows, or ought to know of such breach,..... The notice rule simply reestablished the point of risk at a somewhat later time.

Replace~ent of the a~ceptance nile with the notice rule is ~ the more surprising because the chief justification Williston gave for the notice rule is the ratification argument. With no apparent sense of contradiction, he wrote,

While merely taking title to the goods does not warrant the conclusion that the buyer has agreed to take the goods in full satisfaction of all the seller's obligations, the retention and use of the goods for a considerable period without any complaint warrants a strong inference that the goods are either what the contract called for, or that the buyer is satisfied to accept them instead of such goods.193

The only difference between an acceptance rule and a notice rule is the passage of time and Williston offers no argument why the passage of time~ven a "considerable period"-provides a stronger basis for inferring the buyer's ratification of defective performance than existed immediately after acceptance. Williston also made passing reference to the German notice rule, but he did not mention that the German rule was limited to merchant buyers and to defects in goods, unlike Williston's notice rule that applied to all buyers and

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to all types of breaches.194

While it is clear that the main thrust of Williston's efforts in Section 49 was to expand the buyer's protection, it is curious that Williston felt compelled to temper his pro-buyer reforms with the notice rule, supported chiefly by the very same ratification argument he rejected for the acceptance rule. His reliance on that rationale shows that he felt compelled to attribute great significance to the point of acceptance.

Despite Williston's strident criticism of the acceptance rule for damage claims, he preserved a form of the acceptance rule for the right to avoid by specifying in Section 60 of the Uniform Sales Act that acceptance cut off the buyer's right to avoid with respect to breaches of warranty of which the buyer knew at the time of acceptance. As to the right to avoid for breaches discovered later, the same section imposed the requirement to give notice "within a reasonable time." Williston based the s~ecial cutoff rules for avoidance on the requirement of timeliness in other actions that entitled one to undo a transaction, such as those based on fraud or mistake.195 Although the notice rule for avoidance uses the identical "reasonable time" standard as the notice rule for damages claims, Willis-ton's comments clearly indicate that he expected the notice period for avoidance to expire first.1~

Williston's two separate notice rules have had a highly successful career in American law and are currently to be found in essentially unchanged form in the Uniform Commercial Code.197 Williston's new acceptance rule for the right to avoid for defects known at acceptance has, however, been abandoned. Similarly, Williston's ratification argument for the notice rule that governs the

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damage remedy has been abandoned,198 but courts and commentators have gradually developed various prejudice rationales for the notice prerequisite to the damage remedy, principally those based on cure and the gathering of evidence.1~ The repose rationale has also been articulated, but no one appears willing to rely on it.200

Williston's broadening of the notice rules to all types of breaches has also been well received by American courts. So the UCC notice rule for damages is today generally applied to claims for delay in delivery2ol despite the virtual impossibility that the seller could in that kind of claim suffer the type of informational disadvantage upon which the prejudice and repose arguments have to be premised. The overbroad coverage of the notice rule for damages also appears to have misled the majority of American courts into requiring not merely notice of the defect, which is all that is needed to overcome the informational disadvantage the seller suffers because of delivering the goods, but also notice of the buyer's view that the defect constitutes a breach.202 Although the typical periods courts

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have allowed for the notice rule are not as short as in German law, there are virtually no decisions allowing a business buyer to delay as much as one year to give notice203 and in many cases involving obvious defects the notice period has been held to expire in a matter of weeks.204

Consumer buyers have fared much better under the same rule, despite lack of any express authorization in the rule itself to treat consumers differently.205 The courts have generally adopted the invitation in the Official Comments to judge a "reasonable time" by a more lenient standard in the case of consumer buyers.206 Thus some decisions concerning consumers have refused to find notice periods almost as long as the four-year limitations period of the Uniform Commercial Code untimely as a matter of law,207 and a few states have either by legislative amendment or judicial decision eliminated consumer buyers from the scope of the notice rule.208 Finally, federal consumer legislation has since 1975 overridden the notice rule in the case of sellers that provide written warranties to consumers.2~~

In short, the United States sales law has also employed a short cutoff rule, primarily aimed at commercial buyers, to offset the strengthening at the beginning of this century of buyers' warranty

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protections. Adoption of the notice rule was in part a conscious borrowing from German law. But United States practice does not appear to place as high a value on very short cutoffs as the civil law does. Unlike German and French sales law, the USA and the UCC eliminated the acceptance rule for damage claims and never adopted specially short limitations periods. Moreover, United States courts have applied the UCC notice rule for damage claims in a somewhat more lenient manner than the Germans have applied theirs though unlike the German notice rule the broadly phrased United States rule has also been applied to delay claims.

