Warranty and Liability for Defects

VENDOR’S LIABILITY FOR DEFECTS

Civil Code legislation distinguishes between the liability for defects which the product had at the time of purchase (this is the application of a violation of the purchase agreement under Section 616), and the responsibility for defects which (as a violation of the purchase agreement) occur during the warranty period (the legal warranty for quality, in accordance with Section 619 et al., applies). In contrast to a violation of the purchase agreement, the legal warranty cannot be applied to items that are perishable or used.

Agreeing to the purchasing agreement is understood to mean that the item being sold is without defects, and that it is of such a quality and has such properties as the vendor, the manufacturer or his representative implicitly state in the purchase agreement, or what they claim in the product’s advertisements. It must be of such quality and properties that are normally expected for the item, the item must comply with all legal requirements, be of the required quantity, dimensions or weight, and the item must correspond with either the purpose claimed by the vendor or the purpose for which it is normally used.

The scope of the liability for defects which violate the agreement differ, depending on whether the item being sold is new or used, whether the new item was sold at a discount with defects, and whether the item is perishable.

a) When the item being sold is new, the vendor is responsible for all defects, which are in conflict with the agreement and which occur within the warranty period. The warranty period is defined in Section 620 and since January 1st, 2003 is set at 24 months. The warranty period can be contractually extended beyond the statutory time.

b) If the defective items is sold at a discount:
For defects of either new or used goods where the item’s price was decreased (Section 619, Paragraph 2 of the Civil Code), the vendor is not responsible if the sale occurred according to Section 618 of the Civil Code. (Items with defects, which do not hinder the normal use of the item, may also be sold. The vendor must sell these items at a price lower than that for which a defect-free item sells on the market. The vendor must also warn the purchaser of the defect, unless the defect is not clearly visible at first glance. It is presumed obvious if the store is so named, or if there is a section of the store with appropriate signage. However, even in these cases, the vendor must explicitly warn of the nature of the defect. It must be clearly marked on the receipt that the item purchased is used, has a defect, or that the item’s utility is somehow limited, as per Section 16 of Act No. 634/1992 Coll., on consumer protection. The vendor is not liable for defective items which were sold at a discount. However, if the vendor does not meet the requirements, or at least one of them, he is fully responsible for the defects of the sold item.)

Due to the length of the warranty period, particularly in the sale of consumer goods and the possibility of extending the warranty, Section 619, Paragraph 2 of the Civil Code expressly states that the vendor is not liable for defects occurring as a result of wear and tear during the normal use of an item: this applies to all products.

c) With used items the vendor carries no liability for defects that occur after purchase. The standard warranty does not apply to used goods, and the vendor is responsible for only the defects that were present during the sale of the item. If a defect appears at a later date, there is a limited period during which the consumer may call attention to it and claim it (Section 626, Paragraph 3 of the Civil Code). The period during which a liability for a defect can be claimed is 24 months from the date of purchase. The vendor can, with the consumer’s consent, shorten the warranty, however, it can be no less than 12 months. The vendor must specify the shortened warranty period on the receipt.

d) If the item is discounted below the usual price as a result of a sale or post-seasonal sale, it is significant if the item being sold is new and defect-free, and not a used item; the vendor is responsible in full for all defects in the case of a new item.

DIFFERENT WARRANTIES AND THE EXTENDED WARRANTY

A statutory warranty and contractual (product) warranty are differentiated:

a) The statutory warranty is exhaustively defined in Section 620 of the Civil Code:
When selling consumer goods, the warranty period is 24 months. If there is an expiration date on the item being sold (drugs, food), on its packaging or in the attached instructions in accordance with specific legislation (e.g. Act No.110/1997 Coll., on food and tobacco products) the warranty period will end no later than the expiry date specified. This means that the warranty period can be extended by the expiration date, but not shortened.

For products intended to be used for a longer period of time (such as cars, televisions, washing machines) the warranty period may be extended beyond the above-specified period with special legislation. The extended warranty, however, may only apply to select components.

The statutory warranty period cannot be shortened, even if the parties agree: it can only be extended.

 b) The contractual warranty: the vendor can extend the warranty beyond the statutory period with a warranty certificate issued to the purchaser. This warranty must be in accordance with the warranty conditions given by the manufacturer or as stated in any connected advertising. The vendor can also extend the warranty beyond the statutory period based on an agreement made with the purchaser.

Note: Unlike Section 620, Paragraph 5, the Commercial Code does not address the statutory warranty (i.e. the establishment of a legal warranty); it concerns itself only with the contractual warranty.

LIABILITY FOR DAMAGE CAUSED BY A DEFECTIVE PRODUCT VS. LIABILITY FOR DEFECTS

The liability for defects of a sold item is distinguished from the claim based on the liability for defects, insofar as the defect caused damage to the consumer’s health or property. The application of the liability for defects in Sections 619-627 of the Civil Code is an attempt to address the situation where the consumer paid the full purchase price but did not acquire the product stipulated by the purchase agreement, that is, the consumer, in variance with the purchase agreement, obtained a defective product and in this way was “injured” up to the maximum amount of the purchase price.

This, however, may lead to a further claim, if the defect to the purchased product caused damage to another party (which does not necessarily have to be the purchaser, and can lead to damages far in excess of the purchase price). In exercising his claim, the injured party can proceed according to either the general regulations on liability for damages (Sections 415-450 of the Civil Code), or the special rules contained in Act No.59/1998 Coll., which deals with the liability for damage caused by a defective product.

DEFECT LIABILITY ACCORDING TO THE COMMERCIAL AND CIVIL CODES: A GUIDE FOR ENTREPRENEURS

Act No.513/1991 Coll., the Commercial Code, regulates, inter alia, contractual agreements between entrepreneurs, if it is evident from all pertinent circumstances that their occurrence is a result of business activities.

The relevant parties may agree that their contractual relationship does not fall under the association specified in Section 261 (i.e., it is a vendor – consumer relationship) but is still governed by this Act. This agreement must be in writing. If it worsens the position of a party who is not the entrepreneur, the agreement is null and void.

Even if an agreement between the entrepreneur and consumer, based on the Commercial Code, is valid, the provisions of the Civil Code regarding compliance with contract and defect liability of the purchased product (Sections 616-627) nonetheless holds. This follows from the provisions of Section 262, Paragraph 4 of the Commercial Code which states: “In relationships defined by Section 261 of the Commercial Code, or a secondary (subordinate) agreement, Paragraph 1 is applicable, unless contraindicated by this Act or other specific legislation. Provisions made under the Civil Code, special consumer contract law, adhesion contracts, unfair clauses and other provisions designed to protect consumer, are always applicable, if they rule in favour of the contractual party who is not the entrepreneur. The party who is not the entrepreneur is liable for the breach of responsibilities as outlined in the Civil Code. Any joint commitments or liabilities are governed by the Civil Code as well.

2017 © The Czech Trade Inspection Authority, All rights reserved