Obligation to Inspect and Notify

Obligation to inspection

A buyer is obligated to inspect the object of an agreement. If the object is available for inspection, the buyer should inspect it before the conclusion of the agreement. Naturally, it is not possible to inspect service performances in advance. Most importantly, the object of the agreement must be inspected by the buyer when it is delivered to the buyer’s possession.

The scope of the inspection depends on the object of the agreement, the value of the object, the expertise of the buyer and the information given by the seller. For example, in an acquisition the buyer has a remarkably larger duty to inspect the object than when making an agreement on the sale of goods of minor value.

If the buyer fails to inspect the object of the agreement, they lose the right to bring claims against the seller in respect of defects which the buyer would have been able to find in inspection.

Obligation to notify defects

A party must notify the other party of defects in the agreement's object. In other words, the party must make a complaint/reclamation about the defect in goods or performances. The reclamation must set out in what way the goods and the performance are defective. The party has to inform the other party of the nature of the defect; e.g. a technical defect, a production defect, a poor instruction manual or that the goods are unfit for their intended use. The notice must be sufficiently clear to enable the other party to remedy the defect.

If the party neglected its performance totally, the other party has no duty to notify the party of the lack of performance. Generally, there is no obligation to notify delay of non-performance as the delaying party is presumed to be aware of the delay. It is advisable to give a notification in these circumstances as well. After receiving the goods or the performance the party has duty to notify the other party of the delay, if they still want to make a claim about it.

The notice of defects must be given within a reasonable time period after the party has found or ought to have found the defect. If the party fails to make the notice within a reasonable time, they usually lose their right to bring claims against the other party in respect of the defect. There is no statutory definition of what constitutes reasonable time. The reasonable time is determined case-by-case.

If the breaching party has acted intentionally or with gross negligence, the requirement for reclamation is not applicable. However, it is advisable to give the notification in these cases, too. Oral notification of the claim is acceptable, but it is recommended that the claim be submitted in writing. Providing a written claim helps avoid issues related to proving the notification, including the timing of the claim, notified defects, and other relevant details.