How to withdraw from a purchase contract correctly

Starting point

The buyer’s right to withdraw from the contract under Section 437 No. 2 BGB in conjunction with Sections 440 and 323 BGB generally requires, under Section 323(1) BGB, that the buyer has previously set the seller a reasonable period for supplementary performance (Section 439 BGB) without success.

A valid demand for supplementary performance from the buyer must, in the BGH’s settled case law, include not only setting a deadline but also the buyer’s readiness to make the purchased item available to the seller for inspection of the alleged defects at the right place, namely the place of performance for supplementary performance (Section 439(5) BGB). This is meant to allow the seller to check the sold item: whether the alleged defect exists, whether it was already present at the time risk passed, what its cause is, and whether and how it can be remedied. The seller is therefore generally not required to engage with a demand for supplementary performance before the buyer has given the seller the opportunity for such an inspection.¹

The place of supplementary performance in sales law is determined by the general rule in Section 269(1) and (2) BGB.² Where the contract does not address the place of performance, the specific circumstances, particularly the nature of the obligation, are decisive. Where those do not yield a clear answer, the place of performance is ultimately at the place where the seller had its business establishment at the time the contract was concluded.³

When no deadline is needed

Setting a deadline is the rule, not a dogma. Sections 323(2) and 440 BGB list the cases in which the buyer may withdraw without one: a serious and final refusal to cure, a failed cure, unreasonableness, and a fixed-date deal. The most important in practice is the flip side of the inspection right above. Sometimes the seller refuses the very inspection it could otherwise insist on. Then a deadline is unreasonable for the buyer, and the buyer may withdraw at once.⁴ A buyer who wants to withdraw should be able to prove that refusal. A seller who means to cure allows the inspection rather than fending it off.

The materiality threshold

Even a formally correct procedure fails if the breach is immaterial: withdrawal is then barred (Section 323(5) sentence 2 BGB). A small, cheaply fixed defect does not support withdrawal, only a price reduction and damages.

For the right to withhold performance the opposite applies, and that asymmetry is regularly missed. Until the defect is remedied, the buyer may withhold the full purchase price under Section 320(1) BGB, even where the defect is minor and remediable. The limit is reached only where exercising the right offends good faith (Section 242 BGB). In the case decided, paintwork damage on a new car was enough: the buyer was entitled to refuse the entire payment and did not fall into default.⁵ So as a buyer facing a trivial defect, your leverage sits with the purchase price, not with withdrawal.

Practical recommendations

1. In contracts for the sale or supply of goods, regulate not only the place of performance but also the place of supplementary performance. A blanket rule (for example, always at the seller’s location) is not the right approach; the place should be defined on a case-by-case basis. This avoids unnecessary disputes, costs, and risks in warranty scenarios.

2. From the buyer’s side, also make sure to make the item available to the seller for supplementary performance, see Section 439(5) BGB.

3. Finally, the demand to remedy the defect has to be drafted carefully. Otherwise no effective deadline for supplementary performance is triggered.

4. Before withdrawing, check two limits: whether the defect is material (Section 323(5) sentence 2 BGB) and whether the deadline was exceptionally dispensable. Withdrawal over a trivial defect, or without a (dispensable) deadline, fails.

Notes

1. BGH, judgment of 30 March 2022 – VIII ZR 109/20; on the version of Section 439(5) BGB effective from 1 January 2022, BT-Drs. 19/27424, p. 26 et seq. ↩

2. The foundational decision is BGH, judgment of 13 April 2011 – VIII ZR 220/10. ↩

3. BGH, judgment of 19 July 2017 – VIII ZR 278/16. ↩

4. BGH, judgment of 26 October 2016 – VIII ZR 240/15. ↩

5. BGH, judgment of 26 October 2016 – VIII ZR 211/15. ↩

Reference: Poleacov, P. (2026). How to withdraw from a purchase contract correctly. INN.LAW. https://inn.law/en/perspectives/cancellation-of-purchase-agreement/

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