No contract adjustment in long-term commercial lease agreements due to pandemic and acts of war
The Koblenz Regional Court ruled on March 14, 2024 (Case No. 14 O 278/24) that neither the COVID-19 pandemic nor the war in Ukraine automatically entitles a party to adjust long-term commercial lease agreements pursuant to § 313 BGB. This decision clarifies the conditions under which a contract adjustment due to unforeseeable disruptions of the equivalence relationship may be considered.
Facts of the underlying legal dispute
The decision centered on a lease agreement for commercial premises of high economic significance. The tenant derived a request for contract adjustment, based on significant difficulties in fulfilling the contract due to the COVID-19 pandemic as well as the expected economic impacts of the Ukraine war. She sought a modification of the agreed contractual terms – namely suspension or reduction of the agreed rent payments.
Arguments of the defendant party
The landlord saw no basis for a change to the lease agreement under § 313 BGB. She argued that neither the pandemic nor the war in Ukraine constituted unforeseeable circumstances that would make it unreasonable for one of the parties to uphold the contract. It was particularly noted that business risk generally remains with the tenant.
Judicial assessment of the adjustment request
Requirement of a serious disruption of the basis of the contract
The Regional Court rejected the adjustment request, stating that a contract adjustment is only considered in the case of a significant, unreasonable disruption of the contract. Neither the pandemic-related restrictions nor the effects of the war met this requirement in the present case for the tenant in question. The judges emphasized that fundamental changes in political or economic situations are also included in the business risk for long-term contracts.
No removal of the basis of the contract under § 313 BGB
The court determined that the so-called “removal of the basis of the contract” under § 313 BGB sets high standards for reasonableness. A disruption of the basis of the contract only justifies an adjustment if maintaining the unchanged contract appears intolerable for one party, considering all circumstances, and if the risk of the development had not already been assumed by the parties. In the case decided, the chamber considered that these conditions were not met.
Impact of the judgment on long-term contracts
The decision of the Koblenz Regional Court has implications beyond the individual case. It underscores that both pandemics and armed conflicts can be classified as general risks of economic life and do not automatically entitle a party to adjust long-term contractual commitments. This highlights once again the requirements for lease parties to demonstrate the removal or significant disruption of the basis of the contract. A contractual adjustment remains an exception for serious and unforeseeable changes in circumstances.
Legal assessment and outlook
The question of the circumstances under which economic or political extreme situations influence existing contracts and trigger an adjustment remains a subject of judicial and scholarly discussions. Crucial is the careful assessment of each individual case. Particular attention must be paid to the contractual provisions, the risk profile of the parties, and the specific effects of the changed circumstances.
For companies, investors, and asset managers, numerous challenges arise in the field of real estate law when dealing with long-term contractual relationships. For further legal questions regarding ongoing or future lease and leasehold agreements, we recommend – to avoid risks and legal disadvantages – obtaining sound advice. Further information can be found under legal advice in real estate law.
