Amendments to the Obligations Act have entered into force and will apply to contracts concluded after 1st January 2022.

The amended provisions of the Obligations Act on the seller's liability for material defects, redefine the concept of material defect and introduce special rules in consumer contracts on the obligations of the seller in the case of sale of items with digital elements.

According to the Obligations Act, the material defect exists in the following cases:

1. if the item does not correspond to the description, type, quantity and quality, i.e. it does not have the functionality, compatibility, interoperability and other features as determined by the sale-purchase agreement,
2. if the item is not suitable for any special purpose for which the buyer needs it and about which the buyer informed the seller at the latest at the time of concluding the contract and in relation to which the seller gave his consent,
3. if the item is not delivered with all additional equipment and instructions, including installation instructions, as stipulated in the sale-purchase agreement,
4. if the item is not delivered with updates as specified in the sale-purchase agreement,
5. if the item is not suitable for use for the purposes for which the item of the same type would normally be used, considering all EU and Croatian regulations, technical standards or, in the absence of such technical standards, applicable codes of conduct in a particular area if they exist,
6. if the item does not correspond to the quality and description of the sample or model that the seller made available to the buyer before concluding the contract,
7. if the item is not supplied with additional equipment, including packaging, installation instructions or other instructions, which the buyer can reasonably expect to receive,
8. if the item does not correspond to the quantity or does not have those properties and other characteristics, including those related to durability, functionality, compatibility and safety, which are common to the item of the same type and which the buyer can reasonably expect given the nature of the item and taken into account any public statements made by the seller or other persons, or made on their behalf, in particular in advertising or labelling in previous stages of the transaction chain, including the manufacturer,
9. if the item is incorrectly installed or assembled, and the installation or assembly service forms part of the sale-purchase agreement and was performed by the seller or the person for whom he is responsible or
10. if the item intended to be installed or assembled by the customer is incorrectly installed or assembled by the customer, and improper installation or assembly is due to a lack of instructions provided by the seller or, in the case of items with digital elements, provided by the seller or supplier of digital content or digital services.

If the consumer contract provides for the continuous delivery of digital content or digital service for more than two years, the seller is responsible for defects in digital content or digital service that occur during the period in which digital content or digital service is to be delivered according to the sale-purchase agreement. On the other hand, if the consumer sale-purchase agreement provides for the continuous delivery of digital content or digital service for a period of less than two years, the seller is responsible for defects in digital content or digital service that occur within two years of the transfer of risk.

In addition to the above changes, the period in which the seller has the burden of proof that the item at the time of the transfer of risk was not defective has been extended from six months to one year, except for commercial contracts where this period is six months from the moment transfer of risk.

Another important change is that the law prescribes the hierarchy of the buyer's rights in case of material defect in such a way that the buyer can first choose between repair or replacement of the item, unless the chosen method of eliminating the defect would be impossible or cause disproportionate costs to the seller. If the buyer does not receive requested repair or replacement, he may request a price reduction or termination of the contract.