THE BOTTOM LINE
- “As is” clauses are not absolute: Even in B2B sales, a standard “as seen, no warranty” clause may not protect a seller if a product has significant defects that prevent its normal use. Buyers are entitled to expect a baseline of quality and durability.
- Acknowledging a customer’s complaint but failing to provide a timely repair is a critical error. This can put a seller in default, giving the buyer the right to cancel the entire contract and demand a full refund.
- When a sale is lawfully rescinded, the seller must not only return the purchase price but may also be liable for consequential damages, such as the buyer’s cost of renting a replacement asset.
THE DETAILS
In a decision with important implications for B2B asset sales, the Arnhem-Leeuwarden Court of Appeal sided with a buyer who sought to return a defective commercial van, despite contractual clauses stating it was sold “as seen and approved without warranty.” The buyer, Basic Activering B.V., purchased a used Peugeot Boxer van from K2 Trading B.V. but experienced significant motor and clutch issues within weeks. K2 Trading’s defense relied heavily on the “as is” language in the sales agreement. The court, however, ruled that a buyer can reasonably expect an asset of that age (6.5 years) and price (€27,849) to function correctly for more than a few months. The defect undermined the van’s fundamental purpose, and such a “non-conformity” constitutes a breach of contract that standard warranty disclaimers do not excuse.
The seller’s handling of the complaint proved to be its downfall. After Basic Activering reported the issue, K2 Trading took the van back for repair. Crucially, in an email, the seller acknowledged a “noise” they were trying to trace. However, after three weeks passed with no solution, the buyer formally moved to rescind the contract. The court determined that by acknowledging the problem but failing to fix it in a reasonable timeframe, the seller was in legal default. This gave the buyer the right to cancel the deal. An inspection report commissioned by the seller over a year after the initial complaint, which found no faults, was dismissed by the court as being too late to be relevant.
The financial consequences for the seller are severe. The court’s decision validates the buyer’s rescission of the contract, creating an obligation for both parties to reverse the transaction. This means K2 Trading must provide a full refund of all payments made by Basic Activering. Furthermore, the ruling establishes that the seller is liable for the damages the buyer incurred as a result of the faulty van. While the exact amount of damages—which includes costs like renting a replacement vehicle—was not finalized, the court referred the calculation to a separate proceeding. This opens the door for the seller to face a significant financial penalty on top of the complete loss of the original sale.
SOURCE
Source: Gerechtshof Arnhem-Leeuwarden
