Changes in the German Sales Law - Necessary adjustments to Terms and Conditions

Extensive changes to the German sales law will come into force on January 1, 2022. These changes go back to the European Directive on certain aspects concerning contracts for the sale of goods (RL (EU) 2019/771), which aims to ensure a functioning digital European Single Market and a high level of consumer protection. At the same time, numerous changes due to the implementation of Directive (EU) 2019/770 come into force, regulating certain contractual aspects of the provision of digital content and digital services.

The new regulations mainly affect the B2C area but also have effects on the B2B area. As a result, contracts, terms and conditions and processes must be adapted to the new regulations.

The most important changes due to the implementation of the Directive 2019/771 are briefly summarized below:

1. New requirements for the conformity of goods, sec. 434 German Civil Code (BGB)

According to the new definition of material defect, goods are considered as free of material defects if they comply with the subjective requirements, the objective requirements, and the assembly requirements (including installability) upon transfer of risk. Nevertheless, contractual deviations due to quality agreements are still possible. In B2C contracts, however, only if the consumer was explicitly informed before submitting his contract declaration that a certain feature of the product deviates from the objective requirements and the deviation is expressly and separately agreed in the contract. It is therefore not sufficient to include such an agreement in terms and conditions.

2. Changes regarding the subsequent performance claim and in the supplier recourse

Further changes affect the claim for subsequent performance, Sec. 439 German Civil Code (Bürgerliches Gesetzbuch - BGB). Among other things, an obligation to take back the defective product at the seller's expense is included in the event of subsequent delivery.

At the same time, the regulations on supplier recourse were expanded to include the reimbursement of these take-back costs. Furthermore, the supplier's obligation to pay compensation for seller's expenses due to a breach of an update obligation when purchasing goods with digital elements have been added. Finally, the maximum limit of the suspension of expiry of five years since delivery of the product from the supplier to the seller has been abolished (Sec. 445 b (2) German Civil Code (BGB)).

3. Changes in the purchase of consumer goods

Numerous changes can be found in the special regulations for the purchase of consumer goods (Sec. 474 ff. German Civil Code (BGB)). In the future, for example, a consumer is entitled to assert his warranty rights when he was aware of the defect at the conclusion of the contract.

• Withdrawal costs
  In addition, there are some new regulations for the rescission from the purchase of consumer goods. If the customer withdraws due to a defect, the entrepreneur must bear the costs for returning the purchased product. If the consumer proofs that he sent the product back to the purchaser this is already considered as the actual return of the purchased product. In the future, an entrepreneur will therefore not only have to bear the costs of the return but will already have to reimburse the purchase price when the consumer proofs sending back the product.
• Formal requirements
  The new law also introduces special information obligations for the seller in Sec. 476 German Civil Code (BGB). For example, there are new prerequisites for an effective shortening of the limitation period for used items. In the future an explicit notice and a separate agreement with the consumer will be necessary. The same applies to negative quality agreements.
  In the future, increased formal requirements will also apply to guarantee declarations in accordance with Sec. 479 (3) German Civil Code (BGB). Sec. 479 now regulates in detail what content a guarantee declaration must have. Nevertheless, a violation of this regulation does not affect the effectiveness of the guar-antee obligation.
• Reversal of the burden of proof
  There is a change in Sec. 477 German Civil Code (BGB) regarding the previously applicable six-month reversal of the burden of proof in the event of defects. This is now being extended to one year in favor of the consumer. In the future, one year after delivery of the purchased product, a defect is considered as already having existed when the purchased product was handed over. It is to be expected that this change will lead to an increased number of warranty cases in the future.

4. New B2C regulations for products with digital elements and digital products

Extensive new regulations can also be found in the sale of products with digital elements (Sec. 475b et seq. German Civil Code (BGB)) and consumer contracts for digital products (digital content and digital services) (Sec. 327 et seq. German Civil Code (BGB)). In this area, there are new obligations to provide updates and to inform the customer about the availability of such updates.

5. Recommendation

In the next weeks, every company should review contracts, terms and conditions and processes and, if necessary, adapt them to the new regulations. The first thing to do is to check which products are distributed and to whom they are distributed. In the B2C area, additionally the regulations of Sec. 474 et seq. German Civil Code (BGB) apply, which for example contain special information obligations (Sec. 476 German Civil Code (BGB)). As far as digital elements are provided the special regulations of Sec. 475b et seq. German Civil Code (BGB) apply in the B2C area additionally. If digital content or services are provided, the applicability of the new Sec. 327 et seq. German Civil Code (BGB) must be considered. When revising general terms and conditions, special attention should be paid to the adaptation of regulations on warranty law. In the context of the adaptation of processes, the new information obligations of Sec.476 German Civil Code (BGB) must be observed.

Dr Julia Offermanns