On 1 January 2022, new warranty provisions will apply in Austria. This article explains the main changes and examines what impact the changes will have on day-to-day practice.
1. What are the reasons for the amendments?
Following the Sale of Goods Directive (EU) 2019/771 and the Digital Content Directive (EU) 2019/770, the Austrian legislator was required to make changes to the Austrian warranty law. On 9 September 2021, the Warranty Directive Implementation Act (Gewährleistungsrichtlinien-Umsetzungsgesetz, GRUG) was promulgated and will enter into force on 1 January 2022. The GRUG makes amendments to the Austrian Civil Code (Allgemeines bürgerliches Gesetzbuch, ABGB) and the Austrian Consumer Protection Act (Konsumentenschutzgesetz, KSchG). In addition, the new Consumer Warranty Act (Verbrauchergewährleistungsgesetz, VGG) was enacted.
2. When do the new warranty laws apply?
The new warranty law enters into force on 1 January 2022 and therefore applies to contracts concluded after 31 December 2021.
Regarding digital content and services, the new warranty law apply if the provision of the content or services takes place after 31 December 2021 - even if the underlying contract was concluded previously.
3. What are the basic changes?
The system of warranty law, which has proven itself in Austria, will not be completely changed by the new provisions and the new law. Below, the most important changes are listed.
The VGG will apply exclusively to the following B2C transactions:
- Contracts for the purchase of goods (movable tangible objects), including goods that are yet to be manufactured or produced; and
- Contracts for the provision of digital content and services, including contracts for the provision of personal data by a consumer in return for goods and/or services.
Excluded from the VGG's application are, among others, the purchase of animals, health, financial and gambling services, and certain electronic communications services.
As in general Austrian warranties law, the VGG contains a legal presumption that a defect occurring within a pre-determined time period was present at the time of transfer or provision of the good/service. Notably, in the VGG, this presumption is extended from six months to one year. The duration of the presumption period remains six months in the ABGB.
Warranty periods (two years for movable goods and digital services, three years for immovable objects) are now combined with a three-month limitation period. This means that, after the warranty period has expired, there is an additional period of three months during which a complaint over a defect can be lodged. This change applies in B2C and B2B transactions.
The VGG, similarly to general warranties law, provides for a hierarchy of remedies: primary remedies are the right to repair or replacement, while secondary remedies are contract termination and price reduction. A new feature under the VGG is that all remedies can now be asserted by consumers extra-judicially without any form requirements.
After a contract has been terminated, the VGG now allows the business to refuse repayment until the goods have either been received the back or the consumer has provided proof that the goods have been returned.
In B2C and B2B transactions, the VGG introduces a new obligation on businesses to supply updates for goods with digital elements and for digital services that are necessary to keep the goods and services free of defects.
Under the VGG, businesses are liable for ensuring not only that their goods or digital services have the contractually agreed qualities but also the objectively required properties. Subject to stringent requirements, consumers may expressly and separately agree to deviate from the objectively required properties.
Contracts that do not fall within the scope of the VGG remain subject to the (revised) provisions on warranty contained in the ABGB.
4. What do businesses need to be aware of?
The abovementioned changes have various implications that businesses must keep in mind, most notably:
- In B2C transactions, the seller must now prove that the defect was not present at the time of transfer or provision of the good/service for twelve months rather than six;
- Businesses will have to comply with the obligation to supply updates, regardless whether they are operating with consumers or with other businesses;
- Businesses should be aware of their express right, in certain circumstances, to refuse payment to a consumer; and
- It will not be able to deviate from the objectively required properties unless this is done in accordance with the VGG - a waiver in the business' general terms and conditions is not sufficient!
- There is now a three-month limitation period added to the warranty period.
This list is not exhaustive but merely serves to illustrate core considerations.
5. Conclusion and outlook
In summary, the warranty law was amended in individual points primarily in favor of consumers. There were no comprehensive changes to the existing warranty law. As a result of the new VGG, it will be necessary in the future to pay more attention to which contract is involved in each individual case in order to draw the correct legal conclusions as well as to consider the most relevant changes outlined in this article.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.