## Facts

- An Italian seller contracted in 2000 to sell 3,600 print boards to a Dutch buyer, who resold the boards to its own Dutch customer.
- The seller delivered the goods in batches between October 2000 and February 2001, delivering at least 2,910 boards; the buyer redistributed 2,819 boards to its customer.
- After an initial delivery of 144 boards (October 2000), the buyer reported customer complaints and requested improved quality control.
- The buyer later examined 787 delivered boards, rejected 105 as defective, and returned them in March 2001 seeking replacements.
- The buyer stopped paying invoices, citing defects and its customer’s nonpayment.
- In May 2001, the seller agreed to replace defective boards and requested resumption of payment.
- In June 2001, the buyer proposed—and the seller accepted—a payment schedule for unpaid invoices; the buyer made three installment payments and then defaulted.
- In December 2001, after further customer complaints, the buyer and customer examined 273 boards and found 78 defective.
- The seller sued for the unpaid purchase price; the buyer counterclaimed seeking avoidance of the contract and damages for nonconforming goods.

## Issues

1. Whether the buyer timely examined the goods and gave notice of nonconformity sufficient to preserve remedies under CISG arts. 38 and 39.
2. Whether the buyer could suspend payment under CISG art. 71 after agreeing to and partially performing a later payment schedule.
3. Whether the alleged nonconformity and the buyer’s later complaints justified avoidance under CISG art. 49 and supported damages.

## Decision

- The Court of Appeals applied the CISG and affirmed the first-instance judgment for the seller.
- The seller was awarded the unpaid purchase price; the buyer’s counterclaims for avoidance and damages were rejected.
- The court treated the buyer’s right to rely on nonconformity as limited to the goods for which timely examination and notice were shown.
- The court held the buyer was not justified in continuing to withhold payment after proposing and beginning to perform the June 2001 payment schedule, and it could not rely on art. 71 to excuse nonpayment thereafter.
- The court found the buyer had not established a basis to avoid the contract under art. 49 in light of the limited, timely-noticed defects and the parties’ replacement/payment arrangements.

## Legal Principles

- CISG art. 38 requires examination within as short a period as is practicable; failure to do so restricts later reliance on defects.
- CISG art. 39 requires notice of lack of conformity within a reasonable time; generalized or late complaints do not preserve remedies for all delivered goods.
- A party invoking CISG art. 71 to suspend performance may lose that defense where it later agrees to and begins executing a payment arrangement that presupposes full payment.
- Avoidance under CISG art. 49 is not available absent proof of the statutory prerequisites (including the gravity and properly preserved scope of nonconformity), and the buyer’s conduct and subsequent agreements may weigh against avoidance.

## Conclusion

The appellate court enforced the seller’s claim for the price and rejected the buyer’s avoidance and damages claims, holding that the buyer’s remedies were curtailed by limited timely notice of defects and that the buyer could not maintain a suspension-of-payment defense after entering into and partially performing a later payment schedule.


G & G Component Complementaries v. Errelle S.R.L., No. C0400803/HE (Neth. Ct. App. Oct. 11, 2005)