The VII. Civil Senate of the Federal Court of Justice, which is responsible among other things for the law on contracts for work and services, has ruled that a clause in the general terms and conditions of the supplier of a kitchen to be installed by the supplier
"The purchase price shall be paid without deduction no later than upon delivery of the purchased items."
is invalid. A subsequent agreement, by which the supplier grants the customer the right to withhold a partial amount until the defect-free installation of the kitchen, fundamentally does not alter the invalidity of the clause.
The clause does not lose its character as a General Term and Condition subject to content control under §§ 305 et seq. of the German Civil Code (BGB) merely because it is subsequently amended by the parties. Rather, the subsequent amendment must occur in a manner that justifies treating it as an individual agreement made from the outset. This is not the case if the user, even after the conclusion of the contract, did not grant the contractual partner freedom of design and did not make the legally alien core content of the clause available for negotiation.
The plaintiff commissioned the defendant with the planning, manufacturing, and installation of a kitchen in her residence for a price of €23,800. The contract was based on the defendant's General Terms and Conditions, which obligated the plaintiff to pay the entire remuneration prior to or upon delivery. Subsequent to contract conclusion and prior to delivery, the parties agreed that, deviating from the terms, the plaintiff only had to pay €21,300 in advance and was permitted to retain €2,500 until the defect-free installation of the kitchen. The defendant did not perform the kitchen installation professionally, which is why the plaintiff withheld €5,500. The defendant, referencing its General Terms and Conditions, took the position that it was only obligated to rectify defects if the remuneration, except for the agreed €2,500, was paid in advance. Due to the refusal to rectify the defects, the plaintiff is claiming damages from the defendant, aimed at the reversal of the contract and reimbursement of additional costs. The defendant is counterclaiming the still outstanding remuneration.
The plaintiff's claim was largely successful in the lower courts; the lower courts dismissed the counterclaim. The Federal Court of Justice confirmed the decision of the appellate court.
The Federal Court of Justice stated that the obligation agreed upon in the defendant's General Terms and Conditions to pay the entire remuneration in advance is incompatible with essential fundamental principles of law and is therefore invalid. The clause obligates the defendant's customers to pay the full remuneration before the kitchen is installed. In this way, they lose all leverage if the installation is defective. The subsequent agreement does not alter this assessment, as the defendant did not make the core content of its invalid General Term and Condition – the obligation for advance performance – available for negotiation and did not grant the plaintiff any freedom of design in this regard. Granting a right of retention of merely approximately 10% of the remuneration does not sufficiently consider the legitimate interests of the plaintiff. The defendant was therefore not permitted to make defect rectification dependent on further advance payments. Consequently, the defendant is liable for damages.
Judgment of the BGH of March 7, 2013 - VII ZR 162/12
Previous instances:
OLG Karlsruhe, judgment of May 3, 2012 - 9 U 74/11
Constance Regional Court, judgment of March 25, 2011 - 5 O 332/10
Source: Press release of the Federal Court of Justice
Attorney Michael Ullrich, LL.M. (Information Law)
Specialist Attorney for Information Technology Law
Email: info@goldberg.de
