The new provisions on liability for defects and warrantees in accordance with Act No. 89/2012 Coll., the Civil Code (hereinafter the “Code”), underwent lots of changes. In the spirit of the removal of the two-track nature of the legal provisions, the provisions of commercial and civil law were unified in this area; the new provisions are therefore universally applicable, regardless of the nature of the entities in the legal relationship. The unification of the legal provisions, however, brought with it a marked degree of legal uncertainty, and, in particular, the question of the continuance of the statutory 24-month warrantee is still not settled with final validity.

1. Defects in Subject of Purchase 

In the case of purchase contracts, special provisions on liability for defects contained in Sections 2099 – 2112 of the Code are applied.

There is liability for defects only if the subject of purchase is defective at the time of sale, or upon the transfer of the risk of damage (i.e. most frequently upon handover). If a defect occurs in an item subsequently, this does not concern liability for defects. Defects to an item arising after the transfer of the risk of damage can be covered by a warrantee, an entitlement to which, however, does not arise under the law, but in general only if the seller provides it (see below regarding the statutory warrantee for consumer contracts).

The new provisions abandon the previous categories of repairable and non-repairable defects and introduce the viewpoint of the intensity of a breach of contract, i.e. material and non-material defects. Now, the buyer and the seller are not interested in whether a defect can be repaired, but what the intensity of breach of contract as a consequence of the defect is. The criteria for determining the “materiality” of a defect, however, are not stated by the act, and it also does not provide a demonstrative list. Whether a defect is material or not will therefore certainly be the subject of frequent disputes.

In the case of a material breach, the buyer can request:

The correction of the defect through the delivery of a new item or the delivery of a missing item;

Repair;

Discount;

Withdrawal from the contract.

In the case of a non-material breach, the buyer can request:

Correction of the defect; or

A reasonable discount.

The buyer’s basic duty is to notify a defect to the seller in time, i.e. without undue delay after ascertaining it. Together with the notification of the defect, he must also notify the seller of which of the aforementioned claims he chooses in accordance with the intensity of the breach. The selection of a claim is binding and the buyer cannot change his choice, unless the seller agrees. The choice of claim should therefore be thought through carefully.

Claiming a right under a defect late does not mean the claim ceases to exist, but under Section 2112 a court will not award a right under defective performance if the seller rejects a late complaint.

Until the correction of defects, the buyer does not have to pay part of the purchase price that is estimated to correspond to his entitlement to a discount.

These provisions apply not only to purchase contracts, but with regard to Section 2615(2) of the Code also to performance contracts.

2. Statutory Warrantee 

Concerning purchases, the Code also contains special provisions on the sale of goods in a shop, in Sections 2158–2174 of the Code.

As mentioned above, the provisions on the two-year statutory warrantee for consumer goods are a big problem. Given the current provisions, there are still disputes over whether this institution was retained or not.

The relevant provision on the sale of goods in a shop (Section 2165 of the Code) states, “A buyer is entitled to claim a right under a defect that occurs in consumer goods within twenty-four months of acceptance.”

Section 2100 of the Code, however, states, “A buyer’s right under defective performance is established by a defect that an item has upon the transfer of the risk of damage to the buyer, even if it comes to light later.”“

With regard to the above, there is a dispute whether the word “occurs” means the discovery of a defect that existed upon the acceptance of the item in the two-year period, or whether it concerns the occurrence of a new defect that did not exist upon acceptance, but arose during the two-year period.

On the one hand, the professional public is mostly of the opinion that the two-year statutory warrantee ceased to exist as of 1 January 2014, as in accordance with the above it must be a defect existing upon the acceptance of the item, where a defect in accordance with Section 2165(1) can come to light, i.e. occur, within two years of the acceptance of the goods. In support of this interpretation reference is often made to Directive 1999/44/EC, which does not require a mandatory warrantee.

On the other hand, it is necessary to draw attention to the fact that the Ministry of Industry and Trade and the Ministry of Justice, in their common opinion dated 10 May 2013, state that the two-year warrantee remains unchanged even after the Code’s effective date.  The Consumer Protection Association is of a similar opinion.

We are still waiting in vain for a decided case that would shed more light on this important question. Until such time there will be no agreement whether a consumer can rely on a two-year warrantee, the same as under the previous legal provisions.

3. Defects in Performance Other than a Subject of Purchase and Performance

In the case of performance other than purchase or performance, the general provisions on liability for defects contained in Sections 1914–1925 of the Code apply.

These provisions use the categories of correctable and non-correctable defects. In the same way as for purchases, the buyer must primarily raise a defect in time and select an appropriate claim based on the nature of the defect.

A right under a defect cannot be granted if a late complaint is legitimately rejected, where a complaint should be made without undue delay after examining an item, but no later than within 6 months of the acceptance of the item. It is not possible to complain about evident defects of which the buyer was expressly notified, or defects in real estate that is entered in the land registry, or defects in other items (e.g. movables) stated in another public list.

The following claims can be made regarding correctable defects:

For repair;

For supplementation;

For a discount.

The following claims can be made regarding non-correctable defects:

For a discount (new);

For withdrawal from the contract.

4. Conclusion 

With regard to the above, it can be summarised that the new provisions may have removed the two-track nature of legal regulations, but the legislators’ aim of greater predictability and simpler application was not achieved, in particular with regard to the very unclear provisions on the “two-year statutory warrantee”, which still divide the professional public. 

This fact obviously does not help consumers, whose legal certainty has been interfered with, and it helps entrepreneurs, who now do not have to recognise complaints about products made by consumers to the extent usual before the Code.

For more information, please contact our office’s partner, Mgr. Jiří Kučera, e-mail:jkucera@kuceralegal.cz ; tel.: +420604242241.