International Sale Of Goods Contracts – The Seller’s Obligations

• contracts involving carriage

  • if the goods are not specific i.e. they are unidentified goods from inventory, the seller must notify the buyer about the details of the consignment giving clear indication about the particular goods allocated to the buyer’s contract

  • in addition, the choice of transport should be appropriate to the particular goods

    • inanimate or non-perishable goods, no problem

    • but perishable goods should be placed in the hands of an appropriate carrier

• timing of the delivery

  • delivery should be effected on the date specified in the contract (or within a specified period)

  • if no date or period is specified, the seller should deliver within a reasonable time of the formation of the contract

• specific goods – those particular units / items which are to be sold i.e. “this particular pair of trousers”

• unidentified goods drawn from inventory – not individually identifiable, rather they are part of general inventory i.e “a packet of biscuits” rather than “that packet of biscuits”

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1 Contracts involving carriage

• two main areas

  • delivery

  • quality

• delivery

  • the seller is obliged to deliver the goods, hand over any documents relating to the goods and transfer title to the goods as required by the contract

  • the CISG governs risk, not the transfer of property/title

  • if a place for delivery is specified within the contract, then the goods must be delivered to that specified place

• if no place is specified, implied terms apply

  • where carriage is involved, the seller delivers by handing the goods to the first carrier; otherwise the seller makes the goods available at the agreed place or, failing that, at the seller’s place of business

2 Quality

• goods must meet the contract’s quantity, quality, description and packaging requirements and, where the contract is silent, be fit for ordinary and made-known purposes, match any sample and be properly packaged

• there is no obligation on the seller to ensure that the goods comply with legislation in the buyer’s state unless

  • that same legislation applies in the seller’s state, or

  • the buyer made the seller aware of the legislation, or

  • the seller knew the requirements imposed by the legislation

• the seller will not be liable for breach of the conformity requirements in the situation where the buyer knew that the goods would not conform

• the seller is liable for any lack of conformity existing when risk passed to the buyer

• this is so even if the failure to conform became apparent only after the date the title / risk passed

• the seller may also be liable after risk has passed where a contractual guarantee applies

  • for example, where there is a guarantee that the goods will remain fit for the purpose for a period of time after delivery

• finally, if the quantity delivered is less than the quantity ordered but delivery is before the contract date for delivery, the seller is able to make good the short-fall at any time up to the contract date of delivery with no penalty

• the only exception is where, as a result of the reduced quantity, the buyer incurs unreasonable expense or inconvenience. In that situation, the buyer may seek compensation in the form of damages

3 The buyer’s duty to examine the goods

• within as short a period as is practicable after delivery, the buyer should examine the goods

• when the buyer is going to despatch the goods immediately on receipt, and the seller is aware of that fact, the buyer may inspect the goods upon receipt at that next destination

• the buyer must give notice specifying the lack of conformity within a reasonable time after discovery or when it ought to have been discovered; in any event, normally no later than two years after actual hand-over unless inconsistent with a contractual guarantee

• the seller cannot rely on the notice limits where it knew, or could not have been unaware, of the lack of conformity and did not disclose it

4 Third party rights

• the seller must deliver goods which are free from any third party right or claim …

• ... unless the buyer agrees to accept those goods subject to the right or claim of the third party

• special provisions relate to the situation where the right or claim is based on intellectual property or industrial property

• in these situations the seller must deliver goods which are free from these property rights provided the rights exist in the law of

  • the state where the goods will be resold or used, or

  • the state where the buyer has a place of business

• intellectual property includes

  • trade marks

  • patents

  • copyrights

• such a contract where these third party property rights are affected must involve the buyer’s awareness and acceptance that the rights exist and will be respected