Downtime caused by the principal: what § 642 BGB covers — and what it does not
Where the principal omits an act necessary for the production of the works and thereby comes into default of acceptance (Annahmeverzug), the contractor is entitled to reasonable compensation under § 642 BGB. No fault on the principal’s side is required — it is enough that the obstacle comes from his sphere. The compensation covers the contractor’s readiness during the standstill: workers, plant and capital held available on a site that cannot move forward.
The Federal Court of Justice drew the limit of this claim in its judgment of 26 October 2017 (VII ZR 16/17): costs that the standstill caused but that arise only after it has ended are not covered by § 642 BGB. That means above all higher wage and material costs when the postponed works are finally executed — in a market where prices rise every season, often the largest loss item. Lost profit is not compensated either. How to claim additional costs that were actually ordered as extra work is a different story — see our article on extra work (Nachtrag) on German construction projects.
A contractor unwilling to bear the uncompensated losses therefore has a second instrument: he can end the contract and free his capacity for other projects. That is exactly what § 643 BGB is for.
When does the principal “fail to cooperate”? The catalogue is broad
It is not only about duties expressly written into the contract. A so-called Obliegenheit is enough — an act the contractor cannot sue for, but whose omission is charged to the principal. What exactly falls to the principal follows from the interpretation of the contract and the circumstances of the project.
Typical examples from practice: handing over complete drawings approved for execution, providing the building permit, giving access to the site and a free work area, resolving design clashes, making material choices where the decision rests with the principal. Add to that the works of preceding trades: according to the Federal Court of Justice (judgment of 21 October 1999, VII ZR 185/98), the timely and defect-free completion of preceding works is the principal’s affair. If another trade does not clear your work area, the standstill is charged to the principal — even without any fault of his own.
There are limits, though. Events outside the principal’s sphere justify neither compensation nor termination: the Federal Court of Justice ruled (judgment of 20 April 2017, VII ZR 194/13) that extraordinary weather — frost, ice and snow on a scale that did not have to be reckoned with — is no failure to cooperate. Classic force majeure, such as third parties blocking the site access, is judged the same way.
First requirement: default of acceptance — offer your works visibly
The omission alone is not enough — the principal must also come into default of acceptance (§§ 293 et seq. BGB). That requires the contractor to offer his performance at the right time and in the right manner.
If the start of the works is fixed by the calendar, the default can arise without further steps. Individual work stages, however, should be announced in advance: through an updated construction schedule, weekly look-aheads or entries in site meeting minutes. A premature offer triggers no default, and without a documented announcement the principal will easily plead ignorance. The manner of performance matters too: whoever offers something different from what was agreed — another method, other products — does not put the principal into default.
In practice this means one thing: report readiness in writing and archive the evidence. How to document the course of a project with a dispute in mind is shown in our article on the burden of proof on German construction sites.
The § 643 BGB procedure step by step
Step 1: the notice comes only once default exists. A deadline for catching up on the omitted act can be set only when the principal is already in default of acceptance. A notice sent too early is ineffective and starts no period running — one of the most common reasons why § 643 BGB disputes are lost.
Step 2: name the act precisely. The letter must describe exactly what is demanded — not the goal (“remove the obstacles”) but the concrete act of the principal (“hand over the execution drawings for floors 1–3, approved for construction”). The principal must know immediately what to do and by when.
Step 3: an unambiguous termination warning. The deadline must be combined with the declaration that the contract is terminated if the act is not performed before the deadline expires. Soft wording — “we will consider termination”, “we reserve the right to terminate”, “we will decide after the deadline” — is not sufficient. The letter has a warning function: the fate of the contract must depend on nothing but the lapse of the deadline.
Step 4: written form. The termination of a construction contract requires written form (§ 650h BGB). Since under § 643 BGB the effect is produced by the deadline letter and its fruitless expiry alone, it is this letter that should satisfy the written-form requirements: a handwritten signature of a person authorised to represent the company and a provable delivery. A plain e-mail or a message in the site communication app is not enough.
Step 5: expiry of the deadline ends the contract automatically. If the principal does not catch up in time, the contract is deemed cancelled by § 643 sentence 2 BGB itself — no second letter is needed. It is sufficient that the act was made up only in part or that one of several demanded acts is still missing.
The procedure is flexible: before the deadline expires the contractor may extend it and may even withdraw the notice altogether — for instance when the principal has entered into constructive talks. After a withdrawal nothing prevents setting a new deadline later. And where the principal seriously and finally refuses to cooperate, or the act has become impossible, setting a deadline may be dispensable entirely.
How long is an “appropriate” deadline? Shorter than you think
The reference point is catching up on the omitted act, not the whole process of preparing it. What counts is the last step: handing over the complete drawings, not designing them. Handing over the permit already obtained, not running the permit procedure. Giving access to the prepared site, not servicing it. The principal should have taken those steps long ago — only what should already have happened can be “caught up on”.
A principal in default has no right to “extra time”. An appropriate deadline can therefore be short — a few working days are often enough. And if the contractor sets a deadline that is too short, the notice does not fail: an appropriate deadline takes its place. Safe practice is a realistic deadline with a calendar date and a documented calculation behind it.
