Warranty and consumer protection

General information

A warranty is the statutory liability for defects incumbent on the party transferring or handing over goods or services (the seller, contractor, service provider, etc.). It is not the same as a guarantee, although the terms are often confused. Unlike a statutory warranty, a guarantee^{German text} is a voluntary contractual liability generally assumed by the manufacturing company. Consumers need to be aware that a manufacturer’s guarantee does not limit the scope of their statutory warranty claims on the transferring party. If they complain about a defect, therefore, consumers do not need to be satisfied with being referred by the seller to the manufacturing company and to a guarantee made by it. Instead, they can choose whether to assert warranty claims against the sellers or potential guarantee claims against the manufacturers.

Exceptions apply to the sale of purchased goods, where the warranty period can be reduced to one year in the terms of the contract if this is negotiated in an individual case. Simply making a reference in the general terms and conditions of business or inserting a standard clause in the contract is not sufficient. In the case of used motor vehicles, a reduction of this kind will only be effective if more than a year has elapsed since the vehicle was first registered. In the case of private sales (contracts between consumers), warranty claims can be limited or even excluded entirely by mutual consent.

A new warranty law, adapted to fit the digital age, has applied to consumer transactions (contracts between companies and consumers) since 1 January 2022. This gives consumers just as much protection under warranty law when they purchase e-books, apps, software, streaming services and other digital one-off and continuous services as well as goods with digital features such as smartphones and household appliances with embedded software and Internet connectivity as when they conclude contracts for conventional goods and services.

As well as in the case of defective goods (the term “goods” here covers all physical movable property such as household appliances, books and clothes, goods with digital elements) and digital services, consumers can also assert warranty claims under contracts for work, labour and services (such as making a suit from material that the consumer has purchased themselves), contracts for immovable property (e.g. plots of land) and other contracts (e.g. with gyms or electricity providers).

The term “digital services” is an umbrella term that covers digital content and digital services. Digital content is understood to mean data that is generated and provided in digital form, such as software, apps, e-books, downloadable music files and video clips. Digital services enable data to be created, processed, stored, accessed and used collectively and other users to be interacted with (e.g. e-mail, messenger or cloud services, music and video streaming services, social networks and online gaming).

“Goods with digital elements” are understood to mean goods that cannot function as intended without the digital services contained in or linked to them, such as a smartphone, “smart” household appliances such as a connected refrigerator containing software that carries out food purchases, a PC with a pre-installed or purchased operating system, or a car with a satellite navigation system, but also less sophisticated goods with digital features. Nowadays, most high-priced consumer goods, such as motor vehicles, household appliances, consumer electronics and telecommunications accessories, are equipped with embedded software as well as, often, the option of connecting to the Internet (the “Internet of Things” or “IoT”).

The statutory provisions governing goods with digital elements will always apply if the digital features form an integral part of the contract for the purchase of the goods. If a smart TV is advertised as containing a certain video app, for example, this app will form an integral part of the purchase contract for the TV. Other examples are standardised, pre-installed apps on a smartphone such as an alarm, a camera app or other basic features that are included in the original price. Only if the digital services are not covered in the purchase contract will they be subject to the rules on digital services. This would be the case, for instance, if it were expressly agreed that only the hardware for a smartphone is to be sold, with the consumer purchasing the operating system completely separately under a separate contract. In the event of doubt, therefore, the digital features of an item of goods are deemed to form an integral part of the purchase contract.

Under the warranty, the transferring party will only be liable as a basic principle for defects that the product or service exhibits even at the point in time that it is handed over or provided, even if this defect does not become noticeable until later on.

Continuous digital services are an exception: even if they form an integral part of a purchase of goods, any defect in a digital service that occurs or emerges while the contractual obligation to provide it is in force will impose warranty obligations on the company. Whether the defect already existed at the time of provision or did not occur until later is irrelevant.

