Definition and Legal Classification of Procurement Risk
Das Procurement Risk is a central term in German contract law and describes the risk as to whether and to what extent a debtor—particularly in the context of purchase, work, or supply contracts—is able to procure and deliver the owed performance. The legal handling of procurement risk is crucial for key questions regarding liability, default of acceptance, and performance disruptions under German civil law.
Procurement Risk in Contract Law
Obligations and Assignment of Procurement Risk
Procurement risk primarily concerns generic obligations (Section 243 BGB) and in certain situations also specific obligations. In the case of generic obligations, according to Section 243 Paragraph 1 BGB, the debtor must deliver an item of average type and quality; the procurement risk fundamentally remains with the debtor unless procurement is entirely impossible.
In contrast, for individual specific obligations, the risk is related to a particular, individually identified item. After impossibility has occurred (Section 275 BGB), the debtor’s duty to perform regularly lapses.
Special Regulations for Generic Obligations
As a rule, in the case of generic obligations, the debtor bears the procurement risk as long as the type still exists and procurement has not become legally or factually impossible (“stock obligation” and “absolute fixed transaction” are to be distinguished from this). Only in the exceptional cases provided by law or contract can the risk be transferred to the creditor.
Example: Stock Obligation
If the performance is limited to a certain stock (Section 243 Paragraph 2 BGB – stock obligation), the procurement risk is limited to the available stock. If the stock is depleted, impossibility occurs and the duty to perform generally ceases.
Relationship to Performance Risk and Price Risk
Procurement risk is to be distinguished from performance and price risk:
- Performance risk refers to who, in the event of loss of the performance, bears the risk of still having to provide the performance.
- Price risk concerns the question of whether the purchase price must still be paid despite the performance not being rendered (Section 326 BGB, Section 446 BGB).
Procurement risk primarily governs whether the debtor can exculpate themselves in the procurement process or remains liable.
Legal Provisions on Procurement Risk
Principle: Debtor bears the risk
According to Section 276 BGB, the debtor is generally responsible for intent and negligence and bears the procurement risk with regard to generic obligations as long as the performance remains objectively possible. If the debtor can still acquire the item on the market, they must procure it, regardless of whether this is more difficult or more expensive than originally expected.
Exception: Limitation by Contract
Procurement risk can be contractually limited or expanded. In particular, when agreeing on a stock obligation or a case of concretization (within the meaning of Section 243 Paragraph 2 BGB), the risks are allocated differently. Also, in the case of absolute fixed transactions procurement risk may lapse due to passage of time or a deadline clause.
Force Majeure and Impossibility
If a case of force majeure or an objective, legal, or factual impossibility makes procurement permanently impossible, the procurement risk ceases (Section 275 BGB). Until then, it remains with the debtor.
Impact in Commercial Purchase
Bei Commercial Purchase (Sections 373 ff. HGB) and international contracts procurement risk may vary depending on the agreed delivery terms (e.g. Incoterms) and applicable foreign law (e.g. UN Sales Convention/CISG). National and international contract drafting can provide for diverging regulations, which must be reviewed on a case-by-case basis.
Significance for Liability and Damages
If the debtor culpably fails to fulfill their procurement obligation, the creditor can claim damages for non-performance (Sections 280, 281 BGB). A prerequisite is that the procurement risk was with the debtor and at least negligence can be attributed to them.
If the debtor does not perform on time or at all, and the risk lay within their sphere, they are generally liable for damages to the creditor. This also applies to defective procurement in the case of a guaranteed quality or guarantees.
Procurement Risk in Consumer Contracts
Specifically in consumer contracts (B2C), the protection of the consumer is paramount. Here, procurement risk is, in case of doubt, largely assigned to the entrepreneur (Section 475 BGB), unless an exception applies in the individual case (e.g. individual items, clearance stock, proper concretization).
Distinctions and Practical Examples
Distinction from Delivery “ex works” and “on call”
Clauses such as “delivery ex works” or “delivery on call” can affect the procurement risk: In such cases, for example, with agreed call-off delivery after contract conclusion, the risk can be differentiated, for instance, if performance becomes impossible despite the possibility of repurchasing.
Practical Example: Failed Subsequent Procurement
If a dealer orders a standard product and their supplier fails, the dealer must essentially try every other available procurement route—even at higher prices. If they objectively can no longer procure the goods on the market, the risk does not lie with them and they are released from the duty to perform.
References, Case Law, and Sources
The procurement risk is the subject of extensive literature and rulings by the highest courts. Key references can be found particularly in commentaries on the BGB (for example, MüKo, Palandt, BeckOGK) as well as in the case law of the Federal Court of Justice.
In summary procurement risk is a concept of significant importance in contract law with far-reaching relevance for the allocation of performance, liability, and risk between contracting parties. Individual contract drafting, the subject matter of performance, and the respective party’s role are decisive for the legal assignment of procurement risk.
Frequently Asked Questions
Who bears the procurement risk in a purchase contract under German law?