A § 643 BGB letter that holds up
Default of acceptance documented: written notice of readiness, schedule, look-aheads, meeting minutes. A precise description of the act the principal has to catch up on. A realistic though short deadline with a calendar date. An unambiguous declaration that the contract is terminated if the deadline passes fruitlessly. A handwritten signature of an authorised person and delivery with proof. The financial consequences calculated before the letter goes out, not after.
Consequences: what the contractor receives — and what he does not
With the fruitless expiry of the deadline the contract ends for the future. The contractor no longer has to complete the works and receives, for what was built until that moment, a part of the remuneration corresponding to the work performed (§ 645(1) BGB, which its second sentence extends to the cancellation under § 643 BGB). On top of that comes reimbursement of expenses not included in that remuneration: material procured for the project, site setup and overhead costs the executed works have not yet “earned back”, and liabilities entered into towards subcontractors for this very project.
Independently of that, the claims from the standstill period remain: compensation under § 642 BGB and reimbursement of increased expenses under § 304 BGB, for example storage costs. The sum of these items, however, usually amounts to cost coverage, not profit — the profit from works the contractor will no longer execute is not covered by § 645 BGB. Damages reaching the full contract interest come into play only where the principal is guilty of a culpable breach of duty — and in the system of §§ 642, 643 BGB, which require no fault, that is the exception, not the rule.
The decision to terminate is therefore a business decision: cut the growing losses and free workers and equipment for contracts that earn money. Both scenarios should be calculated before the letter goes out. How to build the final account of a terminated contract is described in our article on the settlement after a construction contract is terminated.
VOB/B contracts: § 9 VOB/B instead of § 643 BGB
Where the VOB/B conditions are incorporated into the contract, the contractor’s right of termination is governed by § 9 VOB/B, which displaces the statutory route. There are two grounds: the principal omits an act incumbent on him and thereby puts the contractor in a position where he cannot execute the works (paragraph 1 no. 1), or the principal fails to make a payment that is due and comes into payment default (paragraph 1 no. 2).
The mechanics differ from § 643 BGB: the contractor must first announce the termination and set an appropriate deadline, and after its fruitless expiry declare the termination separately in writing (paragraph 2). Two letters instead of one — the contract does not fall automatically here. The settlement: executed works at contract prices plus reasonable compensation under § 642 BGB (paragraph 3). In addition, § 6(7) VOB/B gives each party the right to terminate in writing where an interruption of the works lasts longer than three months.
The risk: a defective termination can backfire
Whoever “terminates” without meeting the requirements — before default of acceptance exists, without a termination warning in the notice, in the wrong form — does not end the contract. Worse: abandoning the site without justification can be a serious breach of contract that opens the principal’s path to a termination for good cause and to claims for the costs of completion by a third company. We describe that scenario in our article on the termination of a construction contract for good cause (§ 648a BGB).
A § 643 BGB letter should therefore be reviewed by a lawyer before it is sent — together with the calculation of whether exiting the contract pays off at all and whether the documentation of the default will survive a dispute.
Frequently asked questions
The principal does not pay my interim invoices. Can I terminate under § 643 BGB?
§ 643 BGB concerns the failure to cooperate in the production of the works, not payment arrears. For non-payment there are other routes: under a VOB/B contract the termination under § 9(1) no. 2, under a BGB contract above all the demand for payment security under § 650f BGB, whose refusal also allows the contract to be ended. The choice of the legal basis is worth discussing, because the settlement consequences differ.
How long a deadline do I have to give the principal?
Appropriate for catching up on the act itself, measured from its last step — handing over the drawings, the permit or the work area. A principal in default has no right to extra time, so a few working days are often enough. A deadline that is too short does no harm: an appropriate one takes its place.
Can I send the notice with the termination warning by e-mail?
Not for a construction contract. Termination requires the written form of § 650h BGB, and under § 643 BGB the deadline letter takes over the role of the termination. The safe way: a printed letter with the handwritten signature of an authorised person, delivered in a provable manner.
The principal caught up on the act only in part. What now?
If the act was not fully made up within the deadline, the contract is in principle deemed cancelled — it suffices that one of several demanded acts is still missing. The exception are marginal gaps, where invoking the cancellation could amount to an abuse of law. Assess the weight of the gaps before you demobilise.
Will I receive the profit on the works I will no longer execute after a § 643 BGB termination?
No. The settlement covers the remuneration for executed works and the reimbursement of expenses already incurred, including subcontractor liabilities. Profit on the unexecuted part comes into play only where the principal culpably breached his duties. It is different where the principal terminates freely without cause — see our article on termination and settlement.
This overview takes into account §§ 293 et seq., 304, 642, 643, 645 and 650h BGB, § 6(7) and § 9 VOB/B as well as the judgments of the Federal Court of Justice of 26 October 2017 (VII ZR 16/17), of 20 April 2017 (VII ZR 194/13) and of 21 October 1999 (VII ZR 185/98). This article is for information purposes and does not replace legal advice in an individual case.