INSTALLATION AND REMOVAL COSTS UNDER WARRANTY LAW: NEW LEGAL SITUATION SINCE 1 JANUARY 2018

What has been applied so far

Under the current legal situation, the contractor is deemed liable to his clients in the case of a defect for costs arising from installation and removal within corrective actions. However, he is not generally allowed to pass these costs to his supplier because he as an entrepreneur does not benefit from the possibilities of recovery in the case of a purchase of consumer goods. The new regulations came into force on January, 01, 2018 changed this.

New legal situation

Since then, the contractor has the right to claim the damage arising from installation and removal costs from his supplier. He in turn can claim the manufacturer, according to § 445a (new) of the German Civil Code (BGB), if necessary. The reimbursement obligation affects the supplier or the manufacturer whether or not the client of the contractor is a consumer, another entrepreneur or the public sector.

These regulations are particularly relevant for the construction sector. Here, not only items are covered which are “installed” in the classical sense, but also “attached” in a similar way, for example wall paint or tiles.

The claim is aimed at reimbursement. The supplier or manufacturer is not entitled to try to minimize these costs by self-compensation.

Limits of the right to reimbursement

In order to prevent abuse, the legislator has set limits to the reimbursement claim.

Only expenses that are “required” are to be reimbursed. These are deemed to be costs a “reasonable, economically thinking client could and had to provide on the basis of expert advice or determination for a justifiable that means appropriate and promising measure for corrective actions”.[1]

§ 439 paragraph IV (new) BGB also states that the concerned supplier can completely refuse the compensation for expenses when selling to an entrepreneur, if the subsequent delivery as well as the improvement including the expenses for installation and removal costs are combined with disproportionate costs.

When selling to consumers, this right of refusal according to § 475 paragraph IV (new) BGB applies only to a limited extent only. If subsequent deliveries as well as improvement along with reimbursement of expenses, taken individually, lead to disproportionate costs, the seller can limit the reimbursement of expenses only to an appropriate amount but not refuse entirely.

The merchant’s duty to examine and notify defects stated in § 377 of the German Commercial Code (HGB) is not affected by the new rules. The entrepreneur as buyer still must inspect the goods bought by him upon delivery for any defects and report those, when appropriate, to the seller as soon as possible.

If he fails to do so, the object of purchase is deemed to be approved, unless the defect could not be detected during the inspection. If such a defect appears later, notification must be given without delay to avoid the loss of all warranty and reimbursement claims.

Limitation of the recovery claim

To avoid circumstances where the limitation for the seller’s right to redress is statute-barred before having been informed by his customer on the object’s defectiveness, according to § 445b (new) BGB the limitation of the recovery claim commences at the earliest two months after the date that the customer’s warranty claims for defects were fulfilled. No later than five years after delivery of the goods by the seller the limitation for the recovery claim expires entirely. This regulation should serve as legal certainty for the seller.

Exclusion of claim by agreement

As the regulations for transactions with consumers are binding but not for those with entrepreneurs, in business relations they can be excluded by individual agreement. To what extent this is possible by general terms and conditions, the legislator has expressively left open. The official justification speaks insofar of a worthiness of protection of craftsmen and contractors when using general terms and conditions by their suppliers[2]. How far the legal protection ultimately reaches, the jurisdiction has to clarify.

For the affected suppliers, therefore it is temporarily advised to precautionary include an exclusion against entrepreneurs in their general sale terms and conditions and to integrate a protective clause in their purchasing terms in order to preclude any possible rules on exclusion of their suppliers.

If you have any questions, we would be happy to help you. Please contact us under agb(at)paschen.cc.


[1] BT-Drs. 18/11437, S. 40, with reference to the German Supreme Court, decision from 31 January 1991 - VII ZR 63/90

[2] BT-Drs. 18/8486, p. 36, and 18/11437, p. 39

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