• Right to Remedial Work Continues Following Invalid Rescission of Purchase Agreement
  • October 22, 2015 | Author: Michael Rainer
  • Law Firm: GRP Rainer LLP - Munich Office
  • Even after an invalid attempt to rescind a purchase agreement, the buyer is still able to demand that remedial work be performed on the item purchased. That was the decision of the OLG Naumburg (Higher Regional Court of Naumburg) in its ruling of April 9, 2015 (Az.: 2 U 127/13).

    GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: Sale of goods law regulates, inter alia, warranty claims of the buyer against the seller. If the item purchased has a defect, the buyer or customer can demand that remedial work be carried out. The seller generally has to comply with this within a stipulated timeframe. If it fails to do so, the buyer can withdraw from the purchase agreement and, where appropriate, also raise a claim for compensation or a reduction in the purchase price. After the agreement has been successfully rescinded, there is no longer a right to have remedial work performed; instead, both parties return any services received (obligation of restitution).

    The Oberlandesgericht Naumburg had to rule on whether the right to remedial work persists after an ineffective attempt to rescind an agreement. The OLG held that the buyer’s claim for (subsequent) performance only lapses after rescission of the agreement has been effectually announced. If rescission is invalid on formal grounds, then no obligation of restitution arises and the buyer continues to be entitled to demand performance.

    In the case in question, the buyers discovered defects in the purchased item and declared their withdrawal from the purchase agreement. Following negotiations with the seller, a deal was reached on appropriate remedial work. When this subsequently failed to satisfy the demands, they reiterated their demands for remedial work within a specified period of time. The OLG ruled that the original rescission was invalid because the seller ought first of all to have been set a deadline for subsequent performance. However, the Court went on to state that the invalidity of rescission did not extinguish the right to have remedial work carried out, even though this was no longer an issue in the present case.

    The case demonstrates that while a purchase agreement is part of everyday life, it can also raise complex issues. These typically surface if the purchased item has material defects or defects of title. A defect does not confer an automatic right to withdraw from an agreement. This can give rise to difficulties, especially in cases involving international business dealings. That is why the agreement should be drafted in great detail so as to prevent legal disputes from arising at a later date. Lawyers who are experienced in the field of commercial law can be of assistance in preparing agreements and enforcing or fending off claims.