Luca Davini
Lawyer in Milan and Turin

In general, it is known that the seller must provide the buyer with goods that conform in quantity, quality and type to that agreed in the contract: this obligation can be defined from the operational point of view as a kind of insurance provided by the seller to the buyer.

The Vienna Convention of 1980 (hereinafter “Convention” or “CISG”) has a very wide scope of application, to date 95 countries have joined it out of the 193 recognized by the UN, and it is therefore very likely that in the event of a dispute over the conformity of goods sold or purchased it will normally be necessary to refer to the rules provided for by the CISG, except in cases of derogation and exclusion of the same by the will of the parties.

The legal warranty

In the case of application of the rules of the Convention we will talk about legal warranty (as deriving from the law), in the case of exceptions agreed by the parties that provide for the application of a different law or specific agreements on the point we will talk about contractual warranty (as deriving from the contract).

If the international sales contract is regulated by the CISG, the seller must provide compliant goods to the buyer, on the basis of conformity parameters, the so-called “specifications”, hopefully agreed in the contract between the parties. If the contract does not provide anything on the point or is not sufficiently precise, reference will be made to the practices established between the parties and the uses of the sector.

If this is not enough, to determine the parameters of conformity of the goods, reference will be made to the standards provided by the CISG, according to which the goods must be suitable for all uses (and not only for some of them) for which goods of the same type are usually needed.

Complaint to the seller

If the buyer finds the presence of defects, in accordance with Article 39 of the CISG, he must report it to the seller, specifying their nature, within a reasonable period from the moment he discovered it or should have discovered it.

The concept of reasonableness of the period within which to report the defect is determined flexibly but within certain well-defined limits, as is clear from the international case law that was developed on the issue (from seven days to a month, but not later), taking into account the nature of the goods (if the goods are  perishable or seasonal, times are obviously reduced to a minimum) and the ease or not of discovering the defect.

In any case, the buyer loses the right to assert the lack of conformity if he does not report it to the seller at the latest within two years from the date on which the goods were delivered to him (unless this requirement is incompatible with the nature of the goods, for example, fresh, quickly perishable food products).

In the event of product defects, the buyer shall have the right, depending on the circumstances of the specific case, to apply the remedies provided for by the Convention, namely: the request for fulfilment (delivery of compliant goods), the resumption of the contract (only in the case of essential non-fulfilment) or the reduction of the price, without prejudice to the right to obtain compensation for all damages suffered as a consequence of the seller’s non-fulfilment.

Contractual warranty

The above constitutes what is meant by legal warranty, or the guarantee that the seller must provide to the buyer based on the law applicable to the contract, in this case the CISG.

However, considering that the Convention can be derogated, it is advisable to agree with the partner a specific “contractual warranty” clause of conformity of the goods, in which appropriate precautions are provided to minimize the economic risks associated with the deal, starting from the exclusion of any obligation to compensate for loss of income otherwise applicable according to the CISG.

Damages from defective products

Italian manufacturing companies (but also import companies that buy goods and raw materials from abroad) are then required to pay particular attention to the delicate issue of the so-called “product liability”, which concerns liability for all damages caused to third parties by defective products.

In the context of international trade there is no convention that uniformly regulates the problem of defective product damage: the matter will therefore be regulated by the law applicable to the specific case, which in general will be the legislation of the country in which the injured person resides.

Protection of the damaged part

As a matter of fact, on the European level there is a common legislation consisting of Directive 85/374 / EEC, later amended by Directive 1999/34/EC, transposed by all the countries belonging to the European Union, which introduces, alongside national regulations on liability for damages, a special discipline to protect consumers (for example in Italy by the Consumer Code).

In particular, the rules provided for by state regulations, which have transposed the principles contained in the European Directive, generally provide that the victim of a product damage can claim compensation for the damage suffered both against the manufacturer and against the supplier who distributed the product in the context of a commercial activity.

These subjects will then be able to get rid of their respective responsibilities based on the rules strictly provided for by the individual regulations, which will have to be carefully examined on a case-by-case basis.

Non-Eu countries

Even outside the European Union, the legislation is particularly protective against those damaged by defective products: for example, in the USA, where the term defective product means a potentially dangerous product, the damaged person can apply for compensation against any “ring” of the supply chain.

Therefore, given the existence of national regulations governing liability towards damaged third parties (B2C), it must be said that as regards the “internal” (B2B) relationships between Italian seller and foreign buyer, it will be good to contractually regulate their respective responsibilities.

The foregoing, without prejudice to the careful analysis of the rules provided for by the individual national jurisdictions, which provide for mandatory protections in favour of the injured (consumers).

However, it is essential, in view of the potential economic importance of such claims and any costs of recalling products from the market, to prepare a careful contractual protection within the limits of the applicable mandatory rules and to assess the coverage of these risks through suitable insurance products offered by leading companies.