Important changes to the rules for cost of defects and acceptance tests

It has gone almost unnoticed, but effective January 01, 2018, some rules for new business will change, including with regard to cost of defects in purchase law and for the acceptance of work and services. This will have a considerable impact on ICT contracts, such as on the sale of software and hardware, and in particular on the acceptance phase of projects. Cost of defects for purchase contracts

According to the statutory provisions, the cost of removing defective services and installing new products is to be borne by the seller in the future. The seller may then demand reimbursement of such cost from its supplier.

This is also of considerable importance for ICT services: where hardware is sold, whether individual components or entire systems, and where software is made available for permanent use for a one-off fee. In practice, such removal and installation cost may be considerable in relation to the purchase price. While the law provides for the possibility of limiting reimbursable cost to reasonable amounts, this nevertheless means a considerable additional burden for the seller, especially since the law does not grant sellers the right to carry out such work themselves.

Paradigm shift for acceptance requests

In the case of work and services, the contractor must, in accordance with the statutory provisions, provide evidence of complete and essentially fault-free performance if the contractor wishes to demand an acceptance declaration from the customer. This was often not pragmatically feasible. The law, however, stipulates that payment will only be due with the customer’s acceptance declaration at which time the warranty will commence.

The roles will now change substantially as far as acceptance is concerned: In the future, acceptance will already be given if the contractor sets a reasonable deadline for acceptance of the completed work and the customer does not refuse acceptance within this period stating at least one defect. In contrast to the long-standing rule, the customer’s inaction will lead to an acceptance declaration in the future. In particular, customers should adapt their project approach accordingly.

Practical tip:

Sellers of ICT services should adapt their contracts and costing to the legal changes in time. Customers of work services should revise their contracts and procedures in the acceptance phase of projects to avoid “undesired” acceptance declarations.