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Reproduced with permission from 37 American Journal of Comparative Law (1989) 247-299

History of Cutoff Rules as a Form of Caveat Emptor: Part II -- From Roman Law to the Modern Civil and Common Law

John C. Reitz

This two-part article is an attempt to understand why so many legal systems have adopted special cutoff rules that limit the buyer's remedies -- especially the commercial buyer's remedies -- for breach of implied or express warranties of quality, at least to the extent that the parties have not contracted out of these rules. As defined in Part I of this article, these cutoff rules include special limitations periods that are shorter than the limitations periods generally applicable to sales law, notice rules that cut off buyers' claims unless the buyer gives the seller notice within some short period after delivery, and acceptance rules that cut off buyers' remedies upon acceptance.[1] Section I of Part I argued that functional rationales offered to justify special cutoff rules as a neutral accommodation of buyer and seller interests are not persuasive; the special cutoff rules should thus be regarded as reflecting a vestigial form of caveat emptor, a bias in favor of sellers over buyers.

Sections II and III of Part I then examined a political thesis, arguing that the pro-seller bias is the result of under representation of buyer, especially commercial buyer, interests in the processes by which sales law has been formed. Because only the most recent chapter in the long history of special cutoff rules, the negotiations culminating in the 1980 U.N. Convention on Contracts for the International Sale of Goods (CISG), revealed an express conflict between representatives of commercial buyer and seller interests, Part I deferred the much lengthier history of the development of special cutoff rules in domestic sales law to this second part.

This concluding part further tests the political thesis by recounting in Section IV the historical evolution of special cutoff rules in the civil and common law from inception in Roman law, through development as part of the law merchant during the Middle Ages, and into the modern sales law of West Germany, France, Great Britain [page 247], and the United States.[2] Section V argues that the earlier history provides at least indirect evidence to support the political thesis. But that section also considers an alternative explanation referred to as the conceptual thesis. The conceptual thesis posits that certain types of sales law and warranty conceptualizations which are shared by each of the legal traditions under examination have tended to prevent jurists in each tradition from casting a critical eye at special cutoff rules and reaching a fairer accommodation of buyer and seller interests. One of these conceptual factors is the long-standing ambivalence about the justification of the institution of the implied warranty of quality. The other is a strong tendency in all sales law from Roman times to the present to view the buyer's acceptance upon delivery as the time at which the buyer's rights with respect to the goods should first become fixed. Part II of this article concludes that these two conceptual factors, while not strong enough to serve as the sole explanation of the historical pattern, are also a necessary component of a full explanation for the persistence of this form of caveat emptor.

IV. The Historical Development of Cutoff Rules in Domestic Law

The stories of both the implied warranty of quality and the cutoff rules that limit the buyer's quality protection start with Rome because the relevant rules of many modern civil law jurisdictions, including Germany and France, show a striking fidelity to their roots in Roman sales law, which developed an implied warranty of quality subject to a specially short limitations period.[3] The Roman law development manifested several features that reappeared or asserted [page 248] an influence in the formation of the modern national laws: (1) a chariness about imposing implied warranties of quality on sellers that led to marked limitations on remedies for breach of the implied warranty, (2) the tendency to counterbalance the extension or strengthening of the buyer's rights to quality with the development of new cutoff rules, and (3) conceptualization of the sales transaction in a way that necessarily made delivery and acceptance the decisive point for the determination of buyers' rights. After describing these aspects of the Roman law, this section will trace these features in the development of special cutoff rules in German and French law and then contrast that development with the history of cutoff rules in the common law jurisdictions of Great Britain and the United States, which have made far less use of special cutoff rules, but which, to the extent they have, demonstrate some of the same tendencies.

A. Establishment of the Implied Warranty of Quality and a Specially Short Limitations Period for Exercise of That Right in Roman Law

While the development of significant implied warranty protection for buyers was a major accomplishment of Roman law, it seems clear that Roman law began with the principle of caveat emptor.[4] In the earliest period, sales transactions in personality were undoubtedly chiefly cash-and-carry arrangements,[5] so the buyer could protect himself against apparent defects by inspecting the available goods carefully before agreeing to buy. The chief risk caveat emptor imposed on the buyer was the risk of latent defects.

Dating back at least to the Twelve Tables (circa 450 B.C. [6]), there was a mechanism for creating express warranties of quality, but it required the use of the stipulation, a formalistic method of contracting in which the buyer had to state the promise of quality, ask the seller if he in fact promised that quality, and receive an affirmative response.[7] Under this system, mere representations by the [page 249] seller during the bargaining process would not create any liability. It is true that Roman law early came to enforce, on the grounds of consensualism alone, agreements to deliver or to pay as part of a contract of sale (emptio venditio),[8] but the emptio venditio did not at first contain any quality terms. Therefore, in early Roman law, the only way to create a warranty of quality was to do so expressly and formally by stipulation.[9] At least by the time of Justinian's Digest (completed in 533 A.D. [10]), express representations (dicta) and promises (promissa) made in entering into an emptio venditio also came to be regarded as binding even if not in the form of a stipulation,[11] though the Romans may have been more ready than the moderns to excuse commendatory affirmations as mere "puffing."[12]

In the absence, however, of an express warranty created by stipulationes, dicta, or promissa, the chief protection the civil law of Rome gave the buyer against latent defects was against the seller who sold the goods with knowledge of the hidden defects. From fairly early on, Roman law came to regard the failure to disclose [page 250] known defects as a violation of good faith amounting to a type of fraud.[13] This rule, however, provided little protection for buyers because of the obvious difficulty of proving that the seller knew of hidden defects.

The development of implied warranty protection against hidden defects regardless of the seller's knowledge was the product of edicts issued by the curule aediles, magistrates with jurisdiction over the markets of Rome.[14] From the time of Cicero (106-43 B.C.) or earlier,[15] the aediles attempted to repress the sharp practices first of sellers of slaves and then also of beasts of burden and cattle [16] because these dealers were regarded as particularly likely to be deceitful.[17] The aedilician edicts therefore began to provide that, in the markets over which the aediles had jurisdiction, sellers of slaves or livestock must at the time of sale disclose specific faults and give a stipulation that no defects existed other than those declared. If the seller did not give the required stipulation at the time of sale, the edict gave the buyer the right to demand it within two months under threat of avoidance and within six months under threat of [page 251]damages.[18]

Apparently as a subsequent development,[19] the aedilician edict also began to provide that, if there were undisclosed defects, the buyer would be allowed virtually the same remedies even in the absence of a stipulatio: avoidance of the sale through an actio redhibitoria [20] brought within six months of the sale or damages through an actio quanti minoris aestimatoria [21] brought within one year.[22] [page 252]

By forcing sellers to give a stipulatory promise, the aediles apparently initially attempted to keep the non-fraudulent seller's liability for hidden defects within the bounds of express promise, but the results must not have been satisfactory. Perhaps too many buyers neglected to obtain the stipulatio, to their subsequent distress. At any rate, the aediles took the great leap that has marked warranty liability everywhere from many other aspects of contractual obligation. They imposed liability for hidden defects on sellers without regard to their knowledge of defects and even in the absence of the seller's express agreement to assume that liability. At least by Justinian's time, these remedies for hidden defects had been extended to sales of land and all types of goods.[23]

The very limited range of the protection for buyers established by the aedilician edict, even as extended by the time of Justinian, bears emphasis. First, the aedilician warranties originally applied only to sales at markets under the aediles' jurisdiction, and when the warranties were extended, they were thought of as incidents to the emptio venditio contract type,[24] which, like virtually all other ancient forms of sales contracts, applied primarily to sales concluded in the presence of the goods in question and generally at organized markets.[25] Hence the implied warranties were not applicable to [page 253]transactions excluded from emptio venditio.[26] Commercially important sales transactions not covered by emptio venditio, such as sales of generic goods from unidentified masses (a category that would include most sale contracts for future delivery [27]), were probably formed chiefly by stipulatio,[28] in which case liability was limited to [page 254]the express terms of the stipulatio though it appears likely that standard forms of express quality warranties for the common articles of commerce were in general use.[29]

Second, the implied warranty applied only to hidden defects because the assumption was that the buyer in a market sale could protect himself against apparent defects by looking carefully at the goods before buying them. So strong was the view that the buyer should be responsible to use his eyes to protect himself as much as possible that even express warranties were construed, if possible, as not applying to obvious defects.[30] Third, the damage remedy for breach of the implied warranties imposed by the aediles was limited to loss in the good's value due to the defect. Consequential damages for defective goods were not covered by the aedilician remedies though they apparently were available for other breaches by the seller, such as a failure to deliver or delay in delivery.[31]

Finally, from the start, the implied warranties to protect buyers were limited by special limitations periods. The aedilician edicts themselves limited the buyer to a six-month period in which to bring the actio redhibitoria and a one-year period to bring the actio quanti minoris.[32] The imposition of cutoffs is a striking departure from the general civil law of Rome, which did not have until quite late any general statutes of limitations, and which employed the long period of 30 years when it finally did adopt a general limitations period.[33] Thus suit on an express promise of quality embodied in a stipulatio was not subject to any limitations period or at most,[page 255] to a 30-year period.[34]

One need not look far to find the aediles' self-interest in developing implied warranty protections in favor of buyers of slaves or beasts of burden. The aediles were drawn from the ranks of the wealthy [35] and were thus protecting their own interests as representatives of a major group of prospective buyers. The sellers subject to their regulation may not even have been Roman citizens.[36] It is not as apparent, however, why the aediles would choose to undercut implied warranty rights by short limitations periods or why later Roman law maintained the restriction. Several pieces of evidence, however, suggest the influence of conceptual factors.

Some of the other special remedies created by magistrates, generally called "praetorian actions," were also governed by a short limitations period, almost always a one-year period (the annus utilis), though others were perpetual.[37] It was argued by some of the Roman jurists that the praetorian actions subjected to the one-year cut off were penal in nature as opposed to the perpetual ones that provided only compensation.[38] That distinction does not fit a good many of the actions limited by one year,[39] and it is debatable whether the aedilician remedies for hidden defects could have been thought of as penal since they provided the disappointed buyer at most with compensation.[40]

A more satisfactory explanation is the point of distinction offered already in Roman times between actions in furtherance of the [page 256] civil law (that is, the non-praetorian Roman law), which were said to be perpetual, and actions in opposition to it, which were cut off by the annus utilis.[41] If this was the operative criterion, the short cutoffs applied to the implied warranty causes of action highlight a concern that has bedeviled the development of warranty law ever since: implied warranty protection for buyers is a departure from the principle of consensualism on which Roman contract law, and especially the sales contract (emptio venditio), was based.[42] The beguilingly simple notion that contractual obligations are the product of agreement renders suspect the fairness of imposing quality obligations on sellers in the absence of express promises. The aedilician edict's implied warranty protection thus was probably subjected to the short cutoff because it was viewed as directly contrary to the preexisting Roman law.

The contrast with the development of the warranty against eviction reinforces the suspicion that Roman jurists hesitated to impose nonconsensual liability on contracting parties. The warranty against eviction was not the product of aedilician edict and was therefore not subject to the special cutoff rules but rather evolved as customary stipulationes gradually came to be regarded as implied terms of the emptio venditio contract as a matter of good faith.[43] By contrast, the Roman jurists may simply not have believed that all sellers acting in good faith necessarily promised even a minimum level of quality because the circumstances of each sale differed so greatly.[44]They therefore regulated quality directly through the edict though their first impulse was to preserve the appearance of consensualism by requiring the giving of a stipulatio of quality. The limited damage remedy provided for breach of the implied warranty also evidences hesitation. The temporal cutoff on the aedilician remedies may reflect as much as any other factor this same lingering hesitancy about imposing on sellers liability for lack of quality in the absence of express agreement or bad faith.[45] [page 257]

B. The Development of Special Cutoff Rules in the Modern Civil Law

The old Germanic law of sales warranties appears to have been quite similar to the rules of early Roman law before the introduction of the aedilician remedies: in the absence of express warranties, the buyer had no remedy for hidden defects unless the defects were substantial and the seller sold the goods with knowledge of the defects, and even then, the only remedy was avoidance, which the buyer had to claim within very short periods of when he could first have discovered the defect.[46] The major difference was that the early Germanic law already used the technique of a short cutoff on the buyer's non-warranty remedy of avoidance, the remedy for which short cutoffs appear more strongly justified on functional grounds.[47]

By the time of the nineteenth century codification's, both German and French law had taken over the idea of implied warranty directly from Roman law. However, before describing the process of codification and the subsequent development of the codified law, it is instructive to examine briefly the long formative period from the Middle Ages up to the beginning of the nineteenth century, during which Germany and France gradually "received" the Roman law of implied warranty of quality. The reception period sheds light on the political and conceptual influences on the formulation of cutoff rules, especially the central role played by merchant support for the introduction of a new type of cutoff rule, the notice rule.

1. From the Medieval Period up to Codification in Western Europe in the Nineteenth Century

Despite the lack of an implied warranty of quality in Germanic law, by the thirteenth century the buyer's interests in general were vigorously protected by extensive police regulation of the city markets governing not only weights and measures but also, upon pain of criminal sanction, the standard of merchantability of goods offered for sale. This regulation was facilitated by an intrusive system of inspection.[48] Moreover, virtually all sales were market sales because [page 258] city ordinances generally forbade or refused to enforce trade outside of the designated market areas within the city, partly in order to maintain the trading monopoly for its own citizens, partly to ensure protection for and control over the transactions, and perhaps also to ensure for the city or its sovereign the taxes to be levied on the transaction.[49] Thus even without implied warranties, buyers benefited from extensive governmental regulation against defects that could be detected at purchase. They were lacking only implied warranties against latent defects.

From the latter part of the Middle Ages, the influence and the progressive reception of Roman law modified the Germanic law in favor of buyers by transplanting to Western Europe the aedilician remedies for hidden defects. The process of absorbing the new legal ideas and accommodating them with the old was certainly a long one and many of the specifics about the process are unclear.[50] Nevertheless, it seems clear that two factors played an important role in the type of accommodation achieved in Western Europe, a steady improvement of trade conditions and the rise of a merchant class to exploit the improved opportunities for trade.

After the general reversion in Western Europe to an agricultural economy with very little trade following the fall of the [page 259] Western Roman Empire,[51] conditions for trade began to improve, starting in the tenth century in the Mediterranean and leading to a large scale expansion of commerce along all the coasts of Western Europe and a great increase in the number of market fairs in the twelfth century.[52] As trade conditions improved even more in the early modern period, sales at a distance, in which the seller promised to deliver generic goods the buyer did not see before delivery, became possible.[53] Once there were no longer practical limitations restricting the transaction of trade to specified markets, the old detailed police regulation of the goods sold at a market was harder to maintain and the mechanisms for enforcing it began to crumble.[54]

The rising merchant class appears in some cases to have resisted the substance of the Roman implied warranty,[55] but they also extended the basic principle of municipal regulation that generic goods must be "merchantable" (handelsfähig, de qualité locale et marchande) to international trade as a matter of customary law.[56] Typically, however, the merchants favored special cutoff rules that [page 260] limited as much as possible their liability for latent defects.[57] A number of medieval city statutes governing trade within the city laid down the rule that once the buyer had seen the goods and accepted them, the buyer lost all remedies against the seller,[58] and elsewhere merchants adopted, by statute or custom, a short limitations or notice period to cut off implied warranties.[59]

The amelioration of conditions and security of trade over long distances in Europe also appears to have played an important role in the development of the notice rule. Several writers have postulated that, as sales at a distance became more prevalent, the notice rule was developed by analogy to the acceptance rule for apparent [page 261] defects applied in both Germanic and Roman law to sales at a market.[60] In a sale at a distance, the goods are not available for inspection by the buyer at the time of contracting. The earliest point in the transaction at which the buyer could possibly inspect for defects is delivery. Since both Roman and Germanic law treated acceptance of obviously defective goods in a transaction on a market as agreement to purchase goods with those defects, it apparently seemed appropriate by analogy to treat unqualified acceptance of obviously defective goods in a sale at a distance, at least after sufficient time had elapsed for the buyer to inspect, as agreement to purchase the defective goods even in the face of express warranties. Early codifications of the notice rule in Germany exhibit the force of the analogy by applying a notice rule only to sales at a distance.[61]

This bold analogy, which derives a questionable contract performance rule from a well justified rule of contract formation,[62] has faded in significance, but the rule it was invoked to support proved to be popular with merchants, and new arguments were eventually developed for the rule. The next section will describe in some detail the century of efforts to codify the German law of sales that culminated in enactment of the German Commercial Code of 1897 and the German Civil Code of 1896. This chapter of the history provides considerable information about the evolution of modern arguments for the cutoff rules, as well as additional evidence for the political influence of commercial interests in favor of special cutoff rules.

2. Codification of Modern German Law

The Prussian Territorial Code of 1794 illustrates the acceptance that the Roman law of implied warranty of quality had gained by [page 262] the end of the eighteenth century in Germany. The Code imposed liability on sellers for express and "normally expected" assurances of quality.[63] In the event of defects, the buyer had the choice of avoidance or a damages remedy, that was limited to what we would call "direct damages," i.e., the loss in value due to the defect, but unlike the Roman law, the exclusion of consequential damages applied even for express warranties.[64] The buyer could only recover consequential damages if the seller was guilty of deceit (Betrug).[65]

Even though the phrasing of the Prussian Code's section on warranty suggested a general warranty against all defects, a separately drafted acceptance rule limited the warranty effectively to hidden defects: the buyer lost all implied warranty rights if it accepted goods with "obvious" defects without reserving its rights.[66] This acceptance rule illustrates the continuing power of the analogy between sales at a market and sales at a distance. In the phrasing of the Code, it was not the buyer's knowledge of defects at the time of contact formation that prevented him from claiming warranty rights, but his knowledge at the time of delivery and acceptance, whether a sale in place or at a distance was involved. The Prussian Territorial Code also applied the shortest of the aedilician limitations periods, the six-month cutoff, to both the remedy of avoidance and the remedy of damages, as well as to the buyer's cause of action for breach of express warranty.[67]

Most of these features of the warranty system of the Prussian Territorial Code survived intact in many of the various codes and draft codes promulgated in German-speaking countries during the next century of efforts to codify commercial and contract law and are effectively the rules that obtain today under the German Civil Code. The major substantive change in these rules has been the expansion of the damages remedy for breach of express -- but not also implied -- warranties to include consequential damages.[68] Thus by the start of the nineteenth century, one can say that both the aedilician warranty rights, the acceptance rule for defects known by [page 263] the buyer at delivery,[69] and the special six-month limitations period for buyer's remedies with respect to defects in goods were well established in German law.

