The new Law on Construction Contracts 2018

In its session on 9 March 2017, the Bundestag approved the draft drawn up by the government of the “Law reforming the law on construction contracts and amending the liability for defects”. This reform law constitutes one of the greatest interventions of the legislator into construction contracts law of the last years. The aim of the reform is on the one hand to strengthen consumer protection in construction contracts law, on the other hand to provide clear statutory provisions on the complex special matter of construction law.

Summary of the Changes

The draft provides for a radical new regulation of the existing law on contracts for works and services. With the changes that were decided, special regulations on the construction contract, consumer construction contract, architects and engineering contract and developer contract will be introduced into the law on contracts for works and services in the German Civil Code.

The main new regulations include:

• Changes and amendments of the provisions on acceptance;
• A first-time standardization of the termination for good cause;
• Regulations on the subsequent change of the contract volume;
• A right to order for the customer if there is no agreement on changes within 30 days;
• The introduction of a binding agreement on the construction time (only for the consumer construction contract);
• The introduction of a construction description obligation of the contractor (only for the consumer construction contract);
• The introduction of a two-week right of cancellation for the contractor (only for the consumer construction contract);
• The introduction of special construction industry chambers and construction industry senates at the regional courts and higher regional courts in order to expedite construction litigation;
• As well as a relief from liability for architects and engineers in the architects and engineering contract.

With the legislative change, a statutory definition of the construction contract will also be standardized for the first time. The issues that previously had to be clarified in the context of general terms and conditions (AGB) and case law are supposed to be settled by the new construction contracts law in the future. 

Further Development / Need for Action

At the end of March, the Bundesrat also approved the draft. Due to the binding introduction of construction industry chambers and construction industry senates at the regional courts and higher regional courts, the approval of the Federal States was mandatory. The law will enter into force on 1 January 2018. The new regulations will therefore apply to all contracts concluded as of 2018. For “old contracts”, the previous legal situation will continue to apply.

GvW will report on the further development of the new regulations and the individual issues and offer further information events on the application and implications of the new regulations.

In particular for construction industry companies, there will be a substantial need for action from the time when the new regulations become effective. The contracts that were used so far need to be reviewed for compatibility with the new regulations and adjusted.

Christian Esch, Attorney at Law
Moritz Koch, Attorney at Law
both in Hamburg