German sales law will undergo comprehensive reform, effective January 1, 2022. This reform implements EU Directive 2019/771 by the German legislator. The implications are substantial, as German sales law is being adapted to the digital realm for the first time.
What will change?
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New Concept of Defect
Initially, a new concept of defect will be legally enshrined within the framework of Section 434 of the German Civil Code (BGB). Previously, an item was considered free of material defects if, at the time of risk transfer, it possessed the agreed-upon quality and was suitable for the contractually presumed or ordinary use.
The revised version now stipulates that an item is free of defects if, at the time of risk transfer, it complies with the subjective and objective requirements, as well as the assembly requirements.
The purchased item meets the subjective requirements if it possesses the agreed-upon quality and is suitable for the use stipulated in the contract. The item satisfies the objective requirements if it is suitable for ordinary use and exhibits a quality customary for items of the same type. A new development is that statements made by the buyer in advertising or on packaging are now to be specifically considered. Moreover, for the first time, the delivery of an item other than that contractually owed will also be deemed a material defect. Previously, subjective quality criteria took precedence over objective criteria; however, now, subjective and objective quality criteria are to be considered of equal standing.
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Generally, no agreement on reduced quality
Previously, when a defective or incomplete product was offered, this reduced quality became the agreed-upon quality of the goods if the condition was noted in the item description. Simply put, information regarding defects or limited usability was previously considered part of the agreed-upon quality. This changes under the new sales law. Deviations from the objective requirements for a product's freedom from defects, or the specific provisions for a 'product with digital elements' as per § 475b para. 3 BGB n. F., are now only permissible under specific conditions.
Therefore, it may also be necessary to adapt product descriptions and online shops to achieve a corresponding agreement.
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Extension of the presumption that a defective item was already defective at the time of purchase
The regulation concerning the burden of proof is extended, thereby significantly strengthening consumer rights. Previously, it was presumed that the purchased item was defective at the time of risk transfer if a material defect became apparent within six months of the risk transfer.
A new development is that this presumption is now extended to one year.
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Buyer's warranty claims for defects exist even with knowledge of the defect
A new provision also stipulates that warranty claims for defects exist even if the defect is known. Previously, a buyer's warranty rights for defects were excluded if the buyer knew or should have known about the defect at the time of contract conclusion, and if the seller had fraudulently concealed the defect or provided a guarantee. A key change is that this regulation no longer applies to consumers. Consequently, consumers can now assert their warranty rights even if they are aware of defects in the purchased item. Nevertheless, the warranty for defects can still be contractually excluded, for instance, through general terms and conditions, even if the defect is known.
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Updates must be provided free of charge for 2 years
The new sales law is explicitly adapted for the first time to the digital world, for instance, concerning the purchase of computers, software, and smartphones.
A new provision mandates that manufacturers of digital devices and software are obliged to offer updates for a period of two years from the delivery of the device/software. Failure to do so constitutes a material defect. This establishes a codified update obligation for the first time.
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New Contract Type for "Digital Content"
A significant change is the introduction of an entirely new contract type for digital content in Sections 327 et seq. of the German Civil Code (BGB). These regulations apply to consumer contracts involving the provision of digital content or services in exchange for remuneration. They also encompass consumer contracts where the consumer provides personal data or undertakes to provide such data without paying an additional price for the digital content.
What does this extensive legal amendment mean for your business?
The implications of the legal amendment are substantial. Consumer protection will be largely and significantly strengthened by the new sales law.
What action is required?
We strongly advise you to adapt your general terms and conditions (GTC) in light of the sales law reform effective January 1, 2021. This is particularly crucial if your company's business involves trading in software, computers, and other digital content.
As a company, you are obliged to comply with the new legal requirements for all contracts from January 1, 2022. To ensure your company meets these new statutory demands, a timely and comprehensive review and revision of your general terms and conditions are essential.
Therefore, there is an urgent need for action for your company!
Contact us
We will adapt your general terms and conditions and contracts to the current legal situation, preparing you for future challenges.
As the new regulations apply from January 1, 2021, prompt action is necessary.
GoldbergUllrich Attorneys at Law 2021
Attorney at Law Christopher Pillat, LL.M. (Intellectual Property Law)
