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Cite as Bianca, in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 295-302. Reproduced with permission of Dott. A Giuffrè Editore, S.p.A.

Article 38

Cesare Massimo Bianca

1. History of the provision
2. Meaning and purpose of the provision
3. Problems concerning the provision

ARTICLE 38

(1) The buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances.

(2) If the contract involves carriage of the goods, examination may be deferred until after the goods have arrived at their destination.

(3) If the goods are redirected in transit or redispatched by the buyer without a reasonable opportunity for examination by him and at the time of the conclusion of the contract the seller knew or ought to have known of the possibility of such redirection or redispatch, examination may be deferred until after the goods have arrived at the new destination.

1. History of the provision

     1.1. - Article 38 lays down a fundamental principle that requires the buyer to examine quickly the goods delivered by the seller.

A direct precedent of the provision may be found in Article 38 of ULIS. But while laying down a similar principle, the ULIS rule was conspicuously different in one point. In fact, under ULIS if the goods were redispatched by the buyer their examination could have been deferred until they arrived at the new destination only if they were redispatched without transhipment. The ULIS rule, however, was excessively hard toward the buyer considering that in trade practice it is common that the resale of the goods involves their transhipment without the buyer having a reasonable chance to examine them. Having taken into account the criticisms made of the ULIS rule, the Convention states appropriately that even in case of transhipment the examination of the goods may be deferred until after they have arrived at the new destination, provided that the buyer did not have a reasonable opportunity to examine them before. [page 295]

Furthermore, Article 38(1) provides that the examination be made within as short a period as practicable in the circumstances. Thus, the Convention has adopted a more flexible criterion than ULIS, because it allows an appropriate reference to different situations.

     1.2. - The formulation of Article 38 has raised no important objections. The final text is substantially the same as the UNCITRAL Convention Draft, which has been modified only in paragraph (3) by adding an express mention of the case where the goods are redirected in transit by the buyer, while the preceding text mentioned only the case where the goods are redispatched. This addition, included in an amendment submitted by the delegation from Australia (A/Conf.97/C.1/L.154), was later partially adopted.

Others amendments were submitted and then withdrawn or rejected, but generally they were not intended to affect the rule's substance.

The only amendment which seemed to involve a substantial matter was submitted by the delegation from Canada and later withdrawn. The amendment aimed to add an express reference to the case where the goods are resold by the buyer in their existing packaging. In this case, according to the Canadian amendment, the examination «might be deferred until the second buyer had a reasonable opportunity to examine them» (A/Conf.97/C.1/L.118) (see § 3.1., infra).

2. Meaning and purpose of the provision

     2.1. - The principle laid down in Article 38, though not always expressly formulated in national legislations, is generally acknowledged as implied in the rule requiring the buyer to give notice of the non-conformity of the goods to the seller within a short period.

As observed by the Secretariat's Commentary (Official Records, I, 34), the provision is prefatory to the subsequent provision, which deprives the buyer of the right to rely on a lack of conformity of the goods if he does not give notice to the seller within a reasonable time after he has discovered or ought to have [page 296] discovered it. The strict connection between Article 38 and Article 39 means that the buyer has a burden rather than a duty to examine the goods in a short time. The failure to comply with this burden is not a breach of contract but imports only that the buyer will not be de facto in condition to give notice of the lack of conformity in the proper time, with the further consequence that he may not rely on it.

     2.2. - Article 38(1) states that the buyer must examine the goods, or cause them to be examined.

Under the Convention rule it is irrelevant whether the buyer examines the goods through his employees or through other persons. In general it may be said that the buyer must cause the goods to be examined by the persons empowered by him to receive the goods (except the carrier: see § 2.6., infra).

The buyer's employees or agents or also a repurchaser may be empowered to receive the goods. When the buyer, for example, resells and redispatches the goods before having had a reasonable opportunity to examine them, the goods must be examined by the new buyer. If the new buyer fails to examine the goods promptly, he loses the right to rely on the lack of conformity but the first buyer also loses that right toward the first seller.

     2.3. - The provision does not specify how the examination must be performed.

According to ULIS (Article 38(4)) the examination was governed by the agreement of the parties or, in absence of such agreement, by the law or usage of the place where the examination must be affected. While it is obvious that the parties are free to determine the criteria by which the goods have to be examined, the reference to the law or usage made in ULIS rule does not seem satisfactory, specially because it could lead to exonerate the buyer from his burden when there are no laws, rules, or sound usages in the place where the goods must be examined.

