Vienna Convention and termination of the contract of sale. Limitation and prescription periods of the action.
As already noted, the Vienna Convention does not deal with the limitation of actionswhich, according to the most authoritative doctrine[1] and case law,[2] is governed by the domestic rules. The limitation period, therefore, pursuant to Article 7(2) of the same Convention, is governed by the rules of the applicable law and, in the case of Italian law, by Article 1495 of the Civil Code et seq.
- Time limits under Art. 39 and 49 of the Convention
In contrast, the Convention expressly regulates the time limits for the forfeiture of the purchaser's right to warranty. Art. 39 reads as follows:
- The purchaser forfeits the right to rely on a lack of conformity if he does not report it to the seller, specifying the nature of the lack of conformity, within a period of one year. reasonable termfrom the time it found or should have found it.
- In all cases, the purchaser loses the right to assert a conformity defect if he does not report it at the latest within a period of two yearsfrom the date on which the goods were actually delivered to it, unless such expiry is incompatible with the duration of a contractual guarantee.
Art. 39 thus provides that the buyer's right to rely on a lack of conformity of the goods, including the right to terminate the contract, ceases to exist if he does not report it to the seller within a reasonable time after he has discovered it or ought to have discovered it and, in any case at the latest within two years from the date on which the goods were actually delivered to it.
Contrary to civil law rules, in the event that the purchaser wishes to request termination of the contractual relationship, the Convention provides for a further limitation period, in addition to that described above for reporting the defect, which requires it to notify the seller of its intention to declare the contract terminated. Art 49 of the Convention provides as follows:
- The purchaser may declare the contract terminated [avoided]:
- if the seller's non-performance of any of its obligations under the contract or this Convention constitutes a fundamental breach of the contract; [...].
- However, when the seller has delivered the goods, the buyer's right to declare the contract terminated expires if it has not done so:
- in the event of late delivery, within a reasonable time from the time it became aware that delivery had taken place;
- in the event of non-compliance other than late delivery, within a reasonable deadline.
This article contemplates the most radical of remedies for non-performance by the seller: termination of the contract. Para. (2) of Art. 49 provides that where the buyer has delivered, the purchaser loses the right to terminate the contract if it does not exercise it within a "term reasonable" through its own unilateral declaration.
The buyer under the Vienna Convention must therefore:
- within a reasonable time (and at the latest within two years after delivery) to notify the defect (Art. 39);
- within a reasonable time after delivery, declare the contract terminated (Art. 49).
On the interpretation of 'reasonable time' in Art. 49 for the declaration of termination of a contract, the Courts have pronounced themselves taking into account the type of goods sold and product sector.
The period of five months from the moment the buyer informed the seller of the defects in the goods was deemed unreasonable;[3] a declaration of termination made eight weeks after the buyer became aware of the existence of the defects was also held to be out of time;[4] "The period of eight months after the buyer should have known of the defects was also held to be 'unreasonable'.[5] On the other hand, the period of one month to five weeks was considered reasonable and therefore timely to make the declaration referred to in Art. 49 (2) (b).[6]
Moreover, according to authoritative doctrine, the reasonable period of time referred to in Art. 49(2) may never exceed the period of time referred to in Art. 39(2), i.e. two years from the date on which the goods were actually delivered.
"The buyer loses the right to rely on the lack of conformity and consequently to terminate the contract. In such a case, the time limit provided for in Art. 39 prevails over that provided for in Art. 49(2)(B); the date of the complaint under Art. 39 and that of the declaration of termination under Art. 49 may not coincide, but the time limit for both starts at the same time, and has the same expiry date [note date of actual delivery].[7]"
This implies that within a maximum of two years after delivery, the buyer must either denounce the defects (ex art. 39) or declare the contract void (ex art. 49)if it intends to seek termination of the contractual relationship in court.
About the mode with which such a declaration must be made, Article 26 of the Convention provides:
"A declaration of termination is effective only if it is made by notice to the other party."
This implies that this declaration must contain expressly and unequivocally that the contract has been terminated and therefore terminated.[8]
[1] Digest of Case Law on the United Nations Convention on Contracts for the International Sale of Goods, UNCITRALS, 2016 UNITED NATIONS, 2016 Edition, p. 25; Schlechtriem, Internationales UN-Kaufrecht, Tübingen 2007, 124, n. 162; Honsel, Das einheitliche UN-Kaufrecht, available at. http://20iahre.cisg-library.org."
[2] Bundesgerichtshof, Germany, 23 October 2013, Internationales Handelsrecht 2014, 25 = CISG-online No. 2474; Bundesgericht, Switzerland, 18 May 2009, English translation available on the Internet at www.cisg.law.pace.edu; Appellationsgericht Basel-Stadt, Switzerland, 26 September 2008, English translation available on the Internet at www.cisg.law.pace.edu; Supreme Court, Slovakia, 30 April 2008, English translation available on the Internet at www.cisg.law.pace.edu; Oberlandesgericht Köln, Germany, 13 February, 2006, also in Internationales Handeslrecht 2006, 145 ff.; Cour d'appel de Versailles, France, 13 October 2005, English translation available on the Internet at www.cisg.law.pace.edu, Tribunale di Padova, sez. Este, 20 February 2004, available at http://www.uncitral.org/docs/clout/ITA/ITA_100106_FT_clean.pdf.
[3] Bundesgerichtshof, Germany, 15 February 1995; see also Oberlandesgericht München, Germany, 2 March 1994] (4 months).
[4] Oberlandesgericht Koblenz, Germany, 31 January 1997.
[5] Cour d'appel Paris, France, 14 June 2001; see also Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, Russia, 22 October 1998. (which considered a complaint made after five or six months to be untimely); Hof 's-Hertogenbosch, Denmark, 11 October 2005.
