Supplier shall be liable for material defects as set forth below:
1. Any parts or services showing a material defect shall be, at Supplier's discretion, repaired, replaced or newly provided free of charge, provided that the defect already existed at the moment of the passing of the risk.
2. Any claims for subsequent performance shall become timebarred after 12 months from the starting date of the statutory period of limitation; the same shall apply to withdrawal and reduction of price. This period of limitation shall not apply as far as longer periods are required by law pursuant to Sect. 438, Para. 1, No. 2 (buildings and objects for buildings), Sect. 479, Para. 1 (recourse claim) and Sect. 634 a, Para. 1, No. 2 (constructional defects) of the German Civil Code (BGB), in case of deliberate action, fraudulent concealment of the defect or noncompliance with a warranted property. The statutory regulations concerning suspension, suspension of expiration and recommencement of the limitation period shall remain unaffected.
3. Purchaser must report any defects in writing without delay.
4. In case of a notice of defects, payments of Purchaser may be retained to such an extent that these retentions are in an adequate proportion to the material defects that have occurred. Purchaser may retain payments only if the complaint about the defect is undoubtedly justified. Purchaser shall not be entitled to retain payments if his claims for defects are timebarred. If the complaint about the defect turns out to be unjustified, Supplier shall be entitled to request from Purchaser reimbursement of the expenses he incurred.
5. Supplier shall be given the opportunity to provide subsequent performance within an adequate period of time.
6. If the subsequent performance fails to produce the desired result, Purchaser - notwithstanding any claims for damages pursuant to No. 10 below - may withdraw from the contract or reduce the payment.
7. Claims for material defects shall not be admissible if there is only a minor deviation from the agreed quality, if the usability is only negligibly impaired, in case of natural wear or damage that is caused after the passing of the risk as a result of incorrect or negligent handling, excessive use, inappropriate operational equipment, defective constructional works, unsuitable construction ground, or that occurs because of special external influences not provided for by the contract as well as in case of software errors that cannot reproduced. Neither shall there be any liability of Supplier for modifications or repairs that have been carried out improperly by Purchaser or a third party nor for any results caused thereby.
8. Any claims of Purchaser regarding the expenses required for the subsequent performance, in particular transport, travel, labour and material costs, shall be excluded as far as the expenses increase due to the fact that the delivered item has been subsequently relocated to another place than the subsidiary of Purchaser unless the relocation complies with the intended use of the item.
9. Recourse claims of Purchaser towards Supplier pursuant to Section 478 of the German Civil Code BGB (businessperson’s right of recourse) shall exist only as far as Purchaser and his customer have not made any agreements beyond the statutory claims for defects. With respect to the scope of the recourse claim of Purchaser towards Supplier pursuant to Section 478, Para. 2 of the German Civil Code, the provision of No. 8 above shall be applicable accordingly.
10. Any claims for damages of Purchaser because a material defect shall be excluded. This shall not apply in case of fraudulent concealment of the defect, noncompliance with a warranted quality, injury to life, limb or health or if Supplier violates his obligations by deliberate action or gross negligence. The preceding provision shall not imply any modification of the burden of proof to the disadvantage of Purchaser. Any further claims or any other claims than those provided for in this Article IX on the part of Purchaser for a material defect shall be excluded.