The Convention has correctly avoided the adoption of a similar rule. On this point it has been said that because of the international nature of the transaction, the determination of the type and scope of examination required should be made in the light of international usages (Secretariat's Commentary, Official [page 297] Records, I, 34). In fact, as already observed (see comment on Article 35, § 3.1., supra), the question finds its normal solution in view of what is acceptable in international trade.

One must still, however, ascertain which criteria are to be followed in examining the goods when there are no international usages to rely on.

Considering the purpose of the provision it may be said that in the absence of a specific indication from the contract or from international usages the buyer must undertake the examination in a way which is reasonable according to the nature of the goods, their quantity, their packaging and all other relevant circumstances. The buyer, therefore, is not bound to undertake an examination involving complex technological analysis. When the goods are too complex or too numerous the buyer is neither bound to undertake a thorough examination of every single good nor of every single part (see also the comment on Article 35, § 2.8.2, supra).

     2.4. - When the buyer is not able to discover a lack of conformity through the required examination, he may rely on such conformity and give notice to the seller only after the lack of conformity has been discovered. For example, some sacks contain rotten wheat but the ones checked by the buyer present wheat mantained in good condition. The buyer, afterward, resells the wheat and discovers that a part of the wheat is rotten. The buyer is still in time to give notice to the seller of the lack of conformity and to avail himself of his remedies (see Article 39).

     2.5. - Under paragraph (1) the goods have to be examined within as short a period as is practicable in the circumstances. The rule is based on the fundamental idea of reasonableness, meaning that the buyer must examine, the goods as soon as reasonably possible (but according to WELSER, Die Vertragsverletzung des Verkäufers, 112, the rule refers to a short term, not to a proper one; according to REISHOFER, Intervention, 134, the rule expresses a notion to-be-determined which is close to the notion of «proper term»). It may be said that the buyer should act reasonably fast (see the similar view expressed by WHITE and SUMMERS, Handbook of the Law under the Uniform Commercial Code, St. Paul, Minn. (West Publishing Co.) 1972, 423, with regard to [page 298] § 2-607(3)(a) of the United States Uniform Commercial Code which states that the buyer has to give notice of breach within a reasonable time. The Official Comment stresses that a reasonable time for a retail consumer is to be judged by different standards so that in this case it will be extended, for the rule is designed to defeat commercial bad faith, not to deprive a good faith consumer of his remedy).

The Convention has rightly avoided the solution, often adopted by Civil Law codes, of fixing a precise amount of time. A unique fixed period (for instance: eight days) cannot indeed be proper in relation to all contracts of sale. The Convention has also avoided the ULIS formula, which required the examination to be made promptly (Article 38(1)). This formula was objectionable because it gave the same indication for every case.

The Convention solution, instead, is clearly related to what is proper for the different circumstances. By «circumstances» the provision refers to objective situations and factors influencing the examination's length.

In general it may be said that goods of more sophisticated technology and those of complex composition need a longer reasonable time to be examined.

Impediments relating personally to the buyer or to those in charge of examining the goods are not relevant. A delay in examining the goods may be justified only when due to general and objective impediments, such as a general strike.

     2.6. - Article 38(2), (3) concerns sales involving carriage of the goods, where the seller's obligation to deliver consists in handing the goods over to the first carrier for transmission to the buyer (see Article 31). In this case the buyer is generally able to examine the goods only after they have come to destination. This fact has been considered by the Convention which, accordingly, lays down in Article 38(2) the principle that in sales involving carriage of the goods the buyer may defer the examination until after the goods have arrived at their destination.

Article 38(2) is also to be applied when the buyer has chosen the carrier or has chartered the ship. In these cases the carrier maintains the same role of conveyer of the goods from the seller to the buyer. The delivery to the carrier means delivery to the buyer only when the carrier receives the goods as agent of the latter. [page 299]

     2.7. - Article 38(3) takes into account the case where the buyer redirects the goods in transit or redispatches them to another destination. In these cases the examination maybe deferred until after the goods have arrived at the new destination, provided that (a) the buyer has previously had no reasonable opportunity to examine the goods, and that (b) at the time of the conclusion of the contract the seller knew or ought to have known of the possibility of such redirection or redispatch.