The principal warranty issue which divided the code drafters in the nineteenth century was the notice rule. There was general agreement that some kind of notice rule should apply to sales at a distance between merchants. The debates concerned (1) the appropriate length of the notice period, (2) whether the notice rule should also apply to sales in place, and (3) whether the notice rule should be confined to the commercial code, and hence not apply to consumers.

The early codes stipulated very short notice periods. The earliest modern code to contain a notice rule was the Territorial Code for Baden, which came into force in1808.[70] Although primarily a translation of the French Civil Code of 1804 and the French Commercial Code of 1807, neither of which contained a notice rule, Baden's Territorial Code did add a 14-day notice rule for merchants.[71] The 1839 draft of a Commercial Code for the Kingdom of Wurttemberg followed the Spanish Commercial Code of 1829 in shortening the notice period to eight days for sales at a distance, at least for defects that could be discovered merely by unpacking.[72] The draftsman for the Wurttemberg Code opined that the 14-day period in Baden's Code was "clearly too long and dangerous for the seller."[73] For hidden defects, the Wurttemberg draft omitted any requirement for prompt [page 264] inspection but required notice within 48 hours of discovery.[74]

Zurich's Law of Obligations (Obligationenrecht) of 1855 was the first civil code to adopt the notice rule and hence the first code to make the rule applicable to all buyers, including consumers. It was also the first to abandon a definite measure of time for the notice period. The buyer was required to inspect and give notice "without delay."[75] The notice provision of Zurich's Law of Obligations served as the model for the drafting of the notice rule in the Swiss Obligationenrecht,[76] which was adopted in 1881 and is still in force today.[77]

The Zurich notice rule was justified in part as a codification of merchant custom treating the buyer's silence as a waiver of warranty rights or ratification of the seller's misperformance.[78] Like the analogy of sales at a distance to market-place sales, the waiver or ratification argument accords the buyer's reaction to the seller's performance a major role in determining what the legal effect of the parties' agreement will be, just as if in performing a contract for a sale at a distance the buyer and seller were continuing to bargain over the quality requirements until acceptance.

With the next major German codification of contract law, the German General Commercial Code (Allgemeines Deutsches Handelsgesetzbuch or ADHGB), drafted in the late 1850s by a commission of lawyers and businessmen at Nuremberg for the German League and approved by the German Federal Diet in 1861,[79] the German notice rule began to take on its modern form. The notice rule adopted in Section 347 of the ADHGB explicitly embodied the ratification argument: it stated that if the buyer failed to inspect the goods without delay after delivery or to give notice immediately, the goods would be "deemed to have been approved as sent."[80] The [page 265] argumentation about the rule was, however, on a political and functional level. For example, when doubt was expressed in the Nuremberg Commission debates about the fairness of the inspection duty in the notice rule,[81] many of the business representatives emphasized that the buyer's duty of prompt inspection was so generally recognized in commerce "that it would be impossible to disregard it in the Commercial Code."[82] In addition, the view was very strongly put forth to the Commission that the normal distribution of goods by middlemen would not be possible without a notice rule because of the possibility that without receiving timely notice the middleman would lose his claim over against his supplier.[83] Finally, some argued that lack of a notice rule would permit the buyer to speculate at the expense of the seller -- an argument that justifies a short cutoff only on the remedy of avoidance [84] -- and also advanced the partially related repose argument that businessmen have a strong need "to know quickly whether a particular transaction has been satisfactorily completed, in order to make further business arrangements."[85]

Like the notice rule in some of the earlier German-language codes, the ADHGB expressly limited the notice rule to sales at a distance, but in this case partly for reasons having to do with the politics of the German League.[86] Like the Swiss codes, the ADHGB [page 266] applied the notice rule to consumer buyers as well as to business buyers.[87] While the expansion of the notice rule to non-business buyers also coincided with the political agendas of certain parties with respect to League politics,[88] the matter was debated as one that pitted consumer buyers against merchant sellers. It was in this context that one member of the Commission made the revealing comment that the notice rule should be limited to transactions in which both buyer and seller were merchants because only in such cases will the disadvantages the rule imposes on buyers be fairly dissipated by the fact that the merchant buyer will profit from the same rule at other times when he acts as a seller.[89] The minutes report laconically that "[t]his proposal met lively opposition on the part of the business representatives,"[90] and it was rejected by a vote of 12 to 4.[91]

With the establishment of the German Reich in 1871, sufficient political unity at last had come to Germany to warrant a unified German Civil Code (Bundesgesetzbuch or BGB).[92] The lengthy hydrafting process culminated with a new German Commercial Code (Handelsgesetzbuch or HGB), which supplanted the ADHGB as of 1897, and the BGB, which came into force on 1 January 1900. In view of the broad notice rule for all buyers in the ADHGB, which had become the law of the Reich in 1871 and which had been operative in much of German territory since at least 1866,[93] one might [page 267] have expected the new civil code to adopt the ADHGB notice rule without debate. But it did not. Rather, after lengthy debate, the notice rule was excluded from the BGB and relegated to the HGB, where it was expanded to sales in place but limited to cases in which both the buyer and the seller are merchants.

The expansion of the notice rule in the HGB to cover sales in place did not arouse any opposition,[94] but the exclusion of the notice rule from the BGB did. While there was general agreement that acceptance of goods with known defects without reservation of rights could only be seen as a waiver of remedies with regard to those defects,[95] there was strong opposition -- even in drafting sessions that contained strong representation of business interests [96] -- to imposing any duty to inspect on non-commercial buyers, either at delivery or after.[97] [page 268]

Most of the reasons advanced for exempting consumer buyers from the notice rule would seem to have applied equally well to commercial buyers. For example, a notice rule for consumers was opposed to the grounds that it would be difficult to apply to latent defects because "symptoms of defects often are not at first recognized and treated as such, and only the appearance of several signals may give impetus to an inspection which would lead to the conviction that the goods are defective."[98] It was also argued that the risk of loss of evidence was slight in view of the short limitations period.[99] Similarly, the objection that retail sellers had as strong a need as wholesalers for prompt notice in order to prevent loss of claims back against suppliers was met with the assertion that most retailers sold from inventory and therefore would likely not have any claim back against suppliers anyway,[100] presumably because of the short limitations period. Nevertheless, the desirability of a notice rule for merchant buyers was never debated. It was simply assumed to be necessary for trade.[101]

Since enactment of the HGB notice rule,[102] a number of [page 269] German academic writers have criticized the failure to extend the notice rule to consumer buyers and have suggested that good faith may in some cases require treating the buyer's failure to give prompt notice as a waiver of remedies.[103] Nevertheless, the only subsequent German legislative action on this issue has been passage in 1976 of the Law on the Regulation of Standardized Contract Terms, which invalidates express notice provisions in consumer sales contracts.[104] The notice rule of the HGB is, however, well established in sales between merchants, and has been given a rigorous interpretation. In the case of obvious defects, it often has been held to cut off the buyer's remedies in the matter of a few days.[105] Hidden defects must be reported "without delay after discovery,"[106] and the principal severity of the rule in this case lies in the "duty" it imposes on buyers to inspect "without delay after delivery, insofar as practicable according to orderly business practice."[107] [page 270]

The language of the HGB notice rule embodies the ratification rationale by providing that, if the buyer fails to give timely notice, "the good is deemed to be approved."[108] Not surprisingly, the ratification argument still influences German thinking about the notice rule,[109] but it has not misled the courts into requiring the notice to contain assertion of a claim or even a legal position concerning the alleged defect,[110] as United States courts have held with regard to the similar notice rule in the UCC.[111] Current writers also cite prejudice arguments (primarily the evidence-gathering and cure rationales) [112] and the business need for quick repose [113] to justify the severity of the rule. Because the same notice rule cuts off the [page 271] remedy of avoidance as well as the remedy of damages, it is unclear whether German writers and courts would value the planning benefits to be gained from early repose for damage claims highly enough to justify the cutoff rule if the much stronger benefits to be gained from a timely cutoff for the remedy of avoidance were not also involved. However, the severity with which the German notice rule has been interpreted and the already very short special limitations period (six months) suggest that German jurists and merchants place a high value on quick finality, independent of whatever value it may have for preventing prejudice.

3. French Law Developments After Codification

The relevant provisions of the French Civil Code of 1804, which are still in force today, evince an even greater fidelity to the Roman law of warranty than the analogous provisions of the German Civil and Commercial Codes, but under the aegis of the French courts, the French law of the warranty of quality has begun to depart rather dramatically from the explicit rules of the French Civil Code. The most recent product of this development is an acceptance rule for apparent defects. As in Roman and German law, the adoption of the new cutoff rule fits the pattern of counter-balancing resistance to the expansion and strengthening of buyers' warranty rights. The French example is also remarkable for the strong reliance French scholars currently place on the ratification argument to justify the acceptance rule.

Reflecting the emphasis in both Roman law and the pre-code law of Western Europe on the buyer's duty to make reasonable inspection of goods before purchasing them,[114] the French Code Civil enactment of the aedilician remedies applies only to truly hidden defects (vices cache's),[115] that is, defects that the buyer could not have discovered by the exercise of reasonable diligence.[116] For [page 272] vices caches the French Code Civil provides the aedilician remedies of avoidance or a type of damages.[117] Like Roman law, the French Code limits the buyer's damages in this case by excluding consequential damages so that full damages for defects can be recovered only in the case of failure to reveal a known but latent defect.[118] The aedilician limitations periods and the medieval notice rule have been transmuted into a single "short period" (bref delai), which gives the courts considerable discretion subject to the nature of the defects and the local customs and usages.[119] It has generally been interpreted to constitute a relatively short cutoff on buyers' rights [120] once hidden defects have become discoverable.[121]

Unlike German law, which generally assimilated express [page 273] warranty to the aedilician implied warranty at least for the purpose of subjecting it to the short limitations and notice periods,[122] the French Civil Code preserved the distinction between express contractual obligations and the obligations imposed by the aedilician remedies for vice caché. For breach of an express warranty the buyer has the ordinary contract remedies for breach, a type of avoidance (resolution) [123] and full damages,[124] subject to the general limitations periods. For suits by merchant or consumer buyers against merchant sellers, the general ten-year period for commercial suits therefore applies.[125] The French Code's preservation of the aedilician remedies as a regime of contract rights and remedies completely distinct from the generally applicable contract remedies thus has reproduced both of the major features by which the Roman law of warranty differed from the common law: (1) the buyer's damage [page 274] remedy for the implied warranty against hidden "defects" is sharply curtailed by the exclusion of consequential damages, but her remedy for failure to deliver "conforming" goods is not, and (2) the buyer has far longer to exercise her rights against the seller in the case of delivery of a good that fails to conform to express contract requirements than in the case of a good with a hidden "defect."[126]

The significant differences between "defects" and "nonconformities" with respect to both amount of potential recovery and limitations period could be expected to put heavy pressure on the courts to develop a clear test for the distinction between the two concepts. The distinction, however, cannot be planted on the tenuous line between warranties implied in law and implied in fact because a Code article that is not part of the section on vice caché has been interpreted to require a minimum standard of merchantability in any case.[127] Moreover, the obvious overlap between the two concepts has been widened by a tendency, on the one hand, to treat as "defective" any good that is not suitable for the use for which it was offered for sale and, on the other hand, to consider delivery of goods that fail to conform to the contract requirements in any way as a breach of the seller's fundamental obligation to deliver.[128] Although the courts have at least at time attempted to ground the distinction on the difference between alterations or deterioration ("defects") and differences in quality, nature, or identity of the goods ("nonconformities"), French scholars have roundly attacked the distinction as impossible to maintain in any principled manner.[129]

The French courts have relieved some of the pressure to maintain the distinction by judicially abolishing for merchant sellers the clear Code limitation on liability for breach of the implied aedilician warranty. The first step in this evolution was the adoption even before codification of a rebuttable presumption that the merchant seller knows all defects of his goods.[130] For buyers who were not able to recover all damages on the strength of that presumption, the French courts also developed an extraordinarily expansive [page 275] interpretation of the damages covered by the Code section specifying the good faith seller's liability for breach of warranty so that injured buyers could recover virtually all damages except lost profits.[131] Finally, since 1965, the highest French court for civil matters, the Cour de cassation, has consistently held that the presumption of knowledge on the part of a business seller is irrebuttable, thus enabling a buyer to recover, even from an innocent seller, lost profits due to defects.[132] The development is all the more striking because as a consequence of the assimilation of the merchant seller to the bad faith seller, the courts have also held that all express contract clauses purporting to limit the liability of merchant sellers to consumer buyers for vice caché are unenforceable,[133] thus depriving sellers of any contractual way of disclaiming liability to consumers for vice caché, or even of limiting their liability in this regard.[134] The courts have stuck tenaciously to these holdings in the face of vigorous criticism from merchants.[135]

The distinction between non-conformity and defect remains important, however, because it still controls (1) the amount of recovery [page 276] by professional buyers and by buyers from non-professional sellers and (2) the length of cutoff period.[136] A number of French scholars have advocated eliminating the chief remaining significance of the issue by adoption of an acceptance rule for apparent defects, whether covered by express warranties or only the implied one.[137] In their view, defects and non-conformities that could be detected at acceptance should give rights to avoidance or damages only if reserved expressly at acceptance, and defects and non-conformities not detectable at acceptance should be covered only by the rules pertaining to vices cachés, including the short limitations period of the bref délai rule. Although the Cour de causation had rejected the acceptance rule for apparent non-conformities in a series of decisions from 1878 to 1934,[138] there were two decisions earlier in this century that implied support for the acceptance rule,[139] and in a 1980 decision the Cour de cassation squarely adopted the scholars' recommendation by applying a judicially created acceptance rule to a business buyer.[140] A number of lower courts had already adopted the acceptance rule for apparent non-conformities and defects,[141] and the Cour de cassation reaffirmed the rule in a 1981 decision.[142]

Justifications offered for the French acceptance rule include invocation of some of the usual functional arguments for short cutoffs, chiefly protection of the seller's opportunity to cure,[143] but also the evidence gathering rationale.[144] A sort of repose argument appears [page 277] to be alluded to in the argument that the acceptance rule contributes to the "security of transactions,"[145] but since the acceptance rule cuts off both damages and avoidance remedies, it is no clearer than in Germany that adoption of short cutoffs indicates endorsement of the relatively weak repose arguments for a short cutoff on the damage remedy alone. French scholarly writing also appears to attribute considerable normative importance to the widespread inclusion of acceptance rules in standard contract terms [146] despite a recognition that the standard terms may simply reflect seller dominance in the relevant market.[147]

What is most striking about the French justifications is the central role played by the ratification rationale. The scholars who advocate the acceptance rule in effect start with the premise that a buyer who fails to object to obvious or readily discoverable defects should be understood to approve or ratify the seller's defective performance. For them, the possible functional benefits of the rule appear to be less important than the potential they see for creating a theoretically coherent distinction between "defects" and "non-conformities." They would thus explain warranty liability for hidden defects, whether based on express or implied standards of quality, as resting on the notions that (a) the buyer's acceptance without reservation of defective goods normally constitutes a ratification of the seller's defective performance, but (b) the buyer's apparent ratification by acceptance is the product of excusable mistake and can therefore be rescinded if the goods were latently defective at the time of acceptance.[148]

The acceptance rule is thus seen as a vehicle for integrating the disparate buyer's remedies bequeathed by Roman law, the general remedies for breach of the contractual duty to deliver and the aedilician remedies for hidden defects. The rule is touted as [page 278] providing the only sensible distinction between "defects" and "non-conformities." However, the Cour de cassation has continued to manipulate that distinction to evade the bref délai requirement for hidden breaches of warranty,[149] so the integration of remedies has not been completely successful, and it seems reasonable to expect further evolution,[150] especially because of the relative severity of the acceptance rule for buyers.

The adoption of the acceptance rule also fits the pattern of counterbalancing imposition of cutoffs after expansion of buyers' substantive warranty rights. The bold judicial elimination of code limitations on the buyer's damage recovery for vice caché, as well as the concomitant invalidation of express disclaimers and limitations of at least the consumer's remedy, has already been described. The French courts have also enlarged the scope of the buyer's protection against vice caché by relaxing the standard of care to which the buyer is held in determining whether a given defect was really "hidden." As late as 1962, it had been held that "before buying a used car, the non-professional should take the precaution of having the vehicle examined by a specialist,[151] but the courts have now abandoned that rigorous standard and hold the buyer only to the standard of a similarly situated buyer of medium diligence.[152] This standard is, of course, much more lenient to consumers than to merchants, at least insofar as they are purchasing items which they normally purchase in the course of their business affairs.[153] The adoption of the acceptance rule thus comes after over a century of judicial expansion of buyers' warranty rights, especially but not exclusively for the benefit of consumers.

The French example of the recent development of a new cutoff rule is unusual in several respects. First, in most of the other post Roman developments, the tendency has been to limit or eliminate the acceptance rule and replace it by a form of notice rule, which is more lenient to the buyer. In France, the acceptance rule for apparent defects has been introduced where formerly only the regular [page 279] limitations period applied.[154] It seems reasonable to expect that the extreme swing from limitation cutoff to acceptance rule may eventually be compromised by adoption of some kind of notice rule, especially in as much as the present French limitations rule has some of the chief characteristics of a notice rule.[155] Second, in the other instances studied, the establishment or expansion of warranty rights has benefited the same class of buyers that is disadvantaged by the new cutoff rule. Here consumer buyers have been the primary, though not exclusive, beneficiaries of the judicial expansion of French warranty law; the new cutoff so far has only been applied to a business buyer though in principle it would appear to apply to consumers, too.[156] Nevertheless, it seems reasonable to view the French experience as fitting the general pattern pursuant to which cutoff rules are used as a procedural counterweight to the strengthening of substantive warranty rights in the face of active commercial hostility to the expansion of sellers' liability.

