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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 40 [Seller's knowledge of lack of conformity]

[TEXT OF THE UNIFORM LAW]

The seller is not entitled to rely [4] on the provisions of articles 38 and 39 if the lack of conformity relates to facts of which he knew [2] or could not have been unaware [3] and which he did not disclose [1] to the buyer.

[WORDS AND PHRASES, CONCEPTS

1. seller's obligation to disclose
2. facts of which he knew or could not have been unaware
3. knew or could not have been unaware: definition; cross-reference
4. seller's awareness of rights and claims of third parties: contrast with language of Art. 43(2) ]

[COMMENTARY]

[1] [seller's obligation to disclose]

If the seller has not disclosed to the buyer non-conformity of the goods, he can neither require the latter to examine the goods within a reasonably short time (Article 38) nor can he demand from him to give notice of such defects (Article 39). In this case the buyer retains his rights devolving from a lack of conformity of the goods, even if he fails to examine the goods and to give notice. This also applies to the maximum period mentioned under Article 39, paragraph 2 (it being unlikely, however, that the seller knows of latent defects which become apparent only after two years).

The seller has thus an obligation to disclose defects, which is based on the principle of good faith (Article 7, paragraph 1). (Irrespective of this situation, domestic rules governing fraud may apply here, see Honnold, 283.)

The facts to be communicated not only include the qualities of the goods sold, but also the conditions which could influence or alter the goods once they have left the seller's area of competence (Schlechtriem,60).

By contrast to many domestic legal systems the CISG favours the buyer; it already suffices that the seller could not have ignored the lack of conformity. Under Swiss law, however, the buyer has to prove that the seller has cunningly mislead him (Widmer/Lausanne, 106). Also under 377, section 5 of the German Commercial Code the seller must have cunningly hidden the defect from the buyer. [page 163]

[2] [facts of which he knew or could not have been unaware]

What is referred to here is not only the knowledge of the seller personally, but also of his employees. Not, however, that of independent companies which he employs to fulfil his contract (Bydlinski/Doralt, 138), like-subsuppliers and carriers (Binder/Doralt, 146 fol, leaves open whether he would include their knowledge). Nothing is said about the time when the seller should have known or should not have been unaware of the lack of conformity (in contrast to Article 42, paragraph 1 where reference is made to the date of the conclusion of the contract). From the context of Articles 38 and 39 it can be concluded, however, that like in the case of the Articles mentioned above, the time of the handing over of the goods to the buyer is decisive (see also Article 40 ULIS, Stumpf/Dölle, 291).

[3] [knew or could not have been unaware: definition; cross-reference]

Compare Article 35, note 20.

The wording "could not have been unaware" is defined by Huber (482) as being a little bit less than cunning and a little bit more than gross negligence; others treat it as being equivalent to gross negligence (Schlechtriem, 60; Welser/Doralt, 113). In this context it is felt that efforts are made to protect the seller following domestic law. The wording of the CISG itself would, in our view, include simple negligence, which could also be described as a violation of customary care in trade.

[4] [seller's awareness of rights and claims of third parties: contrast with language of Art. 43(2)]

The consequence of the seller being aware of the rights and claims of third parties is contained in Article 43, paragraph 2 where, in contrast to Article 40, it is assumed that the seller has positive knowledge of the non-conformity. [page 164]

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