Prof. Dr. Dr. h.c. Rudolf Welser; Viyana Üniversitesi – Avusturya
1. The Importance of Warranty for the Buyer
Warranty may be an old legal remedy, but it has always been helpful when it comes to enforcing a buyer’s claims. You may know that the principle of warranty is more than 2000 years old and dates back to ancient Rome. Warranty claims were introduced by the Roman market authorities, who had to make sure that the cattle and slave market was ruled by legal principles. The system of warranty has turned out particularly successful, because its effects are sensible and therefore perceived as “entirely natural”. On the other hand, they do not require specific effort of evidence. There are only few requirements for warranty claims and the evidence that needs to be presented by the buyer can easily be obtained.
“Warranty” is usually defined as follows:
Consumer goods must be in conformity with the contract of sale. Warranty means a legal liability of the seller or contractor of goods or services for any defect, or non-conformity with the contract that the product or the service has at the time of delivery.
The sole prerequisite for warranty claims is the existence of a defect or “non-conformity” of the product or service. It is irrelevant whether the seller is responsible for or even caused this defect, or if, because of the defect, the buyer is also entitled to additional claims for indemnification. Unlike claims for damages, where subjective criteria have to be met, no fault on the side of the seller or contractor is necessary. According to ancient Roman Law, warranty only resulted in the cancellation or rescission of any such contract or the right to price reduction.
Austrian law has, however, not only granted buyers the right to rescission of contract and to price reduction, but also a third right, which is the right to repair or replacement of the defective product or subsequent delivery of any missing part.
Now, we are particularly interested in the question which advantages warranty law holds for consumers. First of all, let me point out that neither Roman law, nor the codifications originating in the 19th or 20th century mentioned the term “consumer”. Therefore, there was no specific protection for a consumer, not even in warranty law itself. However, I would like to point out that the principle of warranty has always been, and still is, of advantage for any buyer; and thus also applies to the persons that we now call “consumers”.
2. New rights resulting from the Consumer Protection Act
Only the second half of the 20th century, to be more specific, the 1960s, 1970s and 1980s saw the introduction of the term “consumer” as well as the creation of specific laws regarding his protection in Europe. In Austria, the Consumer Protection Act was passed in 1978, providing manifold protection for the consumer in any consumer-related contract. Regarding the warranty law, however, the Consumer Protection Act of 1978 only included two improvements in favour of the consumer as opposed to other persons, namely businessmen.
These two specific regulations in favour of the consumer were not incorporated into the warranty provisions of the Austrian Civil Code, but into the new Consumer Protection Act.
a) Warranty Law is Compulsory
The regulation that is probably the most important one does not create any additional or specific material rights of the consumer. The Consumer Protection Act simply declared the general provisions of warranty law as laid out in the Austrian Civil Code to be compulsory in favour of the consumer, thereby making it “ius cogens”. Any contractual deviations from these warranty law provisions by agreement between seller and buyer shall only be valid if they are more favourable for the consumer than the statutory warranty provisions.
b) Place of Repair or Replacement
The second specific provision for consumers in the Consumer Protection Act was a material one. It stipulated the place where the repair of the defective good, replacement or subsequent delivery of missing parts shall take place. Of course, if a person entitled to warranty opts for rescission of contract or a reduction of price, the question of where this shall take place does not arise. On the contrary, if the consumer opts for repair, this is a very important question. The general warranty provisions included in the Austrian Civil Code did not provide for specific regulations in this context. The Consumer Protection Act now set out a particularly consumer-friendly regulation. There is, however, one disadvantage of this regulation that has still not been cured: In order to be really favourable for the consumer, so many possibilities have been taken into account that the regulation is very complicated and hardly comprehensible. I will, thus, only present a slightly shortened version of the legislative text: If you understand it, you are lucky, if not, please accept my sincere apologies for not being able to satisfactorily explain it within 20 minutes.
Pursuant to this regulation, a seller or contractor who is obliged to repair a defective good or to replace it by a new one, shall perform any such service at the place where the product was handed over to the consumer. If the seller has, however, sent or shipped the product to another place, that place is relevant. At his choice, the consumer is also entitled to demand repair at the place where the product is usually situated; this choice is, however, only available if the usual site is not a matter of surprise for the seller (such as permanent use of a TV set situated at the peak of a mountain).