The French development also demonstrates that French law places a considerable value on quick finality though not as high a value as German law appears to do. The French acceptance rule obviously imposes the shortest type of cutoff period, but only for apparent defects, and the bref délai has not proven to be as strict a cutoff as the German six-month limitations period. Thus in comparison to German law, French law is apparently willing to sacrifice speed in reaching repose in order to preserve buyers' rights with respect to latent defects, but is willing to burden the buyer more to spot apparent defects at acceptance.

C. The Common Law

The history of caveat emptor has run a somewhat different course in the common law jurisdictions. English law has never adopted short cutoffs for the buyer's damage remedy, but the United States sales law did, as part of a distinct resistance to warranty. Because the general resistance to warranty appears to have had its [page 280] genesis in England, the British development of warranty law will be sketched first.

1. Origin of Warranty in English Law

Although undoubtedly beginning with the same lack of buyer protection as the early Roman and Germanic law, English law did not borrow the aedilician remedies -- or their special cutoff rules -- from Rome but rather from the same strong tendency evident in medieval Germany and France toward buyer protection in the form of an extensive governmental regulation of the markets. The English courts, from the local "courts of custom, of manor and baron, of feet and tolsey,"[157] to the "pie-powder" [158] courts of the law merchant and the royal court of Marshalsea [159] that began to claim jurisdiction for the sovereign over markets, all developed a law that held the seller liable for hidden defects.[160]

But the emerging common law of the king's courts, which began to administer the law merchant in the early seventeenth century,[161] approached the question of the seller's liability for defects in goods with the rigid requirements for proving a warranty in the sale of real property in mind.[162] Moreover, by the late eighteenth century,[page 281] when the common law courts first began hearing a sufficient number of mercantile sales cases to leave an appreciable volume of case reports on sales,[163] and especially in the nineteenth century, liberalism with its emphasis on individualism was beginning to exercise a strong influence on all of the Western world,[164] and English law became increasingly hostile to the notion of protecting the buyer who was so foolish as to fail to obtain express warranties with the care and formality required by the common law.[165] The hostility was expressed chiefly through crabbed constructions of what statements constituted an express warranty and a refusal to find generous implied warranties or trade usage to save an unfortunate buyer.[166]

The British hostility was not long ascendant, however.[167] The British Sale of Goods Act (SGA) of 1893 contained implied warranties of title,[168] fitness for a particular purpose [169] and, at least for goods bought by description from a dealer, the implied warranty of merchantability.[170] Breach of these warranties gave the buyer a right to full damages [171] and, if the warranty was made a condition of the contract either expressly or because of its seriousness, the right to avoid.[172] The British developed only one special cutoff rule, namely that acceptance of the goods cuts off the right to avoid, even for latent defects.[173] These provisions were said to codify the English common law prevailing at the time.[174] Only slightly modified, they are the English law today.[175] [page 282]

2. Development of Notice Rule in the United States

Nineteenth century Americans embraced the principle of caveat emptor with even more enthusiasm.[176] Mid-nineteenth century judges and commentators in our country praised the doctrine as one that promoted trade and properly restrained the courts.[177] They, like their English brethren, therefore favored rigid definitions of warranty and fraud in order to "avoid at least a pilgrimage of litigation, if not a total subversion of the common law rule."[178] In 1870, the United States Supreme Court declared that caveat emptor was of "such universal acceptance" that, with the exception of South Carolina, "the courts of all the States in the Union where the common law prevails, sanction it."[179]

When, however, Professor Samuel Williston almost singlehandedly codified United States sales law in the early twentieth century by drafting the Uniform Sales Act (U.S.A.), he modeled the implied warranty sections on the British SGA even though he recognized that the British warranties were somewhat more generous to buyers than the prevailing doctrines in the United States at that time.[180] By 1930 the U.S.A. had been adopted in over half of the states,[181] thus turning U.S. law also away from the most obvious forms of caveat emptor.

As in pre-codification Germany and France, an acceptance rule that cut off all remedies for apparent defects constituted a significant part of the resistance to the warranty of quality in some of the United States during the late nineteenth century. According to Williston, the "New York rule," which had achieved a strong following, provided that "taking title to the goods indicates assent to accept the goods in full satisfaction of the seller's obligations as to the quality [page 283] of the goods."[182] The New York acceptance rule did not apply to latent defects, and it also was often stated to apply only to "executory contracts,"[183] that is, contracts in which title to the goods was not transferred at the time of contracting.[184] The acceptance rule was subject to such remarkable variation from state to state that Williston wrote, " is a matter of extraordinary difficulty to distinguish under this rule in what cases the acceptance is not a waiver."[185] In some states, including New York, it was held that express warranties would survive acceptance,[186] but there was considerable doubt about what constituted an express warranty if a form of the word "warranty" was not used.[187] Georgia followed a rule identical to the one ultimately chosen for the German Civil Code: at acceptance the buyer lost all rights with respect to defects of which it had knowledge at that time, but the buyer had no duty to inspect for defects, even obvious ones.[188]

The acceptance rule created more than the usual trap for buyers because New York and quite a few of the other states following the rule also held that the buyer had no right of avoidance [189] in an executed sale. Under these rules, the buyer aware of defects at delivery had to determine when title passed. If title had passed at contract formation, the buyer would be in breach if he failed to accept even though the goods were defective. But if title had not already passed, the buyer would lose all remedy by accepting. Yet the determination of when title passed was a difficult one, frequently "a question of doubt even for lawyers and courts."[190] Williston was strongly [page 284] critical of the acceptance rule.[191]

Williston's chief purpose in drafting Section 49 of the Uniform Sales Act was thus to eliminate the acceptance rule in all its Byzantine forms. The bulk of the twenty pages devoted to Section 49 in his 1909 treatise on sales law is a refutation of the chief rationale for the acceptance rule, the ratification argument. "There seems no ground," he wrote, "for saying that the mere fact that [the buyer] has taken the goods indicates . . . an assent [to waive all rights]."[192] In the first sentence of Section 49 he therefore expressly eliminated the acceptance rule, liberating buyers from the risk of losing rights not explicitly reserved at acceptance. Yet in the second sentence of Section 49 Williston undermined that reform significantly by introducing a notice rule that released the seller from liability "if, after acceptance of the goods, the buyer fail to give notice to the seller of the breach of any promise or warranty within a reasonable time after the buyer knows, or ought to know of such breach, . . ." The notice rule simply reestablished the point of risk at a somewhat later time.

Replacement of the acceptance rule with the notice rule is all the more surprising because the chief justification Williston gave for the notice rule is the ratification argument. With no apparent sense of contradiction, he wrote,

"While merely taking title to the goods does not warrant the conclusion that the buyer has agreed to take the goods in full satisfaction of all the seller's obligations, the retention and use of the goods for a considerable period without any complaint warrants a strong inference that the goods are either what the contract called for, or that the buyer is satisfied to accept them instead of such goods."[193]

The only difference between an acceptance rule and a notice rule is the passage of time and Williston offers no argument why the passage of time even a "considerable period" -- provides a stronger basis for inferring the buyer's ratification of defective performance than existed immediately after acceptance. Williston also made passing reference to the German notice rule, but he did not mention that the German rule was limited to merchant buyers and to defects in goods, unlike Williston's notice rule that applied to all buyers and [page 285] to all types of breaches.[194]

While it is clear that the main thrust of Williston's efforts in Section 49 was to expand the buyer's protection, it is curious that Williston felt compelled to temper his pro-buyer reforms with the notice rule, supported chiefly by the very same ratification argument he rejected for the acceptance rule. His reliance on that rationale shows that he felt compelled to attribute great significance to the point of acceptance.

Despite Williston's strident criticism of the acceptance rule for damage claims, he preserved a form of the acceptance rule for the right to avoid by specifying in Section 60 of the Uniform Sales Act that acceptance cut off the buyer's right to avoid with respect to breaches of warranty of which the buyer knew at the time of acceptance. As to the right to avoid for breaches discovered later, the same section imposed the requirement to give notice "within a reasonable time." Williston based the special cut off rules for avoidance on the requirement of timeliness in other actions that entitled one to undo a transaction, such as those based on fraud or mistake.[195] Although the notice rule for avoidance uses the identical "reasonable time" standard as the notice rule for damages claims, Williston's comments clearly indicate that he expected the notice period for avoidance to expire first.[196]

Williston's two separate notice rules have had a highly successful career in American law and are currently to be found in essentially unchanged form in the Uniform Commercial Code.[197] Williston's new acceptance rule for the right to avoid for defects known at acceptance has, however, been abandoned. Similarly, Williston's ratification argument for the notice rule that governs the [page 286] damage remedy has been abandoned,[198] but courts and commentators have gradually developed various prejudice rationales for the notice prerequisite to the damage remedy, principally those based on cure and the gathering of evidence.[199] The repose rationale has also been articulated, but no one appears willing to rely on it.[200]

Williston's broadening of the notice rules to all types of breaches has also been well received by American courts. So the UCC notice rule for damages is today generally applied to claims for delay in delivery [201] despite the virtual impossibility that the seller could in that kind of claim suffer the type of informational disadvantage upon which the prejudice and repose arguments have to be premised. The overbroad coverage of the notice rule for damages also appears to have misled the majority of American courts into requiring not merely notice of the defect, which is all that is needed to overcome the informational disadvantage the seller suffers because of delivering the goods, but, also notice of the buyer's view that the defect constitutes a breach.[202] Although the typical periods courts [page 287] have allowed for the notice rule are not as short as in German law, there are virtually no decisions allowing a business buyer to delay as much as one year to give notice [203] and in many cases involving obvious defects the notice period has been held to expire in a matter of weeks.[204]

Consumer buyers have fared much better under the same rule, despite lack of any express authorization in the rule itself to treat consumers differently.[205] The courts have generally adopted the invitation in the Official Comments to judge a "reasonable time" by a more lenient standard in the case of consumer buyers.[206] Thus some decisions concerning consumers have refused to find notice periods almost as long as the four-year limitations period of the Uniform Commercial Code untimely as a matter of law,[207] and a few states have either by legislative amendment or judicial decision eliminated consumer buyers from the scope of the notice rule.[208] Finally, federal consumer legislation has since 1975 overridden the notice rule in the case of sellers that provide written warranties to consumers.[209]

In short, the United States sales law has also employed a short cutoff rule, primarily aimed at commercial buyers, to offset the strengthening at the beginning of this century of buyers' warranty [page 288] protections. Adoption of the notice rule was in part a conscious borrowing from German law. But United States practice does not appear to place as high a value on very short cutoffs as the civil law does. Unlike German and French sales law, the USA and the UCC eliminated the acceptance rule for damage claims and never adopted specially short limitations periods. Moreover, United States courts have applied the UCC notice rule for damage claims in a somewhat more lenient manner than the Germans have applied theirs though unlike the German notice rule the broadly phrased United States rule has also been applied to delay claims.

V. The Dynamics of Sales Law Formation

This article's examination of the history of special cutoff rules was prompted by the conclusion in Section I of the first part of this article that functional justifications for the rules do not withstand rigorous scrutiny. Part I introduced a political explanation for the prevalence of special cutoff rules, arguing that their development in so many legal systems reflects the dominance of seller interests in the formation of sales law. Part I considered that thesis primarily in the light of the negotiations that resulted in the 1980 U.N. Convention on the International Sale of Goods (CISG), where the conflict between commercial buyer and seller interests on this point was explicit. Now that the historical development from Roman times has been reviewed, it is possible to assess the political thesis against a much fuller historical record.

The foregoing history, however, has paid particular attention, not only to evidence of the play of interests, but also to the justifications actually advanced at each period on behalf of special cutoff rules. To some extent, these justifications have been identical with the functional arguments considered at the outset of this article. But attention to the historical arguments for special cutoff rules reveals the undeniable influence of two types of nonfunctional conceptual factors that also appear to have promoted the development of special cutoff rules on the buyer's rights. Each of these theses, the political and the conceptual, will be assessed in turn.

A. The Politics of Special Cutoff Rules

At first blush, the history recounted above might seem to cast considerable doubt on the political thesis. For example, the historical development confirms the assumption made in Part I: apart from the negotiations in this century to create a uniform sales law for international transactions, there is virtually no evidence of opposition by commercial buyers to special cutoff rules. There is ample evidence that consumer advocates objected to the notice rule in the [page 289] United States and in Germany,[210] but only isolated evidence of pressure for cutoff rules from groups that can be identified as representing commercial sellers and not also commercial buyers.[211] Indeed, throughout the history, the chief opposition to extensions of warranty and the chief support for adoption of cutoff rules have tended to come from merchants, who may be both commercial buyers and sellers. Absence of commercial buyer opposition for most of the history would seem to belie the political explanation for the prevalence of special cutoff rules.

The other aspect of the history of cutoff rules that might seem to raise a question about the political thesis is the fact that the development of special cutoff rules favoring sellers has taken place in the context of a very significant expansion, from Roman times until now, of buyers' warranty rights. If cutoffs are due to seller dominance, why have sellers not also succeeded in thwarting the expansion of warranty rights?

Nevertheless, the history of special cutoff rules can be understood to be consistent with the political thesis, and even to lend indirect evidence to support it. In order to account for the absence of commercial buyer opposition, Part I proposed the following model of the way in which commercial interests are brought to bear on sales law issues: (a) business interests tend to concentrate their efforts to influence the creation of law on the law that regulates their income producing activities, and therefore the primary commercial interests that participate in the formulation of sales law tend to be businesses that both buy and sell goods, like manufacturers and merchant-traders; and (b) these parties tend to identify their primary interests as sellers' interests because they hope to sell for more than they buy.[212]

With regard to the general expansion of warranty rights, it should be remembered that merchant interests did oppose recognition of implied warranties at various times, especially in the medieval and early modern period.[213] Their eventual acceptance and even support for the warranty of merchantability is, however, consistent with the theory that merchants tend to view themselves primarily as sellers because basic implied warranties of quality can be understood [page 290] as rules that best accommodate buyer and seller interests.[214]

With this model of the commercial interests involved, one can interpret much of the foregoing history to support the political thesis. Implied warranties were first imposed by the aediles, representatives of Roman buyers, on a very narrow and politically powerless class of sellers, dealers in slaves and beasts of burden and largely perhaps even non-citizens.[215] By the time the Roman law of implied warranty had been rediscovered and carried into France and Germany in the late medieval and early modern period, the merchant class, seeing its interests predominantly as those of sellers, was also beginning to have substantial political power. Merchants appear to have used their power at times to oppose adoption of implied warranties of quality,[216] though at least in the north of Europe they also embraced the implied warranty of merchantability for generic goods as a matter of "custom."[217] At least by the beginning of the nineteenth century era of codification, the notion of a basic implied warranty sanctioned by the limited aedilician remedies was so well entrenched in Germany and France that business opposition to the implied warranty disappeared. In common law countries, on the other hand, basic implied warranties of quality were not so clearly entrenched for at least another century. Nevertheless, at least by 1950, Rabel could say for the world community, "We surely no longer need to justify ourselves against the phrase caveat emptor!"[218] There thus was no significant opposition to the basic institution of implied warranty of quality incorporated in the CISG or even in the earlier drafts.[219]

Even as the merchants came to accept being held to general standards of quality, they clearly preferred to confine their potential liability as closely as possible in at least two ways: (1) to limit the types of damages as much as possible and (2) to exercise maximum control over the dispute resolution process. The ideal warranty from the merchant-seller's point of view is one that limits liability to repair or replacement and requires the buyer to return the allegedly defective good or present independent expert testimony promptly in order to corroborate any claim of defect. The exclusion of consequential damages from the aedilician damage remedy gave continental sellers much of the advantage of the first limitation with respect to implied warranty claims.[220] Short cutoffs tend to give sellers the [page 291] benefit of the second feature by localizing the dispute to a time period during which corroborative evidence is most likely to be available. That short cutoffs are a grossly overinclusive means to pursue this goal could hardly have concerned the merchant. He was no doubt anxious to maintain full control over the process and would not have been satisfied to trust to the natural skepticism of judges to protect him against lying claimants. In any event, if specially short cutoff rules barred valid claims along with the invalid, that may only have been further reason to favor them, at least during the period before merchants came to favor implied warranties. Historical examples particularly suggestive of these motivations are the extremely short cutoffs sought by merchants, such as (1) the privilege secured by Hanseatic merchants to sell goods in Spain subject to at three-day acceptance/notice rule,[221] (2) the customs of the French provinces shortening the Roman limitation period of six months,[222] and (3) the development of very short notice periods as a matter of custom among German merchants.[223] The merchant's desire to insist on corroboration is evident in the 1808 Territorial Code for Baden [224] and in the practice of the modern French commercial Courts.[225]

The general pattern in which new cutoff rules have been adopted at the same time that buyers' warranty rights have been expanded also suggests that cutoff rules have been imposed, not (or at least not only) to protect sellers from potential harm due to delay in learning of claims or to secure to them the planning benefits that might be gained from early warning, but also to protect sellers from the full risk of liability under the warranty of quality. The pattern suggests that new cutoff rules have played a counterbalancing role, providing a little new protection for commercial sellers as they are exposed to new liability for the warranty of quality. Thus, for example, the Germans adopted a notice rule concomitantly with reception of the Roman warranty law. The French have adopted an acceptance rule for business buyers while strengthening -- perhaps too rigidly -- the commercial seller's warranty against hidden defects. In the common law, Williston played a variation on the pattern for the Untied States sales law by adopting the notice rule to replace an acceptance rule while expanding the scope of the basic warranty protection.

By the beginning of the nineteenth century when the concept of the implied warranty of quality was fully accepted in France and [page 292] Germany, the legal institutions of the short limitations period and the notice rule were also well entrenched in Germany and France (the latter country having in effect combined the two in the bref délai rule). The only objections to the status quo came from those concerned to represent consumer interests. Thus the German codification debates in the nineteenth century show business interests -- to the extent they are visible at all, as for example in the debates over the ADHGB and the BGB -- in a holding action, acquiescing in the basic implied warranty rule but resisting attempts to eliminate the notice rule on behalf of consumer buyers.

