18. Jan 17

BGH: Buyer can refuse to pay purchase price until defects have been remedied

If the object of a sale exhibits defects, the buyer can refuse to pay the purchase price until the defects have been removed. That was the verdict of the Bundesgerichtshof (BGH), Germany’s Federal Court of Justice, in its ruling of October 26, 2016 (Az.: VIII ZR 211/15).

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: The buyer is entitled to have the object of sale passed on to him free from defects. If defects appear, he can demand that the seller remedy these. Until this is done, he can refuse to pay the purchase price and avail himself of his right of retention. This applies even if the damage is minor. That was the decision of the Bundesgerichtshof in a recent ruling.

In the instant case, the buyer had ordered a new car. He noticed minor damage to the paintwork when the vehicle was being handed over. One garage estimated the cost of repairing the damage at around 500 euros. However, the dealer only wanted to pay 300 euros to have the defect removed. The buyer declared that he was rejecting the vehicle and would not pay the purchase price. The dealer, on the other hand, demanded payment of the full purchase price, arguing that this merely amounted to minor damage. Both parties came to an arrangement: the dealer collected the vehicle from the consumer, had the damage to the paintwork removed and returned the car to the consumer again. The latter subsequently paid the full purchase price.

The dealer was not satisfied with this. It demanded reimbursement for transportation costs, demurrage and interest on arrears. All in all, about 1100 euros. This claim was unsuccessful at every judicial instance. The BGH ultimately concluded that the buyer neither had to pay the purchase price nor accept the vehicle before the defect had been remedied, even in the case of minor defects. It held that while limits could in principle be set to exercising the right of retention under certain circumstances having regard to good faith, these kinds of circumstances were present in this case. The Court went on to say that the expenses asserted by the plaintiff were costs that were necessary in any event for the purposes of properly fulfilling the purchase agreement and not to be held against the buyer.

Should disputes arise relating to a purchase agreement, lawyers who are versed in the fields of commercial law and sale of goods law can offer advice.

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