THE REGIME OF VICES IN THE CONTRACT OF SALE

1. THE REGIME OF VICES IN THE CONTRACT OF SALE Univ. Lect. PhD Livia MOCANU Valahia University of Targoviste Faculty of Juridical, Social and Political Sciences mocanulivia@yahoo.com

2. Abstract • The contract of sale has an important position in the Romanian civil law, position designated by the legislator in its regulation in Title IX, Chapter I, of the new Civil Code. • The current regulation bears the signature of the contemporary society evolutions and reflects the national legislator’s interest to elaborate a modern regulation and one in harmony with the efforts existing in the European Union to create an instrument of European law for contracts. • For our analysis, we selected the issue of vices in the contract for sale, considering the fact that the purchase of more and more sophisticated goods increased significantly and this imposed new legislative standards. • The new Civil Code includes important changes for the vices regime of the contract of sale, and on this background our study refers to: the regime of apparent vices, the conditions of liability for hidden vices, the termination and penalty for hidden vices, the warranty for lack of agreed qualities, and the operational warranty. • Key words: apparent vices, hidden vices, warranty for lack of agreed qualities, operational warranty.

3. 1. Introduction • In the present study we aim at analyzing the regulation of vices in the contract of sale, pointing at the novelty elements reflected in the dispositions of the new Civil Code. • Though the new regulation mainly maintains the dispositions of the Code in 1865 in this matter, it also contains a series of important changes, giving a new configuration to a contract widely applicable in day-to-day life. That is why we consider our analysis very actual and useful, both for specialists and for all those wishing to know the characteristics of the new Civil Code, compared to the previous regulation. • Our days, the numerous economic and social causes generate an increase in sales, which makes knowing the juridical rules in the matter almost indispensable for the parties negotiating the terms of the contract, physical person or juridical entity. • As recipients of the new civil dispositions in the matter, we cannot neglect the courts, as well as the other partners of the juridical system, lawyers, notary publics, theoreticians of law. We are also taking into consideration the students of faculties of law for whom we can ease knowledge and the learning of the dispositions of the new Civil Code, in this matter.

4. At the same time, convinced of the necessity to permanently perfect the juridical regulations, we also hope to help in this matter. • In the present study we aim at analyzing the regulation of vices in the contract of sale, reason for which we will approach the following aspects: the regime of apparent vices, the conditions of liability for hidden vices, the termination and penalty for hidden vices, the warranty for lack of agreed qualities, and the operational warranty. • Up to now, the contract of sale constituted mainly the object of academic manuals elaborated for the students’ study, without exhausting the theoretical and practical issue in the matter. • The aim of the present scientific paper is to outline the novelties of the current regulation, convinced that we ourselves can open gates.

5. 2. Content2.1. The regime of apparent vices • In the contract of sale, the seller’s obligation to transmit the property also involves the obligation of handing over the asset. • In accordance with the stipulations in the general part, the new Civil Code regulated the handing over of the asset, as the seller’s obligation, in art. 1685 – 1694. According to art. 1685 NCC by handing over one can understand placing the asset that is sold at the purchaser’s disposal, together with all the necessary, according to case, for a free and open exercise of the possession. Thus, the legislator aims at the main way in which the execution of the handing over obligation takes place that is by placing the asset that is sold at the purchaser’s disposal, so that the purchaser can exercise a free possession over it.

6. In the context of regulating the handing over obligation devolving upon the purchaser, expressed dispositions take into account the state of the asset that is sold. Thus, according to par. (1) and (2) of art. 1690, the asset must be handed over in the same condition as at the moment of concluding the contract, and the purchaser is bound to check the asset condition, immediately after being handed over, according to custom. We refer to those cases where the determined individual asset is not handed over at the very moment of concluding the contract. In view of the above, art. 1690 of the new Civil Code regulates the situation of apparent vices, and this is something new. Thus, the stipulations of the second par. of art. 1690, forces the purchaser to check the condition of the asset immediately after handing over, inclusively in the aspect of possible apparent vices. According to the law, checking the condition of the handed over asset must be done immediately by the purchaser, and in case the purchaser notices some apparent vices, he has to notify the seller „as soon as possible”. Without this notification, the verification is considered performed and the asset without apparent vices art. 1690 par. (3)]. Thus, if the purchaser accepts the asset without any objections, the obligation to hand over the asset ceases. The final par. of art. 1690 stipulates that its dispositions do not apply to hidden vices, as their juridical regime remains distinctively regulated in art. 1707 – 1714 of the new Civil Code. • The expression ‘as soon as possible’ is not defined by the legislator. • ViorelTerzea, Garanţia contra viciilorlucruluivândutprevăzută de art. 1352 şiurm. din Codul civil, in magazine Law no. 9/2007, pp. 37-38.

