Concept and Significance of the Basis of the Contract
The basis of the contract is a central concept in German civil law and describes the circumstances that, at the time of concluding a contract, are considered by the parties to be essential prerequisites for the legal transaction. It forms the foundation upon which the will and interests of the contracting parties are built. Disruptions or changes to the basis of the contract may, in individual cases, lead to contracts being adapted or rescinded. The fundamental provision on the basis of the contract is found in Section 313 of the German Civil Code (BGB).
Legal Development and Dogmatic Classification
Historical Development
The doctrine of the basis of the contract was originally developed through case law by the Imperial Court and, subsequently, by the Federal Court of Justice. For a long time, it was exclusively judge-made law, but it was codified with the reform of the law of obligations in 2002. The goal of this codification was to systematize the case groups and legal consequences that had evolved up to that point.
Dogmatic Position in Civil Law
The legal concept of the basis of the contract stands between the law governing mistakes (Section 119 BGB) and initial or subsequent impossibility (Sections 275, 326 BGB). It primarily covers cases where avoidance, withdrawal, or termination are not applicable, but it would be unreasonable to insist on adherence to the contract.
Requirements for Disruption of the Basis of the Contract
According to Section 313 BGB, several requirements must be met for an adjustment or rescission of a contract due to a disruption of the basis of the contract:
1. Existence of a Basis of the Contract
Definition: The basis of the contract consists of the mutual conceptions of both parties or the expectations of one party that are evident as underlying the contract, if the other party recognized these and did not object. This specifically includes existing factual or legal circumstances on whose existence the parties relied for the transaction.
2. Subsequent Serious Change
The actual circumstances that form the basis of the contract must have changed significantly after the contract has been concluded. Typical examples are fundamental changes in political, legal, or economic conditions.
3. Loss of Mutual Expectation
The change must be so grave that the affected party would not have entered into the contract, or would have done so under different terms, had they known about this circumstance.
4. Unreasonableness of Adhering to the Contract
It must be unreasonable for the affected party to adhere to the unchanged contract, taking into account all the individual circumstances of the case. The contractual risk allocated to different parties must also be considered.
Legal Consequences of the Disruption of the Basis of the Contract
Adaptation of the Contract
According to Section 313 (1) BGB, the parties may have a claim to an appropriate adaptation of the contract to account for the changed circumstances.
Withdrawal and Rescission of the Contract
If an adaptation of the contract is not possible or reasonable, the contract may, according to Section 313 (3) BGB, be rescinded wholly or in part.
Distinction from Other Legal Institutions
The disruption of the basis of the contract must be distinguished from
- Mistake (Sections 119 et seq. BGB): Concerns misconceptions at the time the contract is concluded, not subsequent changes after its conclusion.
- Impossibility (Section 275 BGB): Applies to obligations that are objectively or subjectively no longer capable of being performed.
- Loss of Basis of the Contract (Section 242 BGB – Good Faith): Originally used to fill legal gaps, but today is normatively governed by Section 313 BGB.
Practical Examples of Disruption of the Basis of the Contract
Economic Changes
If, as a result of hyperinflation, agreed prices become economically worthless, an adaptation pursuant to Section 313 BGB may be considered.
Change in Legal Framework Conditions
If, for example, an official permit that was a prerequisite for a contract is later revoked, this may justify a disruption of the basis of the contract.
Political Events
Major political events, such as the fall of the Berlin Wall, led, in many contractual relationships, to an examination of whether the requirements for disruption of the basis of the contract were met.
Limits and Grounds for Exclusion
Contractual Risk
Adaptation due to disruption of the basis of the contract is excluded if the risk of change was contractually assumed or, according to the law, is in any case allocated to one party’s sphere.
Normative Risk Allocation
If the contract contains an explicit or implicit allocation of certain risks, this allocation prevails.
International Relevance and Comparison
Similar legal institutions also exist internationally. In common law, there are concepts such as ‘frustration of contract,’ and in French law, ‘imprévision.’ However, the regulations in German law are considered particularly detailed and nuanced.
Summary
The basis of the contract is a central element of German civil law, which allows for the adaptation or rescission of contracts in exceptional situations. It protects the parties from untenable results when fundamental circumstances subsequently and unforeseeably change. The detailed dogmatic classification and its distinction from other legal institutions are of great importance in both practice and theory.
Further Reading
- Palandt, German Civil Code, § 313 BGB
- Medicus/Lorenz, Law of Obligations I – General Part
- Bamberger/Roth, Beck’s Online Commentary BGB, § 313 BGB
This article provides a comprehensive overview of the basis of the contract in German civil law, aiding in understanding the scope and legal implications of this concept.
Frequently Asked Questions
What is the significance of the disruption of the basis of the contract in German civil law?
