Setting a Specific Deadline for Supplementary Performance is Not Necessary

Background

If a product is defective, under German law the purchaser may request from the seller the removal of the defect or delivery of a new product. For this purpose, reporting the defect is sufficient. However, the purchaser may only reduce the price, rescind the contract or claim damages in lieu of the performance if the purchaser has set the seller an appropriate dead-line for supplementary performance and the deadline has expired without results. The German Federal Court of Justice (Bundesgerichtshof – “BGH”) has recently decided on the requirements for the setting of such deadline.

The judgment of the BGH dated 18 March 2015, Docket no.: VIII ZR 176/14

According to the BGH, neither a specific time period nor a specific end date has to be given to set a valid deadline. Moreover, it is sufficient if the purchaser makes it clear that the seller only has a limited period of time on its hands. This requirement is also fulfilled if the pur-chaser requests performance immediately, as soon as possible or promptly. It is decisive that it is made clear to the seller that the performance is not due someday but that there are time limits for delivery. For this purpose, the mere notification of possible legal action is sufficient.

Comment

The decision of the BGH is not only relevant for the law on purchase contracts but also in work and services contract law (Werkvertragsrecht). An appropriate deadline for supple-mentary performance is also required to be set by the purchaser/ordering party in order to be entitled to further warranty rights (self-fulfilment by purchaser, reduction of price, rescis-sion of contract, damages). Although the court ruling is buyer-friendly, purchaser/ordering parties must be advised to nevertheless set a specific time period or end date when re-questing supplementary performance. By doing so, it is made clear that the seller/service provider has only a certain time period for supplementary performance, and ambiguous performance requests that are open to interpretation are prevented. The purchaser/ordering party does not have to worry that the deadline might be invalid if the time period or end date set is inappropriately short. According to case law, an inappropriate deadline set automatically starts an appropriate deadline. On the other hand, sellers/service providers should note that performance requests without explicit dates can also be deemed to set a valid deadline.