Whether the construction of a residential building, commercial building or a similar property – not everything always goes according to plan in construction projects. In Germany, facilities are often not completed within the previously agreed timeframe. Such construction delays are usually associated with considerable disadvantages for building owners. However, it is possible to assert a claim for compensation.
At Schlun & Elseven Rechtsanwälte, our German construction lawyers support you and explain the legal options available in the event of construction delays. Please, do not hesitate to contact us directly for expert legal assistance with these matters.
Delay caused by the builder, construction company or third party?
In the case of a delay in construction, those affected often ask themselves when a delay exists, how they should react to such a delay and what legal options are open to them. If you are affected by a delay in construction and want to assert your rights, you should first carefully consider the time aspects and other relevant circumstances.
The contractual agreement of a completion date
If a date for completion of construction work has been contractually agreed, this date is initially decisive regarding whether a delay exists. In addition to specifying an exact completion date in the contract, there is also the option of selecting a period. The latter option is the more common. In this case, the agreement specifies, for example, when the agreed period begins within how many months/weeks the building project is to be completed. In this way, a date can be set by which the construction work should be completed.
It should be borne in mind that by specifying this period, it cannot and must not be assumed with certainty that the construction project will be completed by the determinable date. In the event of delays of various kinds (e.g., restrictive weather conditions), the construction and thus the completion date may be postponed.
It is also essential to establish whether a period or completion date has been contractually agreed upon. If no such agreement exists, the following applies: The contractor is obliged to start the work as soon as possible and complete it within a reasonable time. This does not precisely determine the period in which the construction work should be completed. The parties concerned often disagree about this. If a legal dispute arises, the commissioned company has the burden of proof and presentation. It must explain why it is still within the reasonable period with the construction work and the expiry of this period is not yet given.
Who is to be held responsible for the delay?
If there is a delay in constructing a building, the question arises as to which party should be held responsible. On the one hand, third parties can cause a delay. On the other hand, additional wishes of the builder himself can cause such a delay. After all, the contracted building company is dependent on the suppliers for the building material that is now needed. The delivery of the additional material could take more time than previously planned. However, it should be noted here that the changed planning of the construction project is not accompanied by a postponement of the previously contractually agreed completion date. A contract amendment is required to postpone this date and thus avoid the accusation of a delay in construction.
If a third party caused the delay in construction – i.e., by a person commissioned by the contractor – the question arises whether the contractor or the third party is now responsible. The Civil Code stipulates that a debtor is not in default as long as the performance is omitted due to a circumstance for which the contractor is not responsible in such construction law cases (cf. Section 286 (4) BGB). It must be borne in mind that the building contractor is, in principle, liable to the same extent as for his fault for all persons he employs to fulfil his obligations (cf. Section 278 sentence 1 BGB). However, this provision does not apply to delays in delivery caused by contracted building material suppliers. Whether the delay is caused by a wring delivery or a defect in building material is irrelevant. However, if the company commissioned by the building owner has specified the wrong quantity or has not ordered the material required from the suppliers, the fault lies with the building company, so the latter is again responsible.
The lawyers at Schlun & Elseven will be happy to explain to you when the construction company is liable and under what circumstances a builder must assert his claims against a third party.
Is a reminder necessary?
Building owners often wonder whether a reminder is required in the event of a delay in construction and when this should be issued. According to § 286 para. 1 sentence 1 BGB:
If the obligor fails to perform following a warning notice from the obligee that is made after the performance is due, he defaults due to the warning notice.
Accordingly, the issuance of a reminder must occur after the completion date’s expiry. Therefore, the construction work’s default occurrence requires a reminder according to the aforementioned standard.
Section 286 (2) BGB, on the other hand, explains under which circumstances a reminder is not required, and the default, therefore, also occurs without a reminder:
- Determination of the time of performance according to the calendar or calculation of it by a preceding event linked to the performance: It can be precisely determined by the contract agreed between the contractor and the owner at what time the construction project should be completed;
- Refusal of performance,
- for other special reasons justifying the occurrence of the delay.
Claims in case of delay in construction
If the deadline for completion of a building has been agreed and this deadline has not been met, clients have the option of claiming compensation from the commissioned company or withdrawing from the contract in the case of both building contracts (Section 650a BGB) and property development contracts (Section 650u BGB).
Delay damage – compensation in addition to performance due to delay
Despite a delay in construction, building owners usually want the construction project to be completed nevertheless. Since a delay in construction or performance constitutes a breach of duty within Section 280 of the German Civil Code (BGB), compensation for the resulting disadvantages can be claimed. This claim for compensation arises from Section 280 para. 1,2 and Section 286 BGB.
Accordingly, it is first necessary that there is a breach of duty within the meaning of Section 280 BGB, i.e., a delay in performance. Under Section 286 (1) sentence 1 BGB, the debtor (building contractor) is in default if he does not perform after a reminder from the creditor (building owner), which occurs after the due date. Accordingly, it is necessary that a due and, therefore, still possible performance (cf. Section 275 (1) BGB) has not been rendered even after the contractor’s reminder. It should be noted here that no reminder is required in some instances.