B. The Influence of Conceptual Factors

In contrast to the largely indirect evidence of the politics of cutoff rules, the foregoing history attests clearly to the influence of conceptual factors. The functional arguments themselves, though they do not withstand rigorous scrutiny, cannot be discounted as factors shaping the evolution of cutoff rules. Undoubtedly their superficial plausibility has persuaded many a law-maker and lawyer in the history of warranty that special cutoff rules are a fair accommodation of buyer and seller interests. However, it is unclear whether functional arguments played much of a role prior to the nineteenth century, by which time most of the cutoff rules were well established. Perhaps they did but our historical records simply have not preserved them. On the other hand, it seems very unlikely that the functional arguments of repose or prejudice would have occurred, for example, to the Roman jurists since they imposed at most the general 30-year limitation period on claims for breach of an express warranty in a stipulatio.[226] Nor would a mistaken belief in functional arguments explain why the merchants' customary notice rule at first applied only to sales at a distance, leaving sellers exposed to the prejudice of delayed claims for latent defects in sales in place.[227] In addition to the functional arguments, however, the foregoing history suggests the per during influence of two ancient ideas, not functional arguments for cutoff rules, but rather ways of looking at, in the first case, the concept of implied warranty, and in the second case, the sales transaction itself.

The first idea is a profound doubt about imposing full contractual liability on sellers for breach of an implied warranty of quality.[page 293] It seems to be more than simply an artifact of the political opposition of sellers. It is hard to find an issue in civil law that has produced more scholarly discussion than the doctrinal basis for implied warranty liability.[228] Common law scholars have also manifested difficulty in reconciling liability based on an implied warranty of quality with other contractual liability that is typically the product of express or tacit agreement.[229] Rather, implied warranties of quality apparently have struck lawyers in repeated generations as too clear an example of direct government regulation of the market, as indeed they were under the aediles' edict and again in the medieval period in Western Europe, to qualify as the product of even a "constructive" agreement.

Prominent features of the history of warranty mirror this doubt. The civil law systems from Roman times have tended to compromise on the remedy by refusing to grant consequential damages for innocent breach of implied warranties. The common law, going through a period of even greater hostility to all warranties in the nineteenth century, especially in the United States, elevated caveat emptor to the status of a doctrine, refused to recognize implied warranties, and straitjacketed the institution of express warranty with rigorous form requirements. It seems likely that lingering doubt about creating full contractual liability for implied warranties has facilitated the acceptance of special cutoff rules, constituting as they do a limited form of caveat emptor.

The other idea that plays a persistent role in this history is a belief that delivery should constitute an event of great importance for the determination of the parties' rights. The idea is rooted in the ancient view of sales transactions as involving goods present at the negotiation of the contract of sale. The Roman sales contract (emptio venditio) was limited to sales in place, as was most trade in the medieval period. In such transactions, buyers can protect themselves against apparent defects by inspecting the goods before they agree to buy. The Roman implied warranty was therefore limited to latent defects, the only type of defect against which buyers could not protect themselves in sales in place, and the medieval merchants turned that rule around by developing a custom that the buyer had a "duty" to inspect the goods for apparent defects.[page 294]

As trade conditions improved at the end of the Middle Ages and the beginning of the modern era and sales at a distance became possible and even predominant, European lawyers applied the Roman law of warranty to the new kind of sales by analogizing the buyer's acceptance in a sale at a distance to the buyer's acceptance of goods in a sale in place. This analogy appears to have been particularly important in the early development of the notice rule in Germany.[230] The analogy reappeared in new dress in the ratification argument that ultimately left its imprint on the form of the notice rule in the German Commercial Code, was more recently used by Williston in the United States, and currently appears as the justification for the new French acceptance rule for apparent defects. The ratification argument is clearly no longer based on the premise that sales are perforce sales in place. In this new form of the idea, the buyer's duty to inspect and complain arises from the assumption that the buyer should have duties at delivery to match the seller's duty to deliver conforming goods. The bridge between the two conceptions is the "duty" to inspect, so sharply emphasized by the civil law.[231] Delivery and acceptance are seen as marking a critical point, not just because of a perceived functional need to make it important for the protection of the seller, but because delivery and acceptance define the first point at which the buyer can be required to assume duties with respect to the goods. The determination of the buyer's rights is conceptualized as a process that continues beyond delivery instead of being fixed at contract formation. The planning function of contract is therefore sacrificed to some extent for a vision of the contract as an "antagonistic cooperation," [232] a kind of game in which rights to quality negotiated at contract formation remain at risk unless and until the buyer fulfills duties of prompt notice and complaint. Although functional arguments for the cutoff rules have largely supplanted the ratification argument in Germany and the [page 295] United States, echoes of the argument sound from time to time, as in the argument that good faith requires a buyer to give timely notice,[233] which also can be explained only on the basis of the assumption that delivery and acceptance should mark a critical point in the determination of buyer's rights to a damage remedy. In France, the ratification argument still plays a central role because it is seen as offering a way of rationalizing the current, chaotic law of warranty in the Code civil.[234]

C. Relationship between Political and Conceptual Theses

Although the political and conceptual theses are alternative explanations for the prevalence of special cutoff rules, they need not be viewed as mutually exclusive. They are, rather, mutually reinforcing. If commercial buyers' interests have tended to be underrepresented in the processes by which commercial law has been formed, that tendency has simply prevented the development of sufficient political pressure to challenge the entrenched conception that the buyer should have a duty of prompt inspection, and the absence of challenge has led to the further entrenchment of the buyer's duty to inspect.

But the two explanations are more than reinforcing. They are each necessary to account for the whole history. For example, the political explanation seems a dubious way to explain why Williston,[page 296] drafting the Uniform Sales Act essentially by himself, felt it necessary to engraft a notice rule onto the basic model he had taken from the British Sale of Goods Act. It is difficult not to see his notice rule rather as a reflexive balancing of the scales in favor of sellers to compensate for the very considerable strengthening Williston achieved of sales warranties in favor of buyers. Similarly, it is very unlikely that the development of the special short limitations periods for the aedilician remedies can be attributed to the political influence of slave dealers,[235] or that the development of the notice rule can be attributed entirely to seller dominance in view of the fact that it was at first applied only to sales at a distance, leaving sellers exposed to claims for latent defects in sales in place.[236] Finally, most of the French development recounted here has been in the hands of the courts and therefore removed from at least direct political influences.

On the other hand, weak functional arguments, reinforced by conceptual doubts about warranty and a predisposition to view the buyer's acceptance as a determinative event, hardly seem adequate to explain the persistence over at least a millennium and across so many different cultures of a pattern of discrimination against buyers. Even if traditional conceptualizations can tyrannize thinking, eventually it is to be expected that buyers' self-interest would lead them to challenge the arguments and habits of thought upon which the cutoffs are based. This is indeed what appears to have happened during the negotiation of the CISG. Both the conceptual and the political explanations are thus needed to explain this history, and because they mutually reinforce their effect of suppressing commercial buyer resistance to short cutoffs, they together provide a reasonably satisfactory explanation for the development of short cutoff rules.

Conclusion

Short cutoff rules perpetuate today a limited but very widespread form of caveat emptor by creating an early point of risk for buyers, especially commercial buyers, with respect to warranties of quality. Comparative study of this problem strengthens this conclusion because the degree of discrimination against buyer interests through short cutoff rules is so much greater in the civil law than in the common law.[page 297]

It seems clear that the development of these cutoff rules has to be understood within the context of the overall development of warranty law, which started from a position strongly biased in favor of sellers. Each stage of the overall development reflects a different balancing of buyer and seller interests. The foregoing history suggests that cutoff rules have played a key role in that process by providing a way of redressing the balance in favor of seller interests as buyer interests received better protection through strengthened warranty rights. This counterbalancing role attests to the political dominance of seller interests, which Part I of this article sought to explain.

What is perhaps more surprising than the support the full history of cutoffs provides for the political thesis is the evidence that conceptual factors separate and apart from the inadequate functional arguments seem to have played an important role in promoting the development of special cutoff rules. The importance of these nonfunctional conceptual factors should neither be understated nor overstated. Merely to articulate them deprives them of much of their power. For example, the legitimacy of basic quality warranties now appears to be well established throughout the world; no one suggests today that special cutoffs are justified by doubts about the institution of warranty. Nor does any one assume today that the bulk of sales transactions are sales in place, for which an inspection rule makes sense as part of the rules of contract formation. Nevertheless, the direct successor of the ancient conceptualization of the sales transaction is the ratification argument which assumes that buyers in sales at a distance should also have a duty of prompt inspection, and that conceptualization is embodied in Article 377 of the German Commercial Code and in Article 38 of the CISG and still advocated with surprising vociferousness, especially by French [237] and German [238] jurists.[239]

The undeniable evidence presented in this history that ossified [page 298] thoughtways have played a role in the development of cutoff rules, however attenuated that role may be, especially today, raises an interesting possibility. Lawyers have always sought to hone their skills of formulating and critiquing what purport to be principled functional arguments for legal rules. We have been learning, with help from the social sciences and movements like Legal Realism and Critical Legal Studies, to understand law as the product of political conflict among the affected interests. But on how many legal issues have our muddled powers of ratiocination been trammeled by conceptual limitations inherited from an earlier age?

The evolution of law seems to be more complex a phenomenon than is suggested by political interest analysis or functional argument alone. This consideration suggests the continuing utility of historical studies that pay particular attention to both the arguments advanced to rationalize particular legal rules or institutions as they developed and to the economic and social contexts in which they developed. These kinds of studies may give us the perspective from which to identify conceptual barriers and free our thinking from the power of unconsciously assumed limitations. They may also teach us something about the evolution of human thought. At a minimum, they counsel caution and humility with respect to our current efforts at functional and political analysis.


FOOTNOTES

The bracket phrase page followed by a number is used to identify the page number of the original publication.

1. Reitz, "A History of Cutoff Rules as a Form of Caveat Emptor: Part I – The 1980 U.N. Convention on the International Sale of Goods," 36 Am. J. Comp. L. 437, 438-439 (1988) [hereinafter "Part I"].

2. The choice of countries is largely dictated by practical concerns. These are the principal countries for which the author has ready access to materials in languages he can read. In addition, as Part I demonstrated, the sales laws and representatives of these four countries wielded a strong influence on the drafting of the cutoff rules in the CISG. Moreover, it appears that the sales laws of these countries have strongly influenced the development of sales law in many other countries. Finally, broader comparative studies of warranties in sales law have not revealed any basis to believe that independent developments in other legal systems have been significantly different. See Wolfgang Fikentscher, Die Mängelrüge im deutschen, ausländischen und internationalen, Recht 12-27 (1956); Eugen Graue, Die mangelfreie Lieferung beim Kauf beweglicher Sachen 251-64 (1964); John Honnold, Uniform Law for International Sales under the 1980 United Nations Convention 276-77, 280—81 (1982); 2 Ernst Rabel, Das Recht des Warenkaufs 206-25 (1958).

3. Rome does not appear to be the earliest society to have developed implied warranty protection for the buyer. The Code of Hammurabi gave the buyer of an epileptic slave the right of avoidance if claimed within one month of the sale, and the classical Greek sales law appears to have provided the same right to the purchaser of a slave for any disease the seller failed to disclose before concluding the sale. Eugen Graue, supra n.2 at 106; Morrow, "Warranty of Quality: A Comparative Survey," 14 Tulane L. Rev. 327, 347 n.97 (1940).

4. Barry Nicholas, An Introduction to Roman Law 181 n.1 and accompanying text (1962).

5. Max Kaser, Roman Private Law 210 (3d ed., trans. Rolf Dannenbring, 1980); Francis de Zulueta, The Roman Law of Sale: Introduction and Select Texts 1 (1945); Eugen Graue, supra n.2 at 70-71; Morrow, supra n.3 at 349-50.

6. Nicholas, supra n.4 at 15. The Twelve Tables are thought to have constituted largely a codification of the traditional law. Id.

7. Nicholas, supra n.4 at 193. The classic description in English of how the stipulatio worked is by Sir Henry Maine. Henry Maine, Ancient Law: Its Connection with the Early History of Society and Its Relation to Modern Ideas 271-74 (1861, reprinted 1986); see also John Crook, The Law and Life of Rome, 90 B.C.-A.D. 212 207-08 (1967). The formalism of the stipulatio was available to create any type of contract, not just a sales contract.

To create an express warranty, a simple promise that the object was free from specific defects or was "sound" probably sufficed, at least during the Republic. Alan Watson, The Law of Obligations in the Later Roman Republic 90 (1965). But see Nicholas, supra n.4 at 97 (arguing the Ulpian’s concern to refute the position that a promise of fact would not be actionable because if false, it would be void as impossible, shows that the seller had to use language of warranty).

8. W.W. Buckland & Arnold McNair, Roman Law and Common Law: A Comparison in Outline 280 (2d ed., F.H. Lawson, ed., 1965); Kaser, supra n.5 at 210 (emptio venditio recognized not later than the second century B.C.). Watson, supra n. 7 at 40-41 (probably in the third century B.C.).

9. DeZulueta, supra n.5 at 4, 47. According to de Zulueta, when a stipulatio was used, the warranty of quality was generally combined with the warranty against eviction, but for reasons of historical development, the warranty against eviction generally provided a sanction of double the price while the formula usually used for the warranty of quality provided simply for the payment of actual damages as a sanction. Id. at 47.

10. Nicholas, supra n. 4 at 41.

11. The portion of the aedilician edict, see infra n. 16 and accompanying text, pertaining to sales of slaves made dicta and promissa enforceable in the transactions to which it applied, and although the portion of the edict applicable to beasts of burden omitted mention of these informal promises or representations, juristic interpretation filled the gap. Honoré, "The History of the Aedilitian Actions from Roman to Roman-Dutch Law," in Studies in the Roman Law of Sale Dedicated to the Memory of Francis De Zulueta 132, 140 (David Daube, ed., 1959). But outside of the aedilician edict, there is strong debate about when dicta and promissa not cast in stipulatory form became enforceable as an incident of the sale contract. Compare Honoré, supra, at 140-44 (enforceable as part of emptio venditio at least by the time of the aedilician edict) with de Zulueta, supra n. 5 at 9 (became enforceable in "mature" period) with Nicholas, "Dicta Promissave," in Studies in the Roman Law of Sale Dedicated to the Memory of Francis De Zulueta 91 (David Daube, ed., 1959) (refusing to rule out possibility of no general liability for dicta and promissa outside of the aedilician edict prior to Justinian) with Watson, supra n. 7 at 87 n.5 (taking issue with Nicholas, supra).

12. Watson, supra n.7 at 89-90; Rogerson, "Implied Warranty against Latent Defects in Roman and English Law," in Studies in the Roman Law of Sale 112, 112 (David Daube, ed., 1959).

13. W.W. Buckland, A Text-Book of Roman Law from Augustus to Justinian 491 (3d ed., Peter Stein, editor, 1963); de Zulueta, supra n. 5 at 49 ("[a]s early as Cicero"). The only exception in early Roman law was the ancient actio de modo agri, an action for double the proportionately excessive part of the price paid for land if the area of the land sold proved to be less than that stated by the seller, id. at 47; W.W. Buckland, op cit. at 491 n. 4.

14. Because they, like their far more broadly empowered fellow magistrates the praetors, had the power to determine the forms of action through which the Roman civil law relating to their jurisdiction would be enforced during their one-year terms, they were able to exercise great influence over the evolution of the civil law. Nicholas, supra n. 4 at 4, 19-25, 181. The parties to a lawsuit first appeared before the praetorian official (praetor or aedile) with relevant jurisdiction for the drawing up of the formula. The parties then chose a iudex or lay arbitrator from an official list of well-to-do laymen. The formula consisted of a direction to the iudex stating in effect the elements of the plaintiff’s case and of the defendant’s affirmative defenses. See id. at 23-25 (giving examples).

The praetors and aediles created a body of written law by issuing written edicts, generally at the beginning of their year terms, stating generally what forms of action they would grant. Id. at 27-28. The praetors and aediles apparently retained this function until the reign of Hadrian (117-138 A.D.) when the great jurist Julian was commissioned to put the edicts in final form. Id. at 22. By that time, a new procedure in which the praetorian magistrates or their appointees assumed the role of professional judge began to supplant the earlier system of private iudices. Id. at 27-28.

15. De Zulueta, supra n. 5 at 50. Watson adopts Daube’s conjecture that the aedilician edict originated in 199 B.C. Watson, supra n. 7 at 83.

16. There are extant two different portions of the aedilician edict, one which concerns slaves and one which concerns beasts of burden (iumenta). Watson, supra n. 7 at 86-87, 91 (stating no opinion about the historical order of development). Buckland states that the aedilician edict originally dealt only with sales of slaves and was later expanded to live stock. Buckland, supra n. 13 at 491. De Zulueta seems to regard the development of the two known texts as concurrent, with a subsequent extension to cattle (pecora). Francis de Zuluenta, supra n. 5 at 50.

17. Buckland & McNair, supra n. 8 at 284 (citing D.21.1.44.1).

18. Buckland, supra n. 13 at 491; Kaser, supra n. 5 at 218 (noting that the suit could apparently be brought even though no defects had yet become apparent); Watson, supra n. 7 at 84; Fritz Schulz, Classical Roman Law 538 (1951) (concluding that the damage remedy if the seller refused to give the stipulato was double the price).

The seller was free, however, to disclaim all warranties. Watson, supra at 84; de Zulueta, supra n. 5 at 50.

19. See Buckland, supra n. 13 at 491 ("the promise probably represents an earlier phase in which there was no liability except on actual promise."); de Zulueta, supra n. 5 at 51; Rogerson, supra n. 12 at 116.

A number of scholars nevertheless treat the short-lived right to obtain the stipulato as merely an alternative to the longer-term remedies of the edict. See, e.g., Kaser, supra n. 5 at 218; Schulz, supra n. 18 at 538; cf. Watson, supra n. 7 at 84, 91.

