Can the »Seen-Bought« Clause Really Relieve You of Liability for Defects?
In a recent judgment, case no. II Ips 21/2015, the Supreme Court of the Republic of Slovenia confirmed the jurisprudence on the limited application of the seen-bought clause.
In the matter in question, the Supreme Court reviewed a case in which the buyer bought an apartment by way of a sales agreement in which the parties agreed on the use of the seen-bought clause. With the stated clause, the seller excluded his liability for all potential defects of the apartment which exist now (obvious defects) and for all defects which may appear later (latent defects). After the purchase of the apartment, excessive damp stains and mould began to appear in several places in the apartment. Consequently, the buyer submitted a request for withdrawal from the sales agreement and for the return of the purchase price, whereas the seller stated that, due to the seen-bought clause, the buyer’s claim was unfounded.
The Supreme Court ruled that, in the matter in question, all the conditions for the application of the provisions of Protection of Buyers of Apartments and Single Occupancy Buildings Act (Zakon o varstvu kupcev stanovanj in enostanovanjskih stavb, PBASOBA) were fulfilled. Namely, (i) the object of the sales agreement was an apartment as an individual part of a building, whereas the apartment was located in a building with several individual parts; (ii) the seller acted as an investor (as he ordered the construction with the intent of sale); and (iii) the buyer acted as the end buyer which had the position of a consumer. The Court further explained that PBASOBA does not allow for the possibility of relief of liability through the seen-bought clause. As the provisions of PBASOBA are mandatory, the said clause in the sales agreement is null and void. The Supreme Court thus concluded that the withdrawal of the buyer from the sales agreement was reasonable and that subsequently the buyer’s request for the return of the purchase price, with default interest from the day of payment of the purchase price, was also reasonable. The Court also explained that the main reason for the excessive damp and mould appearing in the apartment was poor workmanship and not improper use of the apartment, which is why the damp and mould constituted a defect which substantially hinders the normal use of the apartment, according to the provisions of PBASOBA. Subsequently, the buyer had, pursuant to Article 20 of PBASOBA, a right to withdraw from the agreement without first demanding that the defects be remedied or the purchase price reduced.
In the judgment, the Supreme Court affirmed the previous jurisprudence that the seen-bought clause in sales agreements, which are regulated by mandatory provisions of PBASOBA and the Consumer Protection Act, are not allowed. In other instances, when the application of mandatory provisions is not required, seen-bought clauses are allowed, however they still have a limited effect.
