In June this year, the Swedish Supreme Court issued its judgment in case no. T 5269-23 (“Panelvirket”), concerning a buyer’s obligation to promptly inspect goods and notify the seller of defects – even when the goods are handled by a subcontractor.
Background: A sawmill sold a batch of planed pine panels to a reseller, which subsequently sold the panels further down the supply chain to an end customer. The panels were delivered by a carrier to a surface treatment company engaged by the reseller for lacquering. After the lacquered panels had been delivered to the end customer, defects were reported through several stages of the supply chain, ultimately by the reseller against the sawmill. The Supreme Court had to determine when the reseller should reasonably have inspected the timber and whether notice of the defects had been given within a reasonable time. The assessment was based on Sections 31 and 32 of the Swedish Sale of Goods Act (which apply unless otherwise agreed between the parties).
The Supreme Court’s conclusions: The Court found that the defects should have been discovered through a simple visual inspection when the surface treatment company received the goods, or at the latest during the lacquering process. Furthermore, nothing else had emerged that would have justified the reseller waiting more than “a few days” before giving notice of the defects. Notice to the sawmill was not given until 18 days (including weekends) after receipt of the goods, which the Court did not consider to be within a “reasonable time” after the defects should have been discovered. The reseller had therefore lost the right to rely on the defects.
Analysis: The ruling imposes a strict obligation on buyers to promptly inspect purchased goods and, where necessary, notify the seller of defects without delay. A buyer cannot avoid this responsibility by allowing a subcontractor to receive and process the goods. Where goods are received on behalf of the buyer by another party, the buyer should ensure that the subcontractor inspects the goods in order not to lose its rights. The judgment is likely to have implications beyond the timber industry and may also affect companies operating in other sectors.
You can read the full judgment här.
Please feel free to contact us if you have any questions regarding the ruling or how it may affect your business.