09.04.2020
Many contracts contain agreements according to which a contractual partner must pay a certain amount if a contractually agreed service is not provided in accordance with the contract. Such amounts are referred to as "penalties" or "contractual penalties". The agreed amount is generally to be paid regardless of any damage that has occurred and is intended to create additional "performance pressure" - the debtor is to be encouraged to properly fulfill the contract by threatening a contractual penalty.
A distinction is made between fault-based and fault-dependent contractual penalties: in the case of a fault-based contractual penalty, this only comes into effect if the debtor has culpably committed the defined breach of contract, whereas in the case of a fault-independent contractual penalty, fault plays no role.
In case of doubt, a contractual penalty is to be regarded as dependent on fault and the circumstances resulting from the Corona crisis will in many cases already eliminate the fault for the breach of contract that is threatened with a contractual penalty. In the construction industry, on the other hand, where the instrument of the penalty is a very common part of contracts, a penalty that is not dependent on fault is usually agreed, which can therefore also apply if the contractor is not responsible for the delay.
In addition, at the beginning of April 2020, the 4th COVID-19 Act (BGBl I 24/2020) introduced a clarifying “Exclusion of contractual penalties', which provides for both strict and fault-dependent contractual penalties that a debtor is not obliged to pay such contractual penalties if he "falls into arrears because, as a result of the COVID-19 pandemic, his economic performance is either significantly impaired or he is unable to provide the service due to restrictions on working life“.
At first glance, this provision represents a significant relief and clarification for many entrepreneurs who were threatened with penalties, but of course it raises some questions of interpretation: when is the debtor's economic performance significantly impaired? When is it actually not possible to provide a service and when is it only possible under (uneconomically) difficult circumstances? The explanations to the proposed law cite as an example the "actual disruption of construction work [on a construction site] because of the requirement of “social distancing” or the impossibility of deliveries due to the pandemic-related disruption to interstate freight transport.[1] It should be noted that the delay must actually have been caused by the pandemic, which is why the entrepreneur who is threatened with a contractual penalty should document his basic willingness to perform in detail in order to be able to prove this in court in the event of a dispute.
This provision came into force retroactively on March 16, 2020 and applies to contractual relationships entered into before April 1, 2020. It offers scope to avoid paying contractual penalties that could potentially threaten a company's existence under certain circumstances - but as is often the case, the courts will have to clarify the details.
We are happy to support you in resolving legal issues related to the Corona crisis and to help you enforce claims. We do not pursue the interests of our clients in the context of mass proceedings or so-called class actions, but exclusively in the context of individual advice. The reason for this is that, in our experience, every case is different - in crucial details at most. Each claim requires a separate examination, an examination that we cannot carry out when enforcing many similar (but not identical!) claims.
[1] IA 403/A XXVII. GP, 41.