Scope of the Obligation to Remedy

Scope of the Obligation to Remedy Long Unclear

Since the reform of the law of obligations in 2002, it was unclear whether the seller’s obligation to remedy according to § 439 BGB also includes the costs of removal and installation of the replacement delivery.

The Federal Court of Justice (BGH) had to decide whether the costs of removing defective floor tiles and installing new ones were to be borne or reimbursed by the seller.

Under previous law, these costs would have generally been borne by the buyer.

The Decisions of the Courts

As this question concerned an interpretation of the Consumer Goods Sales Directive, the BGH referred this legal question to the European Court of Justice (ECJ). The ECJ decided in the summer of 2011 that it saw an obligation for reimbursement.

Since the ECJ itself could not make a final decision, but only commented on the legal question, the Federal Court of Justice (BGH) was required to make a decision for the specific legal case based on the ECJ’s decision.

Consequently, it came to the conclusion that the remedy by delivery of a defect-free item also includes the removal and transport of the defective item.

The seller can, in principle, consider proportionality aspects and possibly refuse the remedy. However, this is not possible if only one type of remedy is possible or if the seller rightfully refuses the other remaining type of remedy. In such a case, the seller is only left with the option to object to any excessively high costs and refer the buyer to the appropriate cost level.

The BGH, in its judgment of December 21, 2011, case number VIII ZR 70/08, concurred with the ECJ’s judgment.

For sellers and ultimately manufacturers, this means that they have to expect significantly increased expenses in the case of errors in permanently installed products that prove to be defective.

The question of whether liability for this can be modified in General Terms and Conditions (GTC) is still unresolved. We are happy to advise you on possible strategies and implementations in this regard.

Consequences for Trade and Manufacturers

For traders and, by way of recourse, manufacturers, this judgment means an increase in cost risks in the case of a material defect, especially for permanently installed products that cannot be removed without destruction.