What is this article about?
A machine or system was ordered by the buyer for a specific application and developed and delivered by the manufacturer. The worst-case scenario in mechanical engineering is that the system is idle and not producing as desired by the buyer. The problem is that the investment sums are always high, and this is offset by the technical non-performance. That’s the buyer’s perspective. If things go badly for the buyer, consequential damages (downtime, penalties, etc.) are also a risk. But is the buyer’s assessment always 100% correct?
Read the full article now and learn how to proceed strategically when reversing a machine purchase if the positions are entrenched.
Reversal of machine purchase agreement: An expert team is essential
The most important point regarding such problems comes right at the beginning of the article:
The best result is achieved when the client…
experienced machinery experts and lawyers
is accompanied, and as early as possible, as soon as the conflict between the customer/buyer and the manufacturer/supplier begins to develop.
That’s perfectly understandable. The experienced lawyer is naturally familiar with contract law. This can give rise to various questions that influence the course of the technical assessments and thus the technical evidence preservation.
The experienced lawyer is not a machinery expert. Likewise, the machinery expert is not a lawyer.
That’s why the team of experts is needed. The emphasis is on “experts.” When it comes to a large investment and resolving a technical-legal conflict, efficiency combined with know-how is essential.
If a request is placed here regarding the topics of “reversal of purchase agreement” or “securing evidence”, my first recommendation is:
Legal support from professionals is necessary.
Due to our many years of experience and established collaborations in this field, we can recommend a large number of outstanding lawyers to our clients on this topic.
In two-thirds of my cases, legal representation is already involved before I do. I am contacted and, so to speak, join the process.
Legal basis: Reversal of purchase agreement for a machine
Publicly appointed and sworn experts do not provide legal advice. Therefore, legal counsel from experts is essential when it comes to rescinding a purchase agreement.
A fundamental prerequisite for the rescission of a purchase agreement (§ 433 BGB) is the existence of a defect. According to § 434 BGB, a defect in the purchased item exists if the goods do not conform to the agreed-upon specifications.
The existence of a defect entitles the seller to exercise the warranty rights for defects under Section 437 of the German Civil Code (BGB) .
If rectification is excluded due to the nature of the defect, for example because the item is irreparable, then subsequent performance is completely ruled out.
The legal basis for the reversal of a machine purchase includes, for example:
- Relevant principles of sales law ( German Civil Code §§ 433 ff .)
- Definition: Material defect ( § 434 BGB ) – agreed quality vs. actual quality,
- Buyer’s obligations: notification of defects, deadlines, cooperation
- Subsequent fulfillment,
- Withdrawal / Reversal ( § 439 BGB ).
The starting point: The specification dilemma
For the buyer to even consider the idea of “reversing the machine purchase”, a nearly always typical and very similar backstory is required.
Before the purchase agreement, machine
Before concluding a purchase agreement, the buyer contacts various manufacturers whom the buyer believes can manufacture and deliver the machine according to his wishes.
There are usually several meetings in which the buyer explains their ideas to the future manufacturer or supplier.
Requirements specification vs. functional specification
Almost every buyer of a machine that is custom-developed for them has prepared something resembling a requirements specification. However, these requirements are often imprecise and incomplete.
It is rather rare for the eventual supplier and manufacturer of the machine to present the customer and buyer with a specification document. In fact, it is the exception.
If the manufacturer does not specify how they intend to implement the stated requirements, the consequence is:
This results in a gap in interpretation regarding exactly what is owed.
Another real problem: The "moving target"
In almost all the cases I’ve handled, side agreements were reached after the purchase contract was signed. Then, one or more features were additionally defined and/or modified between the buyer and the manufacturer.
Even after the purchase agreement for the machine has been concluded, further demands or technical agreements are almost always exchanged between the parties involved via email.
These scenarios form the basis for the “ machine dispute ”.
The escalation: Discrepancy in perception
In practice, I repeatedly encounter the same “psychology of escalation.” The buyer is dissatisfied with the delivered machine because, for example, it frequently breaks down (Figure 2).
The buyer contacts the manufacturer with a complaint and usually a comprehensive list of defects (“defect list”). The buyer’s perspective is clear:
“The promised features and performance are not achieved.”
Manufacturers’ reactions vary somewhat at this point. Some manufacturers immediately begin making improvements. However, others immediately take the position:
“The machine meets the requirements and operates according to the state of the art.”
After some back and forth, the manufacturer demands acceptance of the machine and the buyer demands the reversal of the purchase contract for the machine.
This means the parties are at an impasse.
Communication on a factual level is hardly possible anymore; emotions overshadow technical facts.
The solution: Expertise before knee-jerk reactions
To break this cycle, there is only one effective recommendation, which I urge you to follow:
Involve an external, experienced forensic expert from the mechanical engineering sector at an early stage.
This applies to buyers who have identified a defective machine and also to sellers/manufacturers who are confronted with the accusation of defective delivery.
Don’t wait until the lawyers are already exchanging legal documents.
Most companies bring technical experts and lawyers on board far too late.
A well-coordinated team consisting of a forensic expert and a specialist lawyer can get to the heart of almost any technical issue at the factual level.