[6] [Tribunal cantonal du canton de Valais, Switzerland, 21 February 2005] (one month); CLOUT case No. 165 [Oberlandesgericht Oldenburg, Germany, 1 February 1995] (five weeks); Bundesgericht, Switzerland, 18 May 2009, Internationales Handelsrecht 2010, 27 (one to two months).
[7] Bianca and Bonell, Commentary on the Vienna Convention on the International Sale of Goods, New Civil Laws Annotated, CEDAM, Padua, 1989.
[8] Kantonsgericht des Kantons Zug, Switzerland, 30 August 2007; UNCITRAL Digest of Case Law on the United Nations Convention on Contracts for the International Sale of Goods, UNCITRALS, 2016 UNITED NATIONS, 2016 Edition, p. 233.
Notice of Defect and Statute of Limitations in the International Sale of Immovable Property. What does the Vienna Convention provide for?
In the European context, the law applicable to the contract of sale of movable goods is governed by Article 4 of the Regulation EC593/2008which provides that in the event of a lack of choice of the parties, "a contract for the sale of goods is governed by the law of the country in which the seller has his habitual residence."
In the event that the relationship is governed by Italian law, one must certainly be aware that, implicitly, the Vienna Convention 1980 on the International Sale of Goods.
Having said that, this article will briefly analyse two aspects of great practical and legal relevance, i.e. understanding how the time limit for reporting defects and the time limit for bringing an action are regulated when the Vienna Convention applies to the contractual relationship.
(a) Complaint of Defect
This term is governed by Art. 39.1 of the Convention, which provides:
"the buyer forfeits the right to rely on a lack of conformity if he does not report it to the seller, stating the nature of the lack of conformity, within a reasonable timefrom the time when it was ascertained or should have been ascertained."
The problem of quantification of the 'reasonable period', should be regulated on the basis of general principles of international law, taking into account the decisions of the Courts of the who have joined the Vienna Convention and the type of goods sold. This principle was expressed in Article 7.1 of the Convention, which provides that:
"for the purpose of interpreting this Convention, it shall be in view of its international character and the need to promote theuniformity of its applicationand to ensure respect for good faith in international trade."
If one looks in the European context "reasonable time limit" is normally understood as a period of approximately 20-30 days. (see Oberlandesgericht Stuttgart, 21.8.1995, Oberlandesgericht Köln 21.8.1997, Obergericht Luzern 7.1.1997, Cour d'Appel Grenoble 13.7.1995).
In any event, should the dispute be heard by an Italian court, it is noted that the Italian courts would have to take into account European rulings on the interpretation of the Vienna Convention, are not bound to them and may have a tendency to interpret this term using the parameters of Italian law.
As is well known, in this regard, Article 1495 of the Civil Code provides that:
"the buyer forfeits the right to the guarantee if he does not report the defects to the seller within eight days of their discovery, unless the parties or the law stipulate otherwise."
First, it must be specified that it is common ground in doctrine and jurisprudence that the eight-day time limit applies not only in the case of a warranty claim but also in the case of an action for damages. Moreover, the eight-day period runs from the delivery of the goods to the purchaser or, in the case of hidden defects, from the discovery of the defect.
That considered, according to some (but rare) Italian judgmentsthe reasonable deadline for the complaint is around 20-30 days (Court Vigevano 12.7.2000; F. Ferrari, Giur. It. 2001, 2) and this term was even extended to 4 months (Court of Bolzano, 27.1.2009)
In any case, it should be borne in mind that the Court of Cassation has not yet ruled on the point, and therefore it is prudently recommended, in order to be sure that the complaint was indeed timely, to first check whether it was made within 8 days of the discovery of the defect.
(b) Prescription
A second aspect, of no small importance, concerns the limitation period.
In this regard, it should be noted that the Vienna Convention does not expressly provide for a limitation periodbut only a time limit for reporting, which may not exceed two years. Article 39.2 provides that:
"in all cases, the purchaser forfeits the right to rely on a lack of conformity if he does not report it within a period of two years, starting from the date on which the goods were actually delivered to him, unless this deadline is incompatible with the duration of a contractual guarantee."
Since the issue of prescription is not dealt with in the Convention, it will be necessary to ascertain what Italian law provides in this respect. In this regard, Article 7.2 of the Convention provides that:
"questions concerning matters governed by this Convention and not expressly settled by it shall be governed in accordance with the general principles by which it is inspired, or, in the absence of such principles, in accordance with the law applicable under the rules of private international law."
The statute of limitations, in the context of contracts of sale, is regulated in Italian law in Art. 1495 of the Civil Code:
"the action is, in any event, time-barred within one year from delivery; but the buyer, who is sued for performance of the contract, may always enforce the warranty, provided the defect in the thing is notified within eight days of discovery and before the expiry of one year from delivery. "
One wonders whether such term of one year, can be coordinated with the two-year term provided for in Art. 39.2 of the Convention for reporting defects. Here, too, there are differing opinions.
In the aforementioned judgment, the Court of Bolzano considered that the term of two years in Article 39(2) of the Convention is incompatible with the provision for a limitation period shorter than one year in Article 1495(3). According to the Court of Bolzano, therefore, the time limit under Article 1495 para. 3 should be extended from one year to two years.
According to authoritative doctrine (A. Reinstadler; F. Ferrari) and the jurisprudence of the European Courts (Oberster Gerichtshof - Österreich, - 25.6.1998) the gaps in the agreement must be filled according to the law applicable to the contract, even if it provides for a term of less than two years.
Therefore, even on this point, Italian jurisprudence and doctrine are not in agreement and it is deemed advisable, as a matter of prudence, to check whether the one-year limitation period, pursuant to Article 1495 of the Civil Code, has been observed.