Guarantee

In the scope of application of the VGG, it is assumed that a defect was already present at the time of handover/acceptance up to one year from the handover of the goods or acceptance of the service. In all other areas, it is assumed that a defect was already present at the time of handover/acceptance within the first six months from handover of the goods or acceptance of the service.

This means that the transferor must prove that the defect only arose after the handover. If this proof cannot be provided, they are liable under the warranty.

After the expiry of the six-month or one-year period, however, the transferee must prove that the defect was already present at the time of handover, even if the defect was only noticed or only became apparent later.

In warranty law, a distinction is made between material defects and defects of title.

A material defect exists if the delivered goods are faulty, damaged, or incomplete. If the promised service does not correspond to the contractual agreement or does not have the characteristics usually assumed, this is also considered to be a material defect. This means that the agreed service failed to meet the warranted characteristics. 

Example: A painting bought as flawless has cracks or stains.

Example: You are a restorer and have been commissioned to clean a painting. You hand over the finished painting, even though you have not cleaned it completely.

Example:  A purchased, artistic multimedia installation lacks the necessary cables for its installation.

Example: A sculpture bought as an original by a famous artist is actually a fake.

A lack of artistic quality does not constitute a defect that justifies warranty claims. This is because artistic quality can only be assessed in a very subjective manner and rarely constitutes an objective defect. As a rule, warranty claims due to a lack of artistic quality are explicitly excluded in contracts.

A defect of title exists if the goods or services are not free from legal defects. This means that the legal status of the recipient of the purchased item or the service received is compromised. This is the case, for example, if 

• the debtor is not the owner of the item being sold and the creditor therefore cannot become the owner of this item.

• other parties could assert claims against the transferee that impair the ownership or possession of the goods or restrict the usability of the service.

In the arts and culture sector, a defect of title can typically arise if an artistic performance infringes the copyrights of another artist.

Example: You are the author of a play and agree that a play will be performed at a theatre. You conceal from the theatre that a large part of the work is in fact a copy of another person's play and that you have not obtained permission to use and perform the third-party material. This person could take legal action against the theatre.

Example: You take out a loan from a bank and grant the bank a lien on one of your artworks to secure the loan claim. You later sell the same artwork to a collector and conceal the fact that it is encumbered with a lien. The collector believes that they have acquired unencumbered ownership of the artwork. 

Example: You sell someone a work of art, assuring them that it can be exported abroad. In reality, the work of art is an Austrian cultural asset of special significance for which no export licence will be granted.

If a service or product is defective, the recipient shall have the right to demand appropriate remedial action (warranty remedies). Warranty remedies are intended to ensure that the transferee

• ultimately receives a defect-free item, or

• receives financial compensation for the fact that they have received a defective item, or

• can terminate the contract and the parties return what has already been paid. 

The warranty is regulated in the General Civil Code (ABGB), the Consumer Warranty Act (VGG), and the Consumer Protection Act (KSchG). If a purchased item or provided service is defective, the recipient has two primary warranty remedies at their disposal: improvement or replacement. Only if the transferor has not succeeded in remedying the defects after a reasonable grace period, or if this is impossible or unreasonable, is the transferee entitled to secondary remedies: price reduction or cancellation (withdrawal from the contract). 

• Improvement: The transferee may demand that the defect in the goods or service be remedied. The goods must be repaired, or the service must be improved. If the improvement is successful, the defect is deemed to have been remedied and the contract remains effective.

• Replacement: The transferee may demand that the defective goods be replaced by new, faultless goods. The new goods must have the same or a comparable value as the original goods. The contract also remains effective in this case.

• Price reduction: The recipient may demand an appropriate reduction to the purchase price/fee if the defect has not been remedied or the goods cannot be replaced. The price reduction depends on the extent of the defect.

• Conversion/Cancellation of the contract: If improvement, replacement, or price reduction are not possible or not reasonable (e.g. because the defects have returned or the relationship between the contracting parties has broken down), the transferee may cancel the purchase contract and return the goods. In this case, the transferor shall be obliged to refund the purchase price.

These remedies are only available to the transferee for a certain period of time. After this period has expired, no further warranty claims can be asserted:

• In the case of the purchase of goods or provision of services, the period is two years from the delivery of goods or acceptance of service. 

• In the case of the purchase of immovable property (land), the period is three years from the granting of the title to the property. 

Special provisions apply in the event of a defect of title. The period for asserting a claim only begins when the defect becomes known. 

When entrepreneurs conclude a contract, they can contractually exclude the warranty or regulate it differently. For example, they can agree that only certain warranty remedies apply, or that these apply for a shorter period than two years. 

Attention: If the contract is between an entrepreneur (e.g. freelance artist) and a consumer, the warranty cannot be excluded or modified to the detriment of the consumer.

Info: Artists are often considered entrepreneurs, especially if they work full time.

In the case of contracts between entrepreneurs, a special regulation also applies to the inspection of goods to ensure that they are free of defects. An entrepreneur who receives goods or services must inspect them carefully upon receipt. If the entrepreneur notices defects, these must be reported to the other contracting party within a reasonable period of time (in case of doubt 14 days) ("notice of defects"). Otherwise, the warranty claim expires, and the transferee cannot assert any warranty remedies.