Corona as a disturbance of the business basis?

The BGH’s clarifications on corona as a disruption of the basis of the transaction in detail

Starting point: pacta sunt servanda

As already mentioned at the beginning, the Federal Court of Justice has clarified in two recent decisions, which point the way for the right to contract adjustment in accordance with Section 313 BGB (disturbance of the basis of the contract), in a welcome and clear manner that contracts must also be adhered to in the event of a subsequent serious change to the contractual basis.

Assessment of the agreed and/or contractual risk distribution – who bears the risk of use?

This applies in particular and of course if the risk realized as a result of the changed circumstances is legally and/or contractually assigned to a contracting party.

Using the example of commercial tenancy law, the BGH in its Judgment of January 12, 2022, Ref. XII ZR 8/21 , explains how strictly the obligation to comply with a concluded commercial lease agreement is to be understood.

The following applies:

The subject of this new ruling by the BGH on January 12, 2022 was the complete closure of a store that had become necessary due to official measures imposed by the coronavirus authorities.

For the tenant, this meant a complete loss of use of the commercial space he had rented for the period of closure.

On this issue, the BGH found that

• the complete loss of the possibility of use does not constitute a defect in the leased property or a case of impossibility of surrendering the leased property, and
• In the case of contractual relationships under tenancy law, the so-called usage risk lies with the tenant by law.

According to the BGH, the object of the usage risk is in particular the tenant’s expectation of being able to generate profits.

Even more significant is the further finding of the BGH that the assumption of the prescribed risk of use also includes circumstances occurring subsequently, e.g. in the form of official measures. The BGH stated:

“In the case of commercial leases, however, the risk of use of the leased property is generally borne by the tenant. This includes, above all, the risk of being able to make a profit from the rented property. If the tenant’s expectation of profit is not fulfilled due to a circumstance that subsequently arises, a typical risk of the commercial tenant is realized. This also applies in cases in which subsequent legislative or official measures result in an impairment of the tenant’s business operations (Senate ruling of July 13, 2011 – XII ZR 189/09 – NJW 2011, 3151 para. 8 f. mwN).”

Right to contract adjustment as a major exception

As a consequence of the fact that the risk of use also includes circumstances that occur subsequently and may have a serious impact, the BGH further clarified that a claim by the affected party for an adjustment of the contract cannot be considered under the aspect of interference with the basis of the transaction pursuant to Section 313 BGB if and to the extent that the circumstances in question, on which such a right of adjustment is based, are covered by the contractual risk assumed by this party.

The BGH has once again explained this with welcome clarity:

“In principle, however, there is no scope for taking into account the provisions on the frustration of contract (Section 313 BGB) insofar as it concerns expectations and circumstances which , according to the contractual agreements, should fall within the scope of risk of one of the parties. Such a contractual distribution of risk or assumption of risk regularly excludes the possibility for the contracting party to invoke a disturbance of the basis of the transaction if the risk materializes (Senate ruling BGHZ 223, 290 = NJW 2020, 331 marginal no. 37 with further references).”

Interim conclusion on the significance of corona as a disruption of the basis of the transaction

“Pacta sunt servanda” means that assumed contractual obligations generally continue to apply unchanged even in the event of a subsequent serious change in the circumstances underlying the contract.

In particular, if a certain contractual risk, e.g. the risk of use, has been assumed by one party in accordance with the agreements made, circumstances relating to this assumed risk cannot form the basis of a claim for contract adjustment.

NOTE:

Even if an interpretation of the circumstances of the individual case shows that the circumstances that occurred in the case in question “exceed” the risk assumed, this does not mean that the agreed distribution of risk becomes irrelevant.

Rather, in such cases, as the BGH has also made clear, the party bearing the risk according to the agreements made does not bear the realized risk alone. Based on the circumstances of the individual case, it must be determined how the parties are to participate in the consequences of the realized risk. The BGH stated:

“Contrary to the plaintiff’s view, the defendant in the present case did not contractually have the sole risk of use in the event of a pandemic-related closure of its retail store.”

What is important about the above statement is that the BGH only assumes that in this case the risk of use does not lie solely with the tenant, even in the case of complete closure.

Content and loss of the right to amend the contract

In the event that the affected party is exceptionally granted a right to adjust the contract in accordance with the prescribed criteria, the BGH has again attached great importance to the principle of pacta sunt servanda on the legal consequences side, i.e. with regard to the content of any contract adjustment.

