Case law

  • Case Details
    • National ID: 1 Ob 14/05y
    • Member State: Austria
    • Common Name:link
    • Decision type: Other
    • Decision date: 24/05/2005
    • Court: Oberster Gerichtshof (Supreme court)
    • Subject:
    • Plaintiff:
    • Defendant:
    • Keywords:
  • Directive Articles
    Consumer Sales and Guarantees Directive, Article 3, 5. Consumer Sales and Guarantees Directive, Article 3, 6.
  • Headnote
    In assessing whether there is a negligible defect as per § 932 para 4 ABGB, which excludes the right of annulment, it is necessary to weigh up the interests of the contract partners in relation to a specific contract or in the particular circumstances of an individual case.
  • Facts
    In 2003, a consumer bought a factory-new Audi A4 Avant from a car dealer. With 1000 kilometres then on the clock, the gear stick began to vibrate. After the plaintiff complained, the stick was replaced in the car dealer’s garage, though the problem persisted. Following a second complaint, the car dealer read in specialist literature that this was a common problem for the Audi A4 Avant model. After fitting a special comfortable gear stick handle as recommended in the literature, the car dealer was able to contain the vibrating, but not to stop it entirely. This was particularly apparent when the engine was cold as vibrating noises unknown to other similar vehicles were clearly audible. However, the vehicle could still be used without hindrance. Equally, the gearbox was not suffering excessive wear, nor was the vehicle’s use or durability being hampered in any way.
    The buyer filed a lawsuit against the car dealer for annulment of the purchase contract and repayment of the purchase price, minus 0.15 euros per kilometre driven. The car dealer objected, arguing that the defect should be viewed as negligible since, if used as agreed, the vehicle could be driven without restrictions. Thus, the plaintiff was potentially entitled to a price reduction, but not to an annulment of the contract.
    The Court of First Instance rejected the claim. The Court of Appeal overturned this verdict and ordered a retrial in the Court of First Instance. Its rationale for doing so was that the question of whether a defect is negligible or not, should be decided on the basis of the specific contract. Therefore, the critical question was whether the buyer would not have agreed the contract had he been aware of the defect and whether the seller had known about it when he agreed the contract. Since neither party had been aware that these points were relevant, they had been unable to make specific submissions on this. Hence, the trial would have to be resumed.
  • Legal issue
    The OGH upheld the car dealer’s (defendant’s) appeal against the Court of Appeal’s ruling and reinstated the verdict reached by the Court of First Instance. Central to its ruling was the notion of a “negligible defect” under § 932 para 4 ABGB, which excludes the right of annulment. The OGH highlighted the fact that this notion stemmed from art 3 para 6 of the Sale of Consumer Goods Directive, which stated that where there was a “negligible breach of contract”, the consumer had no right to cancel the contract. However, the Directive did not contain more specific criteria for determining whether something was “negligible”. Nonetheless, from commentaries on the Directive’s general standpoint it was possible to infer that the exclusion of a consumer’s right of cancellation under art 3 para 6 should be viewed in the context of the proportionality principle. It was in the sense of proportionality that the right to annul a contract was excluded where there was only a negligible breach of contract. Furthermore, the OGH explored the different academic opinions on how to interpret the notion of “negligible”. It came to the conclusion that in assessing whether there is a “negligible defect”, it is necessary to weigh up the interests of the contract partners in relation to a specific contract or in the particular circumstances of an individual case.
    With respect to the case under examination, the OGH argued that, when agreeing the purchase contract, the plaintiff had not stated that he attached particular importance to a low level of noise when the vehicle was in motion. Therefore, there was no suggestion that this was a particular condition of the contract and that, if not met, would ordinarily provide grounds for annulment. In ruling on whether there was a “negligible defect”, it was necessary to weigh up the interests of both parties. In the court’s view, the key fact in terms of the plaintiff was that there had been no significant impact on the running of the vehicle and that there was no danger that its service life would be curtailed. Should the defect mean that the plaintiff would have to ask a lower price if he were to sell the car on, this difference would be offset by a price reduction. Hence, the only way in which the plaintiff’s interests might be adversely affected was through the noise, which the plaintiff subjectively regarded as a disturbance and which only occurred under certain circumstances. In contrast, the car dealer’s interests would be adversely affected if the contract were annulled and he then had to reimburse the plaintiff for the cost of a new car minus money for “kilometres driven”, as he would only be able to obtain a substantially lower price if had to resell the vehicle on the used-car market (particularly as it is well-known that the value of a factory-new car plummets once used). Compared to the detriment the plaintiff would suffer should he be denied a right of annulment, the detriment for the defendant if the plaintiff were granted the right would be far more significant. Thus, when weighing up the respective interests, it was clear that he should be protected. This was not in any way a situation in which the subjective balance between service and counter-service had been so seriously disrupted that only a contract annulment and not a price reduction appeared to be justified. In this case, annulling the contract would bring about a serious imbalance to the detriment of the defendant and should be viewed as a “disproportionate penalty”.
  • Decision

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