The disruption of the basis of the contract is governed in German civil law by Section 313 BGB and, under certain circumstances, allows for the adaptation or even the rescission of a contract if, after its conclusion, fundamental circumstances have changed drastically and unforeseeably. The basis of the contract encompasses the mutual ideas or fundamental assumptions of the parties underlying the contract, even if not explicitly recorded in the contract. A disruption typically arises when central facts—economic, legal, or actual circumstances—change so significantly afterwards that it would be unreasonable for one party to adhere to the unchanged contract. However, by law, an adjustment or rescission may only be considered if the affected party is not responsible for the change in circumstances and has not assumed the risk of the disruption. The provision is particularly relevant in cases of major economic changes, such as unexpected price explosions, but also for political upheavals or natural disasters that significantly hinder performance of the contract.
When can a contract be adapted or rescinded due to the basis of the contract?
Adaptation or even rescission of a contract due to disruption of the basis of the contract requires that the mutual notions of the parties existing at the time the contract was concluded have changed so fundamentally that, according to the principles of good faith, it is no longer reasonable to expect the affected party to adhere to the contract. The law provides for an appropriate adaptation of the contract to the changed circumstances (supplement of the contract). Rescission is only considered if adaptation is also not reasonable or practicable. In practice, it is first examined what conceptions (objective and subjective basis of the contract) the parties had, how (if at all) these have changed, and whether the change was essential and unforeseeable. The interests and risk allocation between the parties have to be weighed carefully; in particular, it is crucial whether one party has consciously assumed the risk of change.
What are the typical case groups for disruption of the basis of the contract?
In the application of Section 313 BGB, case law and legal literature have developed various groups of cases where a disruption of the basis of the contract is regularly considered. These include, among others: 1) Loss or substantial change of political and economic framework conditions (e.g., currency reform, political upheavals); 2) Price explosions and massive cost increases due to unforeseeable events (e.g., sudden material shortages); 3) Subsequent loss of the contract’s foundation or the commercial interest, for example, through destruction of the contract object; 4) Significant changes of the legal framework, e.g., through new laws or prohibitions; 5)Incorrect or changed assumptions about the existence or characteristics of the contractual object. Each of these cases must be individually reviewed against the requirements for a disruption of the basis of the contract and whether the respective risk falls on one of the parties.
What is the relationship between a disruption of the basis of the contract and impossibility of performance?
The relationship between disruption of the basis of the contract (Section 313 BGB) and impossibility (Sections 275, 326 BGB) is characterized by the fact that Section 313 BGB is only applied subsidiarily when the requirements for impossibility are not met. If a contracting party is objectively no longer able to perform (for example, due to total loss of the owed item), the rules on impossibility apply. Disruption of the basis of the contract only comes into consideration if performance is still possible, but, under changed circumstances, involves significant, unforeseeable burdens for a party. While contracts affected by impossibility generally end automatically (in whole or in part), in cases of disruption of the basis of the contract, a judicial decision and, if necessary, an adaptation or rescission by judgment is required.
Who bears the risk of disruption to the basis of the contract?
As a general rule under German law, each contracting party bears the risk of changes that are within their sphere or can be managed by them. Risk allocation is determined by the contract, its interpretation, and the nature of the basis of the contract. If a party expressly or impliedly assumes the risk of certain circumstances (e.g., as part of a guarantee or risk assumption), they cannot invoke Section 313 BGB in the event of a disruption of the basis of the contract. Likewise, foreseeable changes or typical contractual fluctuations are fundamentally not a case of disruption of the basis of the contract, as these are considered to be part of the parties’ business risk.
What are the legal consequences of successfully invoking a disruption of the basis of the contract?
If a court, or the other party, agrees to an adaptation or rescission of the contract due to a disruption of the basis of the contract, the legal consequences are set out in Section 313 (1) and (3) BGB. Priority is given to adaptation of the contract to the changed circumstances, for example, through modification of the performance, pricing, or deadlines. Only if such modification is not possible or reasonable in the specific case may the contract be wholly or partially rescinded. This may result in the need to unwind services already performed in accordance with the principles of unjust enrichment. Judicial adaptation follows, in this respect, the principle of good faith and requires a comprehensive balancing of interests.
Are there any exclusion periods or formal requirements for filing a request for contract adaptation due to disruption of the basis of the contract?
The law does not provide for any special formal requirements or exclusion periods for asserting a claim for adaptation or rescission of a contract due to disruption of the basis of the contract. Such a request may be made informally, but should always be put in writing to avoid evidentiary difficulties. An out-of-court settlement is also possible at any time. Deadlines may arise only from the general limitation rules found in Sections 194 et seq. BGB or from the contract itself. In special constellations, for example, in the case of statutory special regulations, more specific deadlines may apply and must then be examined.
