General Law of Disturbance of Performance – Definition, Principles, and Systematics
The General Law of Disturbance of Performance forms a central part of the law of obligations in German civil law. It provides the legal framework for cases where the fulfillment of an obligation is impaired, delayed, or impossible. The relevant provisions are found in the German Civil Code (BGB), particularly in Sections 280 et seq. BGB. The law on disturbance of performance generally applies to contractual and statutory obligations, whereby the general law is to be distinguished from specific rules on disturbances of performance, such as in sales law or contract for work and services law.
Systematic Classification of the Law of Disturbance of Performance
The law of disturbance of performance is an umbrella term for those legal norms that deal with impairments of the duty to perform within an obligation. It comes into play when the proper fulfillment of the obligation fails to occur or is impaired. The General Law of Disturbance of Performance is distinguished from the Special Law of Disturbance of Performance, which concerns specific types of contracts (for example, warranty law in sales contracts).
The main cases under the law of disturbance of performance are:
- Impossibility of performance (Sections 275, 326 BGB)
- Default by the debtor or creditor (Sections 286 et seq., 293 et seq. BGB)
- Defective performance (Positive breach of contract, Sections 280 et seq. BGB)
- Breach of ancillary duties (Section 241 Paragraph 2 BGB)
- Creditor’s default in acceptance (Sections 293 et seq. BGB)
Impossibility of Performance
Definition and Types of Impossibility
A performance is impossible if the debtor can no longer render it on a permanent basis (Section 275 Paragraph 1 BGB). The law distinguishes between:
- Objective impossibility: The performance cannot be rendered by anyone (e.g., a unique item that has been destroyed).
- Subjective impossibility: Only the particular debtor cannot render the performance; others could theoretically do so.
A further distinction must be made between initial impossibility (already at the time the contract is concluded) and subsequent impossibility (occurring only after the contract is concluded).
Legal Consequences of Impossibility
If the performance can no longer be rendered, the duty to perform lapses in accordance with Section 275 BGB. The creditor generally loses their claim, and the debtor is released from the duty to perform. Under certain conditions, especially if the debtor is responsible for the impossibility, the creditor may, however, have claims for damages (Sections 280, 283 BGB). Consideration already rendered can be reclaimed according to Sections 326 Paragraph 4, 346 et seq. BGB.
Default
Debtor’s Default
Debtor’s default is regulated in Section 286 BGB. It occurs when the debtor does not render performance when due, although the creditor has demanded performance and no legal defense exists.
- Requirements: Due and enforceable claim, reminder, default of performance.
- Legal consequences: Stricter liability, compensation for default damages, and possibly the creditor’s right to rescind the contract (Sections 280, 286, 323 BGB).
Creditor’s Default (Default of Acceptance)
Creditor’s default is regulated in Sections 293 et seq. BGB and occurs when the creditor does not accept the performance properly offered to them. As a result, the debtor is relieved of certain risks and duties (example: elimination of liability for slight negligence, Section 300 BGB).
Defective Performance and Positive Breach of Contract
Principle
Defective performance refers to fulfillment of the duty to perform that does not comply with the contract, also known as a positive breach of contract. This includes, among others, the delivery of a defective item or improper fulfillment of the obligation.
Legal Consequences
For defective performance, the General Law of Disturbance of Performance provides for claims for damages in Section 280 BGB. These generally require fault on the part of the debtor. Special and additional rights may apply under the Special Law of Disturbance of Performance for certain contract types, such as in sales law.
Breach of Ancillary Duties
In addition to the primary duties of performance, the General Law of Disturbance of Performance also regulates the breach of ancillary duties (Section 241 Paragraph 2 BGB). These include duties of protection, consideration, and care. If an ancillary duty is breached, a claim for damages under Section 280 Paragraph 1 BGB may also arise.
Rescission, Reduction, Damages, and Reimbursement of Expenses
The law of disturbance of performance provides the creditor with various secondary rights to respond to the disturbance of the obligation:
- Rescission from the contract (Sections 323 et seq. BGB): In the event of non-performance or improper performance after a deadline has been set.
- Reduction (Section 441 BGB): Limitation of the exchange of performances in continuing obligations or purchase contracts.
- Damages (Sections 280 et seq. BGB): If the debtor is at fault.
- Reimbursement of expenses (Section 284 BGB): For frustrated expenses incurred in reliance on the contract.
Relationship to the Special Law of Disturbance of Performance
The General Law of Disturbance of Performance applies subsidiarily when no Special Law of Disturbance of Performance is applicable. Special provisions are found, for example, in sales law (Sections 437 et seq. BGB) or contract for work and services law (Sections 634 et seq. BGB), and these take precedence over the general provisions.
Significance and Scope of Application
The General Law of Disturbance of Performance is of fundamental importance for all obligations in German civil law. Its provisions comprehensively clarify the rights and duties of contracting parties in cases of disrupted contract performance. The rules aim to provide a fair balancing of interests between creditor and debtor and also help to ensure that contracts can be executed with legal certainty even under special circumstances.
