Cite as Bianca, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 284-289. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.
Cesare Massimo Bianca
1. History of the provision
2. Meaning and purpose of the provision
3. Problems concerning the provision
(1) The seller is liable in accordance with the contract and this Convention for any lack of conformity which exists at the time when the risk passes to the buyer, even though the lack of conformity becomes apparent only after that time.
(2) The seller is also liable for any lack of conformity which occurs after the time indicated in the preceding paragraph and which is due to a breach of any of his obligations, including a breach of any guarantee that for a period of time the goods will remain fit for their ordinary purpose or for some particular purpose or will retain specified qualities or characteristics.
1. History of the provision
1.1. - Article 36 deals with the fundamental distinction between a lack of conformity of the goods affecting the seller's performance and losses or deteriorations as risks resting on the buyer.
The Convention has its direct precedent in Article 35 of ULIS, which stated that whether the goods are in conformity with the contract «shall be determined by their condition at the time when the risk passes», and that the seller shall be liable for the consequence of any lack of conformity occuring after that time «if it was due to an act of the seller or of a person for whose conduct he is responsible».
Article 36, however, clarifies and enlarges the extent of the seller's liability for the lack of conformity occurring after the risk has passed. Thus, the seller is liable not only if the lack of conformity is due to his act or one of his agents (as stated by ULIS) but, in general, when it is due to a breach of any of his obligations.
Article 36 makes clear, further, that if the lack of conformity exists at the time when the risk passes, the seller is liable even if it becomes apparent after that time. [page 284]
Thirdly, Article 36 adds a provision concerning the seller's liability where he has guaranteed the duration of the goods.
The ULIS specified that if the risk did not pass because of a declaration of avoidance of the contract or of a demand for other goods in replacement, the conformity of the goods had to be ascertained with regard to the time when risk «would have passed». This statement was obviously superfluous and consequently it has not been repeated in the Convention.
1.2. - The final text of Article 36 remains substantially unchanged from the UNCITRAL Draft Convention. The only notable difference is in paragraph (2), and is the result of an amendment orally suggested by the delegation from Greece and later approved. The proposal suppressed the term «express» that referred to the seller's guarantee with regard to the lasting of the goods (A/Conf.97/C.1.L.147). The delegation from Pakistan had previously proposed to specify that the seller is liable also in case of an implied warranty; but the amendment was rejected (see § 3.1., infra).
2. Meaning and purpose of the provision
2.1. - Article 36 is clearly intended to distinguish between buyer's risks and lack of conformity.
Article 36(1) states that the seller is liable for a lack of conformity existing at the time of the passage of risk even if it becomes apparent afterwards. The Convention makes it clear, here, that the defects existing at the time when the risk passes to the buyer amount always to a lack of conformity. The fact that the defects show themselves later is not important, because what becomes apparent is a condition already affecting the goods.
According to Article 38 the buyer must examine the goods promptly in order to ascertain their conformity with the contract. The seller's liability for a lack of conformity which becomes evident later is therefore to refer to those defects which could not have been detected through a normal examination.
The defects may affect the goods to a full extent at the moment of the risk's passage, though their discovery requires a special examination. It is also possible that what later becomes [page 285] apparent is the development of a condition already existing at the time of the risk's passage. In this case it must be ascertained if the original condition of the goods were compatible with the requirement of their normal fitness. For example, when edible goods become rotten after their delivery, they may have begun to rot at the time of the risk's passage or have a defect (for instance, the absence of a normal preservative ingredient) causing them to rot unusually quickly (see § 3.1., infra).
2.2. - Article 36(2) lays down the general principle that whatever affects the goods after the passage of the risk involves the seller's liability if it is due to his breach of an obligation. This principle marks the fundamental delimitation of the risk rule.
According to the risk rule, after the passage of the risk the events affecting the goods (deterioration, destruction, theft, etc.), are chances of the buyer. The underlying idea is that what occurs after that time to the goods is the buyer's problem, no longer concerning the seller. But the risk rule obviously cannot exempt the seller from the consequences of his breach of contract.
The limit of the risk rule, stressed in Article 36, emerges also from Article 66, which states that the buyer must bear the loss of or damage to the goods after the risk has passed to him, unless the loss or damage is due to an act or omission of the seller.
2.3. - A lack of conformity occurring after the risk has passed to the buyer is due to a breach of contract when the goods show later defects already existing in a hidden or embryonic form. This first case is dealt with by sub-paragraph (1).
It is also possible that the goods, though originally conforming with the contract, undergo a deterioration or a loss due to the breach of a collateral seller's obligation. The seller, for example, may not have sent the goods with the proper carrier, or may not have packaged them in the proper manner, or may not have given the necessary warnings as to how to handle them.
