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Construction contract cannot be terminated by e-mail

A construction contract must be terminated in writing. Sending a termination letter by e-mail is not sufficient (Munich Higher Regional Court, decision of February 3, 2022, Case No. 28 U 3344/21).

The case

The decision of the Munich Higher Regional Court (Oberlandesgericht, "OLG") is based on the following facts: In a construction contract, which was concluded after December 31, 2017, the German Construction Contract Procedures (VOB/B) were agreed. Already during the construction project, a dispute arose between the client and the construction company regarding defects, which ended in criminal proceedings for coercion at the expense of the construction company's managing director. This was followed by civil proceedings concerning compensation for work, whereby the parties disputed whether the client had effectively terminated the contract. He had merely sent an e-mail to which a PDF document with the signed termination declaration was attached. The OLG denied effective termination and upheld the judgment of the first instance, which had awarded the contractor the requested compensation for work. A non-admission appeal to the Federal Court of Justice (Bundesgerichtshof, "BGH") was withdrawn (Case No. VII ZR 43/22).

The consequences

In a construction contract in which the validity of the VOB/B was agreed, the termination must already be made in writing in accordance with Section 8 (6) VOB/B. The VOB/B is not, however, a binding contract. However, the VOB/B is not a law, but must be contractually agreed and is legally treated as a general business condition. The requirement of written form is therefore not derived from a law, but is merely contractually agreed - "voluntarily concluded". The written form agreed in this way is treated somewhat less strictly by the legislator than the statutory written form (Section 126 German Civil Code, Bundesgesetzbuch "BGB") in accordance with Section 127 (2) BGB. Pursuant to Section 127 (2) BGB, for example, transmission by telecommunication is sufficient unless it can be assumed that the parties intended otherwise. According to general opinion, it would be sufficient to comply with the written form requirement if a signed letter of termination were sent by fax or e-mail. Now, however, as a result of the so-called new law on contracts for work and services, a statutory written form has been mandatory for the construction contract since January 1, 2018 in accordance with Section 650h BGB, which is not complied with by transmission by fax or e-mail. Instead, it requires that the termination letter be sent in the original with signature or an electronically signed document.

What is to be done?

The ruling is not surprising given the clear legal situation. Nevertheless, Section 650h BGB, the protective purposes of which are legal certainty, preservation of evidence and protection against hasty action, is largely unknown or ignored. The written form requirement for termination also applies to architectural or engineering contracts via Section 650q BGB and to consumer construction contracts under Section 650j (3) BGB.

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