Sec. 642 BGB only includes cost overruns that were incurred during a delay in acceptance

In a judgment dated 26 October 2017 – VII ZR 16/17, the Federal Court of Justice rendered a decision on a long-standing difference in opinions regarding the scope of application of Sec. 642 of the German Civil Code (Bürgerliches Gesetzbuch; BGB) to the detriment of the contractors. According to the judgment, Sec. 642 BGB only includes cost overruns that were incurred during a delay in acceptance. Thus, a contractor cannot request compensation based on Sec. 642 BGB for cost overruns incurred after the delay in acceptance has ended. This decision is of considerable significance for the construction industry. If, for example, a delay in acceptance by the client that already ended in the summer causes work originally scheduled for fall to have to be carried out in winter at a higher cost, the additional expenditure is incurred as a consequence of the delay in acceptance but only after that delay has already ended. Under the earlier interpretation, such cases were covered by of Sec. 642 BGB. According to the decision now rendered by the Federal Court of Justice, Sec. 642 BGB no longer provides any basis for a claim by the contractor for additional compensation. Specifically, cost overruns caused by construction period pushbacks that often occur only after the impediment, and therefore also the delay in acceptance, has ended can no longer be compensated on the basis of Sec. 642 BGB. In most cases, the contractor will therefore have to resort to claims for damages pursuant to Sec. 6 no. 6 sentence 1 VOB/B or Sec. 280 para. 1, Sec. 286 BGB, claims for additional compensation in case of an order issued by the client, or a claim to a contract amendment based on frustration of contract. Whether the prerequisites for such claims are met will depend on the circumstances of each individual case.

Ernst Wilhelm

2018-08-17T16:36:51+00:00 July 20th, 2018|HFK News|