The burden of proof for defects of goods sold. News from the Joint Divisions

In a recent ruling[1], the Supreme Court sitting en banc provided interesting clarifications on the burden of proof incumbent on the buyer who exercises the warranty for defects of goods sold referred to in Article 1490 of the Italian Civil Code.

Until 2013, there were no case law uncertainties on the applicability of the principle that, in warranty actions for defects of goods sold, the burden of proving defects and any harmful consequences, as well as the existence of a causal link between the former and the latter, lay with the purchaser exercising the warranty.

However, with decision No. 20110 of 20 September 2013, the Second Civil Division of the Supreme Court held that this assumption was no longer sustainable in the light of the position taken by the Joint Divisions which, by decision No. 13533/01, unified the rules governing the burden of proving the non-performance of the obligation in actions for breach of contract, contractual termination and compensation for damages for non-performance. Indeed, decision No. 13533/01 established that the creditor - whether acting for breach of contract, termination of contract or compensation for damages - must prove only the (contractual or legal) source of its right and the relevant limitation period, limiting itself to the mere allegation of the circumstance of the other party’s failure to perform; the defendant debtor has instead the burden of proving that the other party’s claim has been extinguished, that is that the performance has taken place.

The guidance expressed by the Supreme Court in the aforesaid decision No. 20110/2013 was not consistently reflected in the subsequent rulings of the Supreme Court, thus creating the difference of interpretation in relation to which the Joint Divisions set out their views in the ruling in question.

Indeed, the Joint Divisions were required to clarify whether, with regard to the warranty for defects of goods sold, the buyer exercising the redhibitory action and demanding a reduction of the sale price has or not the burden of proving the existence of the defects.

This is an interesting case since the Supreme Court, through the argumentative path that we are going to examine, has come to exclude the application of the mechanism of allocation of the burden of proof outlined by decision No. 13533 of 2001 of the Joint Divisions, whereby the creditor should only prove the source of its right, merely alleging the circumstance of the debtor's default.

In order to solve the conflict that has arisen, the Joint Divisions decided, first of all, to verify the correctness of the assumption underlying the reasoning set out in ruling No. 20110/13, namely that the delivery of a defective item represents an incorrect fulfilment of an obligation of the seller.

The Court started from the analysis of the seller’s main obligations under Article 1476 of the Italian Civil Code, i.e. (i) to deliver the item to the buyer; (ii) to cause the buyer to acquire ownership of the item or title thereof, if the purchase is not an immediate effect of the contract; (iii) to warrant the buyer against eviction and defects of the item. The Court further pointed out that the regulation of the delivery obligation provides that the item is to be delivered “in the state in which it was at the time of sale” (Article 1477, paragraph 1, of the Italian Civil Code), without any reference to it being free from defects.

Coming to the analysis of the obligation to warrant against eviction and defects provided for by Article 1476, No. 3, of the Italian Civil Code, the Court made it clear that the rules governing the purchase and sale do not place on the seller the obligation to provide the goods free from defects. In fact, the obligation to warrant the buyer against defects does not imply that the seller has any obligation to behave so as to meet the buyer’s interest and therefore it is not possible to regard the warranty against defects as the subject-matter of a duty of performance.

The delivery of a defective item does not represent, according to the Joint Divisions, the non-fulfilment of an obligation, but the imperfect implementation of the promised transfer.

Based on the foregoing, in the Court’s view it is not possible to uphold the assumption underlying the opinion that delivery of a defective item would amount to a failure to perform an obligation on the part of the seller.

Consequently, the rules governing the allocation of the burden of proof between the seller and the buyer in construction actions cannot be regarded as falling within the scope of the principles laid down by decision No. 13533/01 of the Joint Divisions.

So, the Joint Divisions have solved the case-law conflict by establishing the following principle of law: “as regards defects of goods sold as per Article 1490 of the Italian Civil Code, the buyer exercising the actions for termination of contract or reduction of the sale price as per Article 1492 of the Italian Civil Code has the burden of proving the existence of the defects”.

This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with.

For further information please contact your counsel or send an email to the following address: corporate.commercial@advant-nctm.com

[1] Court of Cassation, Joint Divisions, No. 11748