It is possible that the short-lived right to obtain a stipulatio was developed concurrently with the somewhat longer-lived rights to avoidance or damages. A buyer who had neglected to obtain the stipulatio at the time of sale might still prefer to obtain the stipulatio later rather than rely on the other aedilician remedies because the cause of action for breach of the stipulatio would not prescribe in the short time periods imposed on the aedilician remedies. See infra n. 34 and accompanying text. Nevertheless, it seems improbable that Roman law would have developed such a complex set of remedies at the outset and far more probable that the right to obtain an express promise was the first stage in the development of the seller’s implied warranty liability.

20. If redhibitio was ordered, the buyer had to tender back the goods, together with all accessories and acquisitions and damages for any deterioration. The seller had to repay the price with interest and compensation for damage. Buckland, supra n. 13 at 492.

Buckland indicates a belief that the actio redhibitoria was granted only for serious defects and the actio quanti minoris for minor defects, but he admits that there is no direct evidence in the texts to prove his supposition. Id. at 493.

21. There is much controversy about this remedy. Some scholars argue that it is not classical but was invented by the compilers. See, e.g., Schulz, supra n. 18 at 537-38; Rogerson, supra n. 12 at 124-25. But see Honoré, supra n. 11 at 153 (view "that the actio quanti minoris is not an invention of Justinian’s compilers but truly classical, has been triumphantly vidicated by Pringsheim.") (footnote omitted). Another major question is how the damages were calculated under the actio quanti minoris. The best that can be said is that it is "a matter of some controversy." Bergsten & Miller, "The Remedy of Reduction of Price," 27 Am. J. Comp. L. 255, 257 n.6 (1979). See generally, Honoré, supra n. 11 at 150-56.

The one aspect of the Roman actio quanti minoris upon which there is general agreement is that the buyer could not recover consequential damages. The buyer could recover consequential damages only for breach of express promises of quality or if the seller sold with knowledge of the hidden defects. Buckland, supra n. 13 at 493; Kaser, supra n. 5 at 218; Honoré, supra n. 11 at 155-56; Schulz, supra n. 18 at 539.

22. The portion of the aedilician edict concerning slaves (D. 21. 1.1.1) provides the remedy of redhibition but makes no mention of the right to damages; the damages remedy is explicitly provided only in the section on beasts of burden (D. 21. 1. 38. pr.); de Zulueta, supra n. 5 at 139-40, 145; Watson, supra n. 7 at 86-87, 91. Nevertheless, according to most scholars, the disappointed buyer of both slaves and livestock had a choice of either remedy. Buckland, supra n. 13 at 491; Nicholas, supra n. 4 at 181; de Zulueta, supra note 5 at 50; Kaser, supra n. 5 at 218. The chief dissent comes from those scholars who believe that the damages action (actio quanti minoris) was an invention of Justinian’s compilers. See supra n. 21.

23. In general, scholars are cautious about the possibility of any significant extension before Justinian. See, e.g., de Zulueta, supra n. 5 at 49 (extension may have been completed before Justinian’s codification); Nicholas, supra n. 4 at 182 (full extension only completed by Justinian); Buckland, supra n. 12 at 492-93 (only clear that texts in Digest refer to all sales, including sales of land); Schulz, supra n. 18 at 538 (Justinian’s compilers extended warranty to all sales, including land); Rogerson, supra n. 12 at 117 (extension in classical times to sales outside the markets controlled by the aediles, but probably not beyond the sales of slaves and animals). But see Honoré, supra n. 11 at 143-44 (apparently arguing that actio empti absorbed aedilician remedies in classical times).

24. Graue, supra n. 2 at 72 (aedilician remedies did not apply to generic sales); de Zulueta, supra n. 5 at 47 (aedilician remedies absorbed by actio empti). There is one passage in the Digest that suggests a broader application of the aedilician remedies, at least by Justinian's time. D. 21. 1. 5 (stating that a "buyer" in the aedilician edict must be understood to mean "anyone who acquires a thing for a price.") (quoted and translated in de Zulueta, supra n. 5 at 143). However, another passage expressly limits the aedilician remedies to sales (venditiones) D. 21. 1. 63 (quoted and translated in id. at 147).

25. The emptio vendito might concern either specified goods or generic goods from a specified mass. But no Roman law text treats as valid under the flexible rules of the emptio vendito a sale of generic goods for which not even the mass from which they are to be drawn is specified. Buckland, supra n. 13 at 484; Buckland & McNair, supra n. 8 at 282; Nicholas, supra n. 4 at 173; Kaser, supra n. 5 at 211-12. The one exception to this limitation was that certain sales of future goods could be transacted by means of emptio venditio, see infra n. 27, but even these can be seen as relating to specific land or specific efforts and materials of a craftsman. Fully generic sales appear to have been concluded only by the much more cumbersome formalities of the stipulatio. See, e.g., Buckland & McNair, supra n. 8 at 282; Nicholas, supra n. 4 at 173.

The sales for which the emptio venditio appears to be designed are sales in place, i.e., sales concluded in the presence of the goods. These are most likely to take place at public markets or in private shops, apparently the situs for most of the sales transacted during the Republican period. Morrow, supra n. 3 at 349-50. The emptio venditio of course also encompassed the simplest, and no doubt, earliest type of sales transaction, the cash-and-carry sale. See text supra at n. 5.

The Indian Laws of Manu, Islamic law, Talmudic law, Babylonian, and Greek law also promulgated their sales law for transactions conducted at a market, usually limited to cash sales. Buckland, supra n. 13 at 484 n. 13; Graue, supra n. 2 at 70-71.

26. In addition to being limited to sales of specified goods or generic goods to be supplied from a specified mass, see supra n. 25, the emptio venditio also did not apply to a sales transaction if there was not a money price that was "certain." Buckland, supra n. 13 at 485-86; de Zulueta, supra n. 5 at 16-19.

27. The emptio venditio could, however, cover the sale of future goods in at least some cases, such as crops to be grown by a specified seller, Buckland, supra n. 13 at 483, or a thing to be made by a fabricator who is to supply the materials. Buckland & McNair, supra n. 8 at 281; Nicholas, supra n. 4 at 172. If the thing was to be made by a fabricator to whom the buyer was to supply the materials, then the contract was enforceable as another type of consensual contract, the contract for hire (locatio conductio), id., which included certain implied minimum standards for workmanship or expertise among its items. Buckland, supra n. 13 at 505. But see Kaser, supra n. 5 at 212 (contract to produce a good from seller’s own materials was an emptio venditio according to the Sabinians, a locatio conductio according to the Proculians, and a mixture of both according to Cassius).

28. There appears to be disagreement over how extensive the trade was that fell outside the emptio venditio. De Zulueto says that "the modern frequency of [generic sales that cannot be fitted under emptio venditio] depends on conditions which did not exist in antiquity – mass-production, certainty and rapidity of transport, facilities for insurance. In Roman commerce such transactions seem to have been rare and confined to ‘big business’, . . . " De Zulueta, supra n. 5 at 16. But Rabel claims that "mass use" of standard forms of stipulatio requiring some minimum level of quality in the sale of generic goods played a more important role than the aedilician edict in developing the notion of minimum standards of quality in commercial sales. 2 Rabel, supra n. 2 at 103. See also Honoré, supra n. 11 at 149 (sales of generic goods "non-existant or at least of restricted scope"); Morrow, supra n. 3 at 350 (even at period of greatest commercial expansion "transportation dangers and expense must have tended to produce face-to-face bargaining whenever possible") (footnote omitted); Rogerson, supra n. 12 at 118 (sales "by description" rare and undertaken by stipulationes).

The enormously flexible stipulatio was eventually made capable of accommodating sales concluded at a distance by correspondence although at first it was not capable of doing so because of the requirement that both parties be present during the formal exchange of question and answer. Buckland, supra n. 13 at 434. However, especially because of Greek practice, written contracts came to be used extensively to record the stipulatio. Id. at 435-36; Nicholas, supra n. 4 at 194-95. Eventually the written form became more important than the question and answer of the stipulatio as first a writing alleging the formalities of stipulatio could not be challenged and then an exchange that did not observe the form of the stipulatio but which indicated intent to be bound was made binding. Buckland, supra n. 13 at 435-36. Moreover, although Roman law had no general principle of agency, the institution of the family and the powers of the head of the family, the paterfamilias, were such that slaves and sons could in effect provide the father’s presence in distant locations for the purpose of effecting a stipulatio. Men of affairs, like Cicero, commonly had slaves in places other than where they lived, in part for that purpose. Buckland & McNair, supra n. 8 at 218. Finally, Justinian promulgated the rule that a writing embodying a stipulatio which alleged the mutual presence of the contracting parties could be rebutted only by clear proof that one party was absent from the place at which the stipulatio was allegedly made for the whole of the day on which it was allegedly made. In addition, if the writing alleged that the stipulatio was made by a slave sent for that purpose, the presence and ownership of the slave were conclusively presumed. Buckland, supra n. 13 at 437.

29. 2 Rabel, supra n. 2 at 103; de Zulueta, supra n. 5 at 9, 47.

30. DeZulueta, supra n. 5 at 46.

31. This is the one aspect of the measure of damages for the aedilician remedies upon which the scholars appear generally to agree. See supra note 21. There probably was some limitation on the remoteness of recoverable damages but the precise nature of the limitation is not clear. Buckland, supra n. 13 at 494.

32. De Zulueta, supra n. 5 at 47, 50; id. at 139-47 (bilingual text of relevant portions of Justinian’s Digest); Buckland, supra n. 13 at 491.

33. Buckland, supra n. 13 at 689. In 424 A.D. Theodosius, finally established a general limitations period of 30 years for all actions theretofore deemed to be perpetual. Nicholas, supra n. 4 at 122. This is still the basic limitations period for the modern civil law codes of Western Europe. Id.

34. At least by Justinian’s time the buyer’s general cause of action on a contract of sale (the actio empti) had absorbed the aedilician remedies. Buckland, supra n. 13 at 493. As that took place, the aedilician time limits may also have been applied by analogy to warranty claims in an actio empti. Id. at 493; Rogerson, supra n. 12 at 123. The buyer’s remedy provided in a properly concluded stipulatio, however, was enforceable outside the aedilician jurisdiction and therefore apparently never became subject to the short cutoff period. De Zulueta, supra n. 5 at 51.

35. John Dawson, The Oracles of the Law 106 (1968); Nicholas, supra n. 4 at 6-7.

36. Rogerson, supra n. 12 at 116 n.1 (stating without citation to authority that slave dealers were generally non-citizen foreigners (peregrini)).

37. Buckland, supra n. 13 at 689.

38. Id. (citing Paulus, who in turn relied on Cassius for this view); Nicholas, supra n. 4 at 210 (suggesting that the one-year limitation for "penal" actions was based on a belief that "resentment should in that time have run cold."); Schulz, supra n. 18 at 46 (ascribing to Cassius the same explanation advanced by Nicholas). See also Buckland & McNair, supra n. 8 at 417 (one-year period thought to be desirable because the praetor’s authority itself was limited to one year, but noting that any individual claimant’s annus utilis would usually extend beyond the praetor’s year in office).

39. Buckland, supra n. 13 at 689-90. Buckland concludes that none of the proposed tests explains the choice between perpetual and time-bound actions among the various praetorian rights and that "[i]n fact the matter was one of express legislation in which no invariable principle is traceable." Id. at 690.

40. There is evidence that the aedilician actions were originally viewed as penal. Buckland, supra n. 13 at 492 n.4. But see Rogerson, supra n. 12 at 127-28 (arguing that the aedilician actions cannot be viewed as penal).

41. Buckland, supra n. 13 at 689 (citing Paulus, the same writer who offered the "penal/non-penal" distinction, and Gaius).

42. See supra n. 8 and accompanying text.

43. Rogerson, supra n. 12 at 128; de Zulueta, supra n. 5 at 42-45.

44. DeZulueta, supra n. 5 at 47 ("variety of cases prevented universal forms, like those of the stipulationes against eviction, from becoming established"). But see Rogerson, supra n. 12 at 128 (standard quality stipulationes could have served as the basis for the same kind of development as the warranty against eviction underwent).

45. One would expect that the various functional arguments that might be argued to justify a specially short cutoff rule may also have played a role in the aediles’ thinking, but there is nothing to indicate that influence. The Roman jurists showed little interest in questions of evidence, Nicholas, supra n. 4 at 176, and it is possible that their attitude led them to ignore the prejudice argument for short cutoffs based on potential loss of evidence.

46. Graue, supra n. 2 at 114-16. The Lex Baiuvariorum, a legal code promulgated by Bavarian dukes about 740-745, required the buyer to return the goods within three days in order to obtain the remedy of avoidance for easily discovered defects, and immediately upon discovery of latent defects. The seller also had the protection of the oath; the buyer had no right to avoid the sale if the seller and one oath-helper swore that the seller had no knowledge of the defect at the time of sale. Id. at 114-15. The thirteenth century Older Westgothic Law, Altere Westgötalag, gave the buyer one month to seek avoidance of the sale of a slave with epilepsy but the slave’s entire life for malaria. Id. at 115.

47. Part I, supra n. 1 at 443.

48. Henri Pirenne, Economic and Social History of Medieval Europe 174-75, 181-84 (I. Clegg, trans. 1937; Garrisson, "Etude Historique," in LaVente Commerciale de Marchandises 13, 15-16, 19 (Joseph Hamel, ed., 1951); Hamilton, "The Ancient Maxim Caveat Emptor," 40 Yale L.J. 1133, 1141-53 (1931).

49. In the earliest period all major trade was conducted at fairs, which originally only territorial princes had a right to found, a right which was normally granted to towns of importance. Pirenne, supra n. 48 at 97-98. The towns remained the "sole centres of commerce and industry" up to and during the course of the fifteenth century. Id. at 169. Guilds were established within the towns primarily to suppress competition. Id. at 183-86.

At the same time, every effort was made to suppress the use of middlemen, at least in the trade involving products from the local area, chiefly to prevent price increases necessary to support a system of distribution employing middlemen, but also to facilitate control over quality in the market. Id. at 174-76. Municipal control thus required that all sale transactions be strictly personal and immediately effective, and all types of sales not involving the actual presence of the goods to be sold either strictly limited or suppressed entirely. Garrisson, supra n. 48 at 18. Garrisson cites ordinances from Saint Omer for wheat and cloth that punished the buyer with loss of all rights against the seller if the buyer accepted delivery outside of the boundaries of the public markets where the sales were authorized. Id. at 15.

50. Roman law was "discovered," first by Italian scholars, in the late eleventh century, Arthur von Mehren & James Gordley, The Civil Law System 7 (2d ed. 1977), and gradually spread throughout Western Europe, becoming a substantial source of law for most of the countries now located in that region. Id. at 10-14. It is not clear exactly when the German courts and legislatures adopted the aedilician rights, but the process was certainly a long one. Christian Recknagel, Die Trennung von Zivil- und Handelsrecht unter besonderer Berücksichtigung der Untersuchung-und Rügepflicht nach § 377 HGB 43 (1985). Although the Roman law reception heavily influenced the law of obligations (contract, tort, and restitution) in Germany, warranty law long remained a "German law island." Franz Wieacker, Privatrechtsgeschichte der Neuzeit 238 (2d ed. 1967).

51. Von Mehren & Gordley, supra n. 50 at 5 (relying chiefly on Pirenne, supra n. 48 at 4-7).

52. Von Mehren & Gordley, supra n. 50 at 7.

53. It is not clear when sales at a distance became common, but it probably was not before the latter half of the sixteenth century. The great market fairs of Western Europe had their peak in the second half of the thirteenth century, Pirenne, supra n. 48 at 103, and declined in the fourteenth. Id. at 213. Knowledge of writing, necessary for contract formation by correspondence, was apparently widespread among merchant who died in 1410, leaving an archive of more than 100,000 letters to and from clients or "factors" in Italy, Spain, Africa, France, and England. Id. at 212 n.2. However, sending a letter remained a risky affair until the creation of general postal services. In Germany, a public mail service was developed gradually during the sixteenth and seventeenth centuries out of private mail services maintained by the great nobles. Rehme, "Geschichte des Handelsrechts" in 1 Handbuch des gesamten Handelsrechts 28, 224 (Victor Ehrenberg, ed., 1913). Another indicium of the rise of sales at a distance was the development of contract formation rules on offer and acceptance, which were not needed for sales in place. Grotins (1583-1645) is generally credited with formulating the first set of such rules. Rudolph Schlesinger, et al., Comparative Law: Cases-Text-Materials 280 (5th ed. 1988).

54. See Hamilton, supra n. 48 at 1183 ("In England a supervision of the market, which was more than pretense and less than reality, was maintained until well past the Restoration."); cf. Pirenne, supra n. 48 at 176-77 (describing the municipal regulation as "powerless" to prevent monopolistic behavior, another major concern of medieval regulation, by the wholesale merchant with a shipload of goods).

55. See, e.g., Honoré, supra n. 11at 145 (due to the influence of the merchants at the time of the reception of the Roman implied warranty in Holland, (1) the implied warranty for horses was limited to a warranty that the horse was "sound in six points," two eyes and four legs, and (2) the remedy of avoidance was reserved for defects so serious that the buyer would not have bought the good if he had knowledge of it).

56. For the municipal regulations, see Pirenne, supra n. 48 at 174-75; Garrisson, supra n. 48 at 14-16. Goldschmidt mentions that this standard was adopted as customary law in international trade. Levin Goldschmidt, Universalgeschichte des Handelsrechts 316 (1891).

57. There is no doubt that the city ordinances came to reflect the influence of the merchants, both great and small, both those involved in local trade and those involved in international trade. Goldschmidt, supra n. 56 at 126-31; Pirenne, supra n. 48 at 183; Rehme, supra n. 53 at 172.

58. Recknagel, supra n. 50 at 44 n. 33 (quoting city statutes from Hamburg (1603) and Lübeck; the latter; however, provided at least a brief period for avoidance because of latent defects); Garrisson, supra n. 48 at 16 n. 1 (quoting the terms of a charter for trade granted in 1320 to foreign merchants by the Countess Mahaut at Saint-Omer which imposed an absolute acceptance rule once the buyer had seen the goods). According to Goldschmidt, the rule that goods accepted and placed in the merchant-buyer’s house or ware house were deemed ratified is attested in international trade between Italy and the Levant as early as 1173. Goldschmidt, supra n. 56 at 317 n. 78.

