Safety-related Faults: Not Always Sufficient Grounds for Contract Termination

Aug 27, 2026 Benn-Ibler Rechtsanwälte

The question of when a consumer may immediately terminate the contract of sale under the Consumer Guarantees Act (Verbrauchergewährleistungsgesetz, hereinafter VGG) in the case of a defective second-hand car was considered by the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH).

Oil leakage in a pre-owned vehicle

The claimant had bought a pre-owned Audi A7 from a dealer for EUR 33,500. According to the sales contract, the vehicle was designated as ‘sufficiently roadworthy, Class 3’ and was warranted as both roadworthy and eligible for registration. Nevertheless, an inspection conducted by the Austrian roadside assistance organisation, ÖAMTC, shortly after the transaction identified oil and water leaks from the engine, thereby compromising both road safety and operational reliability.

The defect had existed at the time of handover and could have been remedied at minimal expense. Consequently, the seller proposed a repair to the claimant. However, the claimant declined this solution and instead requested rescission of the contract of sale.

A safety-related defect alone is not sufficient

Under Section 12 of the VGG, a consumer may, in principle, initially only demand rectification or replacement. In the event of a significant defect, immediate termination of the contract may be considered, particularly if an immediate switch to secondary remedies under the warranty is deemed appropriate.

The OGH had initially referred the matter to the European Court of Justice (ECJ) for a preliminary ruling. In its ruling of 9 July 2026, C-307/25, KFZ Kolak, the ECJ clarified that a safety-related defect is not necessarily to be classified as serious solely on the grounds that the condition in accordance with the contract can be restored with relatively little effort.

The OGH has revised its previous assessment in Case 9 Ob 41/23d, determining that the safety-related nature of a defect alone is not sufficient grounds for immediate termination of a contract.

Finding an appropriate balance between different interests

A more suitable method involves assessing each case on its own merits. In this process, it is essential to determine whether, considering the specific nature of the defect, it is reasonable for the consumer to expect the trader to return the goods to the contractual standard.

In this case, the seller undertook to address the oil and water leaks. There were no identified circumstances that would warrant the claimant losing confidence in the seller’s capability to remedy the defect. Consequently, the claimant’s request to terminate the contract on warranty grounds is not valid.  

OGH 3 Ob 122/26a (20 July 2026)