The sales law update at the beginning of the year - The update obligations according to §§ 475 b, c German Civil Code ("BGB)

Hogan Lovells
Contact

Hogan Lovells

In implementation of the Sales of Goods Directive (Directive 2019/771/EU of May 20, 2019, "WKRL") and the Digital Content and Services Directive (Directive 2019/770 (EU), "DIDRL"), a comprehensive reform of the BGB came into force on January 1, 2022, which will apply to all contracts concluded after that date. In particular, digital products and objects with digital elements (keyword: Internet of Things) are given their place in the normative structure of German law of obligations and, above all, the law of sales. In this article, we focus in particular with the newly established updating obligations in this context.

In implementation of the Sales of Goods Directive (Directive 2019/771/EU of May 20, 2019, "WKRL") and the Digital Content and Services Directive (Directive 2019/770 (EU), "DIDRL"), a comprehensive reform of the BGB came into force on January 1, 2022, which will apply to all contracts concluded after that date. In particular, digital products and objects with digital elements (keyword: Internet of Things) are given their place in the normative structure of German law of obligations and, above all, the law of sales. We have already discussed this in our articles: "New (Digital) Sales Law" and "Digitalization in Consumer Law (Part 2)" as well as "Changes in the German Civil Code from January 1, 2022: New Contract Law". As announced in the last article, this article focuses on essential regulations of the newly introduced updating obligation for digital products and goods with digital elements as well as their effects on practice.

Background

In June 2021, the German Bundestag passed the "Act on the Regulation of the Sale of Goods with Digital Elements and Other Aspects of the Sales Contract" to implement the European Sale of Goods Directive (Directive 2019/771/EU of May 20, 2019, "WKRL"). At the same time, the Digital Content Directive (Directive 2019/770/EU of 26 November 2019, "DIDRL") was thereby introduced into national law by the "Law on the Implementation of the Directive on Certain Contractual Aspects of the Provision of Digital Content and Digital Services", the national implementation of which we already reported on.

The transposition of the SDD prompts significant changes in the law of sales for the purchase of goods with digital elements, while the SDD focuses on legislative amendments in the general law of obligations for digital B2C contracts in connection with the provision of digital content or digital services (together: digital products) according to §§ 327 ff. BGB n.F.

In practice, the changes to the law on the sale of goods in particular cover a wide range of products, from motor vehicles and machinery to smartwatches and networked speakers. An estimated 156,000 trading companies based in Germany are primarily affected by the new updating obligations (cf. RegE_Warenkaufrichtlinie.pdf (bmj.de), p. 14 f., which lead to a fundamental reassessment of the requirement profile of freedom from material defects (Section 475b (2) BGB n.F.).

Significance and scope of the updating and information obligations

Among other changes, the biggest innovation concerns the introduction of a new main performance obligation for the entrepreneur: he fulfills his obligation to deliver a defect-free purchased product only if he also performs the corresponding updates for a certain period of time after handover of the product with digital elements. The obligation to deliver a defect-free product thus loses its fundamentally very close link to the time of the transfer of risk (Section 446 of the German Civil Code). What is completely new is that a purchased item that was originally free of defects at the time of the transfer of risk can subsequently become defective - due to the omission of updates.

This was not the case under the previous legal situation at least if the need for an update only arose after the transfer of risk (cf. RegE_Warenkaufrichtlinie.pdf (bmj.de), p. 32). The extension of the entrepreneur's obligation to perform associated with the innovation is justified by the fact that "unlike conventional items, items with digital elements are not completely outside the sphere of the entrepreneur even after delivery" (RegE_Warenkaufrichtlinie.pdf (bmj.de), p. 32)..

Technical progress causes further possibilities for the entrepreneur to influence the consumer's devices, which, according to the specifications of the Union legislator, lead to equally further-reaching obligations to influence. The "updates" are in particular version changes of the software. Entrepreneurs are still not obligated to perform performance-enhancing updates, which are therefore performed at best as a gesture of goodwill.

