Default, Late Performance, Malperformance

This page is all about default or late or bad performance of a vendor.


When am I in default?

That depends. As an example, consider your rental agreement. The clause on payment will usually say something like “rent must be paid by the 3rd of the month”. If you pay on the fourth you are in default. If your contract has no such clause, then you will be in default one month after receiving the bill, if you have not received a prior reminder (§286 III 1 BGB). Be sure the bill fails to inform you that you will be in default after thirty days; otherwise, he will have to send you a reminder.

I forgot to pay a bill and now I have gotten a reminder with an additional default charge. Is that legal here?

Again, it all depends. By law, your creditor can collect damages and / or default interest at 5% above basic interest rate p.a. (§247 BGB). This basic interest rate is set by law and is subject to change every half year. As of the second half year of 2002, the basic interest amounts to 2,47%. This means the default interest is now at 7,47%. Outside of such interest charges, courts usually accept a flat charge of € 15 to 20 on damages without demanding any proof. Anything more is subject to proof. If your contract has a section about arrears, anything is allowed within normal ethical and legal limitations.

I just ordered a Tweety Bird. And what did I get? A Sylvester Cat (no, not Stallone). What can I do about it?

Go back to the store and demand your Tweety Bird! If they do not have a Tweety Bird anymore for whatever reasons, ask for your money back.

Now I am a happy owner of a "Tweety Bird". However, this stupid bird does not say what I expected. It speaks incorrectly: “I thought I saw a pussy cat.” As I know from the cartoons, I expected this bird to say: “I taught I taw a putty tat!” This thing must be damaged. What can I do about it?

I agree, your bird is damaged. Generally, you are entitled to

  • get a new one,
  • withdraw from the sales contract,
  • get a reduction on the price,
  • demand damages.
Which of those consequences should I choose? Or does the salesperson make the choice for me?

Generally, it is your choice. Therefore, if you were sold a broken object and later regretted having bought it in the first place, you are lucky. You cannot insist on any of your rights if they are unreasonable for the store. But this would be seldom. However, standard terms and conditions of the vendor can say something else. Best is therefore to read them if he is not first entitled to subsequent performance. Keep reading.

What do you mean by subsequent performance?

This means one of two things: The vendor must either give you another bird and this bird must  say “I taught I taw a putty tat!” or the vendor must  repair the toy (§§437, 439, 280, 433 BGB). A practical hint: next time, check it out in the store before paying.

Well, what if the store ran out of the very last Tweety Bird, which was ever produced? And what if it would cost the vendor a fortune to get another toy (for whatever reason).

In these cases, you will not be able to demand subsequent performance because the performance is impossible and unreasonable. But you can get a partial or total refund of your money.

You mentioned damages. How much can I collect?

Generally, you can demand compensation for all losses, stemming from the breach of contract. However, you have to reasonably help to keep the damage as low as possible (§254 BGB). If you do anything to make the damages worse, you will not be reimbursed for those damages. When payment is late you can either collect the interest that you have to pay on an agreed overdraft to your account or in doubt the statutory basic interest (as Verbrauchergeschäfte [consumer business]).

After buying a used car, I realized the brakes did not work. I have had a really bad accident as a result. The car was wrecked. I paid EUR 500 for a mechanic’s expertise and EUR 1,000 on doctor’s bills. Can I get my money back?

Yes, you can recover the money you spent on the expert and the doctor. To have your money back for the car depends on whether you return the car or not. If you return the junk, you will get your price returned plus damages. If you do not return the wreck because you sold it to a junkyard then you will receive the car’s sales price minus what you received from the junkyard. On the other hand, you could also just hand the car dealer the same amount of money the junkyard gave you and the dealer will have to give you another car equal in value to your first car. 

I bought a shelf that I am supposed to assemble. The building instructions were not understandable. The bottom shelf ended up on top and vice versa. I broke the thing when I tried to fix it. Can I collect anything?

Among attorneys, this regulation in §434 II BGB is colloquially dubbed as “Ikea Rule”. Generally, yes, you can collect damages. This rule protects you when you assemble something deemed too complicated. 

Additional information