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

Irving Co bought goods from Jarrow Ltd under the CISG. On inspection, Irving found the goods defective but did not notify Jarrow of the lack of conformity. Irving first complained three years after the goods were handed over, and no contractual guarantee covers that period. What is the likely effect?

Irving likely loses the right to rely on the defect. The CISG requires notice of non-conformity within a reasonable time of discovery, and in any case within two years of handover unless a longer contractual guarantee applies. Notice after three years is out of time.

  1. AIrving loses the right to rely on the lack of conformity, because notice was not given within two years of handoverCorrect
  2. BIrving keeps all remedies because the CISG sets no time limit for notice
  3. CIrving may avoid the contract automatically because the defect was not remedied

Explanation

The buyer must give notice specifying the lack of conformity within a reasonable time after discovering it. In any event, the buyer loses the right to rely on it if notice is not given within two years of handover, unless a contractual guarantee period is longer. Three years exceeds this limit.

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