In 1969 the plaintiff gave an order to the G firm to carry out the glazing of his house. Thereupon the firm inserted ‘I–Glass’ units which had been manufactured under licence by the defendant. The delivery took place on 9 October 1969 by way of the F Company, which had ordered the material from the defendant and taken delivery on 7 October 1969. In September 1974 the plaintiff detected condensation on a part of the inserted plates. At the end of October 1974 the defendant was notified of claims by the plaintiff. The defendant, in a letter of November 1974, asserted that the limitation period affecting the warranty had already elapsed. When that letter reached the plaintiff by way of the G firm on 14 November 1974, he learnt for the first time that the defendant included in its publicity a declaration under the heading ‘warranty’, which read, inter alia, as follows:

The manufacturers of ‘I–Glass’ warrant—for five years from the date of the first delivery—that under normal conditions the transparency of ‘I–Glass’ will be vitiated neither by the formation of film nor by the deposit of dust in the space between the plates . . . This warranty creates an obligation only to replace the defective ‘I–Glass’ units . . . The group of European ‘I’ manufacturers . . . have established a warranty fund to insure quality and warranty. This fund serves to provide extraordinary insurance of the ‘I’ warranty and makes it ultimately independent of local conditions and circumstances. The warranty fund therefore supports the warranty issued by each ‘I–Glass’ licensee . . .

The plaintiff in his action begun in January sued the defendant on his producer’s warranty. He at first demanded twelve substitute glass units. In May 1977, he had the plates he objected to changed and claimed compensation for the cost of the materials. The lower courts rejected his claim. On his application for review the Bundesgerichtshof set aside the appellate judgment and sent the case back for reconsideration for these

Reasons

1. The Court of Appeal is of opinion that no direct contractual relation came into being between the defendant manufacturer and the plaintiff as ultimate acquirer of the glass plates. Whether that is correct may be left undecided: for the judgment under review cannot be upheld because by virtue of a contract between the defendant and the F Company a warranty came into existence for the benefit of the plaintiff as ultimate acquirer (contract for the benefit of their parties).

(a) . . .

(b) . . . The defendant’s warranty attached on the date of the first delivery, namely that of the glass to the F Company. Thus it is obvious that the contractual intention of the defendant also relates back to that moment. That answers to the interest of the middleman, who acquires advantages for himself as well as from the creation of the warranty in favour of the ultimate acquirer. If, that is to say, one of the defects covered by the warranty occurs, he will be free from his own liability to the other party in so far as the manufacturer is responsible for the defect by virtue of his duty to perform the warranty. Accordingly everything speaks in favour of the F Company’s intending to establish the warranty as early as possible, in order to assure itself of the indirect exemption from liability connected therewith and its independence of later contingencies (e.g. the question whether the ultimate acquirer had notice as a third party of the warranty). The fact that the warranty fund set up intended the liability assumed by the defendant to be independent of local conditions and circumstances does not stand in the way. That turn of phrase emphasizes the material security of the warranty, but says nothing about the person to whom the defendant intended to direct his offer to make good the warranty. The custom sought by the warranty is not put in doubt on the ground that it initially operated on the middlemen in their relations with the manufacturer, for the last middleman will as a rule indicate to the ultimate acquirer the advantages implied in the warranty, in order to obtain a customer.

(c) As the interests of all concerned speak in favour of creating the warranty at once by means of a contract for the benefit of third parties (§ 328 BGB), it must follow that the defendant and the F Company intended to enter into a contract of that kind . . .

That the person of that third party was not ascertained when they made the contract does not affect the result. For the contracting parties the identity of the future ultimate acquirer played (to start with) no role. The agreement that whoever should happen to be the ultimate acquirer should be the third party beneficiary was enough. That made him sufficiently ascertainable.

2. The plaintiff claimed in good time under the warranty offered by the contract for his benefit.

It is true that the defendant learnt of the occurrence to which the warranty applied only after the limitation period had run out. Since the F Company had taken delivery of the glass plates from the defendant on 7 October 1969, the five-year limitation period had already run out when the defendant obtained on 28 October 1974 knowledge of the complaint. That, however, is of no significance since according to the clear wording of the warranty, the period referred to is the period within which the material damage envisaged must occur and not the period within which the claim must be made.

The only decisive factor therefore is that the defect appeared in September 1974—and so within the warranty period. That at that moment the plaintiff’s claim against the G firm was already time-barred, because it was based on VOB/B standard contract, is irrelevant. The warranty was to be valid ‘independent of local conditions and circumstances’, and therefore irrespective of the contractual arrangements of the ultimate acquirer with the glazier.

3. If the glass plates manufactured by the defendant turn out to have the defect alleged by the plaintiff (which must be taken for granted for present purposes), it should make no difference to the plaintiff’s action that he no longer demands their replacement but compensation.

The defendant’s warranty is intended to give greater effect to the claims for defects that the ultimate acquirer has against the person (the glazier) employed by him to do the work. The contract of warranty is, therefore, ancillary to a warranty arising from a contract for work and labour. In the present case the plaintiff’s contract with the G firm was one of sale and work concerning non-fungible goods; for the glass plates had been prepared to fit the special dimensions of the window-frames in the plaintiff’s house. That the defendant’s contract with the F Company is one of sale is irrelevant. The decisive factor is the economic function the warranty has to perform for the ultimate acquirer as third-party beneficiary.

The plaintiff was at liberty to remedy the defects himself—assumed to exist for the purposes of the present appeal—and to demand monetary compensation from the defendant.

4. The plaintiff’s claim under the warranty is not statute-barred. As has already been explained, the warranty was intended to give greater effect to the ultimate acquirer’s claim for defective delivery based on the contract of work against the builder carrying out his order. In accordance with that purpose, the claim under the warranty becomes statute-barred at the same moment as the corresponding claim of the ultimate acquirer. Here the glazing of all the windows in a house amounts to a building contract. The limitation period for a contract of work is five years. Accordingly, claims under the warranty also are subject to a five-year limitation. That the plaintiff agreed with the G firm that standard conditions of VOB/B should apply makes no difference. The warranty here for the ultimate acquirer was to be ‘independent of the circumstances of the particular case’. It was to give greater effect to his claims of the final acquirer under the warranty arising from the contract of work and therefore according to its sense and purpose should in no way be subject to the agreed curtailment of the limitation period applicable to a contract of work.

The defendant by his warranty agreed to be responsible for all defects appearing within the limitation period. Accordingly, that period for claims under the warranty cannot be taken to run from the delivery, fixing or acceptance of the glass. The better view is that the sense and purpose of the warranty require it to begin only with the discovery of the defect (cf. also BGH NJW 1979, 645). Otherwise defects which were first detected towards the end of the warranty limitation period could in many cases not be successfully invoked before the limitation operated. That is precisely shown in the present case.

The plaintiff here detected the defect in September 1974—within five years from the delivery of the plates—the subject of the action started in January 1977. Thereby the limitation was interrupted in good time.

5. In view of these considerations, the appellate judgment must be set aside. The case must be sent back to the Court of Appeal, which must now inquire whether and how far the plates were defective and what the substitute plates cost.

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