OGH: Avoidability Based on Mistake after Purchase of Damaged Car

Apr 12, 2024 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has ruled on the avoidability of a purchase contract based a breach of the duty of information. The scope of the duty to inform depends on the subject of the contract and a buyer’s presumed and actual knowledge of the matter at hand.

The plaintiff had purchased a second-hand car from the defendant, an Austrian limited partnership (Kommanditgesellschaft, hereinafter KG). The second defendant, the general partner of the KG, conducted the contract negotiations. In response to the plaintiff’s repeated questions as to whether the car was accident-free, the second defendant stated that the car had never been in an accident.

However, the second defendant had knowledge of two previous incidents of damage to the car, which had been professionally repaired. Some damage to the rear caused by a collision with a pillar had been repaired, also several dents to the side door from bad parking. Had the plaintiff known about the true condition of the car, she would not have bought it.

Therefore, the plaintiff sought rescission of the purchase agreement under Section 871 of the Austrian Civil Code (Allgemeines bürgerliches Gesetzbuch, hereinafter ABGB). The lower courts upheld the claim, and their decision was confirmed by the OGH.

If a buyer attaches particular importance to a specific matter, the seller has a duty to disclose it. Sellers are also obliged to inform contractual partners if the seller is acting as an advisor to the buyer on the basis of superior expertise.

The second defendant’s refutation of any traffic accident could be understood to mean that the used car was accident-free. This statement caused the plaintiff to make a mistake. Section 871 of the ABGB is based on the concept of causing someone to make a mistake – and reasonable causation is sufficient, not to mention intentional or negligent deception.

Although the plaintiff did not suffer any detriment as a result of the professional repair of the vehicle, this does not exclude avoidability based on mistake. Since the plaintiff expressly had not wanted to buy a car that had been damaged in an accident, she did not get the car she wanted.

Consequently, the plaintiff may rescind the purchase contract based on mistake.

3 Ob 207/23x (31 January 2024)