Judgment of the Koblenz Regional Court, case no. 14 O 278/24
Contracts remain valid even in times of crisis. The Koblenz Regional Court made this clear with its ruling on December 11, 2024 (case no. 14 O 278/24). The court’s decision is precedent-setting for similar cases in contract law and shows how courts deal with whether extraordinary circumstances can affect the binding nature of contracts. Times of crisis or economic turmoil such as the COVID-19 pandemic or the Ukraine war do not change the fact that contracts are binding, according to the court.
Contracts must be honored. This legal principle also applies in times of crisis, as emphasized by the Koblenz Regional Court. A key question is whether extraordinary circumstances such as a pandemic can influence the binding nature of contracts. This is especially relevant if the crisis was already foreseeable at the time the contract was concluded, according to the law firm MTR Legal Rechtsanwälte, which advises, among other areas, in commercial and contract law.
in contract law
Contract law forms the foundation of modern legal transactions and regulates how contracts between private individuals, companies, or other parties are concluded, executed, and enforced in case of disputes. Whether purchase contracts, rental agreements, or service contracts – almost every legal relationship in everyday life is based on a contract. Freedom of contract allows the contracting parties to make individual arrangements and design the contract contents according to their needs, as long as they comply with legal provisions and good morals.
For a contract to come into effect, an offer and acceptance are required. The parties must agree on the essential terms of the contract, such as price, performance, and contract duration. Companies and private individuals benefit from the flexibility that contract law provides but must also ensure their agreements are clearly formulated and legally permissible. Compliance with the prescribed form – such as notarization for certain contracts – is equally important as the legal capacity of the parties involved.
The Civil Code (Bürgerliches Gesetzbuch, BGB) contains the central regulations of German contract law. It sets out under which conditions contracts are effective, the rights and obligations of the contracting parties, and how claims can be asserted in case of contractual breaches. If problems or disputes arise, for example due to non-fulfillment of a contract, the affected parties can enforce their claims in court, such as before the Koblenz Regional Court. Support from an experienced attorney or specialized law firm is often decisive to protect one’s rights and achieve the best possible outcome.
Especially in the business sector, professional advice in contract drafting and review is indispensable to avoid later problems. Lawyers specializing in contract law provide comprehensive support – from analyzing contract content and clarifying open questions to representing clients in court. This enables companies and private individuals to ensure their contracts are legally secure and their claims can be enforced in case of a dispute.
Contract law is a complex field that requires careful balancing of all parties’ interests. Those who inform themselves early and seek legal advice when necessary lay the foundation for successful and legally secure contractual relationships.
Purchase contract concluded for property
In the underlying case, the plaintiff and the defendant concluded a notarized purchase contract in April 2020 for a property at a purchase price of 226,440 euros. Purchase contracts are among the most important types of contracts in German civil law, as they regulate the purchase and transfer of ownership between the parties. The defendant buyer contractually agreed to construct a ready-to-use commercial building on the property within three years after the purchase price became due. In the event that this construction obligation was not fulfilled on time or only partially fulfilled, the seller and later plaintiff was contractually granted a right of withdrawal from the purchase contract.
Essential contract terms of such a purchase contract include in particular the construction obligation, the right of withdrawal, as well as the precise regulation of the purchase price and transfer of ownership. The buyer paid the agreed price in September 2020 and the property was transferred into his name. Subsequently, although he negotiated with prospective tenants for the planned hall on the site, no business transaction was concluded and the property remained undeveloped.
Deadline missed
After the contractually agreed deadline for the construction of the building passed without implementation, the seller declared withdrawal from the contract in February 2024. However, the buyer refused to hand over the property. He argued that the extraordinary circumstances of the years 2020 to 2023, especially the COVID-19 pandemic and the economic consequences of the Ukraine war, had significantly hindered the planned execution of the construction project. From his point of view, these events disturbed the basis of the contract, so he demanded an extension of the construction deadline or at least an adjustment of the contract.
However, the Koblenz Regional Court rejected this argument and ruled in favor of the seller. The seller was entitled to withdraw from the purchase contract because no building for commercial use was constructed on the property within the agreed three-year period. For entrepreneurs, entering such a contract always involves a certain business risk, especially with regard to compliance with contractual obligations and deadlines. Furthermore, it must be noted that significant financial commitments are associated with the invested money, which can lead to economic disadvantages if the contract is not fulfilled.
No Disruption of the Basis of the Contract
The court clarified that contracts are fundamentally binding. This applies even during times of pandemic and geopolitical crisis. The central legal principle is: “Pacta sunt servanda” – contracts must be honored. The defendant’s construction obligation was clearly and unequivocally regulated, including a fixed deadline and the plaintiff’s right to withdraw in case of non-fulfillment. The corona pandemic and the Ukraine war do not constitute a disruption of the contractual basis, so the buyer cannot demand a contract adjustment.
While a disruption of the contractual basis can lead to the contract being adjusted or even terminated, this is only possible under strict conditions, the court continued. According to statutory provisions, especially § 313 BGB, a contract adjustment is only permitted if the legal requirements are met. The disruption must be unforeseeable and severe. The law stipulates that an adjustment to the contract can only occur if upholding the unchanged contract would be unreasonable for one party. When the purchase contract was concluded in April 2020, the corona pandemic was already evidently noticeable. The World Health Organization (WHO) had recognized the pandemic as a global issue, so economic uncertainties were foreseeable. Discussions about the economic consequences of the crisis were ubiquitous and the contractual parties must have been aware that a quick end to the measures could not be expected. Nevertheless, they entered into the purchase contract with a rigid three-year deadline. Thus, the buyer assumed a business risk knowing about the economic uncertainties, the Koblenz Regional Court explained.
The Ukraine war has worsened the economic situation through low demand and rising interest rates. However, the court ruled that such factors are part of the general business risk.
Reversal of the Purchase Contract
Following the final decision of the Koblenz Regional Court, the purchase contract is reversed. The buyer must return the property to the seller and, in return, will receive the purchase price back.
The judgment emphasizes the importance of clear contract drafting. Careful and forward-looking actions are necessary because strict standards apply to subsequent contract adjustments. In case of contractual issues, it is advisable to seek legal assistance. Examples and case studies from practice are particularly helpful for a better understanding of contract law.
MTR Legal Rechtsanwälte advises on contract law and other topics of commercial law. Further information can be found in our guide to contract law.
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