Software as a defect

Category: compliance Industry: automotive Author: Year:

Purchaser's rights in the case of misleading alerts: software as a defect

Federal Court of Justice (BGH) rules: misleading alerts can trigger purchaser's rights. Moreover: purchaser's right to choose in respect of supplementary performance, and consequences of rectifying the defect without the agreement of the purchaser.

Does the purchaser have warranty rights if the thing itself is not defective but the software displays an alert? Can he or she request delivery of a new thing if a fruitless request for repair has already been issued? And what is the situation when the vendor repairs the purchase object without the agreement of the purchaser?

These questions recently occupied the Federal High Court of Justice (BGH). The basic proceedings (BGH judgement of 24.10.18 VIII ZR 66/17) involved a purchaser who had ordered a new vehicle. After a short time, the car issued a number of software alerts, instructing the driver to stop and let the clutch cool down for up to 45 minutes. After several attempts at repair had proved unsuccessful, the purchaser requested delivery of a new car. The vendor informed the purchaser that the vehicle was in perfect condition from a technical point of view and that he could simply ignore the alert. Subsequently, the vendor installed a software update during a customer service without the agreement of the purchaser, and this, according to the vendor, rectified the problem of the false alert.

In this constellation, the BGH ruled that the vehicle was already defective on account of the false alert. The court said that "the software caused the clutch overheating display to show an alert which instructed the driver to stop the vehicle and let the clutch cool down, although it was not in fact necessary to stop the vehicle at all". Because of this, the vehicle was neither suitable for normal use, nor was it of a quality which was usual in things of the same kind and which a purchaser would be entitled to expect given the type of thing. As for the remark made by the vendor to the purchaser to the effect that he could simply ignore the alert because the vehicle was technically in perfect condition, the BGH ruled that it was inadmissible.

The BGH also confirmed the decision made by the purchaser to go ahead and request delivery of a new vehicle although he had already called for supplementary performance. The court said that the reason for this was that the choice of supplementary performance – other than in cases of rescission or abatement – was not a binding constitutive declaration. Finally, the BGH also adjudged that a purchaser can stick to his choice of requesting delivery of a new thing even if the defect has subsequently been rectified without his agreement. The retroactive software update thus had no legal significance.

Summary

In future, manufacturers must take even greater care as regards the smooth interaction of software and hardware if they do not wish to get caught up in the toils of warranty relating to the sale of goods – for example by way of suppliers' recourse. Thus just delivering hardware that functions perfectly is no longer sufficient for protection against claims of this kind from purchasers. It is also advisable not to proceed proactively with too much energy in the context of supplementary performance, as in cases of doubt the purchaser may nevertheless be entitled to delivery of a new thing if he or she did not actually agree to that performance. The purchaser's right to choose also needs to be taken into account; as a matter of basic principle, he or she can also call for a new delivery after an unsuccessful attempt at repair.

[February 2019]