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

Hollis SA sold goods to Imran Ltd under the CISG, with delivery to Imran's premises. Imran rightly rejects the goods on arrival as seriously non-conforming, which is a fundamental breach, and Hollis refuses to collect them. The goods are in Imran's country and Hollis has no agent there. Imran can store them cheaply in its own warehouse at a modest cost. Which statement is correct?

Imran must take reasonable steps to preserve the rejected goods and may keep them until Hollis reimburses its reasonable expenses. Rightful rejection does not remove the duty of care, and resale is only allowed in limited circumstances, not automatically at any price.

  1. AImran may leave the goods in the open because it has avoided the contract and owes no further duty
  2. BImran must take reasonable steps to preserve the goods and may retain them until reimbursed its reasonable expensesCorrect
  3. CImran must resell the goods immediately at any price to mitigate Hollis's loss
  4. DImran must return the goods at its own cost, with no right to recover expenses

Explanation

A buyer who has rightfully rejected goods must take reasonable steps to preserve them, and may retain them until reimbursed reasonable expenses by the seller. Resale is permitted only in specified circumstances such as unreasonable delay or perishability, not immediately at any price. Imran does not bear return costs without recourse.

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