The liability covers the defective product or service itself and not any consequential damage or loss (however, an exception applies to e.g. the obligation to cover removal and installation costs incurred under warranty if a defective product that is to be replaced is fitted inside another product). The transferring party does not need to have caused or otherwise been responsible for the defect. They shall be liable for defective goods and other services regardless.

Definition of a defect

A defect is deemed to exist if the goods do not have the quality or properties agreed between the seller and the buyer but also if the goods cannot be used as normal or does not exhibit the properties or degree of usability that products of the same kind usually possess and that consumers can reasonably expect. The properties and qualities of digital services must be guaranteed to exactly the same extent as for goods. For these and for all other contractual services, a defect shall be deemed to exist if properties of the service that were contractually agreed or are usually to be expected are absent.

Characteristics of the service that consumers could reasonably expect can be excluded by the contracting parties by mutual agreement. In the case of goods and digital services, however, this is only possible under certain restrictive conditions: company owners are required to inform consumers separately of the specific way in which the goods or digital service deviates from the usual standard before concluding the contract, and consumers must give their explicit separate consent. Simply adding a provision to the general terms and conditions of business will not suffice.

However, reasonably expected performance characteristics are also those actively advertised by the transfering party or the manufacturer (e.g. advertising statements). The transfering party must therefore not only be liable for her/his own advertising statements, but also for those of the manufacturer, provided that she/he was aware of them or at least could have been aware of them.

Warranty claims

There are two stages to a warranty claim:

• In the first stage, consumers can initially request improvement (repair) or replacement from the company in question (primary warranty claims). Improvements and replacements are generally to be carried out at the expense of the transferring party (e.g. working time, material). The consumer does not have to pay anything for the rectification of the defect.
  They are free to choose either remedy as a basic principle unless one of them is
  • not feasible or
  • would require an unreasonable amount of time and effort on the part of the company.
    Digital services are an exception: in this case, the company can always choose for itself how to rectify the defect.
• Not until the second stage does there arise the question of a reduction in price to an amount that reflects the value of the defective service or even the possibility of the contract being rescinded, resulting in the services rendered by each party to the other being reversed (secondary warranty claims).

Companies may refer consumers to these second-stage remedies if improvement and replacement

• are not feasible or
• would require an unreasonable amount of time and effort on the part of the company.

Alternatively, consumers may also switch from the first to the second stage of remedies themselves, specifically:

• in the case of particularly serious defects,
• if the company refuses to repair or replace the defective product,
• if it is likely that such efforts will fail, not be made at all or cause the consumer inconvenience,
• if another defect emerges, and
• if the company refuses to take back the goods to be replaced at their own cost,
• refuses to undertake the necessary removal and installation or bear the associated costs, or
• has failed to rectify the defect despite being given a reasonable deadline for doing so.

As in the first stage, consumers are free to choose between a reduction in price and rescission of their contract provided that the defect is not merely minor.

Digital services are an exception: here, the consumer will not be entitled to demand a reduction in price if the digital service was provided in exchange for the consumer supplying data (“paying” with data). In this case, consumers may rescind their contract even if defects are minor.

Burden of proof – deadline for shifting the burden of proof

If a defect emerges after just a relatively short amount of time, it will be assumed to have already existed on delivery. The law stipulates different deadlines for different types of contract with consumers. These are referred to as deadlines for presuming defectiveness at the time of delivery or deadlines for shifting the burden of proof.

Specifically, companies have until the relevant deadline to either honour warranty claims asserted against them or prove that the defect was caused by excessive use or a violent impact, for example. Consumers need only prove that a defect exists during this time.

After the deadline for presumption has passed, the consumer must either prove that the defect already existed at least in principle at the time of handover or provision, even if it might not have occurred until much later (e.g. a material flaw that does not cause a breakage until long after handover) or that the defect occurred before the deadline for presuming defectiveness at the time of delivery.