7. These dispositions highlight the fact that, after concluding the contract, the seller must hand over a proper asset, as stipulated in the contract. Art. 1690 of the new Civil Code does not define apparent vices, but based on the rules instituted by its dispositions, the result is that they consist in those unconformities of the asset, which, if existing, can and must be identified by the purchaser at the moment of handing over the asset. In view of the above, in the French civil law, one refers to a material compliance and a functional compliance of the asset subject to the handing over obligation, with the specifications of the contract of sale. In its turn, the material compliance can be quantitative or qualitative.

8. According to the procedural aspect, in case at the time of the asset reception or handing over by the purchaser, this one disputes the condition or the quality of the asset that is sold, each of the parties can demand the president of the court at the place stipulated to accomplish the handing over obligation, to assign an expert in order to identify the aspects disagreed by the parties. According to art. 1691 par. (2) of the new Civil Code, by this decision to assign the expert, one can dispose the asset seizing or its storage. At the same time, if by storing the asset one determines important damages or expenses, the court can even decide to sell the asset, at the owner’s account. In such a case, to execute the court’s decision as soon as possible, the law institutes the obligation to communicate the court’s decision which decides the sale, before being executed, to the other party or to its representative, if one of them is at a place situated in the territory of the court taking that decision. If not, the decision will be communicated afterwards, within three days after being executed. • For details, see, Ion Turcu, Vânzareaînnoul Cod civil,C.H.Beck Publishing House, Bucharest 2011, pp. 744 – 746.

9. 2.2 Warranty against the vices of the asset that is solda) Notion and conditions • Article 1707 of the new Civil Code uniformly regulates the conditions of engaging the seller’s liability for hidden vices. Thus, according to art. 1707 par. (1) of the new Civil Code, the seller warrants to the purchaser against all hidden vices making the asset that is sold improper for the destined use or which reduces the use or value to such an extent insomuch that in case the purchaser had known about them he wouldn’t have bought the asset or he would have offered a smaller price. • (2) The hidden vice is the vice which on the contracting date cannot be identified by a cautious and diligent purchaser without specialized assistance. • (3) The warranty is due if the vice or its cause exists on the handing over date. • (4) The seller owes no warranty against vices known by the purchaser when concluding the contract. • (5) In forced sales no warranty is due against hidden vices.

10. From the interpretation of these dispositions we can deduce the conditions of liability for hidden vices. These are: the vice must be hidden, the vice must have existed on the handing over date and it must be serious. • i) the vice must be hidden. According to the dispositions of par. (1) art. 1707, after concluding the contract, the seller is bound to warrant to the purchaser against all hidden vices that make the asset which is sold improper for the destined use or that reduces to such an extent its use or value insomuch that in case the purchaser had known about them he wouldn’t have bought the asset or he would have offered a smaller price. • In agreement with the present jurisprudence par. (2) of art. 1707 regulates the definition of the hidden vice; meaning that the vice is hidden if on the handing over date it cannot be identified by a cautious and diligent purchaser without specialized assistance.The hidden feature of the asset vice means that this one is not visible and it couldn’t have been discovered by a purchaser after a careful and normal check of the asset at the time of handing over, even when executed by a specialist in the matter. If the purchaser had the possibility to know the vice, but for various reasons he didn’t know it effectively, we are in the presence of an apparent vice and not a hidden vice. • Taking into consideration the high technology products existing on the market, the law imposes to the purchaser to be cautious and diligent by asking specialized assistance whenever he cannot convince himself of the asset features because he doesn’t have enough knowledge or proper training. Per a contrario, it is not a hidden vice the apparent defect, as well as the one notified to the purchaser by the seller. This feature is relative and it depends on the purchaser’s qualities and the nature of the asset. • Therefore, the purchaser’s possibility to know the asset vice is considered in abstracto, taking into account a diligent and cautious purchaser.

