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The German law on contracts has been amended. In this article, we briefly explain what has been changed and what this means for you as a Dutch entrepreneur.

Judgment of the Court of Justice
On 16 June 2011 (C-65/09 and C-87/09), the European Court of Justice ruled that an entrepreneur that supplies faulty products to an end-user (consumer) must also reimburse the installation and removal costs of the faulty product. This applies even if the consumer has installed the product itself or has had it installed by a third party and the installation was not part of the contract. If the installation costs are disproportionately high compared with the value of the goods, the seller will be obliged to bear only a proportional part of the installation costs.

In Dutch law, this is already arranged in B2C relations in Section 7:21 of the Dutch Civil Code (BW). It is in line with the legal system that such costs in B2B relations can be claimed as consequential damage. In the case of international B2B relations, this is also arranged in the United Nations Convention on Contracts for the International Sale of Goods (Vienna Sales Convention).

Legislative change
At the time, the above judgment caused a lot of commotion in Germany. The judgment was not in line with the German legal system and resulted in a lack of clarity. Up until this year, sellers of faulty products were liable only for the installation and removal costs in B2C relations. The seller could claim replacement or repair of the faulty product from its supplier, but remained liable for the installation and removal costs. This was unreasonable. Consequently, on 1 January 2018, a legislative amendment was made to the German law on contracts.

In Section 439, subsection 3, of the German Civil Code (BGB), the following has now been arranged. If the consumer has installed or integrated a faulty product, the seller will be obliged, in the context of its obligation to perform, to reimburse the consumer for the extra costs for removing the faulty product and the installation or integration of the replacement product.

Section 445a of the German Civil Code states that the seller has recourse against its supplier for these costs.

The amended legislation applies to both B2C and B2B relations.

German distributor
The judgment of the Court of Justice and the legislative amendment have caused a stir on the German market. Distributors are delighted with this legislative amendment, while suppliers will be forced to pay higher costs.

If you as a Dutch entrepreneur trade with your German distributor on the basis of German law, it will now be very easy for the distributor to hold you liable for the end-user’s installation costs if the product turns out to be faulty. Your German distributor will not be pleased in the context of the legislative amendment if your Dutch general conditions are applicable and such damage claims for installation costs are excluded in those conditions. It is important to maintain a proper relationship with your distributor and to discuss this topic if necessary.

If you have any questions about this subject or about other differences between German and Dutch law, please contact our German Desk.