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ACCA Applied Skills · Corporate and Business Law (Global) · Obligations of the seller and buyer, and provisions common to both

Gantry Ltd sells a consignment of components to Hallam Co under the CISG. Hallam's goods arrive on 1 March with a visible shortfall in quantity and some defects in quality that Hallam could have found by reasonable inspection. Hallam did nothing until it gave Gantry notice on 10 September, seven months later. No contractual guarantee period applies. Which statement is correct?

Hallam has lost its right. The CISG requires notice specifying the lack of conformity within a reasonable time after the buyer discovered or ought to have discovered it. The two-year limit is only a long-stop, so seven months of silence on an inspectable delivery is too late.

  1. AHallam may still rely on the lack of conformity, because notice is only required within two years of delivery
  2. BHallam has lost the right to rely on the lack of conformity because it did not give notice within a reasonable time after it ought to have discovered itCorrect
  3. CHallam may rely on the lack of conformity only for the quantity shortfall, not the quality defects

Explanation

Article 39 CISG: the buyer loses the right to rely on a lack of conformity if it does not give notice specifying its nature within a reasonable time after it discovered or ought to have discovered it. The two-year period is an outer limit from actual handing over, not a safe harbour for late notice. Seven months after an inspectable delivery is unlikely to be reasonable, and the rule covers both quantity and quality.

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