11. ii) The vice must have existed on the handing over date.As for the moment of its existence, the text of par. (3) art. 1707 stipulates the condition for the vice or at least its cause to have existed on the handing over date. For vices occurred after the handing over the seller is not liable as by the effect of handing over the asset, the property over it and the risk of fortuitous loss were transferred to the purchaser. The date of handing over the asset is set in the contract, and without a clause it will be the date of concluding the contract or in the case of generic assets, the date of their individualization.

12. iii) the vice must be serious. According to par. (1) of art. 1707, the vice is considered serious when it affects the asset to such an extent as to make the asset improper for the use of its common destination or it reduces so much its capacity to be used insomuch the buyer wouldn’t have bought it had he known about it. Therefore, from the functional point of view, the vice compromises the very use of the asset which it makes totally improper or reduces its common but also its uncommon use. It is not requested, though, for the vice to refer to the asset substance, the asset essence, but to its qualities. • The conditions of the seller’s liability for hidden vices must be proved by the purchaser, as he is the one invoking them. As we only have to establish a fact and not a juridical document, the proof can be realized by any means of evidence. • According to par. (5) of art. 1707, the dispositions of this article do not apply to forced sales, where there is no real seller, whose will is to sell an asset to a purchaser in exchange of a price. Besides, by a forced sale of the asset, one has the purpose to create a debt, and the entity selling the asset is not bind to know its hidden vices, and, in most cases, it has no interests in finding them out.

13. b) The effects and the extent of the obligation to warrant for hidden vices • If all the conditions stipulated by the laware met, the seller is bound to answer for the hidden vices of the thing that is sold. The effects of the warranty for hidden vices are regulated by the dispositions of art. 1710 - 1715 in the new Civil Code. On the grounds of art.1710 in the new Civil Code, the remedies provided by the legislator for the purchasers are as follows: • - the seller removes the vices on his account; • - the asset that is sold will be replaced by a similar asset, without vices; • - the price will be considerably reduced; • - the sale will be solved. • The purchaser has the right to choose among these possibilities, and one notices that in this list, besides the estimative action and the redhibitory action, there are other two possibilities, respectively the possibility to ask the court the removal of vices by the seller or at his account or the replacement of the asset that is sold with a similar one, but without vices. • In all cases an action is opened and, although the option right belongs only to the purchaser, choosing one or another remedy remains the judge’s option. Thus, par. (2) of art.1710 stipulates that, at the sellers’ request, the court, taking into account the seriousness of the vices and the purpose for which the contract was closed, as well as other circumstances, it can dispose a different measure than the one required by the purchaser, without violating the principle of availability. The court’s intervention occurs only if requested by the purchaser and motivated

14. Anyway, in the legislator’s vision, the resolution is the last solution favored, essential for saving the contract. • According to art.1713 in the new Civil Code, the seller is responsible for hidden vices and in case of asset loss or damage, even if occurred by reasons of force majeure. • The action by which the purchaser asks for the contract resolution is called redhibitory action (actio redhibitoria) and it is admissible even if the nature of the vice wouldn’t make the asset absolutely improper for its normal destination. However, if it considers that the option right was abusively exercised, the court can refuse to terminate the contract, and it can dispose another measure (for instance to reduce the price, if the vice was not so important). • The admittance of the redhibitory action attracts the sale resolution and in this case the seller is bind to return the price and the expenses incurred to the purchaser, after retaking possession of the asset. • The resolution can be total or partial. Thus, art. 1711 in the new Civil Code stipulates that, in case the hidden vices affect only part of the assets that are sold, the sale resolution is disposed only partially, regarding the affected assets, except the case where the resolution regards the main asset, this leading to the contract termination for the accessory assets as well. • If the purchaser’s purpose is not to terminate the contract, he may ask for a price reduction proportional to the reduction of the asset value, caused by the vice. In such a case a special action called estimatory action is instituted (actio aestimatoria sau actio quanti minoris), as the depreciation of the asset value is set by means of an expert’s report.