The goal is to
to regain control over the interpretation of the technical facts.
The activity involved in the reversal of a purchase agreement for a machine
The work of a publicly appointed and sworn expert is divided into different phases in the unwinding of a machine purchase contract.
The crucial question in every technical examination, expert assessment or legal review, for example in the context of a legal dispute between buyer and supplier of a machine, is:
What was ordered? What was delivered?
Phase 1 of the machine expert's work: Reconstruction of the "target state"
Before a machine expert can even make any findings on the machine, an experienced professional will first conduct detective work.
It needs to be determined what was actually ordered from a technical standpoint.
This leads to the following steps:
- Analysis of communication:
- Review of email traffic,
- Meeting minutes and
- Identifying implied contract amendments:
- What was agreed upon subsequently?
- Definition of the basis for testing:
Creation of a consolidated requirements catalog from the numerous data and additional information.
Phase 2 of the expert's report: The site visit and the fact-finding process
Once the machine specifications defined between the buyer and manufacturer have been determined from the purchase agreement, the requirements specification , other communication, and implied contract amendments relating to the technology, an on-site visit can now be carried out to check the machine’s characteristics.
The steps are
- Preparation: Planning the site visit under production conditions.
- The target-actual comparison:
- Objective findings regarding the agreed target state of the machine, for example:
- Cycle times,
- Application rates,
- Tolerances,
- Availability,
- etc.,
- Documentation of the current state.
- Highlighting the differences between the target state and the actual state.
- If discernible during an on-site inspection, the expert will identify the causes for any differences.
- Objective findings regarding the agreed target state of the machine, for example:
Phase 3: The strategic party report (securing evidence)
The purpose of the expert opinion commissioned by the party, for the purpose of securing evidence , also in the case of the reversal of a purchase agreement for a machine, is:
Substantiating the facts presented in support of the claim.
In the collaboration with the lawyer in the expert team, it is important for the specialist lawyer to
Translation of “Technology” into “Law”.
The lawyer will be appointed with a
substantiated party expert opinions
The lawsuit for the reversal of the purchase agreement for the machine can be easily justified without further ado.
In his report, the experienced, publicly appointed and sworn machine expert will only identify the errors, i.e., the deviations between the target state and the actual state, which can later be clearly established and confirmed in a legal process by the subsequent court expert.
That is precisely why the party’s internal “list of shortcomings” must always be critically reviewed and evaluated internally.
An example from an internal party "list of deficiencies"
In an internal party “list of deficiencies” I had to read: The machine vibrates strongly .
The questions immediately arose:
- What does “strong” mean in this context?
- Is anything defined in the specifications regarding vibrations , or is anything promised in the requirements document?
- Where and by what measurement should the vibration be detected?
- What is the actual consequence of the “strong vibration”?
It is possible that vibrations might cause connections to loosen. However, these are generally technical hypotheses that are difficult or impossible to prove in court proceedings, unless cross-sections break and this is visible in the fracture cross-section.
Therefore, it is important to consider the following when reversing a purchase agreement for a machine.
clearly identifiable deviations
in the
To highlight and name them.
Therefore, if it is determined that, for example, the profiles in an aluminum extrusion plant are gripped incorrectly several times within a certain period, resulting in a standstill of the plant and a necessary restart, then this is an objective finding that any court expert will immediately confirm.
It can then be deduced that, due to the production shutdowns, a potentially previously defined availability is not achieved and/or cycle times are not met.
Guidance of the court expert
Therefore, it depends on the significant deviations between the target state and the actual state, which a court-appointed expert can later determine on behalf of the regional court or the higher regional court.
This means that the expert opinion provided by the party for the purpose of securing evidence for the reversal of the purchase agreement for the machine must also include:
Management of the court-appointed expert.
It is therefore important to focus on the significant deviations that a court-appointed expert will confirm with near certainty.
To better understand this, I will give a numerical example:
If “only” 10 demonstrably verifiable errors are presented and all are confirmed by the court-appointed expert, then this represents a 100% confirmation rate of the party’s own statements in court.
If 15 defects are alleged, 10 of which are definite and 5 of which are unspecified (“machine vibrates excessively”), then the court-appointed expert will certainly confirm 10, or perhaps even 11 or 12 defects. However, he will by no means confirm the entire allegation. Therefore, the success rate is definitely lower. This is always – and rightly – exploited by the defendant’s lawyer as a procedural tactic.
Phase 4: Review the opposing party's written submissions
The competent regional court will have one or two written submissions exchanged between the parties’ lawyers.
For this, the party’s own lawyer again needs neutral technical input. The following happens during this phase:
- Response from the defendant: Attempt to downplay the technical discrepancies between the target state and the actual state.
- The “ping-pong” effect: New accusations come into play and technical hypotheses are put forward.
Here, the court-experienced, publicly appointed and sworn expert in machinery will of course provide further assistance on behalf of the party.
Phase 5: Court order for the taking of evidence and the appointment of the court expert
The expert appointed by the party will advise the party’s lawyer when it comes to the order for the taking of evidence and the appointment of the court-appointed expert.
