The War­ranty of La­tent De­fects

The Malta Independent on Sunday - - DEBATE & ANALYSIS -

it. Se­condly, the seller is bound to war­rant the thing that is sold against any la­tent de­fects. This refers to those hid­den de­fects that ren­der the thing sold un­suit­able for its in­tended use or which re­duce its value to the ex­tent that the pur­chaser would not have bought it or would have paid a smaller price had s/he been aware of th­ese de­fects.

When the thing sold is af­fected by a non-ap­par­ent de­fect which the buyer could not have dis­cov­ered for him­self, Ar­ti­cle 1427 of the Civil Code, Chap­ter 16 of the Laws of Malta, grants the pos­si­bil­ity for two forms of re­dress against the seller. The pur­chaser can ei­ther de­cide to dis­solve the con­tract and there­fore re­store the thing, or re­turn the money paid. This ac­tion is re­ferred to as the ac­tio red­hibito­ria.

Al­ter­na­tively, the buyer may de­cide to keep the thing pur­chased but re­quests that part of the rel­e­vant price be re­paid, which will be de­ter­mined by the Court. The lat­ter ac­tion is known as the ac­tio aes­ti­ma­to­ria.

In or­der to en­sure that the above-men­tioned two ac­tions are suc­cess­ful, a set of re­quire­ments need to be ful­filled. Firstly, the de­fect must be of a se­ri­ous na­ture and not merely in­signif­i­cant. Thus, the thing in ques­tion needs to be de­fec­tive to the ex­tent that it has been ren­dered un­suit­able for its in­tended use or, that had the pur­chaser been aware of the de­fect s/he would not have pur­chased the item in ques­tion or would have pre­ferred buy­ing it for a lower price.

The sec­ond re­quire­ment is that the de­fect must be a non-ap­par­ent one. As such, the seller is not re­spon­si­ble for those de­fects which the buyer could have dis­cov­ered for him­self. It log­i­cally fol­lows that if the de­fect was no­tice­able then the par­ties would have taken it into ac­count when de­ter­min­ing the price. In­ter­est­ingly, if the buyer was in a po­si­tion to dis­cover the de­fect but did not as a re­sult of his/her neg­li­gence, then this war­ranty would be ex­cluded.

The third re­quire­ment is that the de­fect must be present at the mo­ment of the sale. No knowl­edge on the part of the seller of the ex­is­tence of the de­fect at the time of the sale can­not ex­on­er­ate him/her from re­spon­si­bil­ity. Ad­di­tion­ally, if the de­fect was known to the seller s/he shall be also li­able for dam­ages to­wards the pur­chaser.

By way of mu­tual agree­ment, it is pos­si­ble for both par­ties to ex­clude the war­ranty in ques­tion. How­ever, this can only oc­cur on con­di­tion that the seller has not been aware of the ex­is­tence of any de­fects as oth­er­wise such ex­clu­sion would be noth­ing but tan­ta­mount to at­tempt of fraud.

Our Courts, more­over, have on var­i­ous oc­ca­sions ob­served that this ex­clu­sion needs to be ex­pressly spelt out. Mere stip­u­la­tions such as ‘tale quale’ are not enough to ex­clude the war­rant against la­tent de­fects.

Th­ese two ac­tions are also lim­ited by the lapse of time. Both the ac­tio red­hibito­ria and the ac­tio aes­ti­ma­to­ria are to be ex­er­cised within one year from the day of the con­tract in the case of im­mov­able prop­erty and within six months from the day of de­liv­ery in the case of mov­able prop­erty.

It should be fur­ther ob­served that if it was not pos­si­ble for the buyer to dis­cover the la­tent de­fect of the thing in ques­tion dur­ing the stip­u­lated time pe­riod, the said time pe­riod will start to run only from the day on which it was pos­si­ble to dis­cover such de­fect.

Lastly, it should be ob­served that the war­ranty against la­tent de­fects is sep­a­rate and dis­tinct from the pro­tec­tion that the law af­fords to con­sumers. Con­sumer pro­tec­tion leg­is­la­tion ap­plies to those sit­u­a­tions that con­cern deal­ings be­tween a trader and a con­sumer.

In cer­tain cir­cum­stances, it could be that con­sumer pro­tec­tion leg­is­la­tion might of­fer a bet­ter re­dress to an in­di­vid­ual, pro­vided that s/he qual­i­fies within the le­gal def­i­ni­tion of a con­sumer.

In other sit­u­a­tions, es­pe­cially those trans­ac­tions that are carried out be­tween traders them­selves or where both par­ties are con­sid­ered as be­ing con­sumers, then the ac­tio red­hibito­ria and the ac­tio aes­ti­ma­to­ria come in as a very ef­fec­tive rem­edy.

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