A material defect exists if:
1. the item lacks properties necessary for its normal use or marketability;
2. the item lacks properties necessary for a specific use for which the buyer purchased it, provided the seller knew or should have known about this purpose;
3. the item lacks properties or features that were expressly or implicitly agreed upon or prescribed;
4. the seller delivered an item that does not match the sample or model, unless the sample or model was shown only for informational purposes.218
The seller is not liable for defects under points one and three if the buyer was aware of them at the time of contract conclusion or if they were so obvious that they could not have remained unknown. It is assumed that a buyer with average knowledge and experience in a given profession should notice apparent defects during a normal inspection (e.g., incorrect colour, visible damage, or faulty brakes on a bicycle). However, the seller remains liable for even easily detectable defects if they explicitly stated that the item was free from defects or had certain qualities.219
The Obligations Code (OZ) distinguishes between apparent and hidden defects and sets deadlines for the buyer to notify the seller. Apparent defects are those immediately noticeable during a standard inspection at the time of delivery (e.g., a torn zipper on a dress).
The buyer must examine the received item as soon as reasonably possible and notify the seller of apparent defects within eight days (immediately in commercial contracts); otherwise, they lose their rights regarding these defects. If the inspection was conducted in the presence of both parties, the buyer must notify the seller immediately.220
Hidden defects appear after the buyer has received the item and could not have been noticed during a standard inspection (e.g., hiking boots that are not waterproof despite being advertised as such).
In this case, the buyer must notify the seller within eight days of discovering the defect (immediately in commercial contracts). The seller is not liable for defects discovered more than six months after delivery unless a longer period was contractually agreed upon.221 The buyer and seller may limit or completely exclude the seller’s liability for material defects by contract. However, any contractual clause excluding liability is void if the seller knew about the defect but did not inform the buyer, or the seller imposed the clause by abusing their dominant position.222
A “seen – bought” clause completely excludes223 the buyer’s right to claim liability for material defects. This clause is particularly relevant in high-value purchases (e.g., real estate, vehicles).
Example: A seller of a used car, which the buyer had test-driven, is generally not liable for later-discovered defects unless they explicitly stated that the car had no defects or had certain special qualities. If the seller claimed the car was functional and the buyer confirmed this by driving it, the buyer must report any discovered defects to the seller; otherwise, the seller is not liable.
If the buyer properly and in a timely manner notifies the seller of a defect, they may:
1. Demand that the seller fix the defect or deliver a replacement without defects.
2. Request a reduction in the purchase price.
3. Withdraw from the contract.
In any of these cases, the buyer also has the right to claim compensation for damages. The first paragraph of Article 480 of the OZ states that claims regarding the seller’s liability for material defects must be filed within one year from the date the buyer sent the defect notification.224