In a further ruling dated March 2, 2022, ref. no. XII. ZR 36/21, the BGH initially pointed out that it is not sufficient for a right to adjust the contract that the changed circumstances in question exceed the contractually assumed risk. In its ruling of January 12, 2022 (case no. XII ZR 8/21), the BGH stated that

“Even if the business closure associated with the pandemic

If the impairment of use of the rented property cannot be attributed solely to the tenant’s risk of use, this does not mean, however, that the tenant can always demand an adjustment of the rent for the period of closure.”

Rather, it must be added that, again taking into account all the circumstances of the individual case, adhering to the contract unchanged appears to be completely unreasonable.

The agreed distribution of risk is particularly important for the question of reasonableness. The BGH explicitly highlighted this in this further coronavirus rulingfrom March 2, 2022 (case no. XII ZR 36/21):

“Whether it is unreasonable for the tenant to adhere to the unchanged contract also requires comprehensive consideration in this case, in which all circumstances of the individual case must be taken into account (Section 313 (1) BGB). An adjustment can only be demanded to the extent that one party cannot reasonably be expected to adhere to the unchanged contract, taking into account all circumstances of the individual case, in particular the contractual or statutory distribution of risk. According to Section 313 (1) BGB, the court must therefore choose those legal consequences that are reasonable for the parties , taking into account the distribution of risk (MünchKommBGB/Finkenauer 8th ed. § 313 para. 89) and by which a distribution of the realized risk in line with the interests of the parties is achieved with the least possible interference with the original provision. the least possible interference with the original regulation is established (BGH judgment of September 21, 1995 – VII ZR 80/94 – ZIP 1995, 1935, 1939 mwN).”

The aforementioned statements of the BGH contain another important and very welcome finding. This is that, in the event that a claim for contractual adjustment is upheld, an adjustment must be chosen that represents the least possible interference with what was originally agreed. The BGH has thus once again emphasized the great importance of the pacta-sunt-servanda principle.

According to the BGH, contract adjustments are “millimeters of work”.

Any adjustment to the content of what has been agreed requires special justification, which must be justified taking into account the criteria described above and weighing up all the circumstances of the individual case.

NOTE:

It follows logically from the above that the party entitled to claim under certain circumstances can also lose its right to adjust the contract again – and for good!

This applies if the party definitively rejects the right of adjustment offered to it. The latter was the case in the ruling by the BGH on March 2, 2022 .

In this case, the wedding celebration in dispute had to be canceled for the planned date due to coronavirus. The landlord of the wedding venue had offered alternative dates, but the bride and groom were no longer interested in these and only wanted a refund of the rent already paid.

The BGH has ruled that the claim for repayment of the rent does not exist. The couple should at least have agreed to postpone the party. As they had refused to do so, the obligation to pay the rent remained.

The BGH stated (from para. 41 of the judgment):

(…) However, it is an error of law that the Court of Appeal did not sufficiently consider whether the plaintiffs’ claim under Section 313 (1) BGB for an adjustment of the contract is limited to the postponement of the wedding celebration offered by the defendant, because this alone can establish a distribution of the pandemic risk in line with the interests of the parties with the least possible interference with the original arrangement. (…) However, it did not adequately take into account the fact that the defendant had already offered the plaintiffs a large number of alternative dates on March 26, 2020, including for 2021, which would have enabled the plaintiffs to make long-term plans, also taking into account the further development of the pandemic. The defendant repeated this offer to rebook the date free of charge on April 25, 2020. However, the plaintiffs were not prepared to enter into further negotiations with the defendant regarding an appropriate contract adjustment and rejected the offer to reschedule the date across the board. This shows that the plaintiffs were not interested in a solution that was in line with their interests, but only wanted to achieve a termination of the rental agreement and thus unilaterally shift the risk of canceling the celebration to the defendant.

(…)

The adjustment of the contract sought by the plaintiffs to the effect that they are released from their obligation to pay rent in whole or in part is therefore out of the question because they can reasonably be expected to accept the defendant’s offer to postpone the date of the planned wedding celebration, taking into account all the circumstances, including the contractual distribution of risk (Section 313 (1) BGB). (…)”

NOTE:

The aforementioned ruling from March 2, 2022 is also significant from another perspective. In this ruling, which was issued following the first Corona ruling of January 12, 2022 (BGH ruling of February 12, 2022, file no. XII ZR 8/21), which, as is well known, concerned commercial tenancy law, the BGH has now also ruled for the consumer sector that the principle of “pacta sunt servanda” must be applied very strictly and that an adjustment to the contract can therefore only be justified in absolutely exceptional cases.