Warranty remedies: choosing repair, price reduction or rescission correctly

The ABGB arranges the warranty remedies in two tiers. On the first tier stand the primary remedies: repair or replacement. Here the defect itself is to be removed and the contractual work provided. On the second tier stand the secondary remedies of price reduction and rescission, which restore the disturbed balance of performance and counter-performance.

This order under section 932 ABGB is in principle binding. You cannot reduce the price straight away or unwind the contract while repair is still possible and reasonable. The contractor has a right to the second chance to remedy the defect itself. Only once this route is excluded do the secondary remedies follow.

You reach the secondary remedies where the repair is impossible, is refused by the contractor, does not take place within a reasonable time or would be connected with considerable inconvenience for you. In these cases you no longer have to be referred to a repair.

Repair is the remedying of the defect on the work itself, replacement the delivery of a defect-free thing. With buildings, repair almost always stands in the foreground in practice, because a replacement of the entire building is excluded. You have a claim that the contractor remedies the defect at its own cost.

To trigger the primary remedy, you call upon the contractor to repair and set it a reasonable deadline. What is reasonable depends on the nature and extent of the defect. You should send this request in writing and provably, because it is the starting point for all further steps.

Where the contractor refuses the repair, lets the deadline pass or the repair fails, the first tier is exhausted. You then do not have to allow further attempts to be forced on you but can move to price reduction or rescission.

The price reduction reduces the remuneration. It is measured by the so-called relative method of calculation: the agreed price is reduced in the ratio in which the value of the defect-free work stands to the value of the defective work. Price reduction is possible for any defect that has not been remedied, even a minor one.

Rescission is the unwinding of the contract. It comes into consideration only for a defect that is not merely minor. With buildings, rescission often reaches practical limits, because the construction performed cannot readily be returned. In many cases price reduction therefore remains the realistic route.

Which of the two secondary remedies holds in your case depends on the seriousness of the defect and on whether the performance can be unwound. Both remedies are independent of fault. Where a consequential loss is also at stake, the damages claim under section 933a ABGB is to be examined separately.

The warranty for a building becomes time-barred under section 933 ABGB three years from handover. Within this period you must assert your warranty claims in court if necessary. The mere request to repair does not automatically preserve the period, which is why the date of handover must be kept in view.

Proceed in a structured way: document the defect, request repair in writing, set a reasonable deadline and record the response. Only after that has expired without success do you turn to the secondary remedies. These steps in the correct order form the foundation of any successful enforcement.

How the warranty is distinguished from a damages claim is explored in our article on warranty or damages. How to give timely notice of defects after handover is set out in our article on the rights after handover. An overview is provided on our focus page on construction defects and warranty.