Defects of the subject of the contract, withdrawal from the contract and return of the advance payment

Experience / 08.11.2023

Lawyers of the Law Firm successfully represented the Client, i.e. a company that is a prestigious manufacturer of modern and advanced solutions in the field of telecommunication technologies used in the automotive industry, in a court dispute concerning the return of an advance payment in the amount of nearly EUR 75 thousand.

In connection with its business, the Client entered into a contract, the subject of which was the purchase, delivery, and installation of a specialized industrial device for recasting materials, which was to meet the strict specifications and parameters set forth in the contract. Before delivery to the Client’s premises, the device was to undergo a comprehensive overhaul. The Client’s contractor failed to fulfill the contract, as it only delivered to the Client on the agreed date certain components comprising the entire subject of the contract, which did not meet the agreed parameters and were in a condition that prevented acceptance and then assembly, installation, launching and safe operating.

Despite attempts to resolve the dispute amicably, including setting a deadline for the contractor to bring the device into proper condition, and a more favorable deadline than the contractual one, finally, in the absence of reaching an agreement, the Client submitted to the contractor a statement of withdrawal from the contract, demanded return of the advance payment and exercised the right to keep the device until the repayment of the amounts paid so far.

The contractor refused to return the advance payment, claiming that it was the Client who had failed to meet the schedule for the removal of defects, which, on behalf of the Client, was supposed to be agreed upon by one of its employees, and thus prevented the device from being brought into conformity with the contract under the warranty for physical defects of the item.

The case got before the Regional Court in Rzeszow, which agreed with the position of the Client’s contractor and dismissed the claim for reimbursement of the advance payment.

Lawyers of the Law Firm filed an appeal against the unfavorable decision of the court of first instance for the Client, in which they argued, among other things, that the performance offered by the contractor did not correspond at all to the performance the parties had agreed on, so in principle there could be no question of performance of the contract, as well as that the Client’s employee was not authorized to make binding declarations of intent on behalf of the Client, and thus the dispute resolution proposals presented by him could not result in a modification of the contract linking the parties, including a change in the agreed dates for its performance and removal of defects. This argumentation gained the approval of the Court of second instance, which, in addition, in view of the request made in the appeal, conducted an evidentiary hearing with the participation of an expert. An opinion on the technical condition of the device, which was prepared in the case, confirmed the position of the Client presented in the proceedings.

There was a final judgment in the case, in which the Client’s claim was upheld in its entirety. Due to the favorable conclusion of the case, the Client obtained the opportunity to enforce the return of the previously paid advance payment.

For the Law Firm’s team, this is another case in which, with success for the Client, we have used our previous experience in litigation matters related to the enforcement of claims for improper performance of a contract, including claims under warranty for defects.