V. THE DYNAMICS OF SALES LAW FORMATION

This article's examination of the history of special cutoff rules was prompted by the conclusion in Sect~ion I of the first part of this article that functional justifications for the rules do not withstand rigorous scrutiny. Part I introduced a political explanation for the prevalence of special cutoff rules, arguing that their development in so many legal systems reflects the dominance of seller interests in the formation of sales law. Part I considered that thesis primarily in the light of the negotiations that resulted in the 1980 U.S. Convention on the International Sale of Goods (CISG), where the conflict between commercial buyer and seller interests on this point was explicit. Now that the historical development from Roman times has been reviewed, it is possible to assess the political thesis against a much fuller historical record.

The foregoing history, however, has paid particular attention, not only to evidence of the play of interests, but also to the justifications actually advanced at each period on behalf of special cutoff rules. To some extent, these justifications have been identical with the functional arguments considered at the outset of this article. But attention to the historical arguments for special cutoff rules reveals the undeniable influence of two types of nonfunctional conceptual factors that also appear to have promoted the development of special cutoff rules on the buyer's rights. Each of these theses, the political and the conceptual, will be assessed in turn.

A. The Politics of Special Cu toff Rules

At first blush, the history recounted above might seem to cast considerable doubt on the political thesis. For example, the historical development confirms the assumption made in Part I: apart from the negotiations in this century to create a uniform sales law for international transactions, there is virtually no evidence of opposition by commercial buyers to special cutoff rules. There is ample evidence that consumer advocates objected to the notice rule in the

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United States and in Germany,210 but only isolated evidence of pressure for cutoff rules from groups that can be identified as representing commercial sellers and not also commercial buyers.211 Indeed, throughout the history, the chief opposition to extensions of warranty and the chief support for adoption of cutoff rules have tended to come from merchants, who may be both commercial buyers and sellers. Absence of commercial buyer opposition for most of the history would seem to belie the political explanation for the prevalence of special cutoff rules.

The other aspect of the history of cutoff rules that might seem to raise a question about the political thesis is the fact that the development of special cutoff rules favoring sellers has taken place in the context of a very significant expansion, from Roman times until now, of buyers' warranty rights. If cutoffs are due to seller dominance, why have sellers not also succeeded in thwarting the expansion of warranty rights?

Nevertheless, the history of special cutoff rules can be understood to be consistent with the political thesis, and even to lend indirect evidence to support it. In order to account for the absence of commercial buyer opposition, Part I proposed the following model of the way in which commercial interests are brought to bear on sales law issues: (a) business interests tend to concentrate their efforts to influence the creation of law on the law that regulates their income producing activities, and therefore the primary commercial interests that participate in the formulation of sales law tend to be businesses that both buy and sell goods, like manufacturers and merchant-traders; and (b) these parties tend to identify their primary interests as sellers' interests because they hope to sell for more than they buy.212

With regard to the general expansion of warranty rights, it should be remembered that merchant interests did oppose recognition of implied warranties at various times, especially in the medieval and early modern period.213 Their eventual acceptance and even support for the warranty of merchantability is, however, consistent with the theory that merchants tend to view themselves primarily as sellers because basic implied warranties of quality can be under-

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stood as rules that best accommodate buyer and seller interests.214

With this model of the commercial interests involved, one can interpret much of the foregoing history to support the political thesis. Implied warranties were first imposed by the aediles, representatives of Roman buyers, on a very narrow and politically powerless class of sellers, dealers in slaves and beasts of burden and largely perhaps even non-citizens.215 By the time the Roman law of implied warranty had been rediscovered and carried into France and Germany in the late medieval and early modern period, the merchant class, seeing its interests predominantly as those of sellers, was also beginning to have substantial political power. Merchants appear to have used their power at times to oppose adoption of implied warranties of quality,216 though at least in the north of Europe they also embraced the implied warranty of merchantability for generic goods as a matter of "custom."217 At least by. the beginning of the nineteenth century era of codification, the notion of a basic implied warranty sanctioned by the limited aedilician remedies was so well entrenched in Germany and France that business opposition to the implied warranty disappeared. In common law countries, on the other hand, basic implied warranties of quality were not so clearly entrenched for at least another century. Nevertheless, at least by 1950, Rebel could say for the world community, "We surely no longer need to justify ourselves against the phrase caveat emptor!"218 There thus was no significant opposition to the basic institution of implied warranty of quality incorporated in the CISG or even in the earlier drafts 219