59. For example, in 1607, a royal charter authorizing merchants from the Hanseatic League to sell goods in Spain, where the buyers were apparently accustomed to the aedilician remedies for latent defects, included the provision that there would be "no right to avoid the contract or obtain a diminution in price unless the buyer complained of the defect within three days of delivery." Peter Raisch, Geschichtliche Voraussetzungen, dogmatische Grundlagen und Sinnwandlungen des Handelsrechts 278 (1965). Raish cites this charter to illustrate his remark that "[t]he merchants sought, in such cases of collision [between Germanic caveat emptor and Roman warranty law] to force through German law, which was more favorable for trade." Id.

Pothier reports that the customs of various French provinces drastically reduced the six-month limitations period that Rome imposed on the aedilician remedy of avoidance and applied the same short limitations period to the damages action. Robert Pothier, Treatise on the Contract of Sale 140-41 (original 1762; L.S. Cushing, translator, 1839). In the custom of Bourbon, for example, the limitations period for defects in horses and cows was eight days. Id.

Recknagel cites an unpublished dissertation by P. Scheer for the opinion that the notice rule can be traced back to the thirteenth century. Recknagel, supra n. 50 at 43. Goldschmidt cites early Italian sources for the development of the notice rule. Goldschmidt, supra n. 56 at 316-17.

The earliest German writer on commercial law reports in 1662 that the aedilician rights were not enforced with much rigor among merchants. Raisch, supra at 278 (citing Marquard, Tractatus politico-juridicus de iure mercatorum et commerciorum singulari (1662)). As late as the nineteenth century, it was merchants’ custom to treat the failure of prompt notification as a waiver of aedilician rights. Id. at 280 (quoting 2 C.J.A. Mittermaier, Deutsches Privatrecht 823 (7th ed. 1847)). For further citations to the nineteenth century view that the notice rule was customary among merchants, see Recknagel, supra n. 50 at 45-46 (court opinions from 1848, 1850 and official comments to draft Prussian Commercial Code); 49-50 (1839 comments to draft Commercial Code for the Kingdom of Württemberg stating that notice customarily required in less than 14 days).

60. Recknagel, supra n. 50 at 43 (citing unpublished dissertation by Scheer).

61. See Recknagel, supra n. 50 at 48-50 (1808 Territorial Code for Baden and 1839 draft Commercial Code for the Kingdom of Württemberg).

The buyer in a sale at a distance faced greater restrictions than the buyer in a sale in place because the notice rule in these early codifications also required prompt notification of hidden defects as soon as the buyer in a sale at a distance could reasonably be expected to discover them. Recknagel, supra n. 50 at 49 n. 64. The buyer at a market, however, was under no similar requirement to discover latent defects and give notice in order to preserve his damage remedies.

62. The acceptance rule for the market sale is a rule of contract formation, as well as performance. It provides a rule for interpreting the parties’ agreement in circumstances in which the seller neither makes an express warranty nor disclaims implied warranties but simply offers to sell goods the faults of which are available to the buyer to inspect at the time the buyer accepts the offer. The formation/acceptance rule is still the general rule today. See, e.g., U.C.C. § 2-316(3)(b); BGB § 460; CISG Art. 35(3). By contrast, in a sale at a distance, delivery comes after the contract has been formed. Under the performance/acceptance or notice rule, the buyer’s quality rights are contingent upon her response to the seller’s performance. In a sense, contract formation is extended into the performance stage.

63. Das preußische Allgemeine Landrecht [ALR] I 5 § 319 (1794) (the "gewöhnlich vorausgesetzten [Eigenschaften]").

64. ALR I 5 § 328; Graue, supra n. 2 at 121.

65. ALR I 5 § 351.

66. ALR I 5 § 330. Although, the quoted portion of § 330 does not appear to be limited to the implied warranty, Recknagel reports that it did not cut off rights with respect to express warranties. Recknagel, supra n. 50 at 48.

67. ALR I 5 §§ 343-45. The one-year period was reserved for warranty claims made with respect to the sale of land. The six-month period applied to goods. Id. The Prussian Code also established a rebuttable presumption that a defect not specifically called out by the buyer at acceptance and made the subject of a reservation of rights first came into existance after delivery. ALR I 5 § 332.

68. BGB § 463.

69. BGB § 464 (buyer loses rights with respect to defects of which he knows if he accepts the goods without reservation) is slightly more generous to the buyer than ALR I 5 § 330. See supra n. 66 and accompanying text.

70. Recknagel, supra n. 50 at 12 n. 73.

71. Recknagel, supra n. 50 at 48-49 (Section 92ae conditioned avoidance for defects on notice within eight days after delivery of the invoice; Section 92af cut off rights with respect to defects unless the buyer gave notice to the seller within 14 days from delivery of the goods; Section 92ag provided exception to the 14-day limit if the seller guaranteed the continued quality of the goods after delivery or if the goods were packed with the good quality goods on top and the poor quality on the bottom).

If protection against possible loss of evidence was a goal of the notice rule in Baden’s Code, the timeliness requirement was a striking example of "overkill" because Section 92af required the buyer’s notice to consist of written certificates from two neutral merchants or other specialists in the goods in question.

72. Raisch, supra n. 59 at 279; Recknagel, supra n. 50 at 49-50. For truly hidden defects, the draft required notice within 48 hours of discovery of the defect but placed no requirement on the buyer to inspect for hidden defects. Raisch, supra n. 59 at 279 n. 12 (quoting Art. 349 of the draft); Recknagel, supra n. 50 at 50 n. 71 (same). For obvious defects, the draft applied an acceptance rule like that in the Prussian Territorial Code, see text supra at n. 66, but also specified in effect that acceptance would be deemed to take place if the buyer failed to inspect the goods and send notice of defects by the second mail collection after receipt of the goods. Raisch, supra n. 59 at 279 n. 12 (quoting draft Art. 347).

73. Raisch, supra n. 59 at 279-80 n. 13 (quoting from the official comments to draft Art. 347, at 318).

74. Raisch, supra n. 59 at 279 n. 12 (quoting draft Art. 349).

75. The statute used the term "ohne Verzug." Raisch, supra n. 59 at 285 n. 36 (quoting § 1418 of the Code of Obligations for Zurich).

76. Raisch, supra n. 59 at 285-87.

77. Recknagel, supra n. 50 at 185.

78. A contemporary commentator wrote:

"It was agreed that it would be appropriate to bar the warranty claim, which has long been recognized in business dealings, as soon as the behavior of the buyer could be interpreted as approval, and as a rule to view a silent taking custody of the good as such." Bluntschli, Comment 1 to § 1418 of the Code of Obligations for Zurich, quoted in Raisch, supra n. 59 at 285.

Bluntschli also advanced as justification for the rule (1) the possible loss of evidence by reason of the delay and (2) the business need for "clear and binding completion of contracts." Id.

79. Von Mehren & Gordley, supra n. 50 at 73. The Federal Diet could only recommend the draft ADHGB to each state belonging to the German League because it had no national legislative power, but by 1866 almost all member states had enacted it. In 1869, the newly formed North German League adopted the ADHGB, and in 1871, it became the law of the newly established German Reich. Id. at 73-74.

80. The language of Section 347 of the ADHGB followed very closely the notice provision from the draft Commercial Code for Prussia, which was never enacted but which had a major influence on the drafting of the ADHGB. Recknagel, supra n. 50 at 50-51; Raisch, supra n. 59 at 280-81.

81. The proposal was made to limit the notice rule to a requirement that the buyer give notice of defects upon discovery, thus eliminating a duty of timely inspection. In connection with the importance in commerce of good faith, one representative stated that

"If one holds [the requirement of good faith] in mind, it is not apparent why the buyer should not be able to trust that, if the seller sends a good, it will be in compliance with the contract and without defect, why he should lose all rights to reimbursement for his damages if he does not mistrust the seller from the beginning and has not inspected the good." Raisch, supra n. 59 at 281 (quoting 2 Protokolle at 643).

82. Recknagel, supra n. 50 at 57 (quoting from 2 Protokolle 643-44); see also Raisch, supra n. 59 at 281.

83. Raisch says this argument was "decisive." Raisch, supra n. 59 at 282. The argument was presented in vastly overstated terms. Raisch quotes this passage from the debates:

"Brokers and distributors would then have to fear that they would face claims by their buyers months and years later, at a time when it would be either not be possible at all to obtain indemnity from their suppliers, or only with the greatest difficulties." Id. at 282 (quoting 2 Protokolle at 645).

The argument takes no account of the six-month limitations period, which would appear to place a considerable amount of that risk on the middleman whether or not buyers are subject to a notice rule.

84. Raisch, supra n. 59 at 282; Recknagel, supra n. 50 at 57-58. Recknagel recognizes that the speculation argument justifies at most a short cutoff on the right to avoid the contract, id. at 51, as Part I of this article also argued. Part I, supra n. 1 at 443.

85. Raisch, supra n. 59 at 282 (quoting 2 Protokolle at 645).

86. The proposal to broaden the notice rule to sales on a market was rejected on the grounds that regulation of local sales was not a matter that would affect trade between the states of the German League and therefore need not be addressed in a uniform law for the states of the League. Recknagel, supra n. 50 at 58.

87. Applying the notice rule to a consumer buyer is generally regarded by civilians as a matter for the civil law, not for commercial law. Art. 277 of the ADHGB, however, stipulated that the provisions of the section of the ADHGB in which the notice rule is located would apply to transactions to which only one the parties was a merchant as long as it did not appear from the face of the provisions themselves that they were to apply only if the transaction was a business transaction for both parties. Recknagel, supra n. 50 at 59 n. 114 (quoting Art. 277).

88. At the time the Nuremberg Commission was charged with drafting the ADHGB, political consensus for a uniform code of civil law for Germany was lacking, largely because of Prussia’s lack of support for the League, but the Nuremberg Commission members sought to use the ADHGB as a vehicle for a "covert" attempt at unification by sweeping as much as possible under the rubric "commercial law." Recknagel, supra n. 50 at 23-24.

89. Raisch, supra n. 59 at 282-83 (quoting 2 Protokolle at 646). The comment is quoted in full in Part I, supra n. 1 at 467 n. 121, where it points the way to the model Part I proposes to explain how the processes through which commercial interests are brought to bear on the formulation of commercial law may underrepresent commercial buyer interests.

90. Raisch, supra n. 59 at 283.

91. Recknagel, supra n. 50 at 59.

92. It was not until 1873 that the federal Constitution was amended to extend federal legislative power over the whole domain of private law. Von Mehren & Gordley, supra n. 50 at 75.

93. See supra n. 79.

94. It was justified partly on the grounds that such sellers need as much as other sellers to know quickly if the transaction has been satisfactorily completed and partly on the grounds that the limitation in the notice rule in the ADHGB to sales at a distance had not been observed by the courts or even by the individual state government enactments of the ADHGB. Recknagel, supra n. 50 at 71 (citing to memorandum of Justice Department submitted in connection with proposed draft of HGB).

95. Recknagel, supra n. 50 at 65 (citing to the Minutes of the First Commission (for drafting the BGB)). Von Kübel, the author of the draft submitted to the First Commission, omitted the acceptance rule only because he preferred to leave the matter to the courts rather than provide a precise rule. Id. at 61.

96. Unlike the First Commission, which was composed of eleven members, six judges from higher courts, three governmental officials, and two eminent law professors (Von Mehren & Gordley, supra n. 50 at 75-76), the Second Commission called to draft the BGB contained strong business representation. The Second Commission consisted of ten permanent members and twelve nonpermanent members. The ten permanent members were all from the legal profession and included two law professors, six representatives of the government, and one practicing lawyer. The twelve nonpermanent members represented business interests. They included owners of large farms, a bank director, a director of a brewery, a professor of economics, and a professor of law. The nonpermanent members had the right to be present and vote at any time, but were obligated to attend only if asked by the chairman. Id. at 76. The Reich’s Justice Department undertook the drafting of the HGB, but the first draft was circulated for comment to a committee of lawyers, merchants, and manufacturers. Recknagel, supra n. 50 at 70.

97. The First Commission, which deliberated in secret for thirteen years and did not publish a draft until 1887 (von Mehren & Gordley, supra n. 50 at 75-76), rejected a proposal to add an inspection duty to the BGB as "not justified by internal grounds" and "for the non-business trade, as opposed to business transactions, not based on practical considerations." Recknagel, supra n. 50 at 65 (quoting the Minutes of the First Commission).

The Second Commission, which completed its work in five years and submitted its draft in October 1895 (von Mehren & Gordley, supra n. 50 at 76-77), rejected a proposal to add a notice rule without a duty of prompt inspection. Recknagel, supra n. 50 at 67-68.

Finally, when the final draft was being debated in the Justice Committee of the upper house (the Bundesrat), the senator from Bremen moved the addition of a notice rule including a duty of prompt inspection. The motion generated "considerable discussion." Id. at 69. Prussia carried the day by insisting that no inspection requirement be imposed on non-merchant buyers and by objecting to the notice rule without an inspection requirement on the grounds that such a rule would generate litigation and raise a significant risk for persons not knowledgeable about business affairs. Id.

The Justice Department (Reichsjustizamt) drafted the HGB in the light of these debates over the BGB. The memorandum submitted with the draft HGB therefore stated that, while the notice rule was necessary for trade, it would too greatly advantage business interests to subject consumer buyers to the rule. Id. at 71.

98. Recknagel, supra n. 50 at 68 (indirectly quoting Minutes of Second Commission).

99. Id. Perhaps most surprising of all, it was argued that any sort of notice rule would tempt consumer buyers to commit perjury in order to preserve their warranty rights. "The sellers’ need for protection cannot outweigh such an endangering of public morals." Id. (indirectly quoting the Minutes of the Second Commission). The speculation argument for the notice rule was refuted on the grounds that it was not reasonable to expect non-business buyers to engage in speculation. Id.

100. Recknagel, supra n. 50 at 71 (indirectly quoting Justice Department (Reichsjustizamt) memorandum that accompanied submission of draft HGB to the legislature).

101. Recknagel, supra n. 50 at 71 (indirectly quoting from Justice Department memorandum in support of draft HGB).

102. Sect. 377 of the HGB provides:

"(1) If the sale is for both parties a commercial transaction, the buyer must inspect the goods immediately after delivery by the seller insofar as practicable in accordance with orderly business practices and, if a defect shows itself, give the seller notice without delay.

"(2) If the buyer fails to give notice, the goods are deemed approved unless a defect is involved which could not have been discovered by inspection.

"(3) If such a defect is later discovered, the notice must be made immediately after the discovery; otherwise the goods; are deemed approved also in respect to this defect.

"(4) Timely sending of the notice suffices to preserve the buyer’s rights.

"(5) If the seller concealed the defect in bad faith, it cannot rely on these provisions."

Sect. 378 of the HGB provides:

"The provisions of § 377 also apply if a different item from the one specified or a different amount from that specified is delivered, as long as the delivered goods do not differ from the order so materially that the seller must consider the buyer’s approval out of the question."

103. See Part I, supra n. 1 at 450 n. 49.

104. Gesetz zur Regelung des Rechts der Allegemeinen Geschäftsbedingungen [ABG-Gesetz] § 11 ¶ 10(e) (1976) (literally voiding any express contractual notice rule in a consumer contract setting a notice period shorter than the applicable limitations period). See generally Walter Löwe, Friedrich Graf von Westphalen, & Reinhold Trinkner, Kommentar zum Gesetz zur Regelung des Rechts der Allgemeinen Geschäftsbedingungen § 11 (1977).

Although that particular provision of the ABG-Gesetz does not apply to commercial buyers, a section applicable to merchants as well as to consumers (§ 9) invalidates standard clauses in any contract that are against good faith. § 11 is considered a specific application of that provision. There is therefore a possibility that at least in some specific situations a commercial notice provision too short to permit a reasonable inspection would be void under § 9. 5 Ernst Gessler, Wolfgang Hefermehl, Wolfgang Hildebrandt, George Schröder, Schlegelberger Handelsgesetzbuch 4, 168 (5th ed. 1982) [hereinafter cited as Schlegelberger Handelsgesetzbuch].

105. Karsten Schmidt, Handelsrecht 596 (2d ed. 1982) (in case of obvious defects, the notice period is "extraordinarily short," usually encompassing "at most only days, in the case of perishable goods often only hours"). See generally 5 Schlegelberger Handelsgesetzbuch, supra n. 104 at 163-64; 4 Dieter Brüggemann et al., Handelsgesetzbuch: Großkommentar 333, 393-95 (1970) [hereinafter cited as Großkommentar].

106. HGB § 377(3). See generally Schlegelberger Handelsgesetzbuch supra n. 104 at 164-65; Großkommentar, supra n. 105 at 395-97.

107. HGB § 377(3). The term "without delay" (unverzüglich) is interpreted to mean "without culpable hesitation" (ohne schuldhaftes Zögern), a definition used in BGB § 121 (requiring a party to assert his right to avoid an obligation on the grounds of mistake "without delay"). Schmidt, supra n. 105 at 593-94.

The phrase "insofar as practicable in accordance with orderly business practice" obviously is intended to allow flexibility for many different situations and might be thought to militate against an overly strict interpretation of the rule, but German business practices are apparently understood to be quite strict. See, e.g., Judgment of 26 February 1964, BGHZ, W. Ger. 1964 Betriebsberater 329 (holding that claims raised on January 9 with regard to goods (of unspecified type, but apparently not perishable) delivered on December 21 of the previous year came too late, even though the buyer’s business was closed from Christmas through January 2). The court said that the delay in January (of 7 days) was itself sufficient to justify the lower court’s dismissal of the buyer’s claims because by January the need to inspect the goods had become so pressing that other work should have been neglected if necessary in order to accomplish the inspection within the first week of January. See generally 5 Schlegelberger Handelsgesetzbuch, supra n. 104 at 164-68 (surveying cases on required thoroughness of inspection and recommending that parties agree on express notice rules setting one week to ten days as the limit for raising avoidance claims and one month for damage claims); 4 Großkommentar, supra n. 105 at 380-83.

