The COVID-19 pandemic has almost paralyzed the construction industry in several respects. This has resulted in additional costs and productivity losses, primarily due to entry restrictions, price increases and delivery difficulties. However, who bears the “COVID-19 risk” in the specific situation is then discussed on the basis of the Austrian Civil Code and ÖNORM B 2110.

ÖNORM B 2110, which contains general contractual provisions for construction services, is not a legally binding regulation, but a model contract that can be agreed by the parties. Delivery bottlenecks due to the COVID pandemic are consequences of force majeure and, according to clause 7.2.1 of ÖNORM B 2110, fall within the sphere of the client and are therefore the responsibility of the client.

In the event that delivery bottlenecks arise and the provision of services is permanently impossible as a result, some scholars believe that this constitutes subsequent impossibility in accordance with Section 1447 ABGB, whereby all obligations are canceled and both parties are released from their performance obligations. However, another part of the doctrine rejects a subsumption under the facts of impossibility and instead advocates the application of the loss of the basis of the transaction. This is argued on the basis that a more difficult performance has nothing to do with the impossibility of performance. However, the legal doctrinal classification is irrelevant because the fact of the cessation of the basis of the transaction also leads to the same result.

In the recent past, there have also been significant price increases in some areas due to COVID. A price increase relevant to a contractual relationship exists if it exceeds the usual fluctuations that were already to be expected when the contract was concluded.

Deviations in performance in connection with the COVID-19 pandemic, including price increases or delivery bottlenecks, are to be assigned to the sphere of the client within the scope of application of ÖNORM B 2110 – as already explained. In this case, the contractor is entitled to assert unforeseeable changes to the calculation basis due to the pandemic within the framework of an additional cost claim in accordance with point 7.4. of ÖNORM B 2110 and/or also an adjustment of the performance period.

Furthermore, each of the contracting parties is entitled to withdraw from the contract in accordance with clause 5.8.1 Z 6 ÖNORM B 2110 if an obstruction lasts longer than three months.

In an ABGB construction contract, force majeure generally falls within the neutral sphere to be borne by the contractor. If fixed prices have been agreed on the basis of the ABGB, the calculation risk is therefore generally borne by the contractor and the remuneration for the work cannot normally be unilaterally adjusted due to subsequent price changes.

However, if there are unavoidable, extraordinary price changes that could not have been foreseen when the contract was concluded and for which the contractor is not responsible, the contractor can unilaterally request either an adjustment to the contract (if only part of the performance obligation becomes impossible or unaffordable) or rescission of the contract. Case law also applies Section 1447 ABGB if the provision of the contractually owed service becomes unaffordable for the debtor due to a subsequent change in circumstances. Where exactly the limit to unaffordability lies must be assessed on a case-by-case basis, but it is assumed by some scholars in any case if the threshold for laesio enormis (reduction by more than half) pursuant to Section 934 ABGB is reached.

As the assessment of immorality is based on the time of the conclusion of the contract, the application of Section 879 (1) ABGB is ruled out in this context. Subsequent changes can therefore generally not lead to the nullity of agreements.

However, it should be noted that neither Section 1447 ABGB nor the provisions of ÖNORM B 2110 mentioned here apply to contracts that were already concluded during the COVID-19 pandemic, as in this case both price increases and supply bottlenecks do not meet the requirement of unforeseeability.

If you have any further questions, please do not hesitate to contact us at office@toplaw.at or by telephone on 01 505 77 00.