17.10.2019
If a contractual service is not provided correctly and a defect arises as a result, the person who caused the defect is initially required to restore the agreed condition in accordance with Section 932 Paragraph 2 of the Austrian Civil Code (ABGB); he must therefore "provide a guarantee". If the item is of little value, it is usually replaced, otherwise the defect is remedied (improved). However, if both options are refused by the defective supplier, even though at least one of them would be reasonable, the supplier must bear the costs of restoring a defect-free condition in accordance with Section 933a Paragraph 2 of the Austrian Civil Code (ABGB).
But what happens if the injured party receives the money provided for the repairs but never carries out the replacement work? The Supreme Court (OGH 1 Ob 105/19a) recently issued a ruling on this issue: A company laid screed for a farmer and coated parts of the building. However, the work was carried out incorrectly, which is why the farmer demanded the repairs. The company refused to remedy the defect and was ordered to pay the repair amount (as determined by an expert).
Since the farmer never carried out a replacement work, the company demanded the claim back with the argument that the advance was tied to the purpose of the replacement work to be carried out. Reimbursement of costs for a (fictitious) repair that was not intended at all is not permitted because this contradicts the compensatory function of tort law. If cover capital is granted for a repair that has not yet been carried out, it is usually a dedicated advance for which the recipient is liable for accounting. It does not need to be expressly designated as such.
The Supreme Court said: The overall context means that an advance payment must be made. This includes both the costs of remedying the defect itself and possible subsequent costs. The farmer should use these funds to actually remedy the disadvantage. If the replacement is not carried out, he only has to pay back the difference that exceeds this, because the advance payment primarily covers the reduction in value caused by the defect. The farmer would only be unjustly enriched by the payment to the extent that it also contains amounts that are not used to compensate for the value but to compensate for subsequent costs.
This decision makes it clear that an advance payment for a replacement is tied to the purpose of carrying out the repair. The judgment does not specify within what time period the replacement must be carried out, which is why it can be assumed that this will depend on the individual case. However, if the repair is ultimately not carried out, the advance payment already received for it (minus the amount intended to compensate for the reduction in value) must also be returned.