Buying and Selling Classic Cars in Germany: Legal Advice

Requirements for the Classification as a Classic Car

According to § 2 No. 22 FVZ, classic cars are vehicles that were first put into circulation at least 30 years ago. In addition, a classic car corresponds as far as possible to the original condition, is well preserved and serves for the care of the motor vehicle cultural asset.

If a vehicle is classified as a classic car or vintage car, a historical registration number, the so-called H-plate, can be issued. This grants a tax advantage and free driving in environmental zones. In order to be classified as a classic car or as an oldtimer, a certificate from an officially recognized expert, inspector or test engineer is required in accordance with § 23 StVZO. The costs for the appraisal and issuing of the appraisal are approx. 100-200 Euros, depending on the specific test scope and the vehicle test center. Among other things, the appraisal can serve as proof of the condition of the vehicle at the time of purchase.

Written Purchase Contract

A written sales contract is urgently recommended. This serves to preserve evidence, in particular to clarify warranty issues. In addition, the conclusion of a well thought-out, written sales contract can protect against hasty purchases. For both the buyer and the seller of a classic car it can be advisable to have the purchase contract drafted or at least checked by an experienced lawyer. Good legal advice can protect against later lengthy and costly disputes.

In addition to the essential information on the parties to the contract, the object of purchase and the purchase price, the purchase contract should contain a detailed description of the state of preservation of the vehicle. In this way, it is precisely recorded what the seller must provide. This is because, as a rule, it is not possible to determine the usual condition of a classic car or oldtimer as a benchmark.

Rather, each vehicle is an individual piece with its own special features. Therefore, any agreements about the condition should be written down as characteristics guaranteed by the seller. This includes promises from the advertisement as well as from sales conversations. It can be useful to attach a list of the defects found as an appendix to the sales contract. Often it is also advisable to have a valuation report prepared by an expert in order to record the condition of the vehicle in detail. A corresponding reference to this should be noted in the purchase agreement.

Caution is advised with regard to general terms and conditions (GT&Cs). These are pre-formulated contractual conditions for a large number of contracts, which are not negotiated individually. For the effective inclusion of GT&Cs there are special legal regulations which must be observed.

Warranty

Not infrequently, the warranty for defects after the purchase of a classic car, vintage car or oldtimer is a point of dispute. The seller is generally liable for defects in the vehicle that were already present at the time of delivery. If necessary, however, the warranty can also be excluded. In the case of a sale among dealers, among private persons as well as a private person to a dealer, the warranty can be limited or even completely excluded. However, a complete exclusion of warranty in the context of a sale of consumer goods (dealer to private buyer) is ineffective.

Decisive for the warranty is that the defect was already present at the time of delivery of the oldtimer. If possible, the time of occurrence must therefore be determined. However, it is not uncommon for this to be difficult to determine. In the case of a consumer goods purchase, the burden of proof lies with the seller within the first six months after handover. It is therefore assumed that the defect already existed at the time of delivery, unless the seller can prove otherwise (see § 477 BGB). According to the Federal Court of Justice (BGH), it is sufficient if the buyer can prove that the goods were in a defective condition within the first six months (BGH, judgement of 12.10.2016, Az. VII ZR 103/15). However, the buyer does not have to explain on which cause this condition is based. After expiry of the first six months, the burden of proof is on the buyer.

The limitation period for material defects is in accordance with § 438 paragraph 1 BGB in principle two years with delivery of the vehicle. This period may be deviated from by contract. In the case of consumer goods sales contracts, a reduction is generally not possible. In the case of used goods such as classic cars, however, the period can be reduced to at least one year (§ 476 para. 2 BGB). After the expiry of the period, the statute of limitations shall apply and there shall no longer be any warranty claim against the seller. It is therefore important to determine and comply with the applicable limitation period in good time.

Assessment of Defect

Problems within the scope of the warranty occur above all if the agreed condition of the vehicle was not exactly recorded in the purchase contract. Then it can be difficult to assess the existence of a defect and to assert claims in this regard. Whether a defect exists depends primarily on the party agreements on the condition of the classic car.

If, for example, the seller has guaranteed a completely restored vehicle, the buyer may expect that it does not show any rust damage. If this is the case, however, there is a defect. Likewise, a contract for a classic car with a considerable need for revision can be concluded. In this case rust damage could correspond to the agreed condition of the car and therefore there would be no defect. Not only information about the vehicle in the contract of sale is relevant, but also public statements of the seller, especially in advertising, e.g. in internet advertisements and sales advertisements, unless this statement was corrected at the time of conclusion of the contract.

To define the overall condition of a classic car, so-called condition grades from 1 to 5 are usually given. Note 1 describes a flawless condition without signs of use. Grade 5, on the other hand, describes a faulty and non-roadworthy condition with extensive restoration requirements. The condition grade is legally binding. The condition described in the grade is warranted. Deviations from this state of preservation are therefore considered to be defects. Caution is therefore required with regard to the distribution of condition grades. It may be more useful to describe the concrete condition of the classic car.

