Why is entitlement such a bad thing

Purchasing right: rectification and new delivery

If the purchased goods prove to be defective, the buyer can demand supplementary performance in accordance with Section 439 (1) of the German Civil Code (BGB). He can then, at his discretion, request the removal of the defect (subsequent improvement, repair) or the delivery of a defect-free item (replacement, new delivery).

If the purchased goods prove to be defective, the buyer can demand supplementary performance in accordance with Section 439 (1) of the German Civil Code (BGB). He can then, at his discretion, request the removal of the defect (subsequent improvement, repair) or the delivery of a defect-free item (replacement, new delivery).

It is therefore left to the judgment of the buyer to determine to what extent he or she would like to get involved in attempts at improvement by a seller who may have been proven to be unreliable in the meantime. However, the buyer does not have absolutely free choice. For he can only demand what is proportionate; as a rule only what is economically or financially justifiable for the seller. For example, if the buyer chooses the expensive, not absolutely necessary new delivery, the seller can still choose the cheaper rework.

In this sense, it says in § 439 paragraph 3 BGB: “The seller can refuse the type of supplementary performance chosen by the buyer if it is only possible at disproportionate costs. In particular, the value of the item in a defect-free condition, the significance of the defect and the question of whether the other type of supplementary performance could be used without significant disadvantages for the buyer must be taken into account. In this case, the buyer's claim is limited to the other type of supplementary performance ... "

Examples: If the thread of a screw, i.e. a mass-produced item, is not perfect, the seller can reject re-milling as too costly. The seller is entitled to deliver a faultless screw as a replacement. In the case of low-value everyday items, so-called "penny items", such as cheap watches or cheap cameras, reworking is also associated with disproportionate expenses, so that mostly only a replacement delivery is possible.

The seller must comply with the request for repairs even if the buyer has moved the machine to a place other than the original place of performance. However, if it is a very large distance from the contractually agreed delivery point, the seller will be able to reject the repair with the argument that this would involve disproportionately high costs for him (Section 439 (2) BGB). According to previous jurisprudence, this limit of disproportionality / unreasonableness is only reached if the expenses required to remedy the defect are in no reasonable proportion to the success that can be achieved with the removal of the defect.

If the seller delivers a new, defect-free item as part of the supplementary performance, a completely new, two-year limitation period begins at the time this item is delivered. A crediting of the previously expired period is therefore not possible.

Examination of proportionality

The examination of the proportionality initially relates solely to the type of supplementary performance chosen by the buyer, for example to subsequent improvement. If it has rightly been refused by the seller, this does not in any way result in the exclusion of the entire claim for subsequent performance. The buyer can then switch to his or her right to a new delivery. But the seller can also refuse this claim if this would also be disproportionate for him. Only then can the buyer withdraw or reduce the purchase price and, if necessary, demand compensation instead of performance. Basically, the following applies: First of all, the buyer must give the seller the opportunity to provide supplementary performance. Only after an unsuccessful, appropriate deadline has been set, he can withdraw, reduce or demand compensation instead of performance (§§ 437 No. 2, 3; 323, 440, 441 BGB).
When do claims for subsequent performance become statute-barred?

It is rightly pointed out in the specialist literature that there is no specific deadline for requests for subsequent performance - in addition to the two-year limitation period for claims for defects according to §§ 437 No. 1, 438 Paragraph 1 No. 3 BGB - within which a subsequent improvement or New delivery can be requested. However, the immediate examination and complaint period according to Section 377 (3) of the German Commercial Code (HGB) must always be observed. If a (hidden) defect appears within the warranty period, the notification of the defect must be made immediately after it is discovered. Usually, the notification of defects is also linked to the selected claim for supplementary performance. If the notification of defects is not made immediately, “the goods are deemed to have been approved, even with regard to this defect”, which means that all warranty claims by the buyer are void.

The two-year limitation period for the right to supplementary performance begins with the delivery of the item (§§ 438 a (2) BGB). As the limitation period approaches, the buyer is urgently advised to take action to suspend the limitation period. First and foremost, the agreement of an assessment procedure comes into consideration here (Section 204, Paragraph 1, Number 8). In serious cases, the statute of limitations is also suspended by filing a declaratory action (Section 204 (1) No. 1 BGB).

For the duration of the grace period

In order to reach the claims for withdrawal, reduction in price and damages, a deadline must be set, unless there is an exception. In principle, this period must have expired without success.

The supplementary performance period must be reasonable, the length of which depends on the actual circumstances of the individual case and must be measured in such a way that the seller can carry out the rework or new delivery properly and in good time. If the buyer sets the deadline too short, a deadline that is reasonable in the specific individual case is set in motion. In the event of a dispute, the court will ultimately decide whether the deadline set was reasonable.