Even as the merchants came to accept being held to general standards of quality, they clearly preferred to confine their potential liability as closely as possible in at least two ways: (1) to limit the types of damages as much as possible and (2) to exercise maximum control over the dispute resolution process. The ideal warranty from the merchant-seller's point of view is one that limits liability to repair or replacement and requires the buyer to return the allegedly defective good or present independent expert testimony promptly in order to corroborate any claim of defect. The exclusion of consequential damages from the aedilician damage remedy gave continental sellers much of the advantage of the first limitation with respect to implied warranty claims.220 Short cutoffs tend to give sellers the

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benefit of the second feature by localizing the dispute to a time period during which corroborative evidence is most likely to be available. That short cutoffs are a grossly overinclusive means to pursue this goal could hardly have concerned the merchant. He was no doubt anxious to maintain full control over the process and would not have been satisfied to trust to the natural skepticism of judges to protect him against lying claimants. In any event, if specially short cutoff rules barred valid claims along with the invalid, that may only have been further reason to favor them, at least during the period before merchants came to favor implied warranties. Historical examples particularly suggestive of these motivations are the extremely short cutoffs sought by merchants, such as (1) the privilege secured by Hanseatic merchants to sell goods in Spain subject to a three-day acceptance/notice rule,221 (2) the customs of the French provinces shortening the Roman limitation period of six months,222 and (3) the development of very short notice periods as a matter of custom among German merchants.223 The merchant's desire to insist on corroboration is evident in the 1808 Territorial Code for Baden224 and in the practice of the modern French commercial courts.225

The general pattern in which new cutoff rules have been adopted at the same time that buyers' warranty rights have been expanded also suggests that cutoff rules have been imposed, not (or at least not only) to protect sellers from potential harm due to delay in learning of claims or to secure to them the planning benefits that might be gained from early warning, but also to protect sellers from the full risk of liability under the warranty of quality. The pattern suggests that new cutoff rules have played a counterbalancing role, providing a little new protection for commercial sellers as they are exposed to new liability for the warranty of quality. Thus, for example, the Germans adopted a notice rule concomitantly with reception of the Roman warranty law. The French have adopted an acceptance rule for business buyers while strengthening-perhaps too rigidly-the commercial seller's warranty against hidden defects. In the common law, Williston played a variation on the pattern for the Untied States sales law by adopting the notice rule to replace an acceptance rule while expanding the scope of the basic warranty protection.

By the beginning of the nineteenth century when the concept of the implied warranty of quality was fully accepted in France and

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Germany, the legal institutions of the short limitations period and the notice rule were also well entrenched in Germany and France (the latter country having in effect combined the two in the bref ddlai rule). The only objections to the status quo came from those concerned to represent consumer interests. Thus the German codification debates in the nineteenth century show business interests-to the extent they are visible at all, as for example in the debates over the ADHGB and the BG~in a holding action, acquiescing in the basic implied warranty rule but resisting attempts to eliminate the notice rule on behalf of consumer buyers.

B. The I~uence of Conceptual Factors

In contrast to the largely indirect evidence of the politics of cutoff rules, the foregoing history attests clearly to the influence of conceptuals factors. The functional arguments themselves, though they do not withstand rigorous scrutiny, cannot be discounted as factors shaping the evolution of cutoff rules. Undoubtedly their superficial plausibility has persuaded many a law-maker and lawyer in the history of warranty that special cutoff rules are a fair accommodation of buyer and seller interests. However, it is unclear whether functional arguments played much of a role prior to the nineteenth century, by which time most of the cutoff rules were well established. Perhaps they did but our historical records simply have not preserved them. On the other hand, it seems very unlikely that the functional arguments of repose or prejudice would have occurred, for example, to the Roman jurists since they imposed at most the general 30-year limitation period on claims for breach of an express warranty in a stipulatio.226 Nor would a mistaken belief in functional arguments explain why the merchants' customary notice rule at first applied only to sales at a distance, leaving sellers exposed to the prejudice of delayed claims for latent defects in sales in place.227 In addition to the functional arguments, however, the foregoing history suggests the perduring influence of two ancient ideas, not functional arguments for cutoff rules, but rather ways of looking at, in the first case, the concept of implied warranty, and in the second case, the sales transaction itself.

