What we do.

Warranty and Compensation Law

Markus Bulgarini, Gunther Gram

We are closely involved in warranty and compensation law in our daily business, as it is part of the core area of our work in general civil and civil procedural law.

Warranty is the legally implied seller's/contractor's contractual liability for material defects and defects of title that have already been latent upon delivery. An item is defective if it lacks agreed-on or usually provided characteristics. The buyer/customer then is eligible for improvement, exchange or price reduction of the item, as well as for cancellation of the agreement (wherby improvement and exchange have priority). For the enforcement of a warranty claim it is essential to be asserted on time - extrajudical complaints are insufficient for the purpose of keeping the term. The period amounts to two years for movable items (e.g., cars) and three years for immovable objects (e.g., apartments), as from time of taking over the contractual object. The buyer's/customer's awareness of the deficiency is no consideration.

Similar to warranty, guarantee is the contractual assurance that the item is free from defects; it grants the buyer an additional contractual claim against the guarantor (usually the manufacturer of the product).

In contrast to warranty, claims for damages require fault of the seller and include the damage to the item itself, as well as consequential damages. Claims for damages require unlawful conduct and may emerge from breach of contract or law. Claims become time-barred within three years counting from discovery of the damage and the liable party. Compensation law therefore provides the opportunity to still claim a defect from the seller/contractor if the period for asserting a warranty claim has already expired, as long as the seller/contractor is at fault for the defectiveness (e.g., developers).