To be able to assert a claim for damages against the building contractor, the latter must also be responsible for the delay in the performance (cf. Section 286 para. 4 BGB), see above) as well as have caused it. The damage must also be compensable (cf. Sections 249 et seq. BGB).
If the builder’s claim is affirmed, compensation must be paid for all damages or financial disadvantages caused by the delay in construction. Such damages can be rental expenses, lawyer’s fees or similar. Exactly which disadvantages can be compensated depends on the specific case. The lawyers at Schlun & Elseven will be happy to examine your chances of success and the expected compensation.
Compensation for damages instead of performance
In the event of a delay in construction, the builder may also claim damages instead of performance (cf. Section 280 (1), (3), 281 BGB). However, this claim requires setting a reasonable grace period and an unsuccessful expiry. The set grace period must offer the construction company a reasonable period in which it can perform/complete the construction work and thus its agreed services. If the construction work is not completed within the grace period set and the other claim requirements are met, compensation may be claimed. However, by asserting this claim, the claim for completion of the building shall then expire.
Withdraw from the contract
Furthermore, the builder may withdraw from the building contract. In addition, the failure to complete the building project at the agreed time or at a reasonable time also requires the setting of a reasonable grace period and the unsuccessful expiry of this. The declaration of withdrawal is made with the setting of this deadline.
If the deadline has passed and the building project has still not been completed, the builder can withdraw from the contract under the conditions mentioned above. However, it should be noted that the builder is obliged to return all services received after asserting his right of withdrawal. However, the return of certain construction services may no longer be possible. This is particularly the case if the construction project is already quite advanced. The contractor then receives compensation from the client for the value of what has already been provided.
The applicability of the right of rescission in construction contracts is disputed. Our construction law practice group will be happy to advise you and explain the most appropriate way to enforce your rights and interests in your case.
Claims of the building contractor
According to Section 642 BGB and Section 6 para VOB/B (Construction Tendering and Contract Regulations – Part B), the building contractor can also claim damages. This is the case if there is an extension of the construction period for which the building owner is responsible. Section 642 (1) Of the Germany Civil Code (BGB) states:
If, in the production of the work, an act by the customer is necessary, then the contractor may demand reasonable compensation if the customer, by failing to perform the action, is in default of acceptance.
Accordingly, the contractor’s claim for compensation can be asserted if he offers his performance, but the client is in default of acceptance. The builder’s failure to do so may extend the construction period, associated with additional costs. Such additional costs may arise, for example, from the provision of personnel who could have been deployed at other construction sites or the accommodation of materials in additional storage rooms.
When calculating the additional costs, changes in performance (Section 2 (5) VOB/B) and changes in quantity (Section 2(3) VOB/B), as well as additional services (Section 2 (6) VOB/B), shall be taken into account. This requires disclosure of the calculations made before the extension of the construction period and a description of the additional work now incurred and thus the additional costs. Therefore, the lawyers at Schlun & Elseven recommend that you properly collect and keep all relevant information and the corresponding documents in such cases. Our practice group for construction law will assist you in asserting your claims and represent your interests both in and out of court.
Contractual penalty
The contractual penalty is an effective means of exerting pressure to meet the completion deadline. Such a penalty is intended to induce the contracted construction company to complete the project on time and as agreed upon. The building contractor must pay the contractual fine even if the building owner has not suffered any damage due to construction delays.
A contractual penalty provision must be set out in the relevant construction contract or an additional agreement. Statutory regulations on contractual penalties are contained in Sections 339 BGB and Section 11 VOB/B.
The contractual penalty requires a delay (cf. Section 286 BGB). The client is not entitled to payment of the contractual penalty if he is responsible for the delay. Likewise, he cannot demand compensation if the contractor commissioned indicates that the completion deadline has been exceeded because another company did not finish on time.
The lawyers at Schlun & Elseven will be happy to review or draft your construction contract. We also advise construction companies in cases of delayed construction and explain which legal aspects need to be considered and how further action should be taken.
Current problems: supply bottlenecks and material shortages
The consequences of the Covid pandemic and the ongoing war in Ukraine have a lasting impact on economic cycles worldwide. The construction industry, in particular, is severely affected. Delivery bottlenecks and material shortages lead to longer waiting times and considerable additional costs.
Our construction and contract law experts will explain what consequences these circumstances have for your company and what legal options are open to you in existing construction contracts. We will explain who has to pay for the price increase of the materials required for the construction project and who has to pay the additional costs.
Please look at our articles “Disruption of supply chains in Germany” and “Ukraine: Supply Bottlenecks and Price Increases for Raw Materials – Contract Adjustment as an Exit” for more information.
Practice Group: German Construction Law
Practice Group:
German Construction Law
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