Avoiding the purchase contract for error or fraudulent deception

A transactional error concerns the content of the transaction, for example an essential characteristic of the property that the buyer wrongly assumes. Under section 871 ABGB you can avoid the contract for such an error, but only under narrow conditions. The error must have been caused by the other party, must obviously have been apparent to them from the circumstances or must still have been clarified in time.

The error is essential if the contract would not have been concluded, or not on those terms, without it. If the error concerns only a secondary point, it does not lead to annulment but at most to an adjustment of the contract. A mere error in the motive, which lies outside the content of the transaction, does not in principle entitle you to avoidance.

The legal consequence of successful avoidance is the annulment of the contract from the outset. The performances are restored, the buyer returns the property and receives the purchase price. How the error differs from a material defect is covered in the post on the warranty for hidden defects.

If the seller deliberately deceived you or fraudulently concealed a circumstance known to them that they had a duty to disclose, there is fraud under section 870 ABGB. Unlike with a simple error, what matters here is the culpable conduct of the seller. Avoidance for fraud is also possible if the error concerned only a motive or was not essential.

Fraudulent deception carries serious weight and is treated accordingly by the law. While avoidance for error must be asserted within three years, avoidance for fraud is subject to the long limitation period of thirty years from the conclusion of the contract. Alongside avoidance, a claim for damages comes into question, because the fraudulent conduct establishes fault.

In practice the proof of fraud is demanding, because the deliberate deception must be proven. Secure therefore listings, correspondence and witnesses that document the assurances given. Which documents the seller must provide in any case is covered in the post on the seller obligations for the energy certificate and documents.

A separate possibility of avoidance is opened by laesio enormis under section 934 ABGB. If a party receives less than half the value of its performance, it can annul the contract unless the other party makes up the shortfall. This claim too is time-barred three years after the conclusion of the contract and requires that the striking disproportion already existed at the time of conclusion.

Avoidance for defects of will must be separated from the warranty and from withdrawal. The warranty concerns a material defect of the property, withdrawal releases from the contract for other reasons such as default. Avoidance, by contrast, attaches to the formation of the contract, because the will of the avoiding party was disturbed. More on exiting the contract is covered separately in the post on withdrawal from the purchase contract.

Which path is the right one depends on the seller conduct, the severity of the defect and the periods. Often several bases come into question alongside one another. A first assessment of the risks is provided by the purchase contract risk check. An overview of the review steps before the purchase is offered by the focus page on the purchase contract review.