Contracts

Warranty Terms

The choice of law will, amongst other things, determine the extent of the parties' warranty obligations and the extent of their liability. If the parties agree on the rule of German law, then the provisions of the German Civil Code (Bürgerliches Gesetzbuch - BGB) will apply. The parties to international sales contracts may also agree that the provisions of the United Nations Convention on Contracts for the International Sale of Goods (CISG) are to apply.

In the case of contracts of sale, both the BGB and the CISG stipulate that the seller must transfer the merchandise defect-free to the buyer, and the buyer must pay the purchase price to the seller. To be deemed "defect-free", the goods must, at the time of delivery, conform to the quality agreed to by the parties in the contract. If the goods are not defect-free, the buyer essentially has the following claims:

• Subsequent remedying of the defect or delivery of substitute goods (Sections 437 No.1, 439 (1) BGB). For sales contracts governed by the CISG, there must have been a fundamental breach of contract in order to claim delivery of substitute goods (Art.  46 CISG).
• If a request to remedy the defect proves unsuccessful, the buyer is entitled to avoid the contract (Sections 437 No. 2, 440 BGB respectively Art.  49 CISG).
• Instead of avoiding the contract, the buyer may reduce the purchase price (Sections 437 No. 3, 441 BGB respectively Art. 50 CISG).
• The CISG also entitles the wronged party to claim damages for non-performance of the sale (Articles 45, 74 CISG). For contracts of sale governed by the German Civil Code, damages are a last resort only.

Commercial buyers are under an obligation to inspect the goods as quickly as practicable in the particular circumstances. The buyer forfeits the right to object to the goods if he/she does not, within a reasonable time, give notice to the seller specifying the nature of the claim. The same applies when the CISG has been chosen as the law to govern the contract.