Redirection in transit occurs when the destination is changed before the goods are received by the buyer (or on his behalf).

Redispatch occurs when the buyer, after having received the goods, sends them off to another destination.

The buyer could redispatch the goods without having them unloaded, or redispatch them through another carrier. The point is irrelevant under the Convention, which, as already pointed out (see § 1.1., supra), has suppressed the limitation of ULIS. According to ULIS the deferment of the examination could have occurred when the buyer had redispatched the goods without transhipment. According to the Convention, instead, what really matters is whether the buyer has had a reasonable opportunity to inspect the goods before redispatching them.

     2.8. - Whether the buyer has a reasonable opportunity depends mainly on how long the goods stay before their redispatch. Generally a quick redispatch of the goods does not allow the buyer to examine them properly.

Another relevant circumstance is the way the goods are contained or packaged. If the examination is not possible without removing or breaking the vessels, boxes, wrappers, etc., necessary to protect and transport the goods, it is normally assumed that the examination will be effected at the place of their new destination. The same is understood when the examination of the goods requires the removing of the trade mark attesting the authenticity of the product.

Moreover, when the goods are sent in separate parts to be assembled, the examination is understood to be brought about at the place of their final destination.

          2.9.1. - Article 38(3) states that the examination may be postponed until after the goods have arrived at the new destination, [page 300] provided that the seller knew or ought to have known of the possibility of their redirection in transit or redispatch.

This condition is required in the seller's interest, to prevent him from being subject to a notice of lack of conformity after the elapsing of the time normally expected as necessary for examining the goods at their destination.

A longer period of time for possible claims from the buyer is a disadvantage to the seller. The seller undertakes this disadvantages when he sells goods which, as he knows or ought to know, may change their original destination and consequently he can foresee that the buyer will have a later opportunity to examine them.

It is understandable, then, why under the provision of Article 38(3) the seller's knowledge about the possibility of a redirection in transit or a redispatch of the goods is relevant only when the seller knew or ought to have known of such redirection or redispatch at the time of the conclusion of the contract.

Apart from the case of predictable redirection in transit or redispatch it is not up to the buyer to postpone at his discretion the examination of the goods. Thus, the buyer may not defer the time of examining the goods by giving notice to the seller of an unexpected change of their original destination.

          2.9.2. - The possibility that the goods are redirected or redispatched is not related to what abstractly could happen but to a foreseeable event. The seller must face this possibility when the buyer has expressly mentioned or impliedly let it be known, as when the buyer is an international professional trader.

The possibility of a further redirection or redispatch should be expressly mentioned. Otherwise the seller is not understood to undertake a risk depending on a new buyer's disposal of the goods.

3. Problems concerning the provision

     3.1. - The Convention rule does not mention, beside the redirection and redispatch, the mere resale of the goods. Consequently the problem arises of whether the examination of the goods known to be resold may be postponed until after they have been received by the new buyer: The Canadian amendment [page 301] had already called attention to the problem (see § 1.2., supra).

In this respect it must be noted, first, that a resale normally involves a redirection in transit or a redispatch of the goods. A resale without redirection or redispatch of the goods occurs rather in retail trade, where the customer receives the goods at the retailer's place of business or through the retailer's service.

Second, it must be observed that under Article 38(3) the details concerning redirection in transit and redispatch of the goods do not deal with the case of a mere resale of the goods. It is possible, of course, that the goods are contained or packaged in such a way that normally their examination is brought about by the consumer. However, this case and similar ones are to be solved under Article 38(1), which requires the goods to be examined within as short a period as is practicable in the circumstances. Therefore, according to the circumstances one must see if the buyer had a reasonable opportunity to examine the goods before their resale.

     3.2. - Another problem which does not find an express solution in Article 38 concerns the impossibility of having the goods handed over at the original destination. In this situation the seller may not know about a possible redirection or redispatch of the goods. Thus, the question arises whether forced redirection of the goods in transit allows their examination to be postponed until after they have arrived at the new destination.

The answer, allowing such postponement, relies on the consideration that an unforeseen redirection in transit, not depending on the buyer, is an objective circumstance which under Article 38(1) can justify a later examination of the goods, provided that such examination occurs as soon as practicable in the situation concerned. [page 302]


Pace Law School Institute of International Commercial Law - Last updated January 28, 2005
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