General overhaul of Construction Contract Law as of January 1, 2018: Amendments to the right of direction and liability for defects

The new regulations will fundamentally change the existing practice. Contractors should know the innovations and be prepared to implement them.

Of peculiar interest for users are the new directive rights of clients under contract of services law and the liability for defects under purchase law. Until now, directive rights of clients were only governed by the Construction Tendering and Contract Regulations VOB/B. In the future, however, clients will also be able to instruct building contractors to subsequently extend or change the scope of services owed on the basis of the German Civil Code.

Amendments to directive rights

This provision creates a unilateral but not unlimited right of direction. The prerequisite of this unilateral instruction is that the parties do not reach an agreement on the customer´s change requests within 30 days. If the builder hereinafter directs the extension or modification of the owed scope of services, building contractor´s only option to avoid contractual modifications, is the vocation on the unreasonableness of that change request. Since the statutory provisions are inconclusive, it will not always be clear, when the prerequisites of “unreasonableness“ will be present.

Adjustment of remuneration after unilateral change in services

The unilateral change of the owed service also affects the building contractor's remuneration. Particularly in the event of comprehensive construction projects or subsequent changes, the contracting parties often argue over the adjustment of the remuneration. In order to prevent these disputes, the building contractor will have a right of choice on how to determine the new remuneration in the future:

• Will the amount of the remuneration title be based on the necessary cost in addition to reasonable surcharges for general business expenses, risk and profit, or
• will the building contractor fall back on the original calculation?

The contractor may only exercise this right of choise for each supplement unitarily.

Liability for defects under purchase law: As of 2018, manufacturers will be liable

If the building contractor uses defective building elements for his trade, he will not only be liable for the delivery of defect-free goods within the scope of warranty rights. The building contractor will also be liable for installation and removal costs. Building contractors frequently had to bear these expenses, because vendors, the actual responsible parties for the defective goods, have not been liable for reimbursement of these cost incurred by the building contractor. Until now.

From the new year onwards, vendors are also liable to the building contractors for the costs of installation and removal of defective goods. This new provision is expressly included in the law and now applies to businesspersons and to private individuals. In return for this, the vendors have the opportunity of holding their suppliers responsible.

Your contacts are the experts from the Real Estate & Construction Practice Group. Dr. Stefan Osing and his team specialize in real estate law, construction law, and rental and tenancy law.