Upcoming legislative changes in construction law
A new law is expected to be passed in spring or early summer 2017 and to enter into force in late 2017. For the first time specific provisions for construction agreements and agreements with architects and engineers shall be set forth in the German Civil Code. Changes are to be expected i.a. as regards the payment of instalments to contractors, acceptance of works and price adjustments mechanisms in case the employer changes the scope of works. Further, there will be new provisions for construction agreements with consumers.
Construction law and the legal framework governing the professional activities of architects and engineers in Germany is very complex and mainly formed by case-law. Upcoming changes in legislation shall try to simplify those fields of law. This needs to be observed not only by construction companies or developers, but also by real estate investors or tenants that require planning and construction works on their properties.
The background of the complexity of construction law is that the German Civil Code (Bürgerliches Gesetzbuch, BGB) does not provide for a specific set of rules for construction agreements or agreements with architects and engineers. The BGB's provisions on contracts for work and labour (Werkvertragsrecht) are the legal framework also for construction or planning agreements. The provisions of contracts for work and labour were, however, intended for short term, one-off agreements between consumers and craftsmen as for example agreements with tailors. As these provisions are not sufficient to provide for solutions for the problems arising in complex agreements that may last a couple of months or years, they have to be interpreted by courts. In order to try to find a solution for known deficiencies in legislation, the German Construction Contract Procedures (Vergabe- und Vertragsordnung für Bauleistungen, VOB) were created as general terms and conditions for construction agreements. They apply, however, only if the parties of a contract agree to apply them. Further, the VOB need to be interpreted in the light of the provisions of the BGB. This makes construction agreements even more complex.
The government has long since planned to implement provisions that shall deal with the specifics of construction agreements and agreements with architects and engineers into the German Civil Code. A first proposal was made in 2015 and has thereafter been discussed and amended in the German Bundestag and the Federal Assembly (Bundesrat). A new law is expected to be passed in spring or early summer 2017 and to enter into force in late 2017. For the first time specific provisions for construction agreements and agreements with architects and engineers shall be set forth in the German Civil Code. Changes are to be expected i.a. as regards the payment of instalments to contractors, acceptance of works and price adjustments mechanisms in case the employer changes the scope of works. Further, there will be new provisions for construction agreements with consumers. Construction companies dealing with consumers shall i.a. be obliged to present a detailed description of the scope of works before entering into the agreement, to inform the consumer about the date of completion and to hand over certain documentation, in particular as regards plans that may be required by the authorities. It is to be expected that the addressed problems will only partly be solved, may cause additional costs and that new questions will arise.
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