From 2022, there could also be material defects within the meaning of the BGB for digital content. This is because the implementation of the Sale of Goods Directive (EU)2019/711), which will be adopted at the beginning of 2019 and will lead to the end of the Consumer Sales Directive from the beginning of the millennium, is expected to take place then. The directive must be implemented by July 21, 2021, and will then apply to contracts beginning on or after Jan. 1, 2022.

For me as an IT lawyer, one of the most exciting innovations is the change in the definition of material defects in the new § 434 BGB:

(1) The item is free of material defects if it meets the subjective requirements, the objective requirements and the assembly requirements of this provision at the time of transfer of risk.
(2) The thing meets the subjective requirements if it is
1. has the agreed quality,
2. is suitable for the use stipulated in the contract and
3. is handed over with the agreed accessories and instructions, including assembly and installation instructions.

The quality according to sentence 1 number 1 includes the type, quantity, quality, functionality, compatibility, interoperability and other characteristics of the item for which the parties have agreed requirements.

(3) Unless otherwise validly agreed, the item complies with the objective requirements if it is

1. Suitable for ordinary use,

2. has a quality which is usual for goods of the same kind and which the buyer can expect, taking into consideration
a) the nature of the matter and
b) the public statements made by or on behalf of the Seller or any other link in the contractual chain, in particular in advertising or on the label,
3. corresponds to the condition of a sample or specimen provided by the Seller to the Buyer prior to the conclusion of the contract, and
4. is handed over with the accessories including the packaging, the assembly or installation instructions and other instructions, which the buyer can expect to receive.

The usual condition according to sentence 1 number 2 includes quantity, quality and other characteristics of the item, including its durability, functionality, compatibility and safety. The seller shall not be bound by the public statements referred to in sentence 1 number 2 letter b if he did not know and could not have known them, if the statement was corrected in the same or equivalent manner at the time of conclusion of the contract or if the statement could not influence the decision to purchase.

[…]

as well as the introduction of an item with digital content in a new § 475b of the German Civil Code (BGB)

(1) For the purchase of an item with digital elements, where the entrepreneur undertakes that he or a third party will provide the digital elements, the provisions of this regulation shall apply in addition. An item with digital elements is an item that contains or is connected to digital content or digital services in such a way that it cannot perform its functions without such digital content or digital services. In the case of the purchase of an item with digital elements, it must be assumed in case of doubt that the obligation of the entrepreneur includes the provision of digital content or digital services.
(2) Anitem with digital elements shall be free of material defects if it complies with the subjective requirements, the objective requirements, the assembly requirementsand the installation requirementsat the time of the passing of risk and, withregard to an update obligation, also during the period pursuant to paragraph 3 number 2 and paragraph 4 number 2.
(3) A thing with digital elements meets the subjective requirements if
1. it complies with the requirements of Section 434 (2) and
2. for the digital elements, the updates agreed in the purchase contract are provided.
(4) An item with digital elements meets the objective requirements if
1. it complies with the requirements of Section 434 (3) and

2. the consumer during the period that he can expect, given the nature and purpose of the thing and its digital elements, and taking into account the circumstances and nature of the contract, updates are provided that are necessary to maintain the item in conformity with the contract and the consumer is informed of these updates.
(5) If the consumer fails to install an update provided to him in accordance with paragraph (4) within a reasonable period of time, the entrepreneur shall not be liable for a material defect that is solely attributable to the lack of such update, if
1. the entrepreneur has informed the consumer about the availability of the update and the consequences of failure to install it, and
2. the fact that the consumer has not installed the update or has installed it improperly is not due to defective installation instructions provided to the consumer.
(6) One thing with digital elements corresponds
1. the assembly requirements, if it complies with the requirements of Section 434(4); and
2. the installation requirements, if the installation
a) the digital elements have been carried out properly or
b) has been carried out improperly, but this is not due to improper installation by the Contractor, nor to a defect in the instructions handed over by the Contractor or the person who provided the digital elements.

 

Especially the legal obligation to provide updates for software in order not to be liable for material defects and possibly have to exchange goods with an extended period of time can create numerous new obligations for retailers and manufacturers. Consequently, the new § 475c BGB will jump on this bandwagon:

(1) If, when purchasing an item with digital elements, a permanent provision for the digital elements has been agreed, the provisions of this provision shall apply in addition. If the parties have not determined how long the provision is to last, section 475b (4) sentence 1 number 2 shall apply mutatis mutandis.
(2) In addition to Sections 434 and 475b, the entrepreneur shall also be liable for ensuring that the digital elements comply with the requirements of Section 475b (2 ) during the provision period, but at least for a period of two years from the delivery of the item.
(3) The obligation to provide updates pursuant to Section 475b (3) and (4) and to inform the consumer thereof shall continue for the provision period, but at least for a period of two years from the delivery of the item.

 

A software or hardware manufacturer (with software components), must therefore regularly maintain software, make it interoperable, update it regularly and demonstrably inform users about these updates. Software obligations also include updates for security, for example, to defend against viruses or unauthorized intrusion. The hardware elements affected include all “smart” devices from cell phones to smartwatches to televisions, refrigerators or other smart home devices that can be controlled, operated and maintained remotely using apps or similar functions. The obligation to update is to be measured against the usual period of use, i.e. it is likely to be longer for a smart TV or a refrigerator than for a current cell phone. However, the details will have to be clarified by the courts, because the recitals and the directive do not provide much information, except that the regulation is supposed to be flexible.

This is likely to be problematic for online retailers in particular, because not only will the new § 477 para. 1 BGB to increase the previous reversal of the burden of proof from6 months to one year, but it is important to note that all these update obligations affect the dealer (because contractual partner), not the manufacturer, who will usually only be technically capable of updating. This means that supply agreements will have to be adapted in good time so that dealers can in turn commit their own contractual partners. And technological precautions will have to be taken in order to be able to offer these very updates of the manufacturers SELF at all SECURELY.

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