The judgement of the German Federal Court of Justice (BGH) from 10 April 2024 (VIII ZR 161/23) was based on the following facts: In 2021, the defendant sold the plaintiff an almost 40-year-old used car “to the exclusion of any liability for material defects”. The parties agreed, among other things, that the air conditioning system of the classic car would be in “perfect” working order within the meaning of Section 434 (1) sentence 1 of the German Civil Code (BGB) (now Section 434 (1), (2) sentence 1 no. 1 of the BGB). Shortly after receiving the vehicle, the plaintiff discovered that the air conditioning system was defective and had it repaired for several thousand euros. The plaintiff demanded compensation from the defendant for the repair costs for the air conditioning system on the grounds that the defect had already existed at the time of the transfer of risk.
Assessment of the lower court
The competent lower courts had initially denied the plaintiff’s claim with reference to the exclusion of warranty agreed between the parties. It was argued that the exclusion in the present case also applied exceptionally to the absence of a quality, as the wear and tear of certain components had to be expected in such a used vehicle despite the quality agreement due to its advanced age and the plaintiff should therefore not have expected that the air conditioning system would still function.
Correction by the BGH
The VIII. Civil Senate of the BGH was not convinced by this reasoning. With its judgement it confirmed the highest court case law on the scope of contractually agreed warranty exclusions. In doing so, it clarified once again that warranty exclusions for material defects do not generally apply to the absence of an agreed quality. Rather, from the court’s point of view, such an exclusion can only relate to defects that are contrary to the (contractually assumed or customary) use of the item, Section 434 (1) sentence 2 old version. In short: Anyone who promises the existence of a certain quality cannot simultaneously invoke a warranty exclusion for the absence of that quality. Agreements on quality would otherwise lose their “meaning and value”, according to the BGH.
Exceptions to the principle that warranty exclusions for material defects do not refer to the absence of an agreed-upon quality are basically conceivable. However, the way in which the lower court had justified the exception did not apply in this case. In this context, the BGH referred, among other things, to the clear description of the air conditioning system as “flawless”. With this wording, the buyer could expect a fully functional item, even as a component of an almost 40-year-old classic car.
Conclusion
The decision emphasises the value of an individual quality agreement in sales law and that warranty exclusions can have limits even without an express provision. In this context, it is interesting to see whether the facts of the case would still be decided in the same way on the basis of the new version of Section 434 of the BGB, which equates the agreed quality (subjective requirements) with the non-agreed qualities (objective requirements).
In any case, the decision already has practical implications: When selling goods, the wording on the characteristics of the goods (agreed quality) should be checked carefully and precisely. This applies in particular to documents that are frequently used but regularly neglected from a legal perspective, such as data sheets, requirement specifications and drawings of products that become part of the contract. In case of doubt, no warranty exclusion will provide protection if the properties specified therein are not present.
back