Under German law, the procurement risk in a purchase contract is generally borne by the seller. According to Section 275 Paragraph 1 BGB, the seller is obliged to deliver the agreed goods. If the goods are defined only by type (generic obligation), the seller remains liable for delivery as long as the entire category has not perished. Only when the entire category is lost or procurement becomes impossible can the seller invoke impossibility. If only a specific item is determined (specific obligation), the risk exists from the moment the contract is signed that the particular item can no longer be procured afterward. In a so-called congruent covering transaction, such as in commercial business, procurement risk can be shifted by contractual provisions, e.g. an agreement on a true fixed-date transaction. If such a provision is absent, the risk generally remains with the seller, with exceptions conceivable, particularly in cases of debt to be collected, debt to be delivered, or debt to be sent, according to the delivery terms or general terms and conditions (AGB). It is therefore essential that sellers realistically assess their procurement options at contract conclusion and, if necessary, agree on contractual limitations of liability or special provisions concerning risk allocation.
Can procurement risk be contractually transferred to the buyer?
German law permits the procurement risk to be wholly or partially transferred to the buyer, provided this is expressly and effectively specified in the contract. Such agreements may concern, for example, “as is” or “ex works” transactions, where the buyer expressly bears the risk that the goods will be available at the time of collection or delivery. In commercial law, such provisions can be implemented through individual agreements or the use of Incoterms (such as EXW, FCA, or FOB). In any case, such a transfer of the procurement risk must be clearly and unambiguously agreed between the parties; a blanket transfer via general terms and conditions is often ineffective in the B2C sector (consumer) (Section 307 BGB). Moreover, the agreement must not contradict mandatory statutory provisions, particularly those related to consumer protection. For instance, in consumer goods sales under Section 474 BGB, such a transfer is only possible to a very limited extent.
What are the legal consequences when the procurement risk materializes?
If the procurement risk materializes, meaning the seller is ultimately unable to procure the owed goods, this has various legal consequences. In principle, impossibility of performance occurs under Section 275 BGB, which relieves the seller of the obligation to perform. At the same time, the buyer’s obligation to provide counter-performance ceases (Section 326 BGB). However, if the seller is responsible for the impossibility, the buyer can claim damages according to Section 280 Paragraphs 1 and 3 BGB. In the case of commercial fixed-date transactions, the buyer can also withdraw from the contract and/or claim damages for non-fulfillment (Section 376 HGB). If the risk has been transferred to the buyer, the buyer usually bears the consequences of impossibility and cannot assert further claims against the seller. Thorough assessment of the contractual risk allocation is therefore essential when a procurement failure occurs.
What is the effect of force majeure or government restrictions on procurement risk?
Force majeure and governmental restrictions, such as export bans or delivery stoppages, can significantly influence the procurement risk. Under German law, events of force majeure are regarded as a legal hindrance to the duty to perform if they have been contractually stipulated as an exclusion of risk (force majeure clause). In the absence of such a provision, Section 275 BGB (right to refuse performance in case of impossibility) applies only if the performance is impossible for everyone and not just for the specific seller. For supplier risks arising from force majeure or regulatory actions, appropriate contractual safeguards are essential, otherwise, the seller continues to bear the risk under general principles. In international trade, specially formulated force majeure clauses should define the elements, legal consequences, and notification obligations to provide liability protection.
What is the significance of general terms and conditions (AGB) for procurement risk?
AGB play a central role in assigning procurement risk in commercial transactions, especially in the business-to-business sector. Providers can effectively modify procurement risk through AGB, for example by including clauses regarding self-supply reservations (“delivery only while stocks last” or “delivery subject to timely self-supply”). However, such clauses are subject to stricter effectiveness controls pursuant to Sections 308 and 309 BGB in B2C transactions and are often invalid if they unreasonably disadvantage customers or are unclearly worded. In the B2B sector, such clauses are more likely to be accepted if the customer is expressly informed before contract conclusion and they are drafted transparently. The validity of procurement risk clauses in AGB ultimately always depends on their specific structure and intended scope of application.
What rules of evidence apply in disputes over procurement risk?
If there is a legal dispute as to who bears the procurement risk, the seller generally bears the burden of proof that, despite all reasonable efforts, they were ultimately unable to procure the goods (the so-called “final impossibility”). The seller must prove that they exhausted all sources of supply and undertook all reasonable attempts at substitute procurement. In the case of a contractual risk shift to the buyer, the burden of proof reverses; then, the buyer must present and prove that the seller assumed the risk or did not properly exclude it. In the event of a dispute, particular reference should be made to the contractual arrangements, correspondence between the parties, and, if applicable, procurement records.
Are there industry-specific statutory peculiarities regarding procurement risk?
In German law, there are special provisions for certain industries which can affect procurement risk. For example, in commercial law (Sections 373 ff. HGB), special rules apply, such as fixed-date transactions, which modify the risk and legal consequences in the event of non-delivery when specific deadlines or scheduled transactions are involved. In construction or work contracts, procurement risk is assessed according to the contractually agreed materials or parts and the special rules of contract for work and services (Sections 631 ff. BGB). In case of international sales contracts governed by the CISG (UN Sales Convention), different standards for risk allocation may also apply, necessitating a precise review of the relevant laws and contractual clauses. In regulated industries such as pharmaceuticals, defense, or energy supply, there are often special legal regulations that may have a direct impact on procurement risk.