The first idea is a profound doubt about imposing full contractual liability on sellers for breach of an implied warranty of quality.

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It seems to be more than simply an artifact of the political opposition of sellers. It is hard to find an issue in civil law that has produced more scholarly discussion than the doctrinal basis for implied warranty liability.228 Common law scholars have also manifested difficulty in reconciling liability based on an implied warranty of quality with other contractual liability that is typically the product of express or tacit agreement.229 Rather, implied warranties of quality apparently have struck lawyers in repeated generations as too clear an example of direct government regulation of the market, as indeed they were under the aediles' edict and again in the medieval period in Western Europe, to qualify as the product of even a "constructive" agreement.

Prominent features of the history of warranty mirror this doubt. The civil law Systems from Roman times have tended to compromise on the remedy by refusing~to grant consequential damages for innocent breach of implied warranties. The common law, going through a period of even greater hostility to all warranties in the nineteenth century, especially in the United States, elevated caveat emptor to the status of a doctrine, refused to recognize implied warranties, and straitjacketed the institution of express warranty with rigorous form requirements. It seems likely that lingering doubt about creating full contractual liability for implied warranties has facilitated the acceptance of special cutoff rules, constituting as they do a limited form of caveat emptor.

The other idea that plays a persistent role in this history is a belief that delivery should constitute an event of great importance for the determination of the parties' rights. The idea is rooted in the ancient view of sales transactions as involving goods present at the negotiation of the contract of sale. The Roman sales contract (emptio venditio) was limited to sales in place, as was most trade in the medieval period. In such transactions, buyers can protect themselves against apparent defects by inspecting the goods before they agree to buy. The Roman implied warranty was therefore limited to latent defects, the only type of defect against which buyers could not protect themselves in sales in place, and the medieval merchants turned that rule around by developing a custom that the buyer had a "duty" to inspect the goods for apparent defects.

F

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As trade conditions improved at the end of the Middle Ages and the beginning of the modern era and sales at a distance became possible and even predominant, European lawyers applied the Roman law of warranty to the new kind of sales by analogizing the buyer's acceptance in a sale at a distance to the buyer's acceptance of goods in a sale in place. This analogy appears to have been particularly important in the early development of the notice rule in Germany.2~~ The analogy reappeared in new dress in the ratification argument that ultimately left its imprint on the form of the notice rule in the German Commercial Code, was more recently used by Williston in the United States, and currently appears as the justification for the new French acceptance rule for apparent defects. The ratification argument is clearly no longer based on the premise that sales are perforce sales in place. In this new form of the idea, the buyer's duty to inspect and complain arises from the assumption that the buyer should have duties at delivery to match the seller's duty to deliver conforming goods. The bridge between the two conceptions is the 4'duty" to inspect, so sharply emphasized by the civil law.231 Delivery and acceptance are seen as marking a critical point, not just because of a perceived functional need to make it important for the protection of the seller, but because delivery and acceptance define the first point at which the buyer can be required to assume duties with respect to the goods. The determination of the buyer's rights is conceptualized as a process that continues beyond delivery instead of being fixed at contract formation. The planning function of contract is therefore sacrificed to some extent for a vision of the contract as an "antagonistic cooperation,"232 a kind of game in which rights to quality negotiated at contract formation remain at risk unless and until the buyer fulfills duties of prompt notice and complaint. Although functional arguments for the cutoff rules have largely supplanted the ratification argument in Germany and the

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United States, echoes of the argument sound from time to time, as in the argument that good faith requires a buyer to give timely notice,233 which also can be explained only on the basis of the assumption that delivery and acceptance should mark a critical point in the determination of buyer's rights to a damage remedy. In France, the ratification argument still plays a central role because it is seen as offering a way of rationalizing the current, chaotic law of warranty in the Code civil.234

C. Relationship between Political and Conceptual Theses

Although the political and conceptual theses are alternative explanations for the prevalence of special cutoff rules, they need not be viewed as mutually exclusive. They are, rather, mutually reinforcing. If commercial buyers' interests have tended to be underrepresented in the processes by which commercial law has been formed, that tendency has simply prevented the development of sufficient political pressure to challenge the entrenched conception that the buyer should have a duty of prompt inspection, and the absence of challenge has led to the further entrenchment of the buyer's duty to inspect.