If a positive appraisal of the vehicle according to § 23 StVZO (Oldtimer appraisal) was assured, then according to the BGH this also constitutes an agreement on condition. According to this, the vehicle must be in a condition that justifies the positive appraisal as a classic car. (BGH, judgement of 13.03.2013, Az. VIII ZR 172/12)

Agency Sale

Every now and then an agent is called in to oversee the sale of a classic or vintage car. This is a dealer who brokers the vehicle of a private seller to a private person. The jurisdiction places high demands on such an intermediary business in order to protect the consumer from abuse. This is because such brokerage activities are sometimes used to circumvent the warranty for material defects, since private sellers, unlike dealers, can agree a complete exclusion of warranty. A circumvention of the consumer protection regulations is however not permissible according to § 476 exp. 1 S. 2 BGB.

If the economic risk of the used car sale is borne by the private seller, the brokerage is not a circumvention transaction (BGH, Urt. v. 26.01.2005, Az. VIII ZR 175/04). A circumvention is to be assumed, however, if the economic risk lies with the dealer and therefore a purchase of the vehicle by the dealer can be assumed. In this case the purchase is to be classified as a purchase of consumer goods.

Indications that the economic risk lies with the private seller are the designation as an agency contract and agreements on a commission for the agency activity. In addition speaks for it, if the authority to decide regarding the purchase price lies alone with the private salesperson.

International Classic Car Purchase

When buying a classic car from abroad or selling it abroad, it is vital to determine the applicable location of jurisdiction in order to determine whether German or the law of another jurisdiction applies. This is a rather complicated matter, which is why the consultation of a lawyer can be useful.

The place of jurisdiction, i.e. the competent court, can be contractually agreed. Otherwise, it is governed by international civil procedural law. Within the EU the EuGVVO applies. According to this, each party to the contract can be sued either at the place of its principal place of business or administration or at the place to which the delivery of the goods has been made or should have been made (place of performance). For German buyers and sellers, it is therefore advisable to agree on a delivery to Germany if possible.

With regard to the law applicable to the contract of sale, the parties to the contract may choose the law applicable to the contract (Article 3 Rome I Regulation). In the case of consumer contracts, however, the choice of law is not permitted under Article 6 (2) sentence 2 Rome I Regulation if the consumer is worse off by the law chosen than by the law of his habitual residence. An agreement under German law is particularly recommended for German buyers and sellers. For the choice of foreign law, a good knowledge of this law should exist in order not to be later exposed to considerable disadvantages.

If no choice of law has been made, the purchase contract is generally subject to the law of the country in which the seller has their habitual residence (Article 4 (1) (a) Rome I Regulation). If both contracting parties have their branches in contracting states of the UN Convention on Contracts for the International Sale of Goods, this applies in principle. A list of the contracting states can be viewed on the UN website. However, the UN Convention on Contracts for the International Sale of Goods only contains regulations on the core of the contract of sale, which includes, for example, its conclusion and warranty, but not the limitation of claims. The national law of the seller shall then apply to any matters not regulated by the UN Convention on Contracts for the International Sale of Goods. The UN Convention on Contracts for the International Sale of Goods is not applicable to cross-border contracts for the purchase of goods for personal use. So if the classic car is bought for personal use, it remains with the national law of the seller.

Import and Export of Classic Cars

If the classic car remains within the EU, neither customs duty nor import sales tax must be paid. However, if the car is sold across the borders of the EU, a customs transaction will take place. In some cases, a customs exemption is nevertheless possible.

A customs exemption can be granted with a proof of origin if the EU has concluded a preferential agreement with the respective state. Such an agreement exists with Switzerland and Norway, for example. In order to qualify for duty exemption, the classic car must be a product of the EU or the country benefiting from the preference. Proof of origin is provided in the form of a movement certificate EUR.1.

Customs exemption is also granted if the classic car is defined as a collector’s item when imported into the EU. In addition, a lower import sales tax rate of seven percent must be paid. The criteria for classification as a collector’s item under customs tariff 9705 are listed in the EU’s Combined Nomenclature (Chapter 97). Prerequisites for this are that the vehicle is in its original condition without any major changes or conversions and that it is in principle at least 30 years old. In addition, the classic car must correspond to a model or type that is no longer in production. Deviations from the minimum age requirement are possible if the vehicle was used at a historical event or a racing car that has achieved significant sporting success at prestigious national and international events.

It should be noted that a declaration as a collector’s item must be made at the time of customs declaration. The main customs office then decides on the classification. This can vary depending on the interpretation of the requirements.

Legal Service when Buying and Selling Classic Cars in Germany

There are some special features that should be considered when buying and selling classic cars, vintage cars or oldtimers. Great importance should be attached to a written and well-drafted sales contract in order to prevent later disputes. We will gladly help you with the drafting and review of purchase contracts. The sales contract should be checked especially with regard to the scope of warranty, possible exclusions of warranty, the applicable time limits and general terms and conditions. In addition, we advise and represent you in questions concerning liability and warranty.

Schlun & Elseven Rechtsanwälte is a full-service law firm with offices in Cologne, Aachen and Düsseldorf, as well as further facilities in Berlin, Hamburg, Munich, Stuttgart and Frankfurt. Our lawyers advise in English and German. If you have further legal questions regarding buying and selling classic cars in Germany, as well as in an international context, please contact us directly. Our lawyers are ready when you are.