2.4. - The seller's liability is confirmed by the Convention when there is a breach of any guarantee that for some time the goods will remain fit for their purposes or will retain some specified qualities or characteristics. [page 286]
When the goods fail to conform with such a guarantee, the seller is per se liable unless he gives evidence that the failure has been caused by an improper handling of the goods. An improper handling has to be seen when the goods are used or held without the caution and skill normally or specially required, or without observing the warnings or following the instructions given by the seller.
It is not important who improperly handled the goods, provided that it was not a person for whose conduct the seller is responsible.
3. Problems concerning the provision
3.1. - A first question concerns the burden of proof. It is indeed disputed whether the seller must prove that the goods conformed with the contract when the risk passed to the buyer (HUBER, UNCITRAL-Entwurf, 479) or if the buyer must show that the goods were already non-conforming (WELSER, Die Vertragsverletzung des Verkäufers, 110).
The question could be seen as a matter of procedure to be left to the courts to solve (see SCHLECHTRIEM, UN-Kaufrecht, 58; Uniform Sales Law, 68, who seems not to disagree with the view expressed by the delegation from the United Kingdom during the discussion concerning the notice of non-conformity: «The United States representative had mentioned difficulties of providing evidence to show that the goods delivered had been in conformity with the contract. That problem could be safely left to the courts to decide» (A/Conf.97/C.1/SR/21)).
According to a different opinion, however, the question does not belong to the procedural law but to the substantive law of sales, and should be governed by the Convention (see HUBER, cited supra). In favour of this opinion it may be argued that it is up to the judges to decide whether evidence has been sufficiently given but not to decide whether the buyer must prove the non-conformity of the goods. The burden of proof directly affects the contractual position of the parties and the question cannot be devolved to different domestic laws without compromising the uniform application of the Convention.
The question whether the buyer has the burden of proving that the goods were already defective when their risk passed, to [page 287] him, must be resolved in accordance with the generally acknowledged principle of international trade practice that requires the complaining party to prove that the other party has not properly performed his obligations (see also § 2-607(4) of the United States Uniform Commercial Code: «the burden is on the buyer to establish any breach with respect to the goods accepted»). Accordingly, if the buyer assumes that the defects of the goods amount to a breach of contract by the seller, he has to give evidence of the fact involving such a breach; i.e., that the goods did not conform with the contract at the time of the passage of the risk.
However, when the lack of conformity affects the nature or the structure of the goods it is self-evident that the defect was already inherent at the moment of their delivery. Also the breach of contract is self-evident when the lack of conformity is the result of a natural process which requires more time than the time elapsed from the moment of the passage of the risk to the buyer (about the problem of the endurance of the goods as an ordinary quality of theirs, see § 3.2., infra).
3.2. - Article 36(2) makes the seller liable for any lack of conformity occurring after the passage of the risk and which is due to a breach of any of his obligations «including a breach of any guarantee that for a period of time the goods will remain fit for their ordinary purpose or for some particular purpose or will retain specified qualities or characteristics». The paragraph does not specify whether the seller is also liable for the breach of an implied guarantee concerning the duration of the goods. An amendment was submitted to clarify this point. The amendment, however, was rejected and the word «express» was also deleted from the Draft text (see § 1.2., supra).
Accordingly, the seller's liability may not be limited only to the case where there is an express guarantee concerning the lasting of the goods.
But the real problem is whether the buyer is normally entitled to goods having a proper duration; i.e., whether the fitness of the goods for their ordinary purposes includes a certain durability. According to the Canadian amendment, later withdrawn, the Convention should have made clear that goods are reasonably fit for their ordinary purposes when they «remain [page 288] fit or perform satisfactorily ... for a reasonable length of time having regard to all the circumstances» (see the comment on Article 35, § 1.5., supra).
The withdrawal of the amendment leaves unsettled a question, which is answered differently in various national systems. The negative solution requires a contractual provision in order to make the seller liable for short duration because durability is a special qualify of the goods.
The prevalent solution, instead, favours the inclusion of a reasonable duration among the ordinary qualities of the goods (see, for instance, the apposite statutory provision of the 1965 New Contract Law of the Socialist Economy of the Democratic Republic of Germany (§ 41)).
The latter solution is in accordance with the Convention. The buyer surely needs an express guarantee if he wants to rely on a definite duration of the goods. But even without an express guarantee the buyer may expect the goods to last for a normal time. Goods cannot be said fit for their normal purposes, indeed, when they endure only for an exceptionally short period. An exceptionally short duration is not a question of poor quality. It means, rather, that the goods do not meet what may be considered a reasonable expectation of the buyer according to the Convention standards of fairness. [page 289]