Background
On 27 March 2023, GF purchased a second-hand vehicle from KFZ Kolak for €33,500. The vehicle, first registered in January 2015, was described in the contract as fit for operation and registration. On 6 April 2023, an inspection by the Austrian automobile club (ÖAMTC) revealed an engine oil leak caused by poor engine sealing—a defect affecting operational and road safety that existed when the vehicle was delivered and could be rectified inexpensively.
GF refused KFZ Kolak’s offer to repair the vehicle and sued for immediate termination of the sales contract and reimbursement of the full purchase price. The Austrian first-instance court dismissed the claim, holding that the seller’s willingness to repair and the inexpensive remedy justified denying termination. The appellate court reversed, reasoning that under Directive 2019/771, any safety defect that severely affects normal use justifies immediate termination regardless of repair cost or seller willingness. KFZ Kolak appealed to the Austrian Supreme Court, which referred the matter to the CJEU for preliminary ruling.
The Court’s Holding
The CJEU held that a lack of conformity relating to safety of goods that can be rectified relatively inexpensively does not necessarily constitute a defect so serious as to automatically justify immediate price reduction or contract termination. The Court rejected a categorical rule that treats all safety defects identically.
Instead, Article 13(4)(c) of Directive 2019/771 requires assessment of whether the consumer can objectively maintain confidence in the seller’s ability to remedy the defect. The assessment must weigh: the nature of the defect, the type of goods, the conditions and cost of remediation, whether the defect adversely affects safety, and the seller’s conduct. The Court noted that Directive 2019/771 balances consumer protection with fair treatment of sellers; allowing any safety defect to trigger immediate termination would undermine this equilibrium and erase the distinction between remediable and irremediable defects.
Applied to the facts: although the engine oil leak could impair normal vehicle use, the seriousness must be assessed considering that the vehicle was second-hand and over eight years old, the seller engaged in no deception and offered to repair, and the repair cost was relatively low. These circumstances did not justify finding that the consumer could not reasonably maintain confidence in the seller’s ability to cure the defect.
Key Takeaways
- Safety defects alone do not automatically trigger consumer rights to immediate price reduction or contract termination under EU consumer protection law.
- Courts must conduct holistic assessment of defect seriousness, considering repair cost, seller willingness, defect nature, and goods type alongside safety impact.
- The balance between consumer protection and seller fairness requires that remediable defects—even safety-related ones—permit the seller an opportunity to repair when repair is inexpensive and the seller is willing.
- Age and second-hand status of goods are relevant factors in assessing whether a defect destroys consumer confidence in the seller’s remedial ability.
Why It Matters
This judgment clarifies that EU consumer protection law does not create categorical immunity for defect-laden goods merely because a safety issue exists. Instead, it imposes a reasonableness-weighted test that requires courts and arbitrators across the EU to balance the competing legitimate interests of consumers and traders. For sellers, it preserves the right to remedy defects even in goods with safety-related nonconformities, provided repair is feasible and inexpensive. For consumers, it confirms that safety defects remain serious and can justify termination when circumstances—such as repeated failures or prohibitively expensive repairs—destroy reasonable confidence in remediation.
The decision also signals that Member States implementing Directive 2019/771 cannot adopt overly consumer-protective interpretations that automatically classify safety defects as “serious” independent of context. Manufacturers, dealers, and warranty providers in the used-vehicle industry and similar secondary markets will view this as moderating consumer termination rights when repair offers are made, though the open-ended factual inquiry preserves consumer protections where repair is infeasible or seller conduct is questionable.