Project

Legal significance and definition of the term “Project”

The term “Project” (German: Projekt) is used in various legal contexts and is interpreted differently depending on the field, such as business law, contract law, procurement law, or public law. Projects play a central role in implementing temporary undertakings with specific objectives, often characterized by legal frameworks and contractual agreements.

Fundamental characteristics of a project

Project definition

In a legal sense, a project is understood as a venture with a defined time frame, purpose, and budget, as well as an individually determined objective. Core characteristics are its dedicated purpose, distinction from ongoing standard processes, and project-specific use of resources. Projects are often managed by project organizations, which themselves govern the legal relationships, responsibilities, and authorities involved.

Legal regulations and conditions

Projects are typically governed by contracts between the involved parties. The type of contract chosen—such as a contract for work and services, a service contract, or hybrid forms—depends on the project specifics. The parties are subject to the nationwide applicable statutory provisions, such as the German Civil Code (BGB), the Commercial Code (HGB), or specific regulations, for example, procurement law.

Project contracts and contract drafting

Types of project contracts

The type of contract selected depends on the project’s goal and scope, and includes:

• Contract for work and services: Obligation to achieve a result-oriented outcome (e.g., construction contract, IT project).
• Service contract: Obligation to perform activities without a specific guarantee of success (e.g., consulting project).
• Project management contract: Regulation of management and coordination of the project, including rights and duties for project control.

It is