The contractor is generally responsible for handing over defect free work to the employer and must rectify any defects caused by non-contractual performance. However, sometimes only ‘visual defects’ occur during the construction of buildings, such as cracks, scratches, unevenness, dirt or deviations that are largely inconspicuous when viewed impartially and have no influence on the use or lifespan of the affected part of the building (5 Ob 41/22y).
In such cases of a minor defect, remedying the defect (e.g. replacing a window) could involve a disproportionately high cost. The employer therefore only has the right to a price reduction under warranty law and is entitled to monetary compensation (instead of restitution in kind) in tort law. According to case law (7 Ob 43/23h), the amount of the rectification costs alone is not decisive, but rather the importance of rectifying the defect for the employer must be taken into account. If the defect causes only minor disadvantages in the use, even relatively low rectification costs may be ‘disproportionate’. However, if the defect significantly impairs use, then even relatively high rectification costs are not a reason to refuse rectification (RS0022044).
According to case law, however, the case is to be assessed differently if there are ‘gross blemishes’ (7 Ob 151/11y) or if a certain visual appearance was expressly agreed, so that a mere minor deviation from the work owed cannot be assumed. In such cases, the employer can also demand the cancellation of the contract, provided that this has not been contractually excluded.
In tort law, too, according to § 1323 of the Austrian Civil Code (ABGB), damage is to be compensated primarily by restoring the situation to its previous, i.e. defect-free, state. Natural restoration is to be carried out even if it is more expensive than monetary compensation. However, it is not possible if it requires a disproportionate amount of cost and effort (RS0030117). According to case law, it must be considered whether a reasonable, economically thinking owner as the injured party would have the defective parts replaced in full despite the repair costs exceeding the objective reduction in value (9 Ob 3/22i).
Therefore, costly measures to rectify the defect are generally avoided if the visual defects are only inconspicuous, so that the actual reduction in value, taking into account the impairment of use, is to be determined by an expert on the basis of a utility analysis.