In specific terms, updating means maintaining the device and ensuring adequate safety standards. Among other things, the provisions laid down in the European standard EN 303 645 for networked smart home devices can be a guideline in this context.

Generally, the entrepreneur is also obliged to "provide" the updates to the consumer (Section 475b (3) and (4) BGB n.F.). This "making available" requires that the updates themselves, access to them or downloading them be made available or accessible to the consumer "directly or by means of a facility designated by him for this purpose" (RegE_Warenkaufrichtlinie.pdf (bmj.de), p. 32). The decisive factor here is an independent access option. Updating without the user's consent is not provided for.

Another obligation of the entrepreneur is usually to "inform" the consumer about the updates provided. Through this duty to inform, the consumer experiences a full protection of his "right to update". The entrepreneur shall inform the consumer about the installation, the use as well as the possibility of rejection and the associated consequences (in particular the entrepreneur's exemption from liability, cf. Section 475b (5) No. 1 BGB n.F.). The legislator leaves open how this information activity is to be designed. Conceivable are notices in the online store, through the newsletter or by means of push notifications.

The entrepreneur may also comply with both the obligation to provide information and the obligation to inform by way of third parties, in particular by calling upon the manufacturer (cf. RegE_Warenkaufrichtlinie.pdf (bmj.de), p. 33).

Insofar as goods with digital elements are concerned where a permanent provision takes place over a certain or indefinite period of time, Section 475c (2) BGB n.F. establishes a new obligation of the entrepreneur to continuously provide the goods in updated form over a period of at least two years (Section 475c (2) BGB n.F.). This special circumstance concerns use cases such as traffic data for a navigation system or the cloud infrastructure of smart devices.

Deviating contractual agreements are permissible, provided that the formal requirements (Section 476 (1) sentence 2 BGB) are complied with: This can be done by specifically informing the consumer of the specific deviation and by expressly and separately agreeing on this deviation (Section 476 (2) Sentence 2 No. 1, 2 BGB n.F.).

Challenges and outlook

Overall, this update requirement presents two key challenges:

On the one hand, the debtor of the updating obligation is the entrepreneur of the consumer goods purchase contract pursuant to Section 475a of the German Civil Code (BGB). In practice, however, the latter is regularly not the manufacturer of the digital elements, but a (possibly non-brand-related) retailer who does not necessarily maintain contractual or similar close relationships with the manufacturer of the purchased item, but is now dependent on the latter's cooperation.

On the other hand, the period of the updating obligation is deliberately not specified by law. From an objective point of view, the law focuses on the consumer expectation that can be expected "based on the nature and purpose of the control room and its digital elements and taking into account the circumstances and nature of the contract" (Section 475b (4) BGB n.F.). This vagueness creates a certain standing obligation to update, which can vary considerably in time depending on the type of product. Criteria that could particularly play a role in determining legitimate expectations for the duration of the obligation to update are: advertising statements, the processing of the product, the price, the life cycle and the circumstance of whether the product continues to be sold on the market. In this respect, space is opened up for comprehensive casuistry to be established in case law.

This challenge is also linked to a consequential problem under statute of limitations law: This is because the 12-month suspension of the statute of limitations is not triggered until the end of the updating process (Section 475e of the German Civil Code, new version). It therefore seems worth considering for entrepreneurs to specifically define the period of the updating obligation within the framework of the contractual agreement.

It should therefore be noted that the legislator (under EU law) aimed to implement the ongoing digitization in business life in a comprehensively consumer-friendly manner. The updating obligations in particular help consumers to make better and longer-lasting use of products. At the same time, companies are exposed to new obligations that require corresponding preparatory measures such as agreements with the manufacturer and deviating contractual agreements in order to avoid possible claims as far as possible.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Hogan Lovells | Attorney Advertising

Written by:

Hogan Lovells
Contact
more
less

Hogan Lovells on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.