The court's order for the taking of evidence
The court issues an order for the taking of evidence. In most cases, the court bases its decision on the plaintiff’s submissions and, if applicable, also on the defendant’s response.
It is certainly possible to influence the court’s decision regarding the taking of evidence. However, the court is not obligated to follow any objections raised by a party.
However, it is sometimes the case that questions in the order for the taking of evidence are formulated in a “technically curious” way. This is the result of “translation errors.” After all, the judges are “only” lawyers and not technical experts. They often formulate questions based on their “technical understanding” on a legal basis, which sometimes misses the point of the actual technical issue. In such cases, a party’s lawyer can, according to the…
Input from the party expert
subsequently on the
Changes to some wording in the order for the taking of evidence
have an effect.
Appointment of the court-appointed expert by the regional court or, in the second instance, by the higher regional court
The competent court is equally free to appoint a court-appointed expert. It is stipulated that publicly appointed and sworn experts should always be given preference by a regional court or higher regional court.
Sometimes the parties are asked for suggestions. However, as a rule, the parties are asked to approve a selected expert.
The party’s expert can also intervene here.
Anyone who has worked as a court-appointed expert for many years is familiar with other machinery experts who are also commissioned by courts. Thus, an experienced court-appointed expert, acting as a party-appointed expert, can certainly recommend suitable colleagues to their client, who in turn is proposed to the court by the party’s legal counsel.
If the court proposes a potential expert who is unsuitable for addressing the subject matter, an experienced, publicly appointed and sworn expert in machinery can, of course, point this out to their client based on their experience. The client’s own lawyer can then intervene with the court and, from the client’s perspective, “reject” the proposed expert.
However, there is no guarantee that
The competent court also follows the party’s proposal or the rejection by a party.
Phase 6: Review of the received expert report
Once the expert report for the court is available, the machinery expert will review the report’s content on behalf of the party.
Potential inconsistencies or even substantive errors are identified and forwarded to the party’s legal counsel. The legal counsel will then formulate any objections to the expert opinion before the court.
Phase 7: Court Trial
Very often, after the receipt of the expert opinion and the exchange of one or more written submissions by the parties’ lawyers regarding the expert opinion, a hearing also takes place.
In almost all cases, the party for whom the expert opinion tended to be unfavorable wants to question the court-appointed expert personally in court and ask him additional questions.
In such cases, party experts are present in court alongside the party’s lawyer.
Experienced, publicly appointed and sworn experts, who are very familiar with the situation of being questioned as court-appointed experts in mechanical engineering, then question the colleague themselves on all technical matters with the court’s consent. This makes it possible to pinpoint the core technical issue and to probing the proverbial “teacher’s teeth” of the court-appointed expert in mechanical engineering, should they – unexpectedly – deviate from the client’s own arguments on a particular point.
This increases the chances of scoring points for one’s client in court proceedings.
The psychological factor: Why professionals are indispensable
Both the buyer and the manufacturer of the machine are in a particularly stressful emotional situation.
While the buyer maintains that the delivered machine is defective, the manufacturer usually holds a completely different opinion. When the buyer then threatens to rescind the purchase agreement, the entire issue escalates.
By involving professionals, such as experienced machinery experts and experienced lawyers or specialist attorneys, both buyers/plaintiffs and manufacturers/defendants, depending on which party one is representing, are emotionally relieved.
Experienced experts and lawyers bring the dispute back to the factual level, thus leading to a more objective discussion of the entire matter.
When professionals are involved, the approach is objective, strategic, efficient and goal-oriented.
This generally leads to the avoidance of emotional short circuits.
Conclusion
The reversal of a purchase agreement for a machine or even a complex industrial plant is the worst-case scenario in mechanical engineering: High investment sums are often met with technical non-performance. However, for the entrepreneur, this should not be an emotional battle to be right, but rather a coldly calculated project.
Reality shows that once positions become entrenched, emotions overshadow the technical facts. Communication on a factual level becomes impossible. Those who rely on “blind activism” at this stage usually lose.
Their success depends on three strategic pillars:
1. The expert team decides the game:
Don’t rely solely on your technical expertise or isolated legal counsel. Efficiency only arises from the combination of an experienced forensic machinery expert working in collaboration with an experienced specialist lawyer. Only this tandem can translate technical “errors” into legally sound legal “defects.”
2. Authority to interpret rather than defense:
The goal of a strategic expert opinion commissioned by a party is not merely to list errors, but to actively guide the subsequent court-appointed expert. By reconstructing the “target state” early on and objectively demonstrating deviations, you regain control over the interpretation of the technical facts.
3. Objectification protects resources:
Bringing in external professionals takes the emotional burden off the shoulders of those responsible within the company and brings the dispute back to the factual level. This prevents costly, impulsive emotional reactions and secures your negotiating position.
The key takeaway for your planning is:
A successful reversal of a transaction doesn’t begin in court, but long before – with meticulous evidence gathering and a clear technical and legal strategy. Involve forensic expertise early on to save your investment.
Would you like a plan of action to be created for your problem based on the aforementioned phases (reconstruction of the target state, on-site visit, expert opinion from the parties)?
