Under a contract for work and services or a construction contract, the client (purchaser) is entitled to various rights in the event of defective performance, i.e. performance that is not in accordance with the contract, by the contractor (entrepreneur) in accordance with the German Civil Code (BGB).
First and foremost,
- the right to have the defect remedied/subsequent performance by the entrepreneur, combined with the right to withhold an appropriate portion of the compensation until the defect has been remedied.
Further rights in the event of defects, such as
- the right to rectify the defect oneself, combined with the right to claim compensation for the expenses incurred,
- various claims for damages,
- the right to reduce the remuneration,
as well as
- the right to withdraw from the contract
require that the entrepreneur first be given the opportunity for subsequent performance and improvement. Only if the entrepreneur fails to take advantage of this opportunity, expressly declares that he does not want to rectify the defect, or allows a reasonable period of time set for him to rectify the defect to elapse, can the further rights in respect of defects be asserted.
It is important to note that the customer cannot assert the above-mentioned rights in respect of defects from the outset, but only after completion and acceptance of the work or construction service. This was expressly clarified by the 7th Civil Senate of the Federal Court of Justice in several rulings at the beginning of 2017 (BGH, judgment of January 19, 2017 - VII ZR 193/15 and VII ZR 301/13 and VII ZR 193/15).
Accordingly, the contract for work and services or the construction contract can be divided into two phases:
1) the so-called "performance phase", from the conclusion of the contract to the completion of the work or construction
and
2) the so-called "subsequent performance phase", after completion and acceptance of the work or construction service.
However, this does not mean that the customer has no rights at all during the so-called "performance phase". Before acceptance, he is entitled to the rights under the so-called "general performance law" of the BGB, some of which are identical in legal consequence to those of the warranty rights. The general law of obligations in the BGB also provides for claims for damages, a right to terminate and a right to withdraw from the contract, all of which, however, require that the entrepreneur first be given sufficient opportunity to fulfill the contract.
In addition, the above-mentioned rulings of the Federal Court of Justice (BGH) mention various exceptional constellations in which the customer can also assert rights arising from defects before or without acceptance.
Since the legal situation is very complex in this respect and many questions arising from the decisions of the Federal Court of Justice are still controversial today, it is always advisable to seek legal advice in the event of a dispute before cutting off the path to legitimate claims by prematurely terminating or withdrawing from the contract.
The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.