Literature Reference
- German Civil Code (BGB) Sections 241, 275-304
- Palandt, Civil Code, latest edition
- Brox/Walker, General Law of Obligations, latest edition
Frequently Asked Questions
What rights does the creditor generally have in the event of a disturbance of performance?
Under German civil law, the creditor is entitled to various rights in the event of a disturbance of performance, i.e., where the owed performance fails, is delayed, or is defective. Initially, the creditor can insist on fulfillment of the contract (Section 241 BGB). If performance still fails or is defective, specific secondary rights may arise depending on the nature of the disturbance: In the case of default, the creditor can claim damages in accordance with Sections 286 et seq. BGB, provided that fault exists. If performance is impossible under Section 275 BGB, compensation instead of performance may be claimed under Section 280, Section 283 BGB, if the debtor is responsible for the impossibility. The creditor can also rescind the contract (Section 323 BGB) if the respective requirements are met, such as a failed deadline set for performance. In the case of defective performance (deficient performance), the rights under Section 437 BGB apply (supplementary performance, rescission, reduction, and damages). Overall, depending on the type of disturbance of performance, the creditor may rely on fulfillment, damages, rescission, or reduction, with the respective statutory requirements needing to be examined in each case.
When is the creditor required to set a deadline before asserting their rights and how should this be structured?
In the law of disturbance of performance, setting a deadline is generally a prerequisite before the creditor can exercise further rights such as rescission or damages instead of performance (Section 323 Paragraph 1, Section 281 Paragraph 1 BGB). The deadline must be reasonable and must unambiguously indicate to the debtor that the performance is to be rendered within that period. The specific duration depends on the nature and complexity of the performance as well as the individual circumstances; the legislator does not stipulate rigid requirements. The deadline can be set expressly or implicitly but must be unmistakably clear in substance. Exceptionally, setting a deadline is unnecessary if the debtor definitively and seriously refuses performance (Section 323 Paragraph 2 No. 1 BGB), in special circumstances as per Section 323 Paragraph 2 No. 3 BGB, or where a deadline is dispensable due to the nature of the transaction. If a required deadline is missing, rescission and damages (instead of performance) are regularly excluded.
What are the differences between impossibility and default under the law of disturbance of performance?
Impossibility (Section 275 BGB) concerns the permanent unfeasibility of performance, whether physically, legally, or factually. As a rule, it results in the debtor’s obligation to perform lapsing. The creditor may then, if the debtor is responsible for the impossibility, claim damages instead of performance (Section 280 Paragraph 1, 3, Section 283 BGB). Default (Section 286 BGB), on the other hand, occurs when the debtor does not render an otherwise still possible performance in due time, though the performance could still be rendered in principle. In case of default, the creditor can claim not only fulfillment but also compensation for any delay-related damages. It is important to note that in default, the duty to perform continues, whereas in cases of impossibility, it generally ceases.
What is the role of the debtor’s fault in the law of disturbance of performance?
Fault—i.e., intent or negligence—is a central prerequisite for claims for damages under the law of disturbance of performance (Section 280 Paragraph 1 BGB). The debtor is generally liable if they are responsible for the breach of duty, i.e., responsible for failure or defective performance. However, the law also provides for a reversal of the burden of proof: In the event of litigation, the debtor must demonstrate and prove under Section 280 Paragraph 1 Sentence 2 BGB that they are not at fault. In contrast, claims for fulfillment, rescission, or reduction generally do not require fault, but claims for damages or reimbursement of futile expenses do. Liability can be limited or even excluded according to contractual or statutory rules.
What is the significance of default in acceptance (creditor’s default) in the law of disturbance of performance?
The creditor’s default (Sections 293 et seq. BGB), also known as creditor’s default, primarily has two legal consequences: On the one hand, the risk of accidental loss (Section 300 Paragraph 2 BGB) and deterioration of the performance passes to the creditor; on the other hand, the debtor’s liability for slight negligence lapses (Section 300 Paragraph 1 BGB). In addition, the debtor is granted additional rights, such as a claim for reimbursement of additional expenses incurred as a result of the creditor’s default in acceptance (Section 304 BGB). Although the debtor remains obliged to perform, the above-mentioned privileges serve to protect them from further disadvantages due to the creditor’s failure to cooperate.
To what extent does the right of self-remedy affect the general law of disturbance of performance?
The right of self-remedy (Section 637 BGB) represents an important special case, but is generally only provided for contracts for work and services. In the case of defective performance, after a failed deadline for supplementary performance, the creditor can remedy the defect themselves (or have it remedied) and claim reimbursement of the necessary expenses from the debtor. In the general law of disturbance of performance outside the contract for work and services law, there is no comprehensive right of self-remedy; exceptions may result from contractual agreements or special statutory provisions (for example, sales law: Section 439 Paragraph 2 BGB in the context of supplementary performance). As a rule, otherwise, the creditor has to rely on demanding performance or asserting secondary rights.
