NOTICE OF DEFECTS

DEFINITION:

 If any defect appears or damage occurs, the Purchaser or his authorized representative
shall immediately notify the seller and shall confirm such notification of defects in
writing 1 , ANOTHER DEFINE
 In the interest of legal certainty and speed, the buyer must notify the seller of a lack of
conformity of the goods delivered to him by the seller and the nature of such lack if he
wants to preserve his legal right arising out of such non-conformity.2

ORIGIN:

This Principle follows from the presumption of professional competence of international

businessmen.3

 The Principle is based on the understanding known from domestic laws that everybody
who is doing business carries an increased responsibility for his or her business
activities. This increased responsibility is justified especially with respect to the
conclusion of contracts with other businessmen and the assumption of legal rights and
duties which arise out of these contracts. Commercial parties must be aware of the
extent and significance of and the risks associated with the contractual commitments
which they have entered into in the course of their business. They must also accept
trade usages, even if they did not positively know them, as long as they ought to have
known them, which, again, involves the presumption of professional competence of
international businessmen.

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law insider dictionary
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Commentary to Trans-Lex Principle
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Commentary to Trans-Lex Principle
  The application of subsection (b) leads e.g. to the consequence that a seller bears the
supply risk if the contract with his customer does not contain a provision which provides
for a different distribution of the supply risk. Also, the force majeure defense is not
available to a party who is facing an increased economic burden of performance unless
the contract contains a provision which lists or defines such scenarios as force majeure
events.

 Moreover, international arbitral tribunals are particularly reluctant to accept the

hardship defense when there is no gap or lacuna in the contract and when the intent of
the parties has been clearly expressed. In these cases, the Principle of pacta sunt
servanda prevails. The reason why arbitral tribunals are particularly cautious in these
cases is that it is generally much less likely in international commercial transactions that
the parties have been unaware of the risk of a remote contingency or unable to
formulate it precisely, given their presumed professional sophistication.

 Subsections (a) and (b) increase the burden of proof for a professional party that intends
to avoid a contract for errors in law or fact. As a result of the presumption of Subsection
(a), a professional party must carry the consequences of its own mistakes to a wider
extent than private, i.e. non-commercial parties4

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Commentary to Trans-Lex Principle
COMMENTARIES:

 Given that the Principle is intended to protect the seller against unexpected claims of
non-conformity by the buyer, the seller is not protected by the Principle in situations in
which such protection would be contrary to the overriding Principle of good faith.
Subsection (e) clarifies that such a situation exists if the lack of conformity relates to
facts of which the seller knew or could be expected to have known and which the seller
did not disclose to the buyer.5

 In continental European law, the balance of interests in the sale is different: the seller is
not only subject to the obligation to remedy hidden defects and eviction (arts. 1 ff. CC,
so that it is liable to the buyer for the economic damages that arise for the latter from
the possible fact that 1st thing purchased does not serve the purpose for which it is
intended)6

INTERNATIONAL LEGISLATION:
 Derived from Art. 39 (2) CISG which provides that the buyer loses his right to rely on a
lack of conformity of the goods if he does not give the seller notice thereof at the latest
within a period of two years from the date on which the goods were actually handed
over to the buyer, unless this time-limit is inconsistent with a contractual period of
guarantee7

 ARTICLE 2708

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Commentary to Trans-Lex Principle
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Domingo, Ortega, Rodríguez-Antolín, Zambrana, Principles of Global Law, Navarra, 2006
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CISG CONVENTION
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Treaty on the harmonization of the business law in Africa
 The buyer must examine the goods or cause them to be examined within a very short
period. Where the sales contract provides for delivery of goods to a carrier, the
examination may be delayed until the arrival of these goods at their destination.

 ARTICLE 2599

The action of the buyer, based on a defect of conformity concealed on the day of delivery, shall
lapse after a period of one year commencing on the day where such defect was found or ought
to have been found This latter time limit cannot have the effect of reducing the duration of the
contractual warranty eventually consented.

USAGE:

 GMMCO Limited v. Ecovinal International Private Limited,45010

Facts: The Respondent purchased a 250 KVA Cat Diesel Generator Set from the Appellant. When the
afore-stated generator set was installed at the factory premises of the Respondent at Kunigal, it was
found to be defective.

The Respondent brought the defects in the generator set to the notice of the Appellant, and asked the
Appellant to either repair the same or to replace the generator set.

The communication addressed by the Respondent to the Appellant did not receive any response from
the Appellant. It is therefore, that the Respondent issued a legal notice to the Appellant. The Appellant
did not respond to the legal notice.

Issue: Whether Respondent is entitled to compensation in relation to the installation of defective

goods?

Decision: The provisions of the Act are inapplicable in respect of any commercial activity other than for
self-employment, and for earning an individual livelihood. It was submitted, that the pleadings from the
complaint filed by the Respondent clearly establish, that the diesel generator set purchased by the
Respondent was neither for self-employment nor for earning an individual livelihood. It was ruled that
the Respondent is not entitled to remedy.

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Treaty on the harmonization of the business law in Africa
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2015 (2) RCR (Civil) 1011.