Source: http://www.unilex.info/case.cfm?pid=1&do=case&id=241&step=Abstract
Timestamp: 2013-05-19 12:43:08
Document Index: 82984474

Matched Legal Cases: ['Art. 3', 'Art. 38', 'Art. 39', 'Art. 38', 'Art. 38', 'Art. 38', 'Art. 38', 'Art. 39']

An Italian seller delivered a certain number of medical devices to a Swiss buyer, with whom it had an exclusive distributorship contract. The goods had been sent in boxes in which each single item had been wrapped in a sterile plastic bag. The buyer immediately resold a small number of these devices to a Swiss hospital. After discovering some defects in the goods, the hospital returned them to the buyer. The buyer gave the seller notice of non-conformity only three months and a half after delivery and refused to pay the purchase price. The seller commenced an action to recover the contract price.
The Court first analyzed the nature of the relationship between the two parties. It came to the conclusion that the distributorship contract was a mixed contract with elements of agency and elements of sale. Applying Art. 3(2) CISG, the Court noted that service contracts like distributorship contracts are generally excluded from the scope of CISG. However, in the Court's opinion, single sales carried out in execution of service contracts such as the one in the case at hand (the Court also mentioned similar contracts such as franchising and marketing contracts) are governed by CISG.
The Court held that the buyer had lost its right to rely on a lack of conformity because it had not made a timely examination of the goods (Art. 38(1) CISG), nor had it given to the seller timely notice of the non-conformity (Art. 39 CISG). The Court disregarded all the buyer's defenses, which were the following: a) that according to Art. 38(3) CISG it had a right to defer examination, because it was not the final buyer; b) that it could not have examined the goods within as short a period as was practicable in the circumstances (Art. 38(1) CISG) because the items had been packed in boxes and wrapped in sterile plastic bags; therefore, if it had opened the boxes and the plastic bags, the devices would not have been suitable for resale.
As to the first argument, the Court noted that the buyer could not have deferred examination because it had immediately redispatched only a small quantity of the delivered goods, keeping the rest in its warehouse for a certain period of time. According to Art. 38(3) CISG, examination can be deferred only if all the goods to be delivered are redirected or redispatched, and even in that case, only if the buyer does not have a real opportunity to examine them. Therefore, the Court held that the buyer should have examined them as from the time of delivery.
With respect to the buyer's second argument, the Court noted that the determination of the time for examination (i.e. within as short a period as is practicable in the circumstances after delivery) provided in Art. 38(1) CISG) must indeed take into account the nature of the goods, the quantity, the kind of wrapping and all other relevant circumstances. Given the circumstances of the case the Court came to the conclusion that the time period of ten days would have been adequate and that a spot check would have been enough. On the one hand, it held that the devices could have been easily removed from the boxes without being damaged, while on the other hand the transparent wrapping made it possible to discover defects in the goods.
As to the time of notice of non-conformity, which under Art. 39 CISG must be given within a reasonable time after discovery of the defects, the Court, in order to promote a uniform interpretation of the Convention, tried to strike a balance between the solutions provided in the German legal system on the one hand and both the Anglo-American and Dutch legal systems on the other. In view of the fact that in the former the time for notice is generally quite short (i.e. eight days after the discovery of defects), while in the latter two notice may be given within a longer period of time (i.e. even after several months), the Court decided that one month after delivery was a good compromise between the two approaches.