15. Also, in agreement with the judicial practice, the new Civil Code regulated, together with the possibility of resolution or price decrease, there are other two options for the purchaser, the seller to remove the vices on his account and to replace the asset with a similar one, but without vices. • Different from the matter of eviction, where the truthful seller can also be forced to pay damages, in the matter of hidden vices, only the untruthful seller can be forced, together with restituting the price and the expenses incurred by the sale to the purchaser, to pay damages. This principle is stated in art. 1712 in the new Civil Code, according to which the untruthful seller, who was aware of the vices, can be forced to pay damages, together with the measures stipulated in art. 1710 of the new Civil Code. • On the other hand, in case of admitting a redhibitory or estimatory action, if the seller was truthful, the court can force him to restitute the purchaser only the price effectively paid and the expenses incurred to the purchaser for the sale. The restitution is partial in case of estimatory actions as the sale is partially maintained and total in case of redhibitory actions determining the contract termination. • CameliaToader, Evicţiuneaîncontractelecivile, ALL Publishing house, Bucharest, 1997, pp. 80 – 98.

16. c) Conventional changes of the obligation to warrant for vices • As the legal dispositions regarding the seller’s obligation to warrant for hidden vices is not imperatively compulsory, the parties in the contract of sale can remove, limit or aggravate this obligation of the seller. Thus, art. 1708 in the new Civil Code regulates the possibility for the parties to change, by means of a conventional way, the extent of liability for hidden vices. Therefore, par. (1) sets the rule according to which, without a contrary stipulation, the seller is also bound to warrant for the hidden vices he himself was not aware of at the time of concluding the contract. Per a contrario, this liability can be removed by the parties’ convention. • Nevertheless, according to par. (2) of art. 1708, the convention by which the parties dispose the exoneration or even the limitation of the liability for hidden vices is void, if the seller was aware of the existence of hidden vices or he had the possibility to know them at the time of concluding the contract.

17. d) The prescription of the right to action for hidden vices • According to art.1709 in the new Civil Code, the purchaser who identified the hidden vices of the thing is bound to notify them to the seller within a reasonable term, set in accordance with the circumstances, subject to the sanction of losing the right to ask for the contract termination. From the text analysis one can conclude it institutes a compulsory procedure, to be followed before entering the actions stipulated in art. 1710. Thus, the purchaser is bound to inform the seller about the identification of the assets hidden vices, within a reasonable term, set according to the circumstances. According to par. (2) of art. 1709, when the purchaser is a professional, and the asset is a corporate body, the term to inform the seller is of two working days. • The terms set by the law regarding the seller’s notification is usually calculated starting from the date of the vices discovery, but, if the vice occurs gradually, we start counting, according to par. (3), from the day when the purchaser realizes the seriousness and extent of the vice. According to the last paragraph of art.1709, the untruthful seller cannot invoke the purchaser’s lack of information, in order to exonerate himself of the liability for hidden vices, whose existence was known to him.

18. If the law does not provide otherwise, according to the dispositions of art. 2531 in the new Civil Code, the prescription for the right to action against hidden vices starts to be calculated: • - in case of an asset that was sold, other than a building, one year after the handing over date, unless the vice was previously discovered, in which case the prescription is calculated from the identification date; • - in case of a building, after 3 years from the handing over date, unless the vice was previously discovered la in which case the prescription is calculated from the identification date.

19. 2.3. The warranty for lack of agreed qualities • According to art.1714 in the new Civil Code: „The dispositions regarding the warranty for hidden vices also apply when the asset that is sold does not serve the qualities agreed by the parties”. The legislator assimilates the situation of hidden vices, case in which the purchaser notices, while using the asset, that it does not answer the quality standards agreed by the parties when concluding the contract. Therefore, one will apply those dispositions that regulate the matter of hidden vices. The law takes into account the lack of compliance resulting from the contractual clauses, but also the asset capacity to answer the use it was purchased for. This is also the reason for which the law assimilates with the hidden vice the case in which the asset does not meet the agreed qualities, which are the purchaser’s expectations known to the seller. The lack of agreed qualities is noticed at the time of handing over the asset and, respectively, when the purchaser takes it over. As art.1714 refers to the dispositions of art.1710 in the new Civil Code, in case of such an unconformity, the purchaser can be granted the asset repair or replacement, but also the price decrease or the contract resolution.

