International sale of goods: buyer be aware of your inspection and notification duty!

Recently, the Dutch Supreme Court considered a case regarding tomatoes. The facts in the matter were as follows:

The Dutch claimant had purchased tomato cargo from Primar in France. Primar had delivered these tomatoes from Morocco via Perpignan, France, to the claimant in the Netherlands. Subsequently, the claimant had shipped the tomatoes to its customer in Moscow, Russia. Upon arrival in Moscow, the customer rejected the tomatoes because of a germ infection. In an event such as this, which party do you suppose should bear the ensuing risk and damages?

It appears from the facts of the case that the tomatoes were not of satisfactory quality upon their arrival in Moscow. However, one could question whether such a defect already existed upon arrival in the Netherlands, since that is the place where Primar had delivered the tomatoes and where the risk had passed on to the claimant. As of that moment, the claimant is responsible for the conformity of the goods. It must then be assessed whether the cause of the lack of conformity of the tomatoes can be traced back to a defect that already existed before delivery in the Netherlands.

The court of appeal has not ruled on this issue yet. Although it is not clear whether the claimant shipped the tomatoes to Moscow in a proper manner (cooled and under the right temperature etc.), the court did rule that the damage will be at the risk and expense of the claimant. The Supreme Court annulled this ruling, since the court of appeal did not answer the question as to whether or not the defect already existed at the moment of delivery in the Netherlands. Another court of appeal will now have to rule on that issue.

This case shows how important the inspection of the goods is at the moment the risk passes from the seller to the buyer. It also emphasizes the importance of notifying the seller in case of lack of conformity of the goods. Especially when it comes to contracts for the international sale of goods. In such case, in principle, the United Nations Convention on Contracts for the International Sale of Goods (1980) (“CISG”) applies, if the contracting parties have their place of business in different states and they are a member of the convention, such as the Netherlands and France in the tomato case.

On the basis of article 38 CISG the buyer must examine the goods within as short a period as is practicable in the circumstances. Article 39 CISG stipulates that the buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it.

In the tomato case it is questionable whether the claimant will be able to recover its damages from Primar. The Supreme Court has decided that another court of appeal must assess whether the tomatoes lacked conformity at the moment the risk passed from Primar to the claimant, of which the burden of proof is on the claimant. If the claimant succeeds to prove so, the question arises why the tomatoes were nevertheless shipped to Moscow. In this connection, it is also decisive that the claimant had given notice to Primar of the lack of conformity in a timely manner.

In conclusion, in the event of an international purchase of goods, the buyer should be aware of its duty to inspect the goods and to notify the buyer in case of a lack of conformity of the goods. If the buyer does not meet this obligation, he loses the right to rely on such lack of conformity and will not be entitled to claim any damages or to take other legal actions.

Contact information
Should you have any questions about the international sale of goods or doing business in the Netherlands and abroad in general, please do not hesitate to contact one of our commercial contracts lawyers or the members of our International Desk.

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