BGH, Judgment of 10 April 2024, Case No. VIII ZR 161/23

According to the decision of the German Federal Court of Justice (BGH), the seller of a classic car cannot successfully rely upon a contractual warranty exclusion where the functionality of a specific component of the vehicle has been made the subject of a quality agreement. Where the parties to a contract of sale have agreed (expressly or tacitly) upon a quality of the purchased item, a general exclusion of liability for material defects agreed alongside it must be interpreted to the effect that it shall not apply to the absence of the agreed quality, but only to other defects. Otherwise, the quality agreement, which stands on an equal footing alongside the warranty exclusion, would be devoid of sense and value for the purchaser – except in the case of fraudulent intent on the part of the seller.

Official Headnotes:

a) Where the parties to a contract of sale have agreed (expressly or tacitly) upon a quality of the purchased item within the meaning of § 434(1) sentence 1 BGB in its former version, a general exclusion of liability for material defects agreed alongside it must be interpreted to the effect that it shall not apply to the absence of the agreed quality, but only to defects pursuant to § 434(1) sentence 2 BGB in its former version (established case law; since the Senate’s judgment of 29 November 2006 – VIII ZR 92/06, BGHZ 170, 86 para. 31; most recently the Senate’s judgment of 27 September 2017 – VIII ZR 271/16, NJW 2018, 146 para. 23).

b) An interpretation of the warranty exclusion departing from this principle does not come into consideration in the purchase of a used vehicle (here almost 40 years old) even where the functionality of a specific vehicle component (here: air conditioning system) forms the subject of a quality agreement. In particular, in such a case neither the (advanced) age of the vehicle or of the component in question, nor the circumstance that this component is typically subject to wear and tear, justifies the assumption that a general warranty exclusion agreed at the same time should also extend to the quality agreement made.

c) Where the parties have agreed upon the “proper” functionality of a vehicle component typically subject to wear and tear within the meaning of § 434(1) sentence 1 BGB in its former version, a material defect exists if this component is already, at the time of the transfer of risk, in a condition that impairs its proper functionality. This applies irrespective of whether there is “normal” wear and tear in this respect, that is to say wear and tear that is not unusual having regard in particular to age, mileage and quality grade and does not impair road safety – which according to the Senate’s case law (cf. Senate judgments of 10 November 2021 – VIII ZR 187/20, BGHZ 232, 1 para. 39; of 9 September 2020 – VIII ZR 150/18, NJW 2021, 151 para. 21 ff.; in each case with further references) does not constitute a material defect pursuant to § 434(1) sentence 2 BGB in its former version – and/or whether, viewed objectively, the occurrence of a functional impairment of this component was to be expected at any time.

The judgment is published here.