20. 2.4. The operational warranty • It is regulated by the dispositions of. art.1716-1718 in the new Civil Code. According to art.1716 par. (1) in the new Civil Code, besides the warranty against hidden vices, the seller who warranted for a determined period of time the good operation of the asset that is sold, is also bound, in case of a fault occurred during the warranty period, to repair the asset on his account. According to the law, the operational warranty for the asset does not exclude the seller’s liability for hidden vices, as they function simultaneously, but they are subject to specific conditions. At the same time, we refer to the warranty for the good operation only when the seller expressly warranted in the contract the good operation of the asset for a certain period of time. Though such a warranty is specific to relations in the consumption law, once with the regulation in the new Civil Code, it constitutes common law in the matter of the operational warranty, the purchaser having the possibility to choose. • On the grounds of this warranty, the seller is bound to proceed to the repair of all deficiency occurred during the warranty period set by the parties, except for the situation in which, according to art.1717 in the new Civil Code, the seller can prove that the fault was caused by the improper way in which the purchaser used or kept the asset. When evaluating the defective way in which the purchaser acted, one will also consider the instructions for using the asset communicated to the purchaser at the time of concluding the contract.

21. According to par. (2) of art.1716, when the repair is impossible or it takes a longer period of time than the one set in the contract or by the special law, or if it exceeds 15 days, when no such term is stipulated, the seller is bound to replace the defective asset. • In case the seller does not replace the asset within a reasonable period of time, suitable for the circumstances, he can be forced, at the purchaser’s request, to return the price received in exchange of returning the asset [art. 1716 par. (3)]. We can notice that the law no longer establishes a term to replace the asset, and it prefers the reasonable term suitable for the circumstances. • From the analysis of these dispositions, one can conclude that the way to repair the damage suffered by the purchaser is made in a certain order, and the purchaser cannot choose the method. • From the procedural point of view, the purchaser is bound to inform the seller regarding the defect before the expiry of the warranty period. If due to objective reasons the purchaser cannot comply with the warranty period, the law allows purchasers in such a situation to communicate it within a reasonable term from the expiry date of the warranty period. Failure to comply with this obligation leads to the purchaser’s losing his right to hold the seller responsible and ask for repair of the defects occurred [art. 1718 par. (1)]. These dispositions also apply to the contracts in which the seller warranted that the asset which was sold would keep certain qualities for a determined period [art. 1718 par. (2)].

22. 3. Conclusions • The dispositions of the new Civil Code approached in the present study confers new dimensions to the seller’s obligation to hand over the asset and warrant for vices. • According to the common law, except for the case when the parties stipulate clauses of aggravation of the warranty obligation, the seller is responsible only for the hidden vices. • The obligation to hand over refers to the asset compliance with the specifications comprised in the contract, while the warranty obligation against hidden vices regards the asset unconformity with the purpose it was acquired for. • As a conclusion, we want to point out the following novelty aspects in the matter of the vices for the asset that is sold: • - In the present formulation of the new Civil Code there are also rules that apply in case of apparent vices; • - As for the conditions of responsibility for hidden vices, the new Civil Code disposes for the vice or at least its cause to have existed at the time of handing over the asset, dispositions that differ from the previous regulation that considered this condition fulfilled only in the hypothesis of the vice existence and not of its cause, on the date of concluding the contract and not on the handing over date; • - The asset diversified market and the assets increased technicality determined the legislator to impose to the purchaser that is not properly trained to be cautious and diligent, which means to apply to the assistance of a specialist ;

23. - Before entering the actions stipulated in art. 1710 of the new Civil Code, the law regulates the procedure to be followed from the aspect of denouncing the vices, a compulsory procedure and which did not exist in the previous regulation; • - As for the effects of the warranty, the law stipulates various remedies provided for the purchaser and, in addition to the redhibitory action and the estimatory action, it stipulates the purchaser’s possibility to be granted, by means of a juridical action, the vices removal by the seller or on his account or the replacement of the asset that is sold with a similar one, without vices. The resemblance with the stipulations in the consumption law is striking; • - The law assimilates to the situation of hidden vices, the hypothesis according to which the asset that was sold cannot comply with the features agreed by the parties when concluding the sale. As the text has its origin in the existence on the market of assets that are more and more sophisticated, we assume that the legislator must be more explicit in formulating the legal text; • - The operational warranty is a new type of warranty, instituted by the legislator as the seller’s liability, without excluding his responsibility for hidden vices. The two forms of the seller’s responsibility function simultaneously, but according to distinct rules. By the regulation of operational warranty, the legislator extends the responsibility specific to relations in the consumption law to contractual relations among professionals. • All these aspects represent, in our opinion, advantages of the new regulation in the matter of vices in the contract of sale, engaged on the way to reform the juridical institutions in accordance with the realities and demands of the present Romanian society.

24. Thank you for your attention