When can I dispense with setting a deadline?

The setting of a deadline is unnecessary if the seller seriously and finally refuses the supplementary performance or if there are special circumstances that justify the immediate assertion of the withdrawal, the reduction in price or the claim for damages after weighing the interests of both parties (Sections 281 (2), 323 (2) No. 1, 3 BGB).

This catch-all offense is intended to give the courts a wide margin of appreciation. The loss of interest was determined by the highest judge, for example, in the following cases: The late-delivery fertilizer could no longer be used for cultivating the fields; the seasonal goods became unsaleable because the foreign buyer no longer received an import license due to the delay in delivery.

According to § 440 sentence 1 BGB, a deadline is not required even if

· The seller refuses both types of supplementary performance in accordance with 439 para. 3 BGB due to disproportionate costs or
· The type of supplementary performance to which the customer is entitled has failed or is unreasonable for him.

According to the previous jurisprudence before the reform of the law of obligations, a failure of the supplementary performance can be assumed if subsequent improvement or new delivery became impossible, unjustifiably refused or unreasonably delayed or otherwise unsuccessful. In addition, cases were recognized in which a subsequent improvement was not considered unreasonable for the buyer.

How many attempts at improvement?

The question of how often the seller can make improvements until the buyer can withdraw from the contract, reduce the purchase price and demand compensation instead of performance is much discussed. Unfortunately, the BGB does not make a clear statement here. After all, the law makes a presumption (“applies”) in § 440 sentence 2 BGB: “A subsequent improvement is deemed to have failed after the unsuccessful second attempt, unless the nature of the item or the defect or other circumstances indicate otherwise results. "

So how many attempts at rework does the buyer have to put up with? Obviously, the law does not give a universal answer. In the comment "The new law of obligations - applications and effects in practice" by the chief author of the reform of the law of obligations, Dr. Jürgen Schmidt-Räntsch says on this (p. 285): “The number of attempts at improvement is of secondary importance, but also not insignificant because the number of attempts required also determines the appropriate period of time. To make it easier for you to practice, the benchmark for two attempts in Section 440, sentence 2 of the German Civil Code (BGB) should be expressly addressed. Clause 2 expresses that one must always pay attention to the circumstances that can lead to a lower or higher number of attempts. "

The previous two-year practice with the law of obligations reform has shown, however, that the two unsuccessful attempts at improvement have established themselves as a permanent fixture.

The rework has failed if the existing defect has not been remedied or a new defect has arisen as a result of the repair. The replacement delivery has failed if the new item has the same or a different, new defect. The subsequent performance can also be said to have failed if it is unreasonably delayed or seriously and finally refused.

New for old?

If it is a series product, the buyer can request a new or replacement delivery, i.e. the delivery of an absolutely flawless copy. It is disputed whether the buyer has a right to the delivery of an absolutely new item - that is, an item from the very latest production. Or can the buyer only ask for a used, perhaps refurbished, reconditioned item that corresponds approximately to the age of the returned, defective item? This latter view is justified by the fact that otherwise after a longer period of use, i.e. shortly before the end of the statutory two-year warranty period, a new-for-old rule would lead to an enrichment for the buyer.

Nevertheless, the principle remains that even after a long period of use, an absolutely new item must be delivered if a new product was owed from the start.

Who has to prove what?

Even after the reform of the law of obligations, the extremely important question of who has to prove what in disputes remains with the previous regulation of § 363 BGB. This means that the seller, if he asserts his purchase price claim, must provide evidence that the item sold was free of material defects upon delivery. After the handover, the buyer must prove the material defect that occurred and provide evidence that this material defect existed when the risk passed.

Since the type, quality and quantity of the delivery offered must correspond to the purchase contract, the general opinion in specialist literature and jurisdiction is that the buyer may reject a defective item. The same applies if the delivery does not correspond to the agreed type or is inadequately packaged.

However, in such cases the buyer acts at his own risk. If it later turns out that the offered objects of purchase were flawless, then the buyer was in default of acceptance with the unjustified refusal with all the unfortunate consequences resulting therefrom.

In exceptional cases, however, an agreement between the contractual partners may mean that the buyer must first accept defective goods. For example with the cash payment clause “cash against documents”.

According to general principles of the burden of proof, the buyer must assert and prove the requirements of his warranty claim. He must therefore provide evidence that the defect existed when the risk passed and did not arise later, for example as a result of the subsequent use of the item. According to this, the time of delivery is usually decisive, since according to § 446 sentence 1 BGB the risk of accidental loss and accidental deterioration is transferred to the buyer when the item is handed over.

The decisive point in time can be before handover if the buyer does not accept the goods and is therefore in default of acceptance (Section 446 sentence 3 BGB). In the case of sales by mail order, it depends on the moment at which the seller delivers the goods to the freight forwarder, the carrier or the person or institution (rail, post) otherwise assigned to carry out the shipment (§ 447 BGB).

