New warranty law – Advantages for consumers & Requirements for companies

At the level of the European Union, two directives have been issued, which have to be implemented in the member states – and thus also in Austria. Therefore, Austrian legislator intends the Austrian Warranty Directive Implementation Act (“Gewährleistungsrichtlinien-Umsetzungsgesetz – GRUG”) to enter into force as of 01.01.2022, which will result in changes to the existing Austrian warranty law.

The government bill of the planned law, which has already been adopted in the plenary session of the National Council on 07.07.2021 provides for the following changes:

• Introduction of a new federal law on warranties for consumer contracts for goods or digital services – Austrian Consumer Warranty Act (“Verbrauchergewährleistungsgesetz – VGG”).
• Amendments of the provisions of the Austrian Civil Code (“ABGB”) relating to warranties
• Amendments to the Austrian Consumer Protection Act (“Konsumentenschutzgesetz – KSchG”)

These changes, which are described in more detail below, are to apply to contracts concluded as of 01.01.2022. Companies offering goods and services covered by the new warranty law shall therefore adapt their contract terms and websites to the new rules on time.

Please note that, although it has been adopted by the National Council, currently only a government bill exists. After the final text of the law has been published, we will therefore also update this article.

1. The new Austrian Consumer Warranty Act – VGG:

• Application to contracts for the purchase of goods, including contracts for manufacture and supply, and contracts for the provision of digital content and services, including continuing software licenses, in the B2C sector;
• The scope of application of the VGG now also includes contracts under which consumers provide their personal data in return for a good/service (instead of a payment), unless this data is processed exclusively for the provision of the services or to meet legal requirements;
• The warranty period for digital services is 2 years starting with handover (as it was already the case for movable objects in general);
• In contrast to the 6-month “presumption period” previously (and still) stipulated in the ABGB, the VGG provides that in the case of defects that occur within 1 year after handover, the presumption applies that these defects already existed at the time of handover, unless the company is able to prove the contrary. In the case of ongoing digital services, the burden of proof that the service is free of defects or complies with the contract rests with the provider during the entire provision period;
• Introduction of a duty to update (duty to provide updates required for continued freedom from defects or compliance with the contract) in relation to digital services and goods with digital elements (e.g., smartphones), which also appliesB2B in the B2B sector. The obligation to provide updates can be excluded if the consumer expressly and separately agrees to this upon conclusion of the contract, after this has been brought to his attention “specifically” beforehand;
• In addition to the already existing liability for contractually agreed properties and the proper assembly, installation or integration, the company is now under the VGG also liable for the objectively required (usual or on the basis of samples, specimens or test versions expectable) properties, unless the consumer has expressly and separately agreed to a deviating provision at the time of conclusion of the contract, which was previously brought to his attention “specifically”;
• All warranty remedies (primary: improvement and replacement; secondary: price reduction and dissolution of contract (previously called: “conversion”) can now be asserted by consumers extrajudicially by means of a form-free declaration.
• After expiration of the warranty period, the VGG provides for an additional 3-month limitation period within which a defect may be asserted;
• The company is now entitled to refuse a repayment in case of dissolution of the contract until it has received the goods back or at least a proof that they have been returned;
• Company’s right to amend the contract for good cause regarding ongoing digital services, if such option to amend and the good cause for doing so are provided for in the contract, whereby an amendment must not result in any additional costs for the consumer and the consumer must be able to terminate the contract free of charge if his access or usage is more than slightly impaired by the amendment;
• A deviation from the provisions of the VGG to the detriment of the consumer is generally invalid (relatively mandatory law). However, agreements that the consumer concludes only after the company has already been notified of a defect are effective;

2. Amendments to the ABGB:

• Adjustment of terminology to that of the VGG (e.g. dissolution of contract instead of “conversion” as before)
• Adoption of the 3-month limitation period from the VGG (see details above);
• Amendment of the right of recourse under warranty law:
  • Limitation of the claim to the disadvantages incurred by the liable party due to its own warranty obligation;
  • Extension of the limitation period for recourse to three months after fulfillment of its own warranty obligation;
  • Possibility of excluding or limiting recourse if this has been negotiated in detail and is not grossly disadvantageous to the party liable for warranty;

3. Amendments to the KSchG:

• Introduction of a separate consumer law default provision:

In general:

• The consumer may request an entrepreneur who is in default to perform within a reasonable grace period and if this is not done, withdraw from the contract;
• In the case of “fixed-date transactions”, as well as when an entrepreneur has declared or it is clearly evident that he will not perform the service, the consumer may immediately withdraw from the contract;
• The entrepreneur is obliged to immediately refund the consumer’s payments in case of withdrawal from the contract by the consumer;

Regarding the provision of digital services:

• The consumer may request the entrepreneur who is in default to provide the service without setting a grace period;
• If the service is not provided immediately upon request or, if applicable, after an expressly agreed grace period, the consumer has the right to withdraw from the contract (immediate withdrawal is also possible as in the case of “general default” (see above); in this case, the provisions of the VGG apply analogously);
• Agreements that are disadvantageous for the consumer are only effective if they are concluded after the company has already been notified of a defect;
• Insertion of a general reference to the VGG in its scope of application;
• Amendment of the regulations relating to contractual guarantees:
  • Binding of the entrepreneur to the promises made or announced by him in a guarantee bond or advertising; If the advertising contains promises more favorable to the consumer than any guarantee bond, these shall apply unless they have been corrected with the same perceptibility before conclusion of the contract;
  • If the manufacturer guarantees the durability of an item for a certain period of time, the consumer has an immediate claim against him (improvement or replacement during this period);
  • The guarantee bond must be clearly and comprehensibly formulated and contain a reference to the statutory warranty, as well as to the fact that it remains unaffected by the guarantee; it must also be made available to the consumer on a “durable medium” at the latest upon handover;

• Adaptation of the provisions on choice of law, insofar as these expressly also apply with regard to the warranty and the guarantee;
• Amendment of Art 28a of the Austrian Consumer Protection Act (relating to a claim for injunctive relief in connection with a representative action) to the extent that the provision of digital services and the new default rules under consumer law are also expressly mentioned.

4. How companies shall best prepare in order to comply with the new legislation:

• Check if your offer contains goods or services that are covered by the new warranty law;
• In case that you offer goods or services covered by the new warranty law, you should check your GTC (“General Terms & Conditions“) as well as any sample contracts and adapt them if necessary;
• Changes in connection with the new warranty law may also be required with regard to your website. Check your website and if necessary arrange possible adaptions in good time.
• Feel free to contact us if you need assistance with any of the points listed above. We will be happy to help you.

Click here for the government bill.

For questions and inquiries do not hesitate to contact: Árpád Geréd and Alexandra Prodan.

Status: 30.07.2021