Notification Requirement (Commercial Sales)

by Knut Benjamin Pißler

1. Object and goal

In the civil law of the European legal systems notification requirements are found primarily in the legal regimes relating to sales (sale). Additionally, notification requirements are an issue in public procurement law.

In the law of sales the notification requirement (and the legal consequence of the exclusion of remedies if notification is not given) has the function of realizing the principle of the buyer’s co-responsibility for the timely clarification and settlement of a lack of conformity of the purchased goods. The obligation to examine the goods and to notify the seller of any lack of conformity is intended to place the seller in a position in which he may, if possible, remedy the lack of conformity by delivering the missing goods or substitute goods, by repair or by reducing the buyer’s loss in some other way. Furthermore, the notification aims to give the seller the opportunity to prepare for any negotiation or dispute with the buyer concerning the lack of conformity and to take the necessary steps in this regard, eg by securing evidence. Additionally, through the notification the seller is put in a position to prepare a claim against his own supplier. Finally, the purpose is to achieve certainty for the seller with regard to those accounts that he can consider to be closed at any particular time.

This aim of adequately considering the interests of the seller is pursued by some legal systems through the legal doctrine of prescription instead of notification requirements.

2. Trends of international legal development

The approaches to this issue vary between different legal systems, especially as some tend to favour the buyer while others give preference to the seller.

Initially it has to be observed that some legal systems expressly stipulate an obligation to examine the purchased goods and to notify the seller of any lack of conformity. Among these legal systems are the German (§§ 377, 378 HGB) and the Austrian (§§ 377, 378 Unternehmensgesetz), the Swiss (Art 201 Swiss Code of Obligations (OR)), the Italian (Art 1495(1) Codice civile), the Danish (§§ 51, 52 Løv om køp (Law of Sales)) and the Dutch regimes (Art 7:23(1) Burgerlijk Wetboek). In some of the legal systems that prescribe notification requirements, this obligation is restricted to commercial sales: examples are again German and Austrian law. Italy and the Netherlands provide for a general notification requirement. Dutch law requires notification in commercial law and in civil sales law.

In English law the buyer is only required to notify the seller of a lack of conformity for the purpose of exercising his right to rescind the contract (Sale of Goods Act 1979 s 35(4)). Spanish law only stipulates a prescription that the buyer exercises his rights within six months by taking legal action, if it is a non-commercial sale. In the case of a commercial sale, the buyer must notify the seller of any lack of conformity, but it is unclear whether extrajudicial notification is sufficient and within which time-limits the buyer has to notify the seller.

In the legal systems stipulating a duty to examine the goods and notify the seller the period for the examination varies. While the German language legal systems require notice to be given without undue delay (unverzüglich) or immediately (sofort) (in Swiss law), under English law it is sufficient for it to be given within a reasonable time. In the Netherlands notice must generally be given within an appropriate period after the discovery or possibility of discovering the defect; however, regarding consumer contracts the possibility of discovering the defect is irrelevant and notification within two months is deemed to be sufficient. Italian law lays down a precise period of time for giving notice (eight days). In Denmark the buyer in a commercial sale must notify the seller immediately, while consumers have to give notification within a reasonable time in accordance with § 81 Løv om køp (Law of Sales). In the case of a sale that can be classified neither as a commercial nor consumer sale, notification must be given without undue delay.

Under French law and the law of many related legal systems, there is no duty to give notice of lack of conformity because the connected problems are regulated in the rules of prescription. The only requirement is that an action for lack of conformity be brought within a bref délai, Art 1648 Code civil.

There is a recent tendency to introduce notification requirements in the law of the sale of consumer goods in order to better protect consumers. This trend started with the adoption of Directive 1999/44 on certain aspects of the sale of consumer goods and associated guarantees on 25 May 1999. Article 5(2) of Dir 99/44 stipulates that Member States may provide that the consumers must inform the seller of the lack of conformity within a period of two months from the date he detected such a lack of conformity in order to benefit from his rights.

According to a Communication from the European Commission (COM (2007) 210 final), 16 Member States have chosen to provide for a notification requirement. Some of these Member States waive this obligation in certain circumstances (eg Denmark; Finland—when the seller acted contrary to the requirement of good faith or was grossly negligent; Italy—when the defect was known to the seller). Belgian law provides for a variation whereby the parties to the contract are able to specify the existence of a notification requirement, the length of the notification period (but not less than two months) and the consequences of the lack of notification. Slovak law provides that consumers are obliged to notify a defect ‘without undue delay’, which is interpreted by the Communication from the European Commission to be a period shorter than two months. The following Member States have chosen not to make use of this option: Austria, the Czech Republic, France, Germany, Greece, Ireland, Latvia, Luxembourg and the United Kingdom.

3. Regulations in uniform law

According to Arts 38 and 39 CISG (sale of goods, international (uniform law)) the buyer generally has the duty to examine the goods or let them be examined after the goods have arrived at their destination and to give notice of the lack of conformity of the goods to the seller. The goods must be examined within ‘as short a period as is practicable in the circumstances’. If the buyer has a reasonable excuse for failing to give notice, he at least retains the right to claim a reduction in the price and to claim damages (except damages for lost profit), Art 44 CISG. In any event, the buyer loses his right to rely on a lack of conformity of the goods two years after the actual delivery of the goods, Art 39(2) CISG.

Besides this, Art 43 CISG stipulates a notification requirement regarding defects in title; this, however, is an unknown duty in most domestic legal systems.

4. Unitary law

The Principles of European Contract Law (PECL) do not stipulate notification requirements. However, the DCFR (Common Frame of Reference (DCFR)) in Art IV.A.-4:302 and 4:303 requires notification by the buyer in case of a lack of conformity of the purchased goods. The notification requirements are supplemented with a duty to examine the goods in Art IV.A.-4:301 DCFR, which is not applicable for consumer contracts for sale (Art IV.A.-4:301(4) DCFR). According to Art IV.A.-4:302(1) DCFR, the notice must be given within a reasonable time. Failure to give notice to the seller results in the buyer losing the right to rely on the lack of conformity. According to Art IV.A.-4:302(2) DCFR the buyer loses this right in any event if the buyer does not give notice within two years at the latest from the time at which the goods were actually handed over to the buyer.

Literature

CM Bianca and MJ Bonell, Commentary on the International Sales Law—The 1980 Vienna Sales Convention (1987); Friedrich Graf von Westphalen (ed), Handbuch des Kaufvertragsrechts in den EG-Staaten (1999); Michael Georg Gerny, Untersuchungs- und Rügepflichten beim Kauf nach schweizerischem, französischem und US-amerikanischen Recht sowie nach CISG (1999); André Janssen, Die Untersuchungs- und Rügepflichten im deutschen, niederländischen und internationalen Kaufrecht (2001); Ulrich Magnus in von Staudingers Kommentar zum Bürgerlichen Gesetzbuch (13 edn, 2005); Peter Schlechtriem and Ingeborg Schwenzer (eds), Commentary on the UN Convention on the International Sale of Goods (CISG) (2nd edn, 2005); Commission, ̔Communication from the Commission to the Council and the European Parliament on the implementation of Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees including analysis of the case for introducing direct producers’ liability’ COM (2007) 210 final (24 April 2007); Ewoud Hondius, Viola Heutger, Christoph Jeloschek, Hanna Sivesand and Aneta Wiewiorowska, Principles of European Law: Sales (2008); Peter Schlechtriem and Ingeborg Schwenzer (eds), Kommentar zum Einheitlichen UN-Kaufrecht (5th edn, 2008).