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New warranty law – an overview

09/09/2021 - Reading time: 5 minutes

Author

Stefan Adametz

Attorney at Law

Michael Fink

Attorney at Law

This summer, the National Council resolved upon far-reaching warranty law reforms by adopting the Warranty Directive Implementation Act (Gewährleistungsricht-linien-Umsetzungsgesetz, GRUG). The new warranty provisions will apply to all contracts entered into as from 1 January 2022. 

The reforms are meant to implement the provisions of the Sale of Goods Directive (EU) 2019/771 and the Digital Content Directive (EU) 2019/770 and aim to strengthen consumer protection and make the supply of digital content equally subject to warranty. In Austria, the new warranty law has been implemented in particular by way of the new Consumer Warranty Act (Verbrauchergewährleistungsgesetz, VGG) and individual amendments to the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch, ABGB) and the Austrian Consumer Protection Act (Konsumentenschutzgesetz, KSchG). 

Applicability of VGG or ABGB

In the future, it will be necessary to differentiate between cases where the ABGB or the VGG applies as well as the different warranty provisions they contain. 

The VGG will apply exclusively to B2C relations, i.e. to agreements concluded between businesses and consumers, covering 

  1. contracts for the sale of goods (tangible movable items), including goods that are yet to be produced or manufactured (contracts for work and materials), and
  2. contracts for the supply of digital services (digital content and digital services, e.g. antivirus software). The latter will still come under the scope of the VGG even if the relevant consideration is of a non-monetary nature and consists, in particular, in the provision of personal data.

Contracts for the sale of animals, as well as for financial, health and gaming services are exempted from the applicability of the VGG.

All other types of contracts, such as B2B contracts, C2C contracts, contracts for the acquisition of immovable property (e.g. houses, apartments), barter agreements or contracts for the provision of services, will be subject to the warranty provisions of the ABGB.

New features and differences between VGG and ABGB

The main differences between the ABGB and the VGG and thus also the key new features in Austrian warranty law are the following: 

New features in B2C relations:

  1. Extension, within the scope of application of the VGG, of the so-called presumption period from six to twelve months (an advantage for consumers); during this period, it is presumed that a defect was present already upon handover, i.e. it is not the purchaser who must prove that the defect was present upon handover, but the seller who must prove that this was not the case. Within the scope of application of the ABGB, however, the currently applicable six-month presumption period will remain unchanged.
  2. In the future, businesses will also have to warrant that their goods or digital services have not only the contractually agreed qualities but also the objectively required qualities, thus meeting a ‘minimum standard’. Agreeing on deviations from such objectively required qualities is possible only subject to strict prerequisites being met and requires, among other things, the consumer’s explicit consent.
  3. Under the VGG, businesses may now also refuse reimbursement in the context of a rescission of contract or a price reduction until the goods have been returned to them or the consumer has provided proof of the goods having been sent back.
New features in B2B and B2C relations:
  1. In the future, there will be no more form requirements for rescinding a contract. Rescission can now also be claimed directly with the seller, so there will be no more need to do so in court.
  2. After expiry of the two-year warranty period, an additional three-month limitation period will apply during which a complaint may be lodged in connection with a defect.
  3. The warranty period for digital services and goods with digital elements (e.g. smartphones, smart TVs, smartwatches) will comprise the entire period during which the service is supplied, but in any case no less than two years from handover.
  4. A new obligation to supply updates for goods with digital elements and digital services has been introduced, obligating businesses to provide updates as required to ensure that the goods and services remain free from defects. This obligation may be waived only if specific prerequisites (other than those set out in the general terms and conditions) are met. 

Conclusion

All in all, the new warranty law provides for an expansion of consumer rights, in particular by extending the presumption period for the pre-existence of defects to twelve months and by expanding warranty to also cover digital services. As warranty law provisions differ depending on whether the VGG or the ABGB applies, it is crucial to differentiate between the two, based mainly on consumer status and type of contract. From now on, businesses will therefore have to take new aspects into account when dealing with warranty claims.
 

Author

Stefan Adametz

Attorney at Law

Michael Fink

Attorney at Law