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Reproduced with the permission of Oceana Publications

excerpt from

INTERNATIONAL SALES LAW

United Nations Convention on Contracts for the International Sale of Goods

Convention on the Limitation Period in the International Sale of Goods

Commentary by
Prof. Dr. jur. Dr. sc. oec. Fritz Enderlein
Prof. Dr. jur. Dr. sc. oec. Dietrich Maskow

Oceana Publications, 1992

Article 38 [Examination of the goods]

[TEXT OF THE UNIFORM LAW]

(1) The buyer must examine the goods, or cause them to be examined [1], within as short a period [2] as is practicable in the circumstances [3].

(2) If the contract involves carriage of the goods [4], examination may be deferred [5] until after the goods have arrived at their destination.

(3) If the goods are redirected in transit or redispatched [6] by the buyer without a reasonable opportunity for examination by him and at the time of the conclusion of the contract [7] the seller knew or ought to have known [8] of the possibility of such redirection or redispatch, examination may be deferred [9] until after the goods have arrived at the new destination.

[WORDS AND PHRASES, CONCEPTS

1. buyer's examination of goods; distinction between apparent defects and latent defects
2. length of period within which goods must be examined
3. examination must be within as short a period as is practicable in the circumstances
4. cases in which contract involves carriage of the goods
5. cases in which examination may be deferred
6. goods redirected in transit or redispatched
7. significance of at the time of the conclusion of the contract
8. seller knew or ought to have known
9. conditions for deferral of examination ]

[COMMENTARY]

[1] [buyer's examination of goods; distinction between apparent defects and latent defects]

This article stipulates an obligation of the buyer to examine the goods and, therefore, de facto does not belong under the chapter Obligations of the seller.

From the context of Articles 38 and 39 it can be seen that it is not really an "obligation" of the buyer, but rather a burden to examine the goods within a short time. If the buyer fails to do so, he does not commit a breach of contract (Bianca/BB, 297). If he does not comply with his obligation to examine the goods the buyer may lose (c. Articles 39 and 44) his rights vis-a-vis the seller that would devolve from a lack of conformity. It is, however, decisive for retaining his rights that he gives notice of a lack of conformity; the examination only serves to prepare such a notice. The duty to examine the goods also applies to an aliud (Huber, 483 fol; Herber, 28; Schlechtriem, 54, 59; Welser/Doralt, 111).

The purpose of the examination of the goods is to determine whether or not the goods are in conformity with the contract. The goods must be examined with care and skill. [page 154]

The way in which the examination is performed is frequently agreed between the parties, in particular in the case of machines and equipment, e.g. operation and performance tests, and depends primarily on the category of goods. The parties may, for instance, agree on a mathematical and statistical quality check and prescribe the use of specific examination or analysis proceedings. There may already exist specific usages between them. In general, customary methods of examination have emerged for certain branches of trade, which have to be observed (individual examination, spot checks; c. Article 9).

The buyer must examine the goods in a way that is reasonable according to the nature of the goods, their quantity, their packing and all other relevant circumstances. The buyer, therefore, is not bound to undertake an examination involving a complex technological analysis. When the goods are too complex or too numerous, the buyer is neither bound to undertake a thorough examination of every single good nor of every single part (Bianca/BB, 298). An examination in general only uncovers apparent defects. While the CISG does not use the terms "apparent" and "latent" defects, it can be deduced from the rule under Article 39 that a distinction is made between them.

Pursuant to Article 38, paragraph 4, ULIS, the methods and modalities of examination follow from the laws that govern and usages that are customary at the place of examination. Even though the CISG does not provide for that, one can often assume that this has impliedly been agreed (see Schlechtriem, 59).

The buyer does not have to undertake the examination himself; he may instruct a third party to do so. Impartial controlling organizations are frequently used (compare Handbuch 3, paragraph 8.3., 375 fol).

[2] [length of period within which goods must be examined]

The length of the period within which the goods must be examined depends on the circumstances of each case. For this reason, that period was not determined in days. This short period of time is based on the principle of reasonableness. The buyer must examine the goods as soon as this is reasonably possible. The buyer has to act with reasonable speed. Generally, it can be said that goods of sophisticated technology or of complex composition require a longer time to be examined. Impediments relating personally to the buyer or to his employees are not relevant. A delay in examining the goods maybe justified only when it is due to general and objective impediments, e.g. a general strike (Bianca/BB, 298). [page 155]

The examination within a reasonably short time is decisive for determining when the period begins during which notice of a lack of conformity is to be given (for Article 39, paragraph 1 refers to the moment when the buyer has discovered or ought to have discovered it).