108. HGB § 377(2), (3).

HBG § 378, which subjects claims that the delivered goods are different from the ones ordered or of a different quantity to the same notice rule, emphasizes the ratification rationale because it specifically does not apply if the deviation in kind or quantity is so great "that the seller must consider the buyer’s approval out of the question."

109. For example, Professor Marburger states that the required notice has not only an informational function but also a protest function. Marburger, "Die Sachmängelhaftung beim Handelskauf," 23 Juristische Schulung 1, 6 (January 1983). Nevertheless, he mentions repose and prejudice arguments as the basic rationale for the notice rule, id. at 1, and rejects the ratification argument by terming the statutory ratification language a "ratification fiction." Id. at 10; accord 4 Großkommentar, supra n. 105 at 386.

110. The notice that is required need communicate information only about the alleged defect, not also an assertion of legal rights, though the buyer cannot at the same time indicate that she renounces any claims for redress on account of the defect. 4 Großkommentar, supra n. 105 at 386-87; 5 Schlegelberger Handelsgesetzbuch, supra n. 104 at 159-61; Marburger, supra n. 109 at 6.

This interpretation is consistent with Part I’s analysis of the functional arguments for special cutoff rules because the seller suffers an informational disadvantage vis-à-vis the buyer only by virtue of delivery of the good. All parties suffer a more general informational disadvantage with respect to every other party’s intentions, but notice does little to ameliorate that particular disadvantage, and it is not created by delivery. The only informational disadvantage created by delivery of the goods concerns knowledge of the defect.

111. See text infra at n. 202.

112. Schmidt, supra n. 105 at 584-85 (quoting a 1978 decision by the Bundesgerichtshof, 1978 Betiebsberater 1489); Marburger, supra n. 109 at 1.

113. 5 Schlegelberger Handelsgesetzbuch, supra n. 104 at 136 ("So long [the six-months limitations period] an uncertainty about the buyer’s position is unbearable for commercial transactions. A seller who is a merchant has an interest, worthy of protection, in learning as soon as possible after each delivery whether the buyer objects, and whether he therefore must reckon with claims. Otherwise he cannot make his arrangements. Beyond that, there is a general interest in wrapping up commercial transactions quickly."); Schmidt, supra n. 105 at 584 ("The basic idea of § 377 ff. HGB is connected with the need, characteristic for commercial transactions, for clarity and speed in concluding transactions."); Marburger, supra n. 109 at 1.

114. Pothier required the buyer unfamiliar with the goods in question to have someone familiar with such goods examine them for defects. 4 Répertoire de Droit Commercial (Dalloz, 1974), Ventes Commerciales ¶ 428 (1984) [hereinafter "Rép. Comm."].

115. Art. 1641 of the French Civil Code states:

"The seller is responsible in warranty for hidden defects in the good sold which render it improper for the usage for which it is intended, or which impair this usage so much that the buyer would not have acquired it, or would have paid only a lower price, if he had known of them."

Art. 1642 states:

"The seller is not liable for defects which are apparent and of which the buyer could have convinced himself."

116. The standard is usually stated as follows:

"An apparent defect is not only that which necessitates a superficial examination, but also that which a person of medium diligence would have discovered by conducting a simple inspection." Rép. Comm., supra n. 114 ¶ 430, quoting Judgment of 17 December 1964, Cass. civ. 3e, Bull. Civ. III, no. 571.

117. Art. 1644 provides:

"In the case of arts. 1641 and 1643, the buyer has the choice of returning the good and obtaining restitution of the price or of keeping the good and obtaining repayment of a portion of the price, as determined by experts."

Reduction in price determined by experts is apparently rarely sought. 4 Rép. Comm., supra n. 114, ¶ 525. It is most suitable for relatively minor defects which can be easily repaired, but if the defects are too minor, then they do not constitute "hidden defects" at all. Id. ¶ 430. Nevertheless, buyers often sue for both remedies hoping that the judge will grant a reduction in price if she views the defect as insufficiently serious to warrant avoidance. Id., ¶ 525.

118. Art. 1645 states:

"If the seller knew of the defects in the good, he is liable for the buyer, in addition to restitution of the price which he has received, for all damages."

If the seller did not know of the defects, "he is liable only for restitution of the price and to reimburse the purchaser the expenses occasioned by the sale." C. civ. art. 1646.

119. Art. 1648 provides:

"The action resulting from redhibitory defects should be commenced by the buyer within a brief period, according to the nature of the redhibitory defects and the usages of the place where the sale was made."

120. Decisions on the bref délai have shown "a remarkable diversity," 4 Rép. Comm., supra n. 114 ¶ 459, allowing, for example, in the case of defects in automobiles some suits after twenty months or even two years but dismissing others for delays as short as six or eight months. Id. ¶ 460. In general, "the trial judges interpret the bref délai in a rather severe manner for the buyer," id. ¶ 461, with decisions dismissing suits for vice caché for delays of as little as five or eight months. Id.

121. In general, it appears that the limitations period begins to run from the point of discovery of the defect. Jacques Ghestin, Conformité et Garanties dans la Vente (Produits mobiliers) 34 (1983); 4 Rép. Comm., supra n. 114 ¶ 463; but see Ghestin, op. cit. at 34 (suggesting that the period really should run from the earliest point at which the buyer should have discovered the defect). The principal uncertainty concerns what it means to "discover" the defect. Some court decisions have treated the short limitations period as running from discovery that there is a sufficiently significant problem to call for expert assistance in determining the cause, 4 Rép. Comm., supra n. 114 ¶ 465, and others have taken receipt of the expert’s report identifying the defect as the determinative point. Id. ¶ 464. The uncertainty has not been remedied by the Cour de cassation because it treats the question as one that is not reviewable. Id. ¶ 466; Ghestin, supra at 33.

122. BGB § 477; HGB §§ 377-78. But see text supra at n. 68.

123. If the buyer has not yet paid the price for the goods, she can reject the good and withhold the price because of the seller’s breach pursuant to the French law version of the Roman law doctrine exceptio non adimpleti contractus (in French, exception d’inexécution). In the commercial world, the rejected good is said to be laissé pour compte. 4 Rép. Comm., supra n. 114 ¶¶ 376-77. Doubts have been raised about this remedy. It is expressly provided in the French Civil Code only for the benefit of the seller whose buyer fails to pay the price (Arts. 1612, 1613). Moreover, it provides a temporary remedy only; the seller can still redeliver conforming goods and hold the buyer to the contract. Barry Nicholas, French Law of Contract 207-08 (1982).

If she wishes to secure a permanent release from her obligations, or if she has already performed and wants restitution, she must seek résolution. The French law remedy of résolution differs from avoidance (rescission) in the common law in two principal ways: (1) in general the party seeking résolution is not free to claim the remedy as an instance of self-help but must apply to court for an order "resolving" the contract, and (2) the question of which breaches are serious enough to justify the remedy is committed entirely to the lower courts’ discretion. Id. at 236-38. There is a murky collection of cases in which the courts have ratified extra-judicial termination for breach, but the general requirement of judicial control of discharge is much insisted on. See generally Nicholas, supra at 239-40; 4 Jean Carbonnier, Droit civil: Les Obligations §§ 80-81, at 315-24 (11th ed. 1982).

124. Although there are some differences, in broad principle, the damages recoverable under French contract law are the same as those recoverable under the common law. Nicholas, supra n. 123 at 219. The French law of damages is not highly developed, however, because damages issues have been left largely within the discretion of the trial courts. Id. In principle, compensation is available for all loss resulting from the breach, but the scope of recovery is limited by the requirements (1) that the loss be the "immediate and direct consequence of the non-performance" (C. civ. art. 1151), and (2) that, in the case of breach not attributable to dol (misreprestation or duress), the loss have been foreseeable. Id. at 220.

In certain cases of delivery of defective goods, the buyer also apparently has the right to enforce specific performance through repair of the defective good. 4 Rép. Comm. supra n. 114 ¶ 379. These situations, however, must be quite rare.

125. C. com. art. 189 bis ("Obligations arising out of commerce between merchants or between merchants and non-merchants prescribe in ten years if they are not subjected to special shorter prescription periods."). Suits by merchant-sellers against consumers for the price of goods sold are subject to a one-year limitations period. C. civ. art. 2272 ¶ 4. The general limitation period, applicable in the absence of special shorter rules, is thirty years. C. civ. art. 2262.

126. See text supra at nn. 31-34.

127. Art. 1246 has been interpreted to require that in cases in which the contract does not specify quality, the goods should at least be of fair, average quality (qualité loyale et marchande). Especially in sales to consumers, the courts have begun to hold that the goods should be suitable for the usage that one is entitled to expect from a medium good of this type. 4 Rép. comm., supra n. 114 ¶ 214.

128. Ghestin, supra n. 121 at 198.

129. Ghestin, supra n. 121 at 198-210; Zérah, "La Garantie des Vices Cachés," in Vente Commerciale de Marchandises 339, 386-87 (Joseph Hamel, ed., 1951).

130. The doctrine is usally given in the form of the Latin maxim, spondet peritiam artis, and is given by Pothier as Roman law as well as the rule for French sales law of his time. Pothier, supra n. 59, § 214 at 132; see also Morrow, supra n. 3 at 357 (for French law, in part relying on Pothier). For citations of French cases employing the presumption since 1859, see Ghestin, supra n. 121, at 245 n. 8, 251 n. 38.

131. Art. 1646 of the Civil Code makes the good faith seller liable for "restitution of the price" and reimbursement of "the expenses occasioned by the sale." Starting in 1847, the Cour de cassation began to use the latter phrase to justify recoveries of most consequential damages buyers suffered as a result of defective goods sold by sellers in the business of selling goods of the kind in question. Ghestin, supra n. 121 at 244-45. See also Morrow, supra n. 3 at 537-43.

132. Ghestin, supra n. 121 at 245-46; 4 Rép. Comm., supra n. 114 ¶¶ 502-21. In principle, the merchant buyer apparently benefits from the same presumption, but the much higher standard the merchant is held to in buying the goods in which he regularly deals makes it more probable in the case of merchant buyers that the defects will not qualify for warranty coverage against "hidden defects." Id. ¶ 512.

133. Art. 1643 of the Civil Code is understood to mean that a seller with knowledge of hidden defects cannot shield himself from liability through general disclaimers. C. civ. art. 1643 ("[The seller] is liable for hidden defects, even if he does not know of them, unless, in that case, he has not agreed that he will not be liable for any warranty."). Since disclaimers of warranty are not effective with respect to the seller with knowledge, the courts apparently reason that they should not be effective to protect merchant sellers who are always to be treated as sellers with knowledge. Ghestin, supra n. 121, at 247; see generally 4 Rép. Comm., supra n. 114 ¶¶ 411, 529-33.

The types of contractual clauses covered by this ban include clauses that attempt to limit the bref délai or the remedy. Id. ¶¶ 531-32.

134. The enforceability of contractual limitations or disclaimers of warranty liability between merchants appears to have been settled by two decisions of the Cour de cassation in 1978, but the merchant buyer must be a merchant with respect to the goods in question. Ghestin, supra n. 121 at 281-94; 4 Rép. Comm., supra n. 114 ¶¶ 536-39.

135. Id. ¶ 413.

French sellers have been accused of offering express warranties in the hopes of misleading consumers into thinking that the express warranties elaborated in the written contracts constitute the totality of the sellers’ warranty obligations. The government has sought to frustrate this strategy by the decree of 24 March 1978, which imposes criminal penalties on sellers for failure to disclose in form contracts for consumer sales the existence of the consumers’ legal rights in the absence of written warranty. Id. ¶¶ 526-27.

136. Ghestin states that the only function of the distinction in current court decisions is to determine whether the bref délai applies. Ghestin, supra n. 121 at 205-07.

137. Michel Alter, L’Obligation de Délivrance dans la Vente de Meubles Corporels 197 (1972); Ghestin, supra n. 121 at 213-14; Zérah, supra n. 129 at 387; Aubertin, casenote on Judgment of 12 February 1980, Cass. civ. comm., Fr., 1981 Recueil Dalloz-Sirey, Jurisprudence [D.S. Jur.] 278.

138. Ghestin, supra n. 121 at 213.

139. Ghestin, supra n. 121 at 21314 (citing decisions from 1924 and 1968).

140. Judgment of 12 February 1980, Cass. civ. com., Fr., 1981 D.S. Jr. 278 (casenote by Aubertin). See also Ghestin, supra n. 121 at 214 (describing and interpreting the decision). The case involved a claim by a furniture manufacturer against a seller of oak studs which were plainly unsuitable for the intended use but which had been accepted without reservation by an agent for the buyer.

141. Ghestin, supra n. 121 at 214 n.88 (citing court of appeal decisions for Paris from 1975 and 1978 and for Bordeaux from 1977).

142. Ghestin, supra n. 121 at 215 (reporting on Judgment of 3 June 1981, Cass. civ. com., Bulletin civil, IV, No. 263, at 209). In that case, the Cour de cassation reversed the lower court for dismissing a buyer’s suit on the ground of the acceptance rule, not because of disagreement with the rule, but because the lower court had improperly applied the rule. According to the Cour de cassation, the appellate court had found that the defect (improper level of humidity in corn) could only be detected by a specialized test, the results of which were not known to the buyer until after delivery and acceptance. Hence the defect was a latent one which would not be subject to the acceptance rule.

143. Alter, supra n. 137 at 180-81 (justifying function of standard contract terms requiring acceptance of goods in the seller’s factories or stores); Ghestin, supra n. 121 at 211 (same).

144. The evidence gathering argument is stated explicitly by Alter and hinted at in other discussions of the burden of proof. See, e.g., Alter, supra n. 137 at 188; Ghestin, supra n. 121 at 212-13. Since it appears that, as a practical matter, French courts are likely to rule for the buyer only if expert third-party evidence of the defect is available, the evidence gathering argument is of little weight for French law. See Part I, supra n. 1 at 447.

145. Alter, supra n. 137 at 197; Aubertin, supra n. 137 at 279 (¶ 4).

146. Alter, supra n. 137 at 179-82, 187-90 (surveying standard terms and conditions imposing an acceptance rule; giving "commercial practice" as well as the caselaw of the commercial courts as a source of the ratification argument for the acceptance rule) Ghestin, supra n. 121 at 210-11 (relying on Alter’s study of standard terms).

147. Alter, supra n. 137 at 179-80 (noting that clauses imposing an acceptance rule at the place of shipment favor sellers), 188 (giving as one reason for express clauses reducing the time during which the buyer can bring an action for breach of the quality warranty, "the dominant position of the seller imposing a suitable clause to liberate him rapidly."), 197 ("The [acceptance rule imposed by express contract clause] is perhaps severe for the buyer, . . .").

148. Alter, supra n. 137 at 247; Ghestin, supra n. 121 at 216-17; Zérah, supra n. 129 at 388.

149. See, e.g., Judgment of 9 March 1983, Cass. civ. 1re, 1984 J.C.P. II No. 20295 (casenote by Courbe); see also, Judgment of 15 October 1986, Cour d’appel de Paris, 1987 D.S. Jur. 334 (also using distinction to get around the bref délai).

150. See, e.g., Courbe, casenote to Judgment of 9 March 1983, Cass, civ. 1re, J.C.P. II No. 20295, ¶ 27 (accusing Cour de cassation of eliminating all of the special rules for vices cachés and expressing hope that legislation will amend the Civil Code to regularize the situation).

151. Judgment of 8 November 1962, Cour d’appel, Colmar, Fr., reported in Lévy, "La garantie des vices cachés dans la vente de véhicules," 1970 Rev. trim. dr. civ. 1.

152. 4 Rép. comm., supra n. 114 ¶ 430.

153. The merchant is expected to have expertise with respect to items in which it regularly deals in the normal course of business and is held accountable to use that expertise. Id. ¶ 433.

154. In addition to the example of German law restricting the acceptance rule to known defects, BGB § 464, American law eliminated the acceptance rule entirely for damage claims, see infra Section IV C 2, with the exception of the acceptance/formation rule for sales in place. See text supra at n. 62.

155. Because the Code section imposing the "bref délai" is phrased as a statute of limitations, requiring the buyer to start a lawsuit in order to escape its bar, a number of decisions have imposed the bar even though through attempts to resolve the dispute short of litigation the buyer clearly gave notice to the seller of the defect well within acceptable time limits. 4 Rép. comm., supra n. 114 ¶ 468. It has been suggested; however, that prompt notice is all that is really the object of article 1648 and that it therefore ought to be interpreted as requiring nothing more than written notice. Id. ¶ 474.

156. Aubertin has advocated that it be applied to consumers with "suitable modifications." Aubertin, supra n. 137 ¶ 15.

157. Hamilton, supra n. 48 at 1142.

158. The "pie-powder" or "dusty-foot" was the traveling merchant, under way at all seasons except winter. Pirenne, supra n. 48 at 95. The courts of that name were thus for the traveling merchants, and they applied the law merchant. Hamilton, supra n. 48 at 1158.

159. Hamilton, supra n. 48 at 1154.

160. It does not appear from the many cases described in Professor Hamilton’s account that liability was imposed for patent defects. Hamilton, supra n. 48. Professor Simpson is clear that the common law courts did not impose liability for patent defects up to 1677. A.W.B. Simpson, A History of the Common Law of Contract 247 (1975) (covering the period up to 1677 only).

161. Hamilton says that "1606 is the date usually set down as the real beginning of the administration of the law merchant in the king’s courts." Hamilton, supra n. 48 at 1167 n. 224.

162. Hamilton, supra n. 48 at 1167. Simpson’s description of the earlier common law development of actions for deceit for breach of warranty shows that the common law courts had developed a limited action for breach of warranty prior to the seventeenth century, but it was extremely rigid. Simpson, supra n. 160 at 240-47. He cites Chief Justice Frowicke as laying down in essence the following law of warranty in 1507: "The seller of victuals was liable if he sold corrupt victuals whether he knew or not, and whether he warranted or not. Sellers of other chattels who knew that they were defective when the buyer did not were liable even if no warranty was given. Sellers of other chattels who warranted quality were liable irrespective of their knowledge of the defect." Id. at 247. Simpson casts doubt on whether the middle of the three propositions was in fact a correct statement of the then current law. "There is, however, no real evidence that the common law courts in practice gave effect to so paternalistic a doctrine." Id. (footnote omitted).

