Contract for the sale
Under the UN Convention on Contracts for the International Sales of Goods (hereinafter CIDG) and the Uniform Commercial Code (hereinafter UCC), a buyer and a seller are given the rights to ventilate their grievances against the other in the manners and conditions provided by the laws. But the parties must raise their claims at the earliest opportunity as not to be barred from exercising their rights against the other. More or less, the remedies are the same. But before one could take an action against the other, the rights and the obligations of the buyer and the seller in relation to defective goods would depend on who is the owner of the goods at the time the goods are delivered. This follows the general principle on Sales Contracts of res perit domino (or the owner bears the loss). Generally, before the delivery of the goods, it is the seller who bears the loss because ownership over the said goods are still not transmitted to the buyer, and once ownership is transmitted to the buyer, then it is now the buyer who bears the loss.
Under the CIDG, the obligation of the seller is first and foremost to deliver the
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The buyer is also required to examine the goods upon their receipt and inform the seller of any defects in the goods within a reasonable time. And unless otherwise stated in the contract, the buyer has only within two (2) years to notify the seller of the lack of conformity of the goods, and failure to do so within that period will constitute as a waiver on the part of the buyer to make claims against the seller on that ground.(Article 39 CIDG), except when there is bad faith on the part of the seller because of non-disclosure of the lack of conformity of the goods at the time of delivery to the buyer, and provided that such lack of conformity does not fall under the conditions provided under Section 35 of the CIDG. (Article 40, CIDG).
In case of breach of contract by the seller, the buyer likewise has rights or remedies provided under the CIDG. The buyer may either ask the seller for specific performance, for substitution of the goods within the specified period, or for the repair of the goods. (Article 46-52, CIDG). The buyer may also claim for damages against the seller under Articles 74-75 of the CIDG. Or, In case there is only partial delivery, or when only a portion of the goods are defective, the buyer may ask for the reduction of the price of the goods. Only when there is a fundamental breach of the contract can the buyer declare the contract null and void( Article 49, CIDG), with notice of the fact given to the seller. .(Article 26, CIDG)
The obligation of the buyer is to pay the seller the cost or the price of the goods and to take custody or delivery of the goods.(Article 53, CIDG) If the buyer fails to perform his obligations the seller is given the following remedy: he can require the buyer to pay, to take delivery of the goods, or to perform the obligations of the latter in the contract; or he can claim for damages against the buyer;(Article 61, CIDG) or in case when there is fundamental breach of contract by the buyer, or when the buyer is in default or fails to perform his obligations within a specified period or give notice to the seller of such failure; the seller can have the contract declared null and void (Article 64, CIDG), with notice to the buyer of the fact (Article 26, CIDG).
There is a fundamental breach of contract if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result. (Article 25, CIDG)
The remedies provided for the seller and the buyer are not exclusive because they can resort to other remedies which are appropriate under this Code.
Under the Uniform Commercial Code on Sales (Http://www.law.cornell.edu/ucc/2/article2.htm) the obligations of the seller is likewise to transfer and deliver the goods at the place specified in the contract and in the absence thereof, in the place provided under paragraph 2-308 of this law; and, for the buyer to accept and pay the price for the goods. (paragraph 2-301, UCC)
Title of those properties shall pass to the buyer depending on the agreement specified in the contract; it could either pass at the time the goods are shipped or at the time the goods reach their destination, or at the time the documents are contracted or delivered. However, if the buyer refuses or rejects the goods, for any cause, the title over those goods shall revert back to the seller by operation of law. (paragraph 2-401, UCC). In the following cases, the risk of loss falls on the seller.
If the parties agree that the buyer should pay first before he inspects the goods, nonconformity of the goods upon inspection will not excuse the buyer from nonpayment, except when it is apparent, without the need of inspection, that the goods do not conform with the contract. (paragraph 2-513, UCC)
In case of delivery by installment, if the nonconformity of the delivered goods will substantially affect the value of the whole contract then there is a breach of contract. The buyer must substantially notify the seller of such default or nonconformity, otherwise, the contract is reinstated. (paragraph 2-612, UCC)
The remedies are almost the same. In case the goods do not conform with what is stated in the contract the buyer is given the remedies by law. However, the seller may limit the remedies of the buyer provided that such limitation is in writing and made by the parties not later than the time the purchase was made. (paragraph 2-313A, UCC). The buyer may also claim for damages against the seller if the latter wrongfully fails to deliver the goods, or if the refusal or rejection of the buyer to accept the goods is justifiable.(2-711, UCC)
The seller has the right to claim for damages against the buyer in case the latter refuses to accept the goods. (paragraph 2-708, UCC). He may also maintain an action for the recovery of the price against the buyer for the price of the goods in case the latter is in default. (paragraph 2-709, UCC).
In any case, the defects of the goods shall be borne by the owner of such goods.