A&V in Strasse und Autobahn: Deadlines declared before acceptance cannot be interpreted as setting a deadline for subsequent fulfilment!

The service owed under the construction contract was performed without defects. A scenario that all parties to a construction contract – and not just in road construction – would like to see. Unfortunately, this wishful thinking does not always fully correspond to reality and some clients have already realised that this is not the case for them. However, clients are not defenceless in these cases. In fact, defect rights can provide a remedy. Whether defect rights under the BGB or the VOB/B apply, of course, depends on whether the VOB/B was effectively included in the contractual relationship. What both defect law regimes have in common, however, is that certain prerequisites must be met in each case in order for the corresponding defect rights to be successfully asserted. One of these prerequisites is that the client must have previously set the contractor a deadline for specific subsequent fulfilment, which then expired without success. So far so good and certainly not a new insight for most readers. However, pitfalls must also be avoided in this context, particularly with regard to the timing of the respective deadline. The Brandenburg Higher Regional Court (OLG Brandenburg) recently had to decide whether it is sufficient to set a deadline for the rectification of defects before acceptance; the content of this judgement from 22 March 2023 (= 4 U 190/21) is worthy of consideration and should be taken into account by those involved in road construction when dealing with defect rights.

1. Facts of the case

The general contractor (GC) of a construction contract asserts a claim against its subcontractor (SC) for defective construction work under a VOB/B contract for the repair of cracks and joints in an asphalt surface. In the opinion of the GC, the repair of the cracks and joints was defective. After the general contractor’s client (GCC) notified the GC of the defects before the work was completed and set a deadline for the general contractor to confirm that the defects had been rectified, the GC forwarded this notification of defects to its SC. The GC rejected the reported defects, but at the same time asked for an on-site appointment to determine the cause of the damage. However, this did not take place. In a subsequent letter, the GCC once again requested its GC to rectify the defects and set the deadline “in accordance with Section 5 (4) VOB/B as the final deadline for completion of the work”. The GC subsequently forwarded this letter to its SC in order to request that the latter rectify the defects. The GC again refused to recognise the defects and, however, stated that it wanted to check the complaints on site.

In a preliminary lawsuit in which the GC asserted a claim for wages against its GCC, the latter defended itself with the alleged defects and asserted a counterclaim for payment of an advance on costs to remedy the defects. Ultimately, these preliminary proceedings ended with a settlement in which the GC undertook to pay a considerable amount of money to its GCC.

The GC is now demanding payment of a partial amount from the SC. With success?

2. Decision

The Higher Regional Court dismissed the claim. In the opinion of the Higher Regional Court, the requirements for a claim for damages by the GC against the SC under Section 13 (7) VOB/B were not met. The claims for defects under § 13 VOB/B are generally only applicable after acceptance, which did not take place in the present case. Although exceptions to this principle are conceivable, the plaintiff had not submitted that the construction contract had been cancelled or terminated in any other way. In any case, this has the consequence that the scope of application of the claims from § 13 VOB/B has not yet been opened.

Irrespective of this, the assertion of a claim for damages based on Section 13 (7) VOB/B requires a prior setting of a deadline for subsequent fulfilment in accordance with Section 13 (5) VOB/B. In this case, there was a corresponding deadline, but it was set before acceptance and it was also an execution deadline in accordance with Section 5 (4) VOB/B, i.e. a deadline for fulfilment of the contract. At this point, the Higher Regional Court was faced with the question of whether such a deadline for execution could be interpreted as a deadline in accordance with Section 13 (5) VOB/B, i.e. for the rectification of defects. In this respect, the Higher Regional Court ruled that such an interpretation was out of the question because the contractor’s work had not yet been completed at the time of the letter and therefore both the readiness for acceptance and the acceptance itself could be excluded. Since rights under Section 13 VOB/B cannot be asserted prior to acceptance, the Higher Regional Court held that no effective deadline pursuant to Section 13 (5) VOB/B could have been set.

Although it is recognised by case law that warranty rights can also be asserted under certain circumstances without setting a deadline, this only applies under strict conditions. The prerequisite for this is that the respective contractor, in this case the subcontractor, finally and seriously refuses to fulfil its contractual obligations. However, this was not the case here. Although the SC rejected the defects complained about, it declared its willingness to participate in an on-site appointment to determine the cause of the damage.

The claim therefore had to be dismissed.

3. Notes for road construction practice

As described above, claims for defects under Section 13 VOB/B generally require that the client has previously set the contractor a deadline for subsequent fulfilment, which has expired without success. Exceptions to this principle are conceivable, but only to a limited extent, in particular if the contractor seriously and definitively refuses fulfilment. Whether this is actually the case is a question of the individual case and – as the decision of the Higher Regional Court of Brandenburg shows – not always easy to answer. Clients are therefore well advised not to tread too hastily on this “thin ice”, but rather to set appropriate deadlines in case of doubt – as is customary.

When setting the deadlines, it is important to note that this is actually a deadline for subsequent fulfilment. Since the wording of subsequent fulfilment already presupposes that the fulfilment stage has already been completed, the deadline must also be set after this stage has ended. When exactly does this stage end? This is usually the case with the acceptance of the construction work. According to the decision of the Higher Regional Court of Brandenburg, a deadline set before acceptance is not sufficient to fulfil the requirements for the application of claims for defects in accordance with Section 13 VOB/B. Rather, in such a constellation, it is necessary to set a separate deadline for the rectification of defects, namely after acceptance. According to the correct decision of the Higher Regional Court, a deadline for fulfilment within the meaning of § 5 para. 4 VOB/B cannot be interpreted as a deadline for subsequent performance within the meaning of § 13 para. 5 VOB/B. If a separate deadline for remedying defects is therefore not set, this may mean that corresponding claims for defects cannot be successfully asserted. A scenario that should be avoided at all costs!

You can find the entire article in German here: Deadlines declared before acceptance cannot be interpreted as setting a deadline for subsequent fulfilment!