Atiyah also agrees with the essentials of Hamilton’s account by stating that there was no "strong common law tradition of actions for breach of warranty prior to the eighteenth century." P.S. Atiyah, The Rise and Fall of Freedom of Contract 179 (1979).

163. Hamilton, supra n. 48 at 1169.

164. "Not until the nineteenth century, did judges discover that caveat emptor sharpened wits, taught self-reliance, made a man – an economic man – out of the buyer, and served well its two masters, business and justice." Hamilton, supra n. 48 at 1186.

165. Hamilton, supra n. 48 at 1177.

166. Hamilton, supra n. 48 at 1174-77 (describing cases). Atiyah says that the King’s Bench and particularly the Exchequer Court "fought against . . . implied warranties [of quality]," Atiyah, supra n. 162 at 474, but the Common Pleas was willing to hold that "a sound price implied a sound commodity, at least where the fault in the goods was not something readily discoverable." Id.

167. The truth is . . . that the early nineteenth century say little more than a brief flirtation with the doctrine caveat emptor; from the beginning this flirtation had to contend with serious opposition from judges who still believed that it was part of the job of the Courts to see that contracts were fair; and by the 1860s, at least in contracts of sale of goods, these judges had won out, and the flirtation was over." Atiyah, supra n. 162 at 479.

168. Sale of Goods Act, 1893, 56 & 57 Vict., ch. 71 [SGA, 1893], § 12.

169. SGA, 1893, § 14(1).

170. SGA, 1893, § 14(2).

171. SGA, 1893, § 53.

172. SGA, 1893, § 11(1)(b).

173. SGA, 1893, § 11(1)(c).

174. Samuel Williston, The Law Governing Sales of Goods at Common Law and under the Uniform Sales Act § 248 at 335 (1909).

175. Sale of Goods Act, 1979, ch. 54, §§ 12-15, 53.

176. "We must, however, turn from England to America to witness the real triumph of caveat emptor." Hamilton, supra n. 48 at 1178. Accord Atiyah, supra n. 162 at 180 ("the doctrine of caveat emptor never seems to have been nearly as rigorously applied in England as is popularly believed, and certainly not as rigorously as it was later applied in America.") (footnote omitted).

177. Hamilton, supra n. 48 at 1180-81 (citing cases and commentaries).

178. Hart v. Wright, 17 Wend. 267, 275 (N.Y.S. Ct. 1837) (Cowan, J.) aff’d sub nomine, Wright v. Hart, 18 Wend. 449 (N.Y. 1837).

179. Barnard v. Kellogg, 77 U.S. 383, 388-89 (1870).

180. The chief difference between the warranty rule then prevailing in the United States and Williston’s draft of the USA had to do with which types of sellers would be held to the implied warranty of merchantability. The dominant view in the United States was that the warranty of merchantability would be implied in sales by manufacturers of goods sold by description; Williston, supra n. 174, § 232 at 306-07, but not in similar sales by dealers. Id. § 233 at 309-10. The USA, like the SGA, implied the warranty of merchantability whenever goods are sold by description by a seller who deals in goods of the description. Id. § 227 at 300.

181. See 1 Samuel Williston, Williston on Sales § 1, at 6 n. 3-5 (3d ed. 1948) (listing of years of adoption by states; by 1930, 29 states and 2 territories had adopted; by 1948, 34 states, 2 territories, and the District of Columbia).

182. Williston, supra n. 174 § 489 at 853. According to Williston, the rule held sway not only in New York, but also in federal cases and in Georgia, Iowa, Kentuky, Michigan, Minnisota, Mississippi, Nebraska, Texas, and Wisconsin. Id. at 853-54 n. 34.

183. Williston, supra n. 174, § 489 at 855 n. 37-38 (citing New York cases that limited the acceptance rule to executory contracts but also citing to New York cases for the proposition that express warranties survive acceptance).

184. See Williston, supra n. 174, § 2 at 2. The latter limitation tailors the acceptance rule to fit with the ancient formation/acceptance rule that deprives the buyer in a sale in place of implied warranty rights with respect to defects she could have discovered at the time the contract was concluded. Most executed sales will be sales in place. Those executed sales thus are already subject to their own type of acceptance rule. However, the limitation on the New York acceptance rule did apparently mean that if the buyer was willing to take title (and hence risk of loss) before delivery of the goods, subsequent acceptance of the goods would not foreclose all of the buyer's rights to damages for breach of warrenty.

185. Williston, supra n. 174, § 489 at 855.

186. Williston, supra n. 174, § 489 at 855.

187. Williston, supra n. 174, § 489 at 857-58 (giving as example the rule in New York that a sample could create an express warrenty, but not in Minnesota). There was in general great variation among the states with regard to the meaning of "warranty." Id. § 181.

188. Williston, supra n. 174 § 489 at 855-56. For the BGB rule, see supra n. 69.

189. Williston calls the right of avoidance "rescission."

190. Williston, supra note 174, § 489 at 854.

191. Williston, supra n. 174, § 489 at 854. ("To require a business man offhand to determine whether a contract is executory or whether the property in the goods has already passed, and to impose a severe penalty upon him if he guesses wrong, is certainly an unfortunate state of the law, which should not be tolerated if, as in the matter under consideration, it is not necessary.") (footnote omitted).

192. Williston, supra n. 174, § 485 at 847.

193. Williston, supra n. 174, § 488 at 851-52.

194. Id. at 864 n. 73. Williston also cited Morse v. Moore, 83 Me. 473, 22 A. 362 (1891), in which the Supreme Court of Maine rejected the notice rule in a passage quoted by Williston but observed that "the fact of acceptance, however, as a matter of evidence, may have great weight on the question of satisfactory or sufficient performance." 83 Me. at 481, 22 A. at 364. According to Williston, the merits of converting what the Supreme Court of Maine – and, apparently also Williston – thought should be a question of fact into a rule of law were the statutory rule’s "certainty and the limitation of time for disputing the correctness of the seller’s performance." Williston, supra n. 174 at 853. From the brevity of the argument, it is not possible to tell if he means by the latter phrase to advance a repose or prejudice rationale for the notice rule, but one or both would provide the only principled explanations for his preference for a specially short cutoff period for buyers’ claims.

195. Williston, supra n. 174, § 611 at 1017.

196. Williston explained the relationship between the cutoff rules for the two remedies as follows:

"If, knowing that the goods were not what he had a right to expect, the buyer still retains them, he may not thereby be deprived of a right to sue the seller for the injury, but he is precluded from asserting a right to withdraw from the transaction altogether." Williston, supra n. 174, § 611 at 1017 (footnote omitted).

197. U.C.C. §§ 2-602, 2-608 (avoidance), 2-607(3)(a).

198. There are a few cases in the 1930’s apparently premised on the ratification theory. See, e.g., Idzykowski v. Jordan Marsh Co., 279 Mass. 163, 167, 181 N.E. 172, 173 (1932) (notice rule requires "such a notice as to repel the inference of waiver").

199. See James White & Robert Summers, Uniform Commercial Code (Hornbook Series – Student Edition) 481 (3d ed. 1988) (cure is the "most important reason for requiring notice"; evidence gathering also mentioned); see generally Reitz, "Against Notice: A Proposal to Restrict the Notice of Claims rule in U.C.C. § 2-607(3)(a)," 73 Cornell L. Rev. 534, 540-43 (citing current cases and commentary), 547-48 n.41 (general sketch of history), 549-50 nn. 44-45 (history of settlement and repose arguments).

200. White & Summers, supra n. 199 at 481 (repose is a "less important policy behind the notice requirement"); see generally Reitz, supra n. 199 at 543-43 (surveying authorities and arguing that none of them assert repose as an independent rationale for the rule, capable of justifying it in the absence of prejudice).

Some American courts and writers have also advanced the very questionable rationale that the prompt notice requirement is justified on the grounds that it promotes settlement. See generally id. at 541 n. 23 (surveying authorities). Some courts have adopted the idea enthusiastically, as an independent ground for the rule, but many others have simply omitted it from their catalogue of the policy justifications for the rule. Id. at 542 n. 26. for a refutation of the settlement argument, see id. at 550-52.

201. See, e.g., Roth Steel Products v. Sharon Steel Corp., 705 F.2d 134, 152 (6th Cir. 1983); Eastern Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957, 972-73 (5th Cir. 1976); Armco Steel Corp. v. Isaacson Structural Steel Co., 611 P.2d 507, 510-11 n.8 (Alaska 1980).

202. The courts are fairly evenly divided over whether the notice rule in U.C.C. § 2-607(3)(a) requires strict or only a lenient standard for the content of notice. The strict standard requires the buyer to tell the seller, directly or inferentially, that the buyer demands damages for the seller’s breach. It is probably the majority rule today. The lenient standard is said to require only that the buyer notify the seller that "the transaction is still troublesome and must be watched." U.C.C. § 2-607, comment 4 (also stating that the notice must "inform[. . .] the seller that the transaction is claimed to involve a breach"). Cases for each standard are collected in Note, "Notification of Breach under Uniform Commercial Code Section 2-607(3)(a): A Conflict, A Resolution," 70 Cornell L. Rev. 525, 530-37 (1985); see also Reitz, supra n. 199 at 543-44 n. 31 (cases), 575-77 (arguing for lenient standard).

203. See Reitz, supra n. 199 at 556 n. 67 (collecting cases on business buyers).

204. Mariner Water Renaturalizer of Washington, Inc. v. Aqua Purification Systems, Inc., 665 F.2d 1066 (D.C. Cir. 1981) (upholding trial court finding that notice 5 to 8 weeks after delivery was untimely); Fruin-Colnon Corp. v. Air Door, Inc., 157 Ga. App. 804, 278 S.E.2d 708 (1981) (notice 2 weeks after discovering defect shortly after delivery too late); Societe Nouvelle Vaskene v. Lehman Saunders, Ltd., 14 U.C.C. Rep. Serv. (Callaghan) 692 (N.Y. Sup. Ct. 1974) (3 ½ months after most deliveries, 1 ½ months after all deliveries, and at least 1 month after discovery of the defects, which were readily apparent); EPN-Delaval, S.A. v. Inter-Equip, Inc., 542 F. Supp. 238 (S.D. Tex. 1982) (65 days).

205. U.C.C. § 2-607(3)(a) applies to any "buyer."

206. U.C.C. § 2-607, comment 4 ("A 'reasonable time’ for notification from a retail consumer is to be judged by different standards so that in his case it will be extended, . . .") See Clark, "The First Line of Defense in Warranty Suits: Failure to Give Notice of Breach," 15 U.C.C. L.J. 105, 115-17, 131-33 (1982) (collecting cases).

207. See, e.g., Goldstein v. G.D. Searle & Co., 62 Ill. App. 3d 344, 378 N.E. 2d 1083 (1978) (almost 4 years); Maybank v. S.S. Kresge Co., 302 N.C. 129, 136, 273 S.E. 2d 681, 684 (1981) (3 years).

208. See Fischer v. Mead Johnson Laboratories, 41 A.D.2d 737, 341 N.Y.S.2d 257 (App. Div. 1973); Me. Rev. Stat. Ann. tit. 11, § 2-607(7) (Supp. 1986) (excluding consumer goods from scope of 2-607); S.C. Code Ann. § 36.2-607(3) (Law. Co-op. 1976) (eliminating from scope of notice rule all cases of personal injury, which would include a large portion of consumer claims).

209. The Magnuson-Moss Warranty Act, 15 U.S.C. § 2301-2312 (1982), applies to all consumer contracts in which the sellers provide written warranties. Sec. 2304(b)(1) overrides the suppletive rule of U.C.C. § 2-607(3)(a) but permits a seller to impose an express contract clause requiring notice. The federal legislation also requires consumers to comply with any informal dispute resolution procedure established by the seller and to give the seller an opportunity to cure. 15 U.S.C. § 2310(a)(3) and (e) (1982).

210. See text supra at nn. 87-89, 95-97, 104, 205-09.

211. See n. 59 supra (Hanseatic League merchants securing very short acceptance/notice period for their sales in Spain).

212. See Part I, supra n. 1 at 466-68. Part I also argued that the tendency of commercial interests not to view short cutoff rules as inimical to their interests was reinforced as each type of cutoff rule became established by the basic conservatism of legal tradition and by the relatively minor disadvantages short cutoff rules impose on buyers as compared to other forms of caveat emptor. See Part I, supra n. 1 at 468-69.

213. See, e.g., supra n. 55 and accompanying text.

214. See Part I, supra n. 1, at 438 n. 4 and accompanying text.

215. See text supra at nn. 35-36.

216. See text supra at n. 55.

217. See text supra at n. 56.

218. 2 Rabel, supra n. 2 at 132.

219. See Part I, supra n. 1 at 451.

220. Under the aedilician remedy, the seller, however, might have to pay a money judgment instead of handing over a new item from his stock.

221. See supra n. 59.

222. See supra n. 59.

223. See supra n. 59.

224. See supra n. 71.

225. See Part I, supra n. 1 at 447.

226. See text supra at n. 34. When functional arguments have been made, the far stronger functional arguments for short cutoff rules on the buyer’s right of avoidance have often been used to justify the same short cutoff on the damages remedy so that it is impossible to tell, for example, whether German and French writers attribute great weight to the repose argument for a cutoff on the damages remedy, or only for a short cutoff on the remedy of avoidance.

227. See text supra at n. 61.

228. For a survey of the earlier literature, both civil and common law, see 2 Rabel, supra n. 2 at 101-32. For a shortened version of that discussion in English, see Rabel, "The Nature of Warranty of Quality," 24 Tulane L. Rev. 273, 280-87 (1950). For more modern civilian treatment, see Graue, supra n. 2 at 265-312 (detailed survey of theoretical debate in Germany); Alter, supra n. 137; Ghestin, supra n. 121; Bernard Gross, La Notion d’Obligation de Garantie dans le Droit des Contrats (1964).

229. See, e.g., Williston, supra n. 174 § 197 (discussing whether warranty arises out of contract or tort). See also Rabel, supra n. 228 at 280-82.

230. See text supra at nn. 60-61.

231. If this view of the evolution of the current ratification argument is correct, it illustrates Ernst Rabel’s theory that the persistence of the doctrine of caveat-emptor in the sales law of the world was due in part "to the predominance of cash-and-carry bargains in the legal mind even in periods when sales contracts were in fact made without delivery or payment or both." Rabel, supra n. 228 at 274. Rabel, who was no opponent of short cutoff rules, see Rabel, "The Hague Conference on the Unification of Sales Law," 1 Am. J. Comp. L. 58, 67 (referring to the draft UCC limitations period of four years as "monstrous"), offered his comment in explanation of some of the other ways in which the civil law has tended to limit the warranty of quality. Although he apparently did not mean to apply his comment to cutoff rules, his theory is most cogent with respect to this particular type of limitation.

232. Aubertin, supra n. 137 ¶ 5 (quoting 4 Carbonnier, supra n. 123 § 51 at 202). It should be noted, however, that Dean Carbonnier’s use of the term is in a passage emphasizing the cross-purposes out of which contractual cooperation arises and counselling realism in determining what specific duties of cooperation may be imposed in the name of good faith.

233. For American Law: U.C.C. § 2-607, comment 4 (notice rule "designed to defeat commercial bad faith"); Note, "Notification of Breach under Uniform Commercial Code Section 2-607(3)(a): A Conflict, A Resolution," 70 Cornell L. Rev. 525, 540 (1985) (taking good faith as a central rationale for the notice rule).

For French law, see Aubertin, supra n. 137 ¶ 5.

234. The functional significance that delivery and acceptance have for unrelated legal issues of great importance to sales may have strengthened the power of the assumption. Thus, for example, although the parties are free to contract otherwise, delivery and acceptance have normally marked the transfer of title from seller to buyer since Roman times, with the partial exception of modern French law. Buckland & McNair, supra n. 8 at 287 (Roman and German rule is that formation of contract is not enough to transfer ownership in property); de Zulueta, supra n. 5 at 31 (Roman law required conveyance to transfer property). For French law, Article 1138 of the Civil Code reverses the Roman law rule in the case of specific goods so that the property rights are conceived of as transferred immediately upon formation of the contract to sell.

On a more closely related point, the remedy of avoidance may strengthen the analogy to contract formation by seeming to give the buyer a kind of option to get out of the contract up to the point of acceptance. The superficial impression is inaccurate because the buyer generally has no right of avoidance if nondefective goods are delivered, and the buyer cannot avoid unless the defects are of a particularly serious nature under at least the modern sales law of France, see supra n. 123, the CISG, CISG Art. 49 (1)(a) (buyer has right to avoid only if seller’s breach is "fundamental"), and in the case of installment contracts under the UCC, U.C.C. §§ 2-612(2) (buyer can reject installment only if breach "substantially impairs the value of that installment and cannot be cured"), 2-612(3) (buyer can avoid entire contract only if breach "substantially impairs the value of the whole contract").

235. It should also be noted, however, that the six- and twelve-month limitations periods chosen by the aediles constitute the type of fixed-period cutoff of moderate duration for which the strongest functional arguments can be made. See Part I, supra n. 1 at 443.

236. See text supra n. 61.

237. See text supra n. 148.

238. See 1 Diplomatic Conference on the Unification of Law Governing the International Sales of Goods, The Hague, 2-25 April 1964: Records and Documents of the Conference 72 (West German representative Riese strongly opposing proposals to eliminate the separate article on buyer’s duty to inspect).

239. Despite Art. 38 and the rest of the notice rule in Arts. 39-40 and 44, the CISG also provides the analytic framework for escaping from the historical tendency to ascribe so much importance to the buyer’s acceptance because the CISG does not use the term "acceptance" in connection with contract performance issues. As Professor Ziegel has remarked, "[B]y avoiding the concept of ‘acceptance’ the Convention has wisely spared itself much of the complexity and metaphysics of the common law." Ziegel, "The Remedial Provisions in the Vienna Sales Convention: Some Common Law Perspectives: in International Sales: The United Nations Convention on Contracts for the International Sale of Goods; 9-1, 9-27 (Nina Galston & Hans Smit, eds., 1984).


Pace Law School Institute of International Commercial Law - Last updated August 13, 1999

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