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Published in J. Herbots editor / R. Blanpain general editor, International Encyclopaedia of Laws - Contracts, Suppl. 29 (December 2000) 1-192. Reproduced with permission of the publisher Kluwer Law International, The Hague.

[For more current case annotated texts by this author, see Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed. (2003) and Lookofsky, Understanding the CISG in the USA, 2d ed. (2004).]

excerpt from

The 1980 United Nations Convention on Contracts
for the International Sale of Goods

Joseph Lookofsky

Article 38
Examination of Goods

  1. Timely Examination
  2. Nature of Examination
  3. Contract of Carriage: Examination May Be Deferred

1. Timely Examination

186. Obviously, a buyer can first give the seller notice of a given non-conformity at that point in time when the buyer becomes (or ought to become) aware that the non-conformity exists. Usually, this awareness will coincide with the buyer's examination upon delivery, and Article 38 lays down the rules which define the concept of timely examination. [page 102]

Paragraph (1) of Article 38 sets forth the general rule: 'The buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances.'

2. Nature of Examination

187. Article 38(1) describes only the time for buyer's examination, not the intensity thereof. It is to be assumed, however, that this question is a 'matter' which is 'governed' by the Convention, and that the examination required is one which is reasonable in the circumstances, not one which would reveal every possible defect.[l] More generally, the nature of the examination required will depend, inter alia, on international usages in the trade concerned.[2] Arguably, a buyer not having the requisite technical expertise and special equipment could not be expected to effect an examination for hidden defects discoverable only by such technical means,[3] so a middleman who purchases goods in sealed containers would not normally be expected to undertake (or secure) a laboratory analysis of the contents prior to resale.[4]

The developing CISG case law indicates a certain measure of disagreement on this important question, however, and some courts have taken a rather demanding (i.e. seller-friendly) stance as regards the nature of the examination required. In one case, the German buyer of 48 pairs of shoes was held to have lost all remedial rights by failing to undertake a thorough examination at the time of delivery.[5] In another instance, a buyer who gave notice of defects 24 days after delivery of adhesive foil covers lost all remedial rights, since the buyer had not processed a sample immediately upon delivery (which, in the court's view, was 'practicable in the circumstances'); while acknowledging that Articles 38 and 39 are less severe than the corresponding provisions in German domestic law, the court still found that this CISG buyer could have given notice within 10 to 11 days.[6]

1. Regarding 'general principle' requiring reasonable conduct see supra Nos. 79-80.
2. See A/CONF./97/5, Secretariat's Commentary No. 3 to Article 36 of the 1978 Draft Convention. See also infra No. 190-191.
3. See A/CONF./97/5, Secretariat's Commentary No. 3 to Article 36 of the 1978 Draft Convention.
4. See, e.g., the decision of LG Paderborn (Germany), 26 June 1996, No. 7 0147/94, reported [at <http://cisgw3.law.pace.edu/cases/960625g1.html> and] in UNILEX, where seller delivered PVC containing a lower percentage of a certain substance than the percentage agreed in the contract: in this situation, the buyer had not lost its right to rely on the lack of conformity by failing to examine the PVC before receiving customers' complaints, since the defective composition could only be discovered by special chemical analysis which buyer was not bound to have made. Accord: BGH (Supreme Court of Germany), 25 June 1997, NJW 1997, 3311, reported [at <http://www.cisg.law.pace.edu/cisg/text/casecit.html> and] in UNILEX (exact nature of defect first discoverable after processing).
5. Since improper sewing, measurement and poor color quality could not be considered latent defects, the buyer's duty to examine and discover ('discoverable') defects upon delivery was not discharged by a superficial examination of a few (conforming) pairs; consequently, the court held that notice of non-conformity given to the seller 16 days after delivery, when the buyer's customers began to complain of non-conformities not revealed by the prior inspection, was too late. The apparent severity of this particular decision is ameliorated by the fact that the seller had been 'forewarned' by customer complaints concerning a first lot of shoes delivered previously, so he had special reason to promptly and carefully examine all shoes delivered in the second lot. See the decision of LG Stuttgart of 31 August 1989, published in German in IPRax 1990 at 317, reported [at <http://www.cisg.law.pace.edu/cisg/text/casecit.html> and] in UNILEX, and as CLOUT Case 4).
6. See the decision of OLG Karlsruhe (Germany), of 25 June 1997, RIW 1998 pp. 235-237, CLOUT Case 230, also reported [at <http://cisgw3.law.pace.edu/cases/970625g1.html> and] in UNILEX.
[page 103]

3. Contract of Carriage: Examination May Be Deferred

188. As regards a common kind of international sales case, paragraph (2) of Article 38 provides:

'If the contract involves carriage of the goods, examination may be deferred until after the goods have arrived at their destination.'

The main (general) rule in paragraph 1 of Article 38 (discussed in the foregoing sections) applies, inter alia, if the contract 'involves carriage'. In these, as in other cases, the examination is to be effected 'within as short a period as is practicable in the circumstances.'

However, in cases involving carriage, the 'circumstances' will often dictate the application of the special rule in paragraph 2, for in these (carriage) cases, 'examination may be deferred until [as short a period as is practicable in the circumstances] after the goods have arrived'. In other words, inspection is presumed to first become 'practicable' at this point in time.

Article 38(2) is supplemented by a rule which provides for a further extension in some cases where the goods have been redirected in transit or redispatched.[1] [page 104]

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

Pace Law School Institute of International Commercial Law - Last updated April 4, 2005
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