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Legal problems with advertising with guarantees

Guarantee is always a special promise of performance by the seller or the manufacturer, with which he promises a certain minimum durability in the sense of freedom from defects or a certain property. In the event of a warranty claim, the buyer regularly has the right to repair or product replacement. Guarantee statements in advertising bind the guarantor. The customer may refer to such advertising statements. The guarantee no longer has to have been given in the form of a guarantee declaration. The statement in relevant advertising is also sufficient. The use of the word "guarantee" naturally has a special appeal. However, the word "guarantee" or "guarantee" does not have to be expressly mentioned. The decisive factor is what is expressed in an advertising message.

"Promised absence of defects"

The sentence "We promise you complete freedom from defects in the first three years" is clearly to be understood as a guarantee from the customer's or consumer's point of view.

A manufacturer provides his product advertising with the clearly recognizable sentence "We trust in the quality of our products and their freedom from defects for 4 years". From a consumer's point of view, this sentence can be understood as a guarantee of durability. True, nothing is expressly promised; the word "guarantee" or "guarantee" is also not mentioned. But the content and the connection with a product advertisement should convince customers of the product. The customer can argue well here that a guarantee should be given here.

##Unfair advertising with guarantees

Wherever guarantees are advertised, the question of the competitive admissibility of the guarantee always arises. Advertising has to be louder and therefore has to follow rules. Guarantees are, on the face of it, consumer-friendly, so one might think that the consumer cannot be unfairly misled or misled. This does not apply if an advertisement refers to a long-term guarantee, but the guarantee is limited in the guarantee conditions to such an extent that the customer can hardly ever refer to the guarantee. Guarantee conditions must therefore not be too narrow.

### Dealer Warranty

A dealer advertises a multi-year guarantee on all the products he sells. Its warranty conditions contain no restrictions. This is allowed. The guarantee does not always have to come from the manufacturer. The seller can also issue an independent guarantee to the customer. This then applies in addition to the statutory warranty rights and, if applicable, in addition to a manufacturer's guarantee.

####Long but meaningless durability

A manufacturer advertises its products with a 15-year shelf life. This warranty promise may be incompatible with competition law. Nothing speaks against the promise that a product has a shelf life of 15 years. However, it is also necessary that the product in question has a 15-year guarantee that has its own meaning for the buyer, i.e. he uses the product for 15 years. If this is not the case, case law considers long-term guarantees to be inadmissible.

####Warranty only for initial defects

Another example: The warranty conditions for a 5-year warranty for the freedom from defects of an instrument provide the following clause: "The warranty only applies if the customer proves that the defect existed from the beginning". This clause would be anti-competitive for a number of reasons: First, a guarantee means that the product will remain free of defects during the guarantee period. Every defect must therefore be covered by the guarantee, without the customer having any obligation to provide proof. Exception: If a defect, in particular damage to a product, is due to misuse by the buyer, the guarantee can be excluded for this. Nevertheless, it should be inadmissible to impose the burden of proof on the buyer for this.

####Exclusion of statutory liability for defects in guarantees

A retailer advertises his product as follows: "Further than the law: 3-year durability guarantee on all products". In the guarantee conditions, he grants a generous guarantee, for example accepting the costs of sending in and returning the goods, but expressly excluding the statutory rights of the consumer under the law. This makes the guarantee unfair: the statutory rights of the consumer must not be excluded. In this case, the dealer can be warned. His customer, who has bought an instrument for private use and is therefore a consumer, can still take action against the dealer on the basis of the guarantee, since only advertising with such a guarantee is prohibited.

####Warranty subject to change

A dealer advertises a 5-year guarantee on all the products he sells. However, its warranty terms contain a clause that the repair or replacement of the product is subject to the supply of spare parts or replacement products to the dealer. Advertising with such a guarantee is very critical. The customer is lured with a promise that is again severely limited in the warranty conditions. The retailer is likely to be acting unfairly if it knows or has reason to believe that a warranty repair or replacement may be problematic because the manufacturer does not stock replacement parts or has restricted its product lines. This threatens to be the case, especially at the end of the respective guarantee period.

####Warranty only for specific defects

Guarantees are often formulated in general terms, but are limited to specific defects in the guarantee conditions. For example, the following provision in the manufacturer's or retailer's guarantee conditions is likely to be unfair: "The guarantee only applies to defects that can be proven to be based on a production or material defect". This rule would be legally vulnerable for three reasons: It would fall short of the statutory warranty, which applies unreservedly to all defects, not just manufacturing or material defects. The word "demonstrable" would mean that the buyer has to prove the production or material defect because he is asserting claims under the guarantee. However, such proof is regularly not possible for him because he has no insight into the production processes of the manufacturer. Finally, proving a material defect is often associated with high costs for experts, which can prevent the consumer from asserting claims under the guarantee. In addition, no burden of proof may be imposed on the consumer in general terms and conditions that the law does not provide for.

####Warranties and Limitation Periods

Manufacturers and dealers should also be careful with so-called cut-off periods. Limitation periods determine from which point in time claims due to a guarantee case must be asserted. For example, a clause like the following would be inadvisable: "The buyer must report warranty claims to the seller within the warranty period." In this clause it would be very uncertain what is meant by the warranty period, when it begins and how long it lasts. If this is understood as the period of freedom from defects advertised by the manufacturer or retailer, it is not clear when this begins. As a rule, the guarantee period should begin with the handover of the instrument or the otherwise acquired item; however, this is not mandatory. The wording would also be critical because a defect that only occurs on the last day of the warranty period would still be covered by the warranty, but the customer would only have this one day to assert his claims. In many cases this might not succeed. At the same time, such a clause would probably shorten the statute of limitations in an unacceptable manner: Claims from a guarantee are also subject to the statute of limitations. According to the formulation presented above, the earlier the defect occurs, the longer this period would be. The law does not recognize this consequence. Exclusion periods must therefore always match statutes of limitations.

####Summary

Guarantees are and will remain an important marketing tool. However, guarantees in advertising can be doubly critical. On the one hand, a guarantee claim can already arise if a corresponding guarantee intention can be read in an advertisement. On the other hand, a guarantee that has an unrestricted effect in advertising must not be “evaporated” again in the guarantee conditions. Limitations to certain types of defects, the customer's obligation to provide proof, deadlines, a conflict with rights arising from statutory liability for defects or warranty periods, which come to nothing, especially in the event of a shortage of spare parts or replacement products, are particularly critical. Particular caution is therefore required when drafting the guarantee conditions.

dr Andrelang, LL. M

Specialist lawyer for international business law

Specialist lawyer for commercial and corporate law

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