But the two explanations are more than reinforcing. They are each necessary to account for the whole history. For example, the political explanation seems a dubious way to explain why Williston,

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drafting the Uniform Sales Act essentially by himself, felt it necessary to engraft a notice rule onto the basic model he had taken from the British Sale of Goods Act. It is difficult not to see his notice rule rather as a reflexive balancing of the scales in favor of sellers to compensate for the very considerable strengthening Williston achieved of sales warranties in favor of buyers. Similarly, it is very unlikely that the development of the special short limitations periods for the aedilician remedies can be attributed to the political influence of salve dealers,235 or that the development of the notice rule can be attributed entirely to seller dominance in view of the fact that it was at first applied only to sales at a distance, leaving sellers exposed to claims for latent defects in sales in place.238 Finally, most of the French development recounted here has been in the hands of the courts and therefore removed from at least direct political influences.

On the other hand, weak functional arguments, reinforced by conceptual doubts about warranty and a predisposition to view the buyer's acceptance as a determinative event, hardly seem adequate to explain the persistence over at least a millennium and across so many different cultures of a pattern of discrimination against buyers. Even if traditional conceptualizations can tyrannize thinking, eventually it is to be expected that buyers' self-interest would lead them to challenge the arguments and habits of thought upon which the cutoffs are based. This is indeed what appears to have happened during the negotiation of the CISG. Both the conceptual and the political explanations are thus needed to explain this history, and because they mutually reinforce their effect of suppressing commercial buyer resistance to short cutoffs, they together provide a reasonably satisfactory explanation for the development of short cutoff rules.

CONCLUSION

Short cutoff rules perpetuate today a limited but very widespread form of caveat emptor by creating an early point of risk for buyers, especially commercial buyers, with respect to warranties of quality. Comparative study of this problem strengthens this conclusion because the degree of discrimination against buyer interests through short cutoff rules is so much greater in the civil law than in the common law.

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It seems clear that the development of these cutoff rules has to be understood within the context of the overall development of warranty law, which started from a position strongly biased in favor of sellers. Each stage of the overall development reflects a different balancing of buyer and seller interests. The foregoing history suggests that cutoff rules have played a key role in that process by providing a way of redressing the balance in favor of seller interests as buyer interests received better protection through strengthened warranty rights. This counterbalancing role attests to the political dominance of seller interests, which Part I of this article sought to explain.

What is perhaps more surprising than the support the full history of cutoffs provides for the political thesis is the evidence that conceptual factors separate and apart from the inadequate functional arguments seem to have played an important role in promoting the development of special cutoff rule~. The importance of these nonfunctional conceptual factors should neither be understated nor overstated. Merely to articulate them deprives them of much of their power. For example, the legitimacy of basic quality warranties now appears to be well established throughout the world; no one suggests today that special cutoffs are justified by doubts about the institution of warranty. Nor does any one assume today that the bulk of sales transactions are sales in place, for which an inspection rule makes sense as part of the rules of contract formation. Nevertheless, the direct successor of the ancient conceptualization of the sales transaction is the ratification argument which assumes that buyers in sales at a distance should also have a duty of prompt inspection, and that conceptualization is embodied in Article 377 of the German Commercial Code and in Article 38 of the CISG and still advocated with surprising vociferousness, especially by French~7 and German~ jurists.239

The undeniable evidence presented in this history that ossified

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thoughtways have played a role in the development of cutoff rules, however attenuated that role may be, especially today, raises an interesting possibility. Lawyers have always sought to hone their skills of formulating and critiquing what purport to be principled functional arguments for legal rules. We have been learning, with help from the social sciences and movements like Legal Realism and Critical Legal Studies, to understand law as the product of political conflict among the affected interests. But on how many legal issues have our muddled powers of ratiocination been trammeled by conceptual limitations inherited from an earlier age?

The evolution of law seems to be more complex a phenomenon than is suggested by political interest analysis or functional argument alone. This consideration suggests the continuing utility of historical studies that pay particular attention to both the arguments advanced to rationalize particular legal hiles or institutions as they developed and to the economic and social contexts in which they developed. These kinds of studies may give us the perspective from which to identify conceptual barriers and free our thinking from the power of unconsciously assumed limitations. They may also teach us something about the evolution of human thought. At a minimum, they counsel caution and humility with respect to our current efforts at functional and political analysis.