The Hamburg Higher Regional Court ruled on 15 April 2015 – docket no. 14 U 202/10 – that the general contractor (GC) is entitled to damages against the subcontractor (SC) if the developer/builder (contracting entity; CE) rejects the SC contracted by the GC due to not having passed the eligibility test, and the GC therefore has to engage a third-party contractor.

The GC hires the SC for the lateral sealing of a waterway. Under the contracting entity’s terms and conditions, the application of the process chosen by the SC required the passing of an eligibility test. As the SC was unable to demonstrate its performance capacity, the CE rejected the SC proposed by the GC. The GC therefore canceled the contract with the SC and engaged a more expensive third-party contractor.

The court granted the GC’s claim for damages against the SC in the amount of the additional costs incurred by engaging the third-party contractor. The contracting entity’s final refusal to accept the SC made it permanently impossible for the SC to provide the service. This performance impediment was attributable solely to the SC. As the SC had committed to provide the service to the GC without having passed the formal eligibility test at that time, the SC had fully accepted the risk of failing the eligibility test.

Christopher Riedel, Lawyer, and Rico Schulz, Lawyer, Berlin