Germany Update: When do claims for damages due to delay become statute-barred?

In its judgment of 19.05.2022 (Az.: VII ZR 149/21), the BGH dealt with the question of when claims for damages of a client due to delay on the part of the contractor become statute-barred and whether the limitation period for all damages caused by delay – including the subsequent and foreseeable consequences of damage – begins uniformly at the same time.

Circumstance

The client (AG) commissioned a construction company with the construction of a single-family house. A construction period of three months was agreed. Construction began in June 2008. After there were discrepancies regarding the regularity of the company’s services and the AG did not want to pay advance invoices, the company ceased its work in 2008. This was followed by legal letters on the resumption of work, legal proceedings regarding the advance invoices and settlement discussions. After a withdrawal from the contract in 2017, the AG claimed, among other things, damages due to default for the reimbursement of storage costs for a kitchen, provision interest and rent payments. The company raised the objection of limitation period.

Decision

The court agreed with the company! The claims are time-barred. The claim for damages as a result of delay is subject to the regular limitation period of three years. The limitation period begins at the end of the year in which the claim arose and the Client became aware of the circumstances giving rise to the claim and the person of the debtor – in this case the company – or had to have become aware of it without gross negligence. The limitation period had already begun in 2008. This is for the following reasons:

A claim for damages also arises uniformly for the attributable and foreseeable damages that will only arise in the future, as soon as any partial damage has occurred and this can be asserted in court – even if only by declaratory action – (principle of damage unity). Here, a partial loss had already occurred in 2008. Thus, the three-year limitation period began to run at the end of 2008. The ongoing expenses for rent payments, the storage of the kitchen and provision interest are expected consequences of the delayed completion. In any event, the AG could have brought an action for a declaratory judgment on that basis.

Practical tip

Damage caused by delay to construction projects can often only be (completely) quantified months or years after an original delay. However, this does not change the fact that the statute of limitations for damages – possibly also those damages that have not yet occurred but were expected – begins uniformly as soon as a damage can be asserted in court (for example by means of a declaratory action). In the case of large-scale construction projects with construction times of a few years, this can mean that the client’s claims for delay may become statute-barred even before the completion of the construction project. The client must then take action at an early stage in order to secure his claims against a statute of limitations. In particular, the declaratory action, which inhibits the statute of limitations, comes into consideration. This can be levied without having to quantify the damage. It can therefore be invoked well before an action for payment is brought.

By MELCHERS, Germany, a Transatlantic Law International Affiliated Firm.  

For further information or for any assistance please contact germany@transatlanticlaw.com

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