Statutory warranty in vehicle sales between businesses, with examples: what to look out for

This article covers Polish regulations and market practice. The principles apply elsewhere, but check the rules in your country.

The statutory warranty provides for the seller's liability for defects in the vehicle. From the buyer's point of view it is advantageous, because it allows them to withdraw from the contract (return the vehicle and recover the price), reduce the price (claim the difference between the value of the vehicle with defects and without them) or demand repair or replacement. This does not, however, mean unlimited liability on the seller's part.

This article presents the most important issues relating to the statutory warranty in sales between businesses, without the involvement of a financing entity.

The buyer's consent to excluding the warranty.

The Polish Civil Code allows the seller's liability under the statutory warranty to be excluded where the sale takes place between businesses. That liability may be limited, e.g. to 6 months, or extended, e.g. to 3 years. As a rule, the seller cannot exclude or limit the warranty when the buyer is a consumer.

Because the parties may exclude liability under the warranty, a concurrent declaration by both the seller and the buyer is required. Any statements on the invoice, such as "the seller declares that it excludes the warranty", do not effectively exclude it, because this is a unilateral declaration. The buyer's consent is required to exclude the warranty. It is open to debate whether the buyer signing the invoice with the note "received" can be read as their consent to excluding the warranty, bearing in mind that the signature was not mandatory.

Amendments to the Consumer Rights Act allow a business (a natural person) to be treated as a consumer. This applies not only to contracts concluded at a distance or off-premises, but also to a standard sales contract. It must be shown that for the buyer (the business) the contract is not of a professional nature, which is assessed in particular on the basis of the registered business activity.

Example: A business providing programming services, working remotely, owns a vehicle used only for private purposes. So when signing a sales contract online, such a business may in certain cases withdraw from the contract if the vehicle has defects.

How not to lose the right to the warranty

The buyer loses their rights under the warranty if they did not examine the item at the time and in the manner generally accepted when buying a vehicle and did not notify the seller of the defect without delay. Where the defect came to light only later, if they did not notify the seller without delay after discovering it.

Sales between businesses mean the buyer must exercise additional diligence when taking delivery of the item. Although the buyer can rely on the warranty, they also have obligations to make sure the vehicle has no legal or physical defects.

The standard pre-purchase procedure for a vehicle begins (or rather should begin) with checking the vehicle's legal status (whether the seller is the owner, or whether the vehicle is subject to a registered pledge) and its technical condition (basic diagnostics at a testing station). Before purchase it is advisable to preserve the advert published online, because it shows the information the seller provided. If the buyer did not even lift the bonnet when buying the vehicle, trusting the seller unreservedly, they are deprived of the right to the warranty.

Example: The buyer noticed an oil stain under the car and then learned from a mechanic that it came from the engine and the engine needed replacing. The seller may then argue that the buyer did not examine the vehicle in the generally accepted manner, e.g. at a testing station, where the leak could easily have been located. This does not, however, apply to situations where the leak is deliberately wiped off before the sale and there are visible traces of the engine being wiped. The buyer should inform the seller of any defects noticed at the time of purchase.

While an oil leak or a break in the chain of contracts (inability to register) can be examined at purchase, defects may appear as a result of using the vehicle after a short distance. The buyer may not have the specialist equipment to detect, say, micro-cracks in the engine block, which then cracks in use. It may also happen that the seller deliberately prepares the vehicle for sale to hide the visibility of defects. Either way, the buyer should notify the seller immediately after the defects come to light, i.e. the same day or within the next few days. It is accepted that "without delay" means up to 14 days, but in any further proceedings it is established whether the buyer had the opportunity to notify the seller of the defects right after they came to light. The buyer cannot excuse themselves by saying they first wanted to obtain a garage's opinion and only then notify the defects. Notifying defects too late results in loss of the right to the warranty. The notification can be made in any form, e.g. by text message or e-mail. What matters most is proof that the seller was informed.

Does the warranty mean the seller's unlimited liability for vehicle defects?

It is commonly claimed that a buyer can purchase a vehicle, drive it for 6 months and return it to the seller because of its defects. This is wrong, because return (withdrawal from the contract) can only concern material defects. From the seller's perspective it means refunding the price and getting back a non-working vehicle whose repair may involve high costs.

Defects can be divided into many categories, one of which is defects arising from use. While replacing brake discs, oils and filters is undoubtedly the vehicle owner's responsibility, problems most often arise with the timing system. It is accepted that a belt-driven timing system needs replacing, but not a chain-driven one. A belt or chain breaking while driving usually means the whole engine has to be replaced. For a timing belt, the manufacturer sets intervals between replacements, usually every 5 years or after a set number of kilometres. For a timing chain, the manufacturer may not provide for replacement unless circumstances arise that indicate the need, e.g. loss of power, juddering.

In the case of wear defects relating to a belt-driven timing system, the seller can escape liability by showing that on the date of sale the vehicle had been serviced in line with the manufacturer's recommendations, as evidenced by the garage's entries. The chain-driven timing system is a problematic matter. The manufacturer may not provide for its replacement, so if this part fails, the decisive factors will be the circumstances at purchase and whether, on the date of sale, there was a situation indicating problems with the timing system.

Another circumstance that excludes the right to rely on the warranty is the seller notifying the buyer of the defects. From the seller's point of view, the most important thing is to document (advert, text message, note on the contract/invoice) that they informed the buyer of the defects and listed them. A clause stating that "the buyer has familiarised themselves with the technical condition of the vehicle and accepts it" is not sufficient. It is the seller who will bear the burden of showing that they notified the buyer of specific defects.

If the vehicle has a cracked windscreen, a damaged gearbox or has undergone bodywork and paint repairs in the past, this should be communicated to the buyer. A buyer who knows, for example, about a damaged gearbox will not be able to withdraw from the contract on that ground, because the seller informed them of it. From the buyer's point of view, the most important thing is a detailed description of the nature of the defect.

Example: The invoice says "damaged gearbox", and the seller told the buyer verbally that the gearbox module/control unit needed replacing. After the sale it turns out the gearbox is not technically functional and cannot be repaired. In any dispute, it is the buyer who must prove they were only told about replacing the module/control unit, because the invoice mentions a damaged gearbox, which may cover any of its components. So if the invoice states in detail that the gearbox module/control unit is damaged, the buyer's knowledge relates only to that part and does not cover the technical condition of the whole gearbox.

What if the buyer has lost the right to the warranty?

Losing the ability to pursue claims under the warranty, e.g. because the defects were notified too late, does not mean the buyer cannot pursue any claims against the seller. This happens under the so-called general rules, and the buyer must show that the contract was improperly performed (sale of a vehicle with defects), that they suffered a loss (repair costs) and that there is a causal link in that, had the vehicle been free of defects, the buyer would not have suffered the loss in the form of repair costs. Before the repair, the buyer should obtain a detailed opinion on the vehicle's technical condition with photo and video documentation, and allow the seller to take part in the inspection.

Summary

Selling a vehicle between businesses requires greater diligence on the buyer's part. The Civil Code obliges the vehicle's buyer to examine its condition and to notify the seller without delay of any defect discovered, on pain of losing their rights under the warranty. The parties may exclude the warranty in the contract, and the buyer must consent to the exclusion. The seller should clearly inform the buyer of the vehicle's defects, and in any further proceedings it is the seller who will bear the burden of showing that they gave the buyer all the information about the vehicle's condition.

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