- Supreme Court
- The Australian Wheat Board v. General Company for Silos & Storage SAE
LACK OF CONFORMITY OF GOODS – TIME OF EXAMINATION (ART.38(1)CISG) – SALE INVOLVING CARRIAGE OF GOODS
LACK OF CONFORMITY OF GOODS - TIME OF NOTICE (ART. 39(1) CISG) -REASONABLENESS DEPENDS ON CIRCUMSTANCES OF CASE AND NATURE OF GOODS
BUYER'S OBLIGATION TO GIVE SELLER NOTICE OF LACK OF CONFORMITY OF GOODS - TIME OF NOTICE ( ART. 39 CISG)
An Australian seller entered into a contract with an Egyptian buyer for the sale of wheat. Upon arrival at the port in Egypt, the local authorities prohibited the goods to enter the country as they were found to contain a higher quantity of Saponaria seeds than that allowed by Egyptian health standards. The buyer then initiated a lawsuit against the seller seeking damages.
The Court of first instance rejected the claim. On appeal, the Court reversed the decision, and, subsequently, the seller challenged the appellate decision before the Supreme Court.
The Supreme Court held that the contract between the parties was governed by CISG.
As to the merits, the Supreme Court recalled that, according to Art. 38(2) CISG, if the contract of sale implies carriage of goods, the inspection can be deferred until the goods have arrived at the place of destination. Furthermore, under Art. 39 CISG, the buyer is obliged to notify the seller of any lack of conformity within a reasonable time from the date it has discovered, or ought to have discovered, the defects and, in any case, not later than two years from delivery. By referring to the U.N. Convention on the Use of Electronic Communications in International Contracts, the Court also noted that notice by the buyer could be given by any means of instant communication, including electronic communications.
As to the notion of “reasonable time” in Art. 39(1) CISG, the Court pointed out that it is a flexible time standard whose length depends on the circumstances of the individual case (the kind of the goods involved, the nature of the defects, the buyer’s experience and skills, etc.). The court also reasoned that said notion must be construed with due regard to the applicable customs of the trade sector concerned.
In conclusion, the Court remanded the case to the appellate Court for further consideration, as it found that the lower tribunal had failed to ascertain whether the buyer had promptly notified the lack of conformity to the seller.
- available at the University of Pace Law website, https://iicl.law.pace.edu/}}