Rescission: a safety defect alone is not enough

A buyer who has acquired defective goods often simply wants to hand them back. Austrian warranty law, however, treats that route as the second step, not the first. In decision 3 Ob 122/26a of 20 July 2026 the Austrian Supreme Court recalled this. At the same time, it corrected a widespread assumption: that a safety-related defect is in itself enough to justify rescission.

The case

A buyer purchased a used car from a dealer that had been described as “sufficiently roadworthy – class 3”. After handover an oil leak appeared which made the vehicle unsafe to operate and to drive. The defect could, however, be repaired at comparatively modest cost, and the dealer was willing to repair it. The buyer nonetheless demanded that the sale be unwound.

The decision

The Supreme Court did not allow immediate rescission. It relied on a preliminary ruling it had obtained from the European Court of Justice in these very proceedings: the fact that a defect concerns safety does not on its own justify dissolving the contract. What matters is a balancing of interests – in particular, how serious the defect is, how burdensome its repair is, and whether the buyer can reasonably be expected to keep the repaired goods. On the facts, that balance came out against unwinding the sale.

The hierarchy of warranty remedies

This assessment follows the scheme of Austrian warranty law as set out in § 932 ABGB. The buyer may first demand repair or replacement. Price reduction and rescission come into play only afterwards: where both are impossible, where they would cost the transferor disproportionately much, where he refuses to provide a remedy, or where he fails to do so within a reasonable time and without significant inconvenience. And even then: where the defect is minor, only price reduction remains.

Where a consumer buys movable goods from a business, warranty has been governed since 2022 by the Consumer Warranty Act (Verbrauchergewährleistungsgesetz). The hierarchy of remedies there is built the same way, and dissolution of the contract is likewise excluded for a minor defect; the underlying assessment does not change.

An oil leak is not a cosmetic flaw – its safety relevance certainly argues for considerable weight. But the Supreme Court makes clear that this relevance does not replace the balancing exercise. Where the defect can be remedied at little cost, the buyer is as a rule sufficiently protected by repair.

What buyers and sellers should take from it

For buyers: the road to handing goods back runs through repair. Giving notice of the defect and allowing the seller an opportunity to remedy it loses nothing – on the contrary: if repair fails, rescission is then well founded. A buyer who skips that step and sues for rescission straight away carries the litigation risk.

For sellers: a prompt offer to repair is an effective answer to a rescission claim. It should be documented, and so should the cost of the repair – that figure can tip the balance.

For both: statements about condition in a used-car sale, such as a class rating, are not mere sales talk. They help determine what condition the buyer was entitled to expect, and therefore whether there is a defect at all.

This information is general in nature and does not replace advice on an individual case.