Joseph Calleja

 

When a contract of sale is concluded, one of the obligations of the seller towards the buyer is that s/he is to warrant the thing sold. The warranty that the seller owes to the buyer is two-fold. Firstly, the seller must warrant the peaceful possession of the thing sold, thus ensuring that the purchaser peacefully possesses the thing and is not molested or evicted by a third party that claims any rights over it. Secondly, the seller is bound to warrant the thing that is sold against any latent defects. This refers to those hidden defects that render the thing sold unsuitable for its intended use or which reduce its value to the extent that the purchaser would not have bought it or would have paid a smaller price had s/he been aware of these defects.

When the thing sold is affected by a non-apparent defect which the buyer could not have discovered for himself, Article 1427 of the Civil Code, Chapter 16 of the Laws of Malta, grants the possibility for two forms of redress against the seller. The purchaser can either decide to dissolve the contract and therefore restore the thing, or return the money paid. This action is referred to as the actio redhibitoria.

Alternatively, the buyer may decide to keep the thing purchased but requests that part of the relevant price be repaid, which will be determined by the Court. The latter action is known as the actio aestimatoria.

In order to ensure that the above-mentioned two actions are successful, a set of requirements need to be fulfilled. Firstly, the defect must be of a serious nature and not merely insignificant. Thus, the thing in question needs to be defective to the extent that it has been rendered unsuitable for its intended use or, that had the purchaser been aware of the defect s/he would not have purchased the item in question or would have preferred buying it for a lower price.

The second requirement is that the defect must be a non-apparent one. As such, the seller is not responsible for those defects which the buyer could have discovered for himself. It logically follows that if the defect was noticeable then the parties would have taken it into account when determining the price. Interestingly, if the buyer was in a position to discover the defect but did not as a result of his/her negligence, then this warranty would be excluded.

The third requirement is that the defect must be present at the moment of the sale. No knowledge on the part of the seller of the existence of the defect at the time of the sale cannot exonerate him/her from responsibility. Additionally, if the defect was known to the seller s/he shall be also liable for damages towards the purchaser.

By way of mutual agreement, it is possible for both parties to exclude the warranty in question. However, this can only occur on condition that the seller has not been aware of the existence of any defects as otherwise such exclusion would be nothing but tantamount to attempt of fraud.

Our Courts, moreover, have on various occasions observed that this exclusion needs to be expressly spelt out. Mere stipulations such as ‘tale quale’ are not enough to exclude the warrant against latent defects.  

These two actions are also limited by the lapse of time. Both the actio redhibitoria and the actio aestimatoria are to be exercised within one year from the day of the contract in the case of immovable property and within six months from the day of delivery in the case of movable property.

It should be further observed that if it was not possible for the buyer to discover the latent defect of the thing in question during the stipulated time period, the said time period will start to run only from the day on which it was possible to discover such defect.

Lastly, it should be observed that the warranty against latent defects is separate and distinct from the protection that the law affords to consumers. Consumer protection legislation applies to those situations that concern dealings between a trader and a consumer.

In certain circumstances, it could be that consumer protection legislation might offer a better redress to an individual, provided that s/he qualifies within the legal definition of a consumer.

In other situations, especially those transactions that are carried out between traders themselves or where both parties are considered as being consumers, then the actio redhibitoria and the actio aestimatoria come in as a very effective remedy.

 

Dr Calleja is a practising advocate