Withdrawal from Purchase Contract after VW Scandal

Volkswagen must be prepared for clients wishing to withdraw from the purchase contracts for their diesel vehicles. However, to date, the purchasers’ rights remain unclear.

Certain characteristics of a vehicle, which the purchaser comes to expect due to the seller’s or manufacturer’s statements, especially in advertising, are also part of the vehicle’s quality (sec. 434, para. 1, clause 3 of the German Civil Code – Bürgerliches Gesetzbuch – “BGB”). In such a case, the manufacturer’s statements must be also attributed to the seller.

Apparently, VW adjusted the software for the engine management system with regard to testing cycles. Initially, the question has to be addressed, whether the test procedures allowed for the use of such adjusted software or not. With regard to the US, this question has been answered. Not so for Europe. Therefore, the emission results can only be viewed as a deviation in quality, if the use of such software was not permissible. In this case, a quality defect must be assumed. If this defect had influenced the purchase decision, it has to be material to be able to justify a withdrawal from contract. If a simple software update were sufficient to remove the defect, then an adequate legal basis for a withdrawal from the purchase contract is not given. In general, a purchaser must grant the seller an adequate period of time for removal of any defects during the guarantee period. Only if the seller fails to remove the defect in this time period, does the purchaser have the right to withdraw from the purchase contract.

The purchaser could, however, contest the purchase contract on the basis of wilful deception (sec. 123, para.1 BGB). Assuming that the purchaser feels deceived, because he believed that he was buying an environmentally friendly diesel, and the vehicle turned out to be less environmentally friendly, than wilful deception cannot be excluded, at least not if the client bought the vehicle directly from the manufacturer. If the client purchased the vehicle from a dealer who did not know of the manipulation, it is questionable whether the conduct of the manufacturer has to be attributed to the dealer (sec. 278 BGB).