Defects: agreed-upon qua­li­ty vs. requi­red use

Requi­re­ments for agree­ments as to qua­li­ty and requi­red uses.

The ruling was based on the fol­lowing case: a bird feed manu­fac­tu­rer purcha­sed a bird feed packing machi­ne which was sup­po­sed to be capa­ble of packing up to 40 bags of feed per minu­te (“up to 40 pcs/min”). But in fact, the machi­ne was only capa­ble of packing 9 bags per minu­te. The buy­er of the machi­ne under­stand­a­b­ly rai­sed the ques­ti­on as to whe­ther war­ran­ty rights could be asser­ted against the sel­ler on the grounds that the machi­ne was defective.

Among the seller’s princi­pal con­trac­tu­al duties is deli­vering the object to the buy­er free of mate­ri­al defects and defects in tit­le. In accordance with sta­tu­to­ry inter­pre­ta­ti­ons of § 434 of the Civil Code, a defect exists if the object does not have the agreed-upon qua­li­ty, is unsui­ta­ble for the con­trac­tual­ly requi­red use or does not have the qua­li­ty which is cus­to­ma­ry for such objects or is unsui­ta­ble for their habi­tu­al use. In accordance with the court’s estab­lis­hed case law, an agree­ment as to qua­li­ty exists whenever the sel­ler makes clear that it intends to assu­me a bin­ding gua­ran­tee for the pre­sence of a spe­ci­fic cha­rac­te­ris­tic which is important to the buy­er. The Federal Supre­me Court did not reco­gni­ze such an intent in the state­ment that the machi­ne can pack “up to 40 pcs/min” becau­se the for­mu­la­ti­on “up to” does not gua­ran­tee a mini­mum quan­ti­ty, so that a machi­ne packing a smal­ler num­ber of feed bags could also adhe­re to the terms of the con­tract accord­ing to this phrasing.

The Federal Supre­me Court also ruled that a use is con­trac­tual­ly requi­red whenever the con­trac­ting par­ties agree upon a spe­ci­fic type of use who­se impor­t­ance to the buy­er is evi­dent. In this respect as well, the Federal Supre­me Court found that the machi­ne was not defec­ti­ve, sin­ce it was sui­ta­ble for packing bird feed.

No other defect was found in the machi­ne eit­her, after expert review, sin­ce the machi­ne was sui­ta­ble for the habi­tu­al use of a packing machi­ne and pos­ses­sed the qua­li­ty which is typi­cal of packing machines.

Prac­ti­cal tip

The cru­cial ele­ment in war­ran­ty claims is the pre­sence of a defect of rele­van­ce for the con­trac­tu­al agree­ment. Accord­in­gly, par­ti­cu­lar atten­ti­on should be paid to the con­trac­tu­al agree­ment rela­ting to the qua­li­ty or use of the object, which does not necessa­ri­ly requi­re ver­bal com­mu­ni­ca­ti­on. Ins­tead, agree­ments as to the con­trac­tual­ly owed qua­li­ty or the con­trac­tual­ly requi­red inten­ded use may come into being based on the buyer’s expec­ta­ti­ons, if tho­se expec­ta­ti­ons are evi­dent to the sel­ler. Sel­lers should the­re­fo­re check to ensu­re that their pro­ducts meet the adver­ti­sed spe­ci­fi­ca­ti­ons, as well as draf­ting pre­cise con­trac­tu­al pro­vi­si­ons and set­ting them down in wri­ting, if only for evi­den­tia­ry purposes.

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