Supreme Court: relative proportional method may meet requirements for determining a reasonable price discount

In its decision ref. no. 23 Cdo 2666/2024, the Supreme Court attempted to simplify the calculation of the amount of an appropriate discount from the purchase price or price of the work. This time, it took the approach of the so-called relative proportional method.

A price discount is one of the rights arising from defective performance. Therefore, we must rely on the meaning and purpose of the regulation of rights arising from defective performance itself. Our aim is to restore balance between the contractual parties if the relationship is disrupted by one of the parties. In the final result, we assume that the buyer will receive an impeccable performance corresponding to the agreed purchase price.

The regulation of rights arising from defective performance cannot be interpreted as reparation. It is a matter of balancing the imaginary scales so that the relationship is equalized. The purpose is not to punish the defective party, but to provide protection to the party complaining of the defect.

Previous unifying case law required courts of first instance to comprehensively consider the individual circumstances of each case when deciding whether a price discount is appropriate. The resulting reasonable discount should take into account the manifestation of the identified defect during use of the item, how the defect complicates use of the item, any reduced service life of the item, the cost of necessary repairs beyond the costs associated with removing the defect, and other factors. The amount of the discount will depend primarily on the nature and extent of the defects in relation to the price, on the reduction in the functional of the item and, where applicable, its aesthetic value. The discount is not equal to the cost of repair alone, but also reflects the usability or service life of the item.

If we buy an item below or above the normal price, this will also be reflected in the amount of the reasonable discount on the price. The final price will be lower or higher, depending on the underlying circumstances.

Decision-making practice therefore does not give us a single specific key for determining a reasonable price reduction. The above requirements may be met by using the so-called relative proportional method. The starting data for using this method is the usual price of both defective and faultless items. If we multiply their quotient by the agreed price of the item and subtract this value from the agreed price, we get the amount of the discount. For greater clarity, the verbal expression can be graphically represented as follows:

discount on the agreed price = agreed price - (usual price of the defective item / usual price of a faultless item * agreed price)

However, the Supreme Court does not deny the existence of other methods for calculating a reasonable price discount. If the deciding courts resort to a different calculation, they must duly justify the deviation by the circumstances of the case.