German construction law has been recast effective 2018. For the first time since its inception in the year 1900, the German Civil Code now contains specific rules on construction contracts. Before, construction contracts merely fell under the (broader) category of “contracts to produce a work” (Werkverträge).
Under the German Civil Code, a construction contractor promises to achieve a particular result (Erfolg). If not agreed otherwise, this result means that the contractor is under an (implied) fitness for purpose obligation for the completed works.
In almost every German construction project of some size, the parties incorporate the standard form referred to as “VOB/B” into the contract. VOB stands for Procurement and Contract Procedure for Building Works (Vergabe- und Vertragsordnung für Bauleistungen). The VOB consists of the following three parts:
- Part A (VOB/A): General Provisions of Procurement for Building Works,
- Part B (VOB/B): General Contract Conditions for Building Works, and
- Part C (VOB/C): General Technical Conditions for Building Works.
Part B (i.e. the VOB/B) is the only commonly used standard construction contract used in Germany (besides standard forms from large employers or contractors). The VOB/B contract was first drafted in 1927 and is regularly updated. It is a balanced contract published by the Committee for Procurement and Contract Procedures for Building Works (Deutscher Vergabe- und Vertragsausschuss für Bauleistungen, DVA), an expert panel dominated by public authority organisations, e.g. ministries from the 16 federal German states, representing the interests of public employers, with further members from the construction industry representing the interests of contractors. The DVA has also published an English version of the VOB/B contract.
The VOB/B contract has been drafted to apply in conjunction with the German Civil Code. Many rules of the code are either complemented or amended by the VOB/B contract.
In practice, the parties heavily amend the VOB/B standard contract. If they are standardised, such amendments are often invalid due to their non-compliance with German law: Freedom of contract is severely restricted in standardised B2B contracts due to the provisions in sections 305 et seq. of the German Civil Code. Indeed, the level of regulation applicable to standardised B2B contracts is higher in Germany than anywhere in the world. By way of illustration, in B2B contracts under German law, any clause drafted and/or suggested by one of the parties and foreseen for inclusion in more than two individual contracts is invalid if it:
- exhibits any unresolvable ambiguities or a relevant “lack of transparency” – the courts are sometimes rather quick to assume each of those – ;
- is not in line with even the non-mandatory provisions of the German Civil Code or the German Commercial Code (which both regulate both, purchase and construction contracts in fairly specific detail in hundreds of provisions).
BODENHEIMER routinely represent investors, employers, contractors and other stakeholders in German construction law cases, both in non-contentious matters and in disputes.
BODENHEIMER Representative Matters as Parties’ Counsel
Undertook a risk analysis for an international project developer regarding the risks involved for project developers under German law
Represented an Australian hotel operator before the German state courts in proceedings for taking evidence regarding defects in all bathrooms of a hotel
Represented a German provider of technical due diligence services before the German state courts, and gained a European Payment Order for the client in a lawsuit against a Luxembourg real estate business
Represented an international project developer in a dispute with a German architect about fees after the termination of the contract
Advised an international project developer on the construction of 200+ flats in Berlin
Represented a German real estate developer in a dispute brought before the German state courts against a German-French interior designer revolving around claims for delay in delivery of the project
Advised an EU administrative body in a dispute against a German contractor, arising out of a contract for the construction of an embassy in France, and revolving around claims for additional payment
Advised a German contractor in claims against the Berlin Airport Authority for additional payment following major variations and following numerous shortcomings in the execution design provided by the airport authority
Represented a German architect in a dispute against a German employer, revolving around claims for outstanding payments and claims for remedying defects
Drafted a master framework agreement governed by German construction law, for a Spanish construction company, to be used in subcontracting arrangements
Advised a major Spanish provider of engineering and construction services on their market entry in Germany
Advised a contractor from the UAE in a dispute with a German subcontractor and a German bank following our client’s call of the subcontractor’s performance bond
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