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Created on Monday, 19 January 2009 16:20

Last Updated on Friday, 28 December 2012 18:44

Grading a Defect as Minor

Minor defects in used objects hinder withdrawal from a contract -- no question (§323 V BGB). The BGH (Judgment of November 11, 2008, re VIII ZR 166/07) had to determine when moisture in a used car is such a significant defect that it would justify a withdrawal from a sales contract ("insignificant breach of duties").

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In 2004, Charlie purchased her used Range Rover from a car dealer. Shortly after the purchase, moisture entered the car. The dealer tried several times to fix this intrusion but always without success. In May 2005, Charlie again complained that the car was moist in the front right foot and back seats and threatened to withdraw from the contract. Since by June nothing had been achieved, Charlie sued the vendor. The court hired an expert to determine what caused the leak. It was only a little hole in the filter box for pollen, the repair of which would cost about € 200.

The Federal Court of Justice decided that Charlie effectively withdrew. It is without question that minor defects exclude a withdrawal (§323 V 2 BGB). However, the question is at what time is to be determined when a defect is minor or severe? When complaining to the seller or in court? BGH held that the time when Charlie withdrew from the contract was the relevant time. At this time, neither Charlie nor the vendor was able to determine the cause for the leak - not even a second repair was able to find the leak. A serious defect does not lose its significance later during a dispute, when an expert hired by the court can temporarily remedy it.

However, all rights are limited to good faith (§242 BGB). The vendor argued that Charlie was, in spite of the prior decision, not entitled to the withdrawal because the expert was able to fix the leak. The court dismissed this argument. Charlie would have unjustly withdrawn if the leak had been repaired with her consent. This was not the case here, as the court ordered the expert to determine the cause of the moisture and while doing so the expert temporarily repaired the car.