Both parties are terminating the construction contract incorrectly: What are the legal implications?

What is the legal situation if the mutual terminations of a construction contract are invalid? In a recent case, the Berlin Court of Appeal considered this to be a mutual cancellation of the contract.

This article is part of the special topic Current building law

Disputes between customers and tradespeople are common on construction sites. When they escalate, quit often beide The Berlin Higher Regional Court had to decide what actually applies when both parties terminate the construction contract. ineffective are and what consequences this has for the wages the contractor has.

The case

The construction company was supposed to carry out the drywall work during the renovation of a university. Because the client was a Supplementary offer did not accept stopped The tradesman stopped his work. When the client asked him to resume work, the tradesman did not respond. Thereupon kündigt to The client terminated the construction contract extraordinarily and simultaneously imposed a No entry to the construction site.  

The tradesman proved the termination Section 174 sentence 1 of the German Civil Code (BGB) back, because the client no power of attorney presented the document to the person who had signed the termination notice. Nevertheless, the building owner maintained the access ban.

The craftsman responded with his own written extraordinary request. Termination of the construction contract Section 9 paragraph 1 no. 1 VOB/BHe demanded the wages for work he could no longer carry out due to the access ban. He argued that his termination was valid because the client had seriously considered accepting the work and definitively refused I have. Therefore, he is entitled to the agreed-upon payment for the work performed, even for the Services no longer provided . 

The judgment

The Higher Regional Court (KG) saw things differently: The tradesman's extraordinary termination was not legally valid, but the client's termination was also legally incorrect due to the lack of a power of attorney. Thus, both terminations ineffective.

Nevertheless, the construction contract effective here completed The Higher Regional Court clarified that this had been done. It had assumed that the parties had implicitly and tacitly agreed to the contract through their conduct. aufgehoben The court ruled that this could not be concluded solely from the mutually invalid terminations.

Leave this here further behavior The contracting parties must clearly recognize that both not further on the construction contract festhalten They had planned to meet shortly after each other terminated their contracts to jointly assess the progress of the completed work. Following this, the client commissioned another company to complete the remaining drywall work. The contractor, however, had objected. no objectionsBecause both sides agreed not to further fulfill the contract, the Higher Regional Court saw this as a tacit revocation of the contract. This also applies even though they had not agreed on the craftsman's remuneration.

The building owner had grounds for termination.

Since there was no agreement regarding the legal consequences of the cancellation, the Higher Regional Court ruled that the claims depended on the rights the parties possessed at the time of the cancellation. The decisive factor was therefore whether the building owner Contract without reason or had terminated for an important reason, or whether the tradesman himself had a legitimate reason for termination: If no of both sides at the time of contract termination Law on an extraordinary Termination If the craftsman has the full Remuneration less saved expenses Section 648 sentence 2 BGB and Section 8 paragraph 1 no. 2 VOB/B desire. 

Here the Client however, an important Reason for termination, The Higher Regional Court ruled that his termination was invalid only due to formal errors; however, he was entitled to terminate the construction contract without notice on substantive grounds. "The cessation of work and the withdrawal of all workers from the construction site by the contractor represents the extreme case of inadequate site facilities. If the client demands remedial action, failure to comply constitutes a culpable breach of contract." Breach of contract, the client – ​​under the further conditions of the Section 5 paragraph 4 VOB/B – entitled to an extraordinary termination of the construction contract,” the judgment stated verbatim.

The tradesman has to pay upfront.

However, in the opinion of the Higher Regional Court, the On Site Team his works not simply adjusted"Because of his Obligation to make advance payments The contractor is generally obligated to continue fulfilling their contractual obligations even if disagreements arise regarding the amount of remuneration, as long as the client is not objectively in default on due progress payments. The principle applies:Contract execution prior to price certainty", the verdict clarified.

Therefore, the court awarded the craftsman a sentence no compensation for the services not performed.

Berlin Regional Court, judgment of 15 May 2025, Ref. 27 U 117 / 23

Conclusion

"The decision shows that in the case of ineffective mutual terminations of a construction contract, a tacit mutual agreement to terminate the contract can be assumed if the parties clearly no longer wish to adhere to the contract," explains the lawyer. Alfred Hennemann, Specialist lawyer for construction and architectural law. "In the absence of an agreement regarding the consequences of contract termination, these are governed by the substantive legal situation at the time of termination. This has been decided in favor of the client in this case. However, depending on the circumstances, this can be different." to The outcome is in favor of the contractor., who may then be entitled to full remuneration less saved expenses even for services no longer rendered."

This also makes it clear that terminating construction contracts in conflict situations always involves uncertainties and risks for both sides. In the event of disagreements, the parties involved should first... amicable solution search. This also corresponds to the contractual obligation to cooperate in construction projects, as the Federal Court of Justice has consistently emphasized in its case law for years.

DHB now also digital!Simply click here and register for the digital Handwerksblatt (DHB)!