The Cabinet recently approved the draft of a 2013 revision of the Schedule of Services and Fees for Architects and Engineers. The central element of the seventh amendment of the schedule is the revision of the areas of performance and an increase in the table values of the schedule.
Two recent rulings highlight the importance of careful documentation of the ideas behind costs and cost limits. Architects and clients are advised to urgently carry out and document a prior calculation of costs. If there are any later planning changes which change the costs, it is important that these changes be documented in order to refute any allegation of a breach of obligations.
The Federal Court of Justice recently ruled that a contractual penalty provision in a client's general terms of business which fixed a contractual penalty payable for culpably exceeding an interim deadline at no more than 5% of the total order sum was null and void. The ruling means that in any contractual penalty provision for interim deadlines, the upper limit must be based on the amount that has been earned up to that point only.
The new Act to Combat Delayed Payments in Business Transactions, which is now in the consultation stage, will force clients to check and pay invoices from contractors more quickly in future. If they fail to do so, the financial costs arising from the delay will increase. It will also be easier for a contractor to enforce costs arising from the recovery process.
The Brandenburg Higher Regional Court recently ruled that a contractual penalty provision stipulating that the contractor must pay 0.2% of the net invoice amount for each working day of any delay, up to a maximum of 10% of the net invoice amount, in the general terms of business of a client places the contractor at an unreasonable disadvantage and is therefore null and void.
It has long been disputed whether fire safety planning is an additional service by the architect which must be remunerated separately, or whether it is part of the basic service to be rendered by the overall building planner. A recent Federal Court of Justice decision has not completely settled this dispute, but leans strongly towards fire safety planning falling under the remit of the building planner.
In a recent ruling, the Federal Court of Justice again stated its fundamental position on the correct invoicing of several technical service installation groups according to the Ordinance on the Schedule of Services and Fees for Architects and Engineers. The court also clarified that there is no minimum rate protection under the schedule if the maximum amounts in the table of fees are exceeded.
If Part B of the Standard Building Contract Terms provided by the client is not agreed as a whole in the construction contract, Section 16(3)(i) of Part B will not stand up to an isolated judicial examination of the terms. This means that the remuneration becomes due with acceptance and receipt of the final invoice. The client then falls into default at the latest 30 days after the final invoice.
The seventh revision of the schedule on architects' and engineers' services and fees is planned for 2013. According to the Federal Council, the goals of the reform are to modernise and harmonise the performance areas defined in the schedule, remedy the defects that were noted in the 2009 revision of the schedule, and adjust the fee structure and the sufficiency of the fees again, with a view to increasing the fees.
A clause is often included in building and architect's contracts stating that set-off by the client against the fee entitlement of the planner or contractor is permissible only for claims which are undisputed or have been finally awarded. Such provisions have often been applied to disputes over the payment of remuneration. However, the Federal Court of Justice recently departed from the higher courts' previous practice.
The Fee Structure Commission of the Engineers' and Architects' Associations and Chambers has resolved to reform the regulations on architects' and engineers' fees (which were revised as recently as 2009) by 2013. It aims to publish the seventh revision of the regulations that same year, in conjunction with the Federal Ministry of Transport, Construction and Urban Development.
In a recent case the Federal Court of Justice gave a detailed definition of the requirements regarding the right of partial termination by providing an interpretation of the term 'self-contained'. Thus, the court established the principle whereby a right of partial termination does not apply to individual parts of a performance which have been undertaken by the same trade.
The Federal Court of Justice has recently ruled on several cases regarding the problem of what standard of sound insulation is required in the construction of semi-detached houses and owner-occupied apartments. The issue arose following significant regulatory changes. This update discusses the most important case law principles which have emerged from the court's rulings.
A recent case has demonstrated that, in future, public sector clients for construction projects will have to pay any extra costs resulting from an unexpected delay in the award of the contract. The case law regarding the problems relating to delayed contract award proceedings remains in a developmental phase.
The Federal Court of Justice has clarified that a contractor can demand the return of the guarantee certificate both to itself and to the guarantor. This ruling seems sensible since under its own contractual relationship with the guarantor, the contractor is obliged to act for the benefit of the guarantor in ensuring that the guarantee certificate is not left in the hands of the client for longer than is necessary.
The Federal Court of Justice has ruled on the determination of the burden of proof in a case related to substitute performance. The contractor would normally be liable to determine the specific cause of the defect, since no acceptance had yet been made in this respect. However, the court held that the contractor is relieved of this obligation in cases where the client has made it impossible for the contractor to do so.
The Federal Court of Justice has ruled on a case in which a contractor had agreed a unit price for an item in the specifications which was 200 times higher than the national average price. The case demonstrates that the court will not accept arguments suggesting that a price agreement as a whole is ethical because overpriced items in the specifications are compensated for by other items specified at below-average prices.
The Federal Court of Justice has clarified the circumstances in which a client is liable for turnover tax on accounts receivable by a contractor arising from construction delays. The findings are significant for developers and building owners that are unable to reclaim turnover tax (currently 19%) from the Tax Office (ie, public sector clients and non-profit corporations).
Where points are unclear in a functional call for tender, there is longstanding case law from the Federal Court of Justice which can require a contractor to seek clarification before the conclusion of the contract. The court recently confirmed that where a contractor has not sought such clarification, this alone is insufficient reason to burden the contractor with uncertainties regarding its obligations.
In a recent ruling the Federal Court of Justice cancelled the privileged status of the standard building contract terms in dealings with consumers. This status previously meant that none of the provisions contained in standard building contracts with consumers were subject to the judicial examinations which would otherwise need to be carried out.