In the case of early delivery, that period only commences with the date set for delivery and/or not before the beginning of a period for delivery (Article 33), except when there was agreement on such early delivery (c. Article 37, note 2, and Article 52).

[3] [examination must be within as short a period as is practicable in the circumstances]

The provision refers to objective situations and factors influencing the examination's length (Bianca/BB, 299). Circumstances that have to be taken account of include the place where the goods are at the moment the risk passes (c. Article 36, paragraph 1, and Article 66 fol) and the nature of the goods, i.e. single pieces, mass-produced articles,

perishable goods, consumer goods. An example given by Honnold (276) relates to gas canisters, the content of which can be examined only when using the gas. Those circumstances further include how the goods are packed, e.g. whether the interior packaging remains closed until it reaches the final user; whether the goods are used by the buyer himself or are resold by him; the technical facilities of the buyer to examine them (O.R. 34); and finally, the practices and usages that have emerged (c. Article 9).

If the goods are resold (c. note 3) they can be examined by the repurchaser, who, however, has to do so equally within a reasonably short time. If the new buyer fails to examine the goods promptly, he and the original buyer lose the right to claim a lack of conformity (Bianca/BB, 297).

[4] [cases in which contract involves carriage of the goods]

Paragraph 2 also applies when the buyer arranges for carriage but does not carry the goods himself. In this case, the carrier acts only as the agent who has the goods transported from the seller to the buyer. The situation is different when the handing over of the goods to the carrier constitutes delivery to the buyer and the carrier receives the goods as agent of the latter (Bianca/BB, 299). Then it is his duty to examine them.

[5] [cases in which examination may be deferred]

This is generally the standard case in the international sale of goods, which was not considered in ULIS. Hence the CISG better meets the requirements of commercial practice (Honnold, 275). An examination of the goods when passing a border, or when transferred over the deck rail of a ship, in general is not possible and not necessary. However, should disputes arise often over whether defects that are discovered when the goods are received occurred during transportation and before or after the risk had passed, it is recommendable [page 156] to call in a controlling organization which should examine the goods at the place and the date of risk passing.

[6] [goods redirected or redispatched]

This provision covers two different situations: on the one hand, the buyer himself; at the place of performance, is responsible for redispatch to the place of destination, and, on the other, the buyer resells the goods without receiving them first. But even if he receives the goods, e.g. 1,000 TV sets, and resells them from his stocks he is not obligated to open each wrapping and to examine each individual TV set. In this case it is customary that the buyer undertakes only spot checks (c. note 1).

[7] [significance of at the time of the conclusion of the contract]

A redirection in transit or a redispatch must be taken into consideration when the contract is concluded. It is not up to the buyer to postpone at his discretion the examination of the goods and to give notice to the seller of an unexpected change in their original destination (Bianca/BB, 301). The possibility that goods are redirected or redispatched is not related to what abstractly could happen but rather to a foreseeable event. The seller must face this possibility when the buyer has expressly mentioned it or when it results from the circumstances. The seller, however, does not have to consider the possibility of a further redirection or redispatch if it was not expressly mentioned to him (Blanca/BB, 301). (It must be seen from the contract whether a redispatch to third countries is admissible. Compare also Article 42, paragraph 1, subpara. (a).)

Redirection or redispatch and resale are not identical. Except for retail trade, a resale normally involves a redispatch of the goods (Bianca/BB, 302).

[8] [seller knew or ought to have known]

That the seller knew or ought to have known is required because by deferring the examination he might be confronted with a notice of non-conformity at a much later date. The seller has to reckon with the possibility of a resale of the goods whenever the buyer is a trading company.

[9] [conditions for deferral of examination]

Two conditions are required for a deferral of an examination: (a) the buyer had previously no reasonable opportunity to examine the goods; and (b) the seller knew or ought to have known of the possibility of such redirection or redispatch (Bianca/BB, 300). [page 157]

Whether or not the buyer has a reasonable opportunity to examine the goods depends on how long the goods stay with him before their redispatch. Generally a quick redispatch of the goods does not allow the buyer to examine the goods. Another relevant circumstance is the way the goods are contained or packaged. If the examination is not possible without removing or breaking the vessels, boxes, wrappers, etc., necessary to protect and transport the goods, it is normally assumed that the examination will be effected at the place of their new destination. The same is understood when the examination of the goods requires the removing of the trademark attesting the authenticity of the product (Bianca/BB, 300). [page 158]

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Pace Law School Institute of International Commercial Law - Last updated August 14, 2002
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