The Supreme Court of the Czech Republic: Statutory warranty not renewed when the product is replaced or repaired

Much has been written about the statutory warranty, or, in the terminology of Act No. 89/2012 Coll., Civil Code, as amended (the “Civil Code”), the legal obligation arising from defective performance, by professionals and laymen. We will likely all recall, in this context, a long-lasting academic debate on the nature of Section 2156 (1) of the Civil Code. Specifically, whether the provision establishes a responsibility of the seller for any defects that appear in the goods during the period of 24 months after the goods is received by the buyer or whether it solely establishes a warranty period to file a complaint about a defect existing already at the time when the goods are received by the buyer.

The purely practical, however not less important, issue of whether by solving the warranty claim through
a replacement of the product or its part means a commencement of a new warranty period has been frequently neglected in the debate.

The Civil Code effective before 31 December 2013 addressed this issue explicitly. Section 627 (2) of the previous Civil Code stipulated that an exercise of the right arising from the responsibility for the defect resulting in a replacement of the defective goods will commence a new warranty period for the replaced goods from the beginning, specifically from the moment it was received by the buyer. The same conclusion applied to a replacement of a part of the goods; in such case, the new warranty period commenced only for the replaced part. As a result of this legal construct, consumers’ entitlement for almost an infinite warranty, or an endlessly renewed warranty, may have arisen in certain cases pursuant to this law.

It may have been for the above reason that the Czech lawmaker decided not to explicitly embody this provision in the Civil Code. Therefore, a question arose whether and in what manner the courts would address this aspect of the statutory warranty stipulated in the Civil Code effective since 1 January 2014.

A definite answer to this question was introduced by the Supreme Court of the Czech Republic on 29 October 2020 in its ruling Case no. 33 Cdo 416/2020. The core of the dispute did not lie, as readers could assume, in the dispute arising from a purchase agreement, but rather from a contract for work. In that specific case, the defendant was obliged to build a specified inground pool and supply and assemble two pieces of LED tapes in the pool groove. Subsequently, after 8 months from the receipt of the work, the plaintiff filed a warranty claim regarding the supplied LED lighting in the pool. The defendant accepted the claim and dealt with it by replacing the existing pool LED lighting with a new LED lighting of a different type as the original type of the lighting had been recalled by that time due to its malfunction. The plaintiff subsequently filed another, i.e. second, warranty claim to the defendant, 22 months after the installation of the new pool LED lighting. He filed it at the time when more than 24 months had passed from the delivery of the work as a whole, i.e. the pool. For this reason, the defendant rejected the claim filed by the plaintiff by stating that it had been filed after the end of the statutory warranty period.

Ruling of the Supreme Court  

In the above context, the Supreme Court had the opportunity, for the first time since the Civil Code became effective, to comment in more detail on whether the warranty period determined for the exercise of the right arising from the defect in the part of the work commences from the moment of the receipt of the subject matter of the work as a whole, or whether it commences again from the moment when the defect is remedied by a replacement of a defective part. Even though this issue may seem banal at first sight, its controversy is underlined by the fact that even the courts of the first and second instance did not have an identical opinion on this issue.

The District Court for Prague 5 interpreted Section 2156 (1) of the Civil Code by reference to the previous legislation and established practice as follows: the removal of the defect by replacement of the goods results in a new 24-month period for the exercise of the right arising from the responsibility for defects commencing at the moment when the new goods are received.

The Municipal Court in Prague, as an appellate court, took a completely opposite view in its ruling.
It interpreted Section 2156 (1) of the Civil Code as follows: the warranty period of 24 months from the receipt applies exclusively to the goods itself, i.e. to the subject matter of the contract for work. In the legal opinion expressed by the Municipal Court in Prague, “a potential defect in part of it (note of the author: part of the work) does not give rise to a new warranty period for the replaced part, unless the parties agree otherwise”.

Following an assessment of both rulings of the courts of lower instance and the presented legal issue, the Supreme Court concluded that the replacement of the goods no longer resulted in a new warranty period as according to the previous legislation. In this context, it reached an opposite conclusion stating that “the statutory obligation arising from defective performance relates to the obligation of the seller to make sure that the buyer can use the goods without defects for a certain period of time (24 months), and it therefore does not relate to the goods itself …” The Supreme Court additionally supported its interpretation of the relevant provision by using the method of historical subjective interpretation which examines the meaning that the author associates with the text. It concluded that “if a lawmaker had intended to relate the commencement of a new warranty period to the remedy by a replacement of the goods or its part, he/she would have explicitly stipulated that in the Civil Code effective since 1 January 2014…”.

The ruling changes the practice applied hitherto

The above conclusions of the Supreme Court have a far-reaching application significance as they apply not only to consumer contracts for work, by also to almost all consumer purchase contracts. The outlined conclusions constitute a significant departure from the previous legislation and practice which, in the opinion of the authors, provided an extra advantage to consumers over businessmen as the obligations arising from the statutory warranty were connected with the goods itself rather than with the obligation of a businessman to provide
a possibility to a consumer to use the goods without any defects for 24 months from the receipt.

For the above reasons, the ruling of the Supreme Court can be seen as favourable for the businessmen and their customer relations. However, the presented conclusions must be used solely in respect of the obligations arising from the law and naturally nothing will stop the businessmen from providing an extra servicing to their customers in the form of extended warranties of various scope or new warranties for the supplied goods as part of the warranty claims handling.

The article was published on the website on 23 March 2021. (edited)
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