If the defect has not yet occurred at these times, but the cause already existed, then the purchased item is nonetheless defective. The seller is also liable for material defects that only arose after the conclusion of the purchase contract and that still exist when the risk was passed. However, the seller is not liable for defects in the goods that existed when the purchase contract was concluded, but were eliminated by the time the risk passed.

However, this proof is not always easy to provide. It is by no means the case that it is sufficient if the material defect occurs within the warranty period. However, this assumption is widespread, especially among salespeople. Only if there is a durability guarantee is it sufficient if the material defect occurred within the guarantee period - according to Section 443 (2) BGB, where it says: "If a durability guarantee has been accepted, it is assumed that a material defect occurred during its period of validity establishes the rights from the guarantee. "

If, on the other hand, a consumer buys a movable item from an entrepreneur, i.e. a purchase of consumer goods (Section 474 BGB), and a material defect becomes apparent within six months of the transfer of risk, it is assumed that the item was already defective when the risk was transferred. This only does not apply if this assumption is incompatible with the type of item or the defect (Section 476 of the German Civil Code), for example when buying used items. When buying animals, too, it is often uncertain whether an infection occurred before or after the animal was delivered to the buyer.

After six months, the seller could demand proof from the customer that the defect already existed at the time of handover. As far as can be seen, this proof is not required by the department stores during the entire two-year warranty period - probably for reasons of goodwill or fear of the competition.

Seller bears the costs of subsequent performance

According to § 439 Paragraph 2 BGB, the seller has to bear the expenses necessary for the purpose of the supplementary performance, in particular transport, travel, labor and material costs. The seller has to rightly bear these expenses, because he has the obligation to provide the buyer with the item free of material and legal defects (§ 433 paragraph 1 sentence 2 BGB). He is liable for this breach of duty with the reimbursement of the expenses incurred.

The expenses will only be reimbursed if they were incurred for the purpose of supplementary performance. They can arise from both the buyer and the seller. The seller has to bear his own expenses in the context of the supplementary performance in full, so he is not allowed to invoice them to the buyer and must consequently also pay the services of third parties if he has used them for the supplementary performance.

The expenses mentioned in Section 439 (2) of the German Civil Code are only exemplary (“in particular”). As a result, the seller also has to bear the costs of finding the cause of the defect, as well as the costs of a necessary expert opinion, if necessary legal fees, vehicle towing costs, etc.

Damages that occur to other legal interests of the buyer as a result of the supplementary performance are not included in the expenses. This damage must be replaced by the seller in accordance with Section 280, Paragraph 1 of the German Civil Code (BGB).

Can you get rid of the legal regulation?

If the sales contract is based on the general delivery conditions of the seller, restrictions on the right to subsequent performance must be expected. This is possible, but there is much controversy in this area. Clarity will only be able to be created by the case law in the course of time.

For example, according to Sections 307, 309 No. 8 b, cc BGB, the obligation of the supplier to bear the necessary expenses cannot be excluded in the case of contracts for the delivery of newly manufactured items through general terms and conditions. The supplier cannot make supplementary performance dependent on the previous payment of the full remuneration or - taking into account the defect - a disproportionately high portion of the remuneration.

According to § 444 BGB, the rights of the buyer due to a defect can neither be excluded nor restricted in an agreement if the defect was fraudulently concealed by the seller or if the seller had assumed a guarantee for the quality of the purchased item.

Conversely, in the General Terms and Conditions of Purchase, it is possible to allow the seller only one attempt at improvement instead of two. But this is not recommended.First, the legal admissibility of this approach has not yet been confirmed by the courts; secondly, in practice, the seller will predominantly be given at least one second attempt at improvement.

Clause for practice

If you summarize the statements, the following clause can be recommended for practice:

"Defects in the delivery / service complained about during the warranty period, which also include the non-achievement of guaranteed data and the lack of guaranteed properties, you have upon request immediately and free of charge, including all ancillary costs, at our option by repairing or replacing the defective parts or new delivery to eliminate.

In particular, you bear all expenses incurred in connection with the detection and elimination of defects, even if they are incurred by us, in particular inspection costs, dismantling and installation costs, labor and material costs, as well as the transport and other costs for sending defective parts and returning non-defective parts . This also applies if the expenses increase due to the fact that the delivery item has been moved to a location other than the place of performance.

After the second unsuccessful expiry of a reasonable deadline set by us for subsequent improvement or new delivery, we are also entitled to the statutory rights of withdrawal and reduction. We reserve the right to assert claims for damages in all cases. "

The author: RA Prof. Dr. Karlheinz Schmid

The article was published in the current issue of June 2004, page 38ff.