Consumer Sales and Guarantees Directive, Article 5 Consumer Sales and Guarantees Directive, Article 5, 2.

Legal obligations of the seller regarding material defect of the goods are also applicable in situations when a contract of exchange it concluded under Croatian law. In this case, two things are important. Firstly, the courts agreed that the forged paintings are goods with material defect. Secondly, under Croatian law, the buyer (in this case one contract party of the exchange contract) is obliged to notify the other party of the existence of material defect within a two-month time period.

The defendant gave the plaintiff two paintings that the plaintiff was to sell on behalf of the defendant and under the defendant's name. In March 2009, a female person handed over to the plaintiff the sum of EUR 500 as a down payment for the abovementioned paintings, but she did not appear again after that.

The plaintiff was hereby convinced that he would also receive the remaining amount of EUR 11,500 in the name of the purchase price. Since this did not happened, the defendant offered the plaintiff to exchange the paintings in such a way that the plaintiff retains the two abovementioned pictures, and that in exchange, the plaintiff gives him other pictures. The given images are forged.

The first-instance judgement rejected the plaintiff 's main and secondary claim by which he asked the defendant to return nine paintings by different authors (main claim), i.e., to pay him the amount equivalent to EUR 12,000.00 in case of impossibility to return the requested paintings. The constitutional complaint was filed in connection with the judgement of the Šibenik County Court rejecting the applicant's appeal (the plaintiff in the civil proceedings) and upholding the judgement of The First Instance Court.

The plaintiff, as the owner of the gallery, has been selling paintings for over 40 years, while the defendant is an amateur collector of paintings. Both concluded a contract in March 2009, and they  exchanged artistic paintings. The question of the case answered by The First and Second Instance Courts is whether such contract is a contract in which a person is liable for material defect. This is important for the application of the right provisions of the Obligations Act to their legal relationship because in the case of a contract of exchange there is a liability for material defects of performance. In Croatian law, the provisions on the seller's liability for material defects also apply to other legal transactions under consideration, unless this is explicitly regulated differently in some cases.

The Constitutional Court rejected the constitutional complaint, but in this case the legal positions of The First and Second Instance Courts, with which the Constitutional Court agreed, are of importance.

The Šibenik County Court found the following:

…since no commission was indisputably agreed on between the parties and since the plaintiff indisputably handed over his paintings to the defendant, and the defendant handed over his paintings to the plaintiff, The First Instance Court correctly concluded that considering the objections,  the parties concluded a contract of exchange and not a contract of commission, ...

Since a contract of exchange was concluded between the parties, and given the allegations and objections of the plaintiff, which are repeated in the complaint that the two paintings by Frane Šimunović are forgeries, this legal relationship between the parties should be considered through the provisions of the contract of sale of goods in accordance with the provisions of Art. 475 in connection with Art. 404. Obligations Act (OA), as further concluded byTthe First Instance Court.

According to the provisions of art. 404, paragraphs 1 and 2 of the OA, when after receiving the item  it turns out that the item has a defect that could not be detected by the usual inspection when receiving the item, the buyer is obliged, under threat of loss, to inform the seller within the two month period  from the day the defect was discovered, provided that the seller is not liable for defects that appear after two years have elapsed since the delivery of the goods.

The specified deadlines are preclusive, which means that the buyer, if he misses them, loses the rights from art. 410. OA.

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This decision is important because it is established that the paintings that are forged represent things with material defects. It is also confirmed that the acquirer cannot exercise the rights upon the expiration of the preclusive deadlines.