3. Reformation of Warranty Law by the EU Directive on the Sale of Consumer Goods and Associated Guarantees
For nearly 25 years, these were the only specific provisions regarding warranties in consumer contracts. In 2002, a substantial legislative reform of warranty law was put into effect, which was – in part – caused by the so called “Directive on Sale of Consumer Goods” as passed by the European Union; this Directive needed to be implemented into Austrian law. It exclusively dealt with consumer rights. Austria was now faced with the question whether a separate Warranty law for consumers based on this Directive should be created. In this case, the question would have arisen whether or not such rights that refer exclusively to consumers were to be incorporated into the Civil Code or into the Consumer Protection Act. There was, however, another option: Amending the existing general Austrian warranty law so that it includes all provisions of the EU Directive. This would result in an applicability of the provisions as set forth in the Directive for all buyers, even though they were originally designed for consumer purposes only. The Austrian legislator chose the golden middle: Basically, the provisions of the directive were implemented in the general warranty provisions contained in the Austrian Civil Code. Therefore, the entire general warranty law was amended. Ever since, the warranty law based on the provisions of the Directive has been in force for all sellers and buyers, not only for consumers. There are, however, also a few provisions that only apply to consumers and not to all buyers. These are not included in the Austrian Civil Code, but are part of the Austrian Consumer Protection Act. The two particular provisions regarding consumers that I laid out to you beforehand, the ones dating back from 1978, have remained in force.
4. New Privileges for Consumers since 2002
a) Warranty for used goods
The first of the new provisions refers to the warranty period for used goods but, if you look at it closely, you will discover that it does not set up particular privileges for the consumer, but for the business owner as a seller. The compulsory legal provisions regarding warranty for consumer-related contracts do, of course, include warranty periods. The changes of warranty law in 2002 generally led to an extension of these warranty periods for movable goods from six months to two years. Due to the compulsory character of warranty provisions for consumers, there is no general possibility to contractually reduce this two-year period. However, the Austrian legislator included a specific provision in the Consumer Protection Act that refers to “used moveable goods” only. Pursuant to this provision, the warranty period may be limited to one year by party agreement; this agreement must, however, not be concluded by means of standard form contracts. It may therefore not simply be included in the general terms of trade or business of the seller, but must result from specific “negotiations” between the parties. But, of course, this alone would be too simple, so the law provided for an exception to the exception: When selling a used car, a limitation to a one-year warranty period shall only be effective if more than one year has passed since the car’s first registration.
b) Incorrect Installation Cases
Another provision included in the Consumer Protection Act in 2002 deals with the so called “installation” of consumer goods. The law refers to two cases: The first one illustrates a situation in which the seller is obligated to undertake installation works for the buyer and, in the course of his work, causes some defect or damage to the product resulting from his incorrect installation. Of course, he is also liable for other damages he has caused by his negligent performance.
The second regulation in this context is especially peculiar: Pursuant to a specific provision, the seller can be held liable even if the buyer has installed or set up the product himself, if the buyer damaged the product due to a shortcoming of the installation manual or instruction. This legal provision, also known as the “IKEA-clause” (in fond remembrance of a Swedish furniture-supplier), is strange, as the seller is obliged to assume liability for the damage even though the product had been delivered to the buyer in a perfect state, so it was not defective when being handed over to the consumer. On the contrary, in this case, the error in the manual only leads to a defect after delivery of the product.
c) Commercial Guarantees
The last provision concerns commercial guarantees. Quite frequently, in such guarantees, the producer of a product offers replacement not only if a defect existed at the time of delivery, but also if it occured within a certain period of time. On the other hand, there might not be any guarantee if the good has visible outer damages, even if they are of no relevance what so ever for the defect.
In this context, the legislator has taken into account the risk that the consumer, when reading the text of such guarantees, may think that he only has the specific rights to remedy defects of the product that are explicitly laid down in the guarantee. This, however, is not true, since – as we know already – the statutory warranty provisions are compulsory in consumer contracts. Therefore, a consumer is, of course, in addition to a commercial guarantee, also entitled to all legal remedies that warranty law offers. The Consumer Protection Act therefore obliges the seller to point out that warranty law provisions are not in any way limited by commercial guarantees. There is one other advantage for the consumer in this respect: The contents of a guarantee may not only be deducted from the written guarantee itself, but also from public advertisements.
*Bu metin, 24-25 Kasım 2011 tarihinde gerçekleştirilen Uluslararası Tüketici Hukuku Sempozyumu‘nun 2. Gün 1. Oturumunda Viyana Üniversitesi’nden Prof. Dr. Dr. h.c. Rudolf Welser tarafından sunulmuştur.