In the case of continuous digital services, whether the defect already existed at the time of provision or did not occur until later is irrelevant. Throughout the agreed provision period, the company shall bear the burden of proving that the digital service complied with the terms of the contract during this time.

Until 31 December 2021, all consumer contracts stipulated a six-month period for shifting the burden of proof. The new warranty provisions governing digital services and goods with digital elements now require consumers to make a more precise distinction.

In the case of consumer transactions, the deadline for shifting the burden of proof is:

• One year from handover/provision
  • when purchasing goods (i.e. purchasing physical movable property), including purchasing goods whose digital elements form an integral part of the contract for purchasing the goods (e.g. a bicycle, a book with an integrated data carrier, a PC with an operating system, a smartphone) where the contract is concluded in 2022 or later
  • when providing one-off digital services from 2022 onwards (e.g. e-books), even if they form an integral part of a goods purchase (see above, e.g. a PC with an operating system)

• Six months
  • when purchasing immovable property (e.g. an apartment)
  • for contracts for work and labour (e.g. a tailored suit made from material that the consumer has purchased themselves)
  • in the case of contracts for work and labour concluded and digital services provided prior to 2022
• Whole contract term
  • in the case of continuous digital services provided on or after 1 January 2022, e.g. antivirus software or a computer game that can be used for three years under the terms of the contract and must be updated on the first day of every month during this period, a one-year cloud storage contract or non-time-limited membership of a social media platform
• Whole contract term or two years, whichever is shorter
  • in the case of continuous digital services that form an integral part of a goods purchase contract concluded on or after 1 January 2022, e.g. traffic data that is to be updated continuously for a satellite navigation system or training plans for a fitness smartwatch that are to be customised on an ongoing basis

Warranty period and statute of limitations

Adapting warranty law to fit the digital age has also brought changes to warranty periods. Until 31 December 2021, the only distinction really made was between the two-year period for movable property and the three-year period for immovable property (most notably plots of land, houses or apartments). The new warranty provisions governing digital services and goods with digital elements have required consumers to make a more precise distinction since 1 January 2022.

Warranty claims apply to all defects that at least existed at the time of delivery and that emerge during the following warranty periods:

• Two years from handover or provision 
  • physical movable property, i.e. goods (e.g. a bicycle)
  • goods incorporating one-off digital services (e.g. a PC with an operating system)
  • hardware defects affecting goods incorporating continuous digital services (e.g. a satellite navigation system with continuously updated traffic data)
  • one-off digital services (e.g. an e-book)
  • work or labour using or on the movable property forming the subject matter of the contract (e.g. a tailored suit made from material that the consumer has purchased themselves, repairs to a car)
• Three years from handover
  • immovable property (e.g. plots of land, houses or apartments)
  • work or labour using or on the immovable property forming the subject matter of the contract (e.g. repairs to a parquet floor)
  • delivery of movable property linked to immovable property by the transferring party (e.g. when supplying tiles with an associated obligation on the part of the supplier to lay them)

In the case of continuous digital services, including those that form an integral part of a purchase contract, any software defect that occurs or emerges while the contractual obligation to provide the digital service is in force will impose warranty obligations on the company, in the case of continuous digital services that form an integral part of a goods purchase, however, the minimum period is two years. Whether or not the defect already existed while the service was being provided is irrelevant.

This means that companies will be liable for all (software) defects affecting continuous digital services that occur or emerge during the following warranty periods:

• Two years from handover or provision
  • continuous digital services to be provided for up to two years that form an integral part of a purchase contract (e.g. customised training plans provided by a fitness smartwatch for a period of 18 months)
• Whole contract term
  • continuous digital services to be provided for longer than two years that form an integral part of a purchase contract (e.g. traffic data to be updated continuously for three years for a satellite navigation system)
  • digital services to be provided continuously independent of any purchase of goods (e.g. membership of a social media platform)

Once a warranty claim has been met, new warranty claims are possible for repaired or replaced items. The warranty period begins afresh, but only if the claim has been met under the statutory warranty and not as a goodwill gesture.

Additional deadline for asserting claims (NEW)

The following applies to contracts concluded or digital content provided on or after 1 January 2022: anyone who asserts warranty claims against the company and ultimately intends to take legal action must do so within three months of the end of the relevant warranty period at the latest.

Consumers cannot benefit from the extra three months for asserting claims in the case of contracts concluded or digital content provided before that date. They will need to take legal action by the end of the warranty period.

Updates – obligation to supply updates

Companies have an obligation under warranty law to supply updates for digital services (e.g. an operating system or messenger service) that they provide on or after 1 January 2022. This also applies if the digital services form an integral part of a goods purchase, such as basic software contained in or linked to a smartwatch, a smartphone, a satellite navigation system or a car, continuously updated traffic data for a satellite navigation system, or customised training plans for a fitness smartwatch.

The companies are obliged to provide the updates required to keep the goods or service free from defects without charge. Amongst other things, this obligation also covers updates to functionality, safety and security aspects and to ensure that the software works with other hardware and software.

An update that is defective, incomplete or not made is also deemed to be a defect and will oblige the company to remedy it. Equally, the company is required to remedy defects that are actually caused or triggered by the update itself.

How long this obligation to supply updates applies for will depend on the individual contract. It may last

• For a length of time to be reasonably expected by the consumer, i.e. at least two years. Depending on the expected usage period, it may be considerably longer, e.g. in the case of
  • one-off digital services (e.g. an e-book),
  • including if they form an integral part of a purchase contract (e.g. a PC with an operating system)

Note that what constitutes a consumer’s reasonable expectations can also extend well beyond the end of the warranty period, particularly for high-priced, long-lasting goods and services.

• The whole contract term in the case of
  • continuous digital services (e.g. a one-year cloud storage contract, a computer game that can be used for three years and must be updated on the first day of every month during this period, non-time-limited membership of a social media platform). However, the period will be:
• At least two years if
  • continuous digital services form an integral part of a purchase contract (e.g. customised training plans provided by a fitness smartwatch for an unlimited period)

The obligation to supply updates can be excluded from the contract, but only if the company owner specifically notifies the consumer that this is to be the case and if the consumer agrees explicitly and separately to this exclusion.

Right of recourse on the part of the company

If a warranty claim arises from a consumer transaction and the providing business person did not cause the defect himself, he may claim indemnity by a right of recourse against upstream businesses. The business person may claim indemnity against the upstream business person even if his own warranty claim is already statute-barred. This right of recourse may extend back, from one link in the sales chain to another, to the manufacturer. In any case, this right lapses five years after the upstream business person provided the original service. The business with the right of recourse must exercise that right within two months of actual fulfilment of its own warranty obligation.

 Online shopping

Warranty rights also cover online purchases, in which case the warranty applies at the location to which the goods were shipped. However, the company owner may ask the consumer to return the goods at the company’s cost so that they can be replaced or repaired. More information on the right of rescission in the case of online shopping^{German text} and the law applicable to online orders^{German text} is also available at oesterreich.gv.at,

which also contains further details on cross-border consumer contracts in the EU.

Further links

• Consumer protection (→ BMSGPK)^{German text}
• Consumer questions (→ BMSGPK)^{German text}
• Warranties and guarantees (→ VKI)^{German text}
• Warranties for digital goods (→ EVZ Österreich)^{German text}
• Online-Shopping (→ EVZ Österreich)
• Consumer Information Association (→ VKI)^{German text}
• Court search (→ BMJ)^{German text}
• Consumer Contracts and Guarantees (→ Your Europe)
• FAQs on warranties and returns (→ Your Europe)

Legal basis

• Verbrauchergewährleistungsgesetz (VGG)
• Konsumentenschutzgesetz (KSchG)
• Allgemeines Bürgerliches Gesetzbuch (ABGB)