§ 38. How a price reduction is calculated
The price reduction (prisavslag) must reflect the ratio between what the goods are worth with the defect (mangel) and what they would have been worth without it. The formula: new price / agreed price = defective value / value under the contract. In practice, the repair cost is often used as an approximation, but the rule itself is proportional.
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The text of the law (unofficial translation)
If the goods have a defect, the buyer (kjøper) may demand a price reduction so that the ratio between the reduced price and the agreed price corresponds to the ratio between the value of the goods in defective condition and in the condition required by the contract at the delivery time (leveringstid).
What does this mean?
A price reduction is about restoring the balance in the deal. You paid for goods that should have had value X. You received goods that have value Y. You should pay in the same proportion.
The formula:
Reduced price / Agreed price = Defective value / Value under the contract
Example: You paid NOK 100,000. Without the defect, the goods are worth NOK 100,000. With the defect, they are worth NOK 80,000. Then:
Reduced price / 100,000 = 80,000 / 100,000
Reduced price = NOK 80,000
You are entitled to a price reduction of NOK 20,000.
Why not just the repair cost? Because a repair does not always fully restore the goods. Repaired goods may be worth less than flawless goods. A price reduction under § 38 captures the full loss of value.
In practice, the repair cost is often used as an approximation when it is reasonable. But if the goods are old or unusual, a valuation may differ from the repair cost.
The point in time: The value must be assessed at the delivery time — not today. This means the comparison is between the condition required by the contract and the defective condition, both at the time of delivery.
Comparison: Price reduction vs. compensation
| Type | What does it cover? |
|---|---|
| Price reduction (§ 38) | The difference in value of the goods themselves |
| Compensation (erstatning) (§ 40) | Specific losses caused by the defect — expenses, lost profit |
You can claim both at the same time. The price reduction concerns the goods themselves; compensation concerns the damage the defect caused you.
Examples
Sara buys a used car for NOK 80,000. It turns out there is rust that neither she nor the seller (selger) knew about. The car is still usable, but an appraisal shows that a similar rust-free car would have been worth NOK 80,000, while this one with rust is worth NOK 65,000. The price reduction: Reduced price / 80,000 = 65,000 / 80,000, so Reduced price = NOK 65,000. Sara is entitled to a price reduction of NOK 15,000.
Tom buys a sewing machine for NOK 4,500. It turns out that one of the sewing functions does not work. A similar model without that function costs NOK 3,800. Tom is entitled to a price reduction of NOK 700 (the difference between the agreed value and the actual value). A repair would have cost NOK 1,200 — but it is the reduction in value under § 38, not the repair bill, that is the main rule. In practice, sellers often accept the repair cost if it is approximately correct.
Common mistakes
- Thinking price reduction = repair cost. That is an approximation, not the rule
- Forgetting that the value must be assessed at the time of delivery
- Including consequential losses (business interruption, inconvenience) in the price reduction — these belong to compensation
- As a seller: offering a small price reduction based on "what is reasonable" without calculating proportionally
What should you do?
As a buyer:
- Get an independent assessment of the value both with and without the defect
- Calculate the price reduction using the formula
- Consider whether the repair cost is a good approximation
- Also claim compensation if you have had specific losses
As a seller:
- Offer a price reduction that actually reflects the change in value
- A quick repair of the defect (retting) can often cost you less than a large price reduction
Frequently asked questions
If the goods are useless — is the price reduction = the full price?
Can I claim a price reduction and repair of the defect?
- § 30Claims in the event of a defect
- § 34Repair of the defect and replacement
- § 37When you can claim a price reduction
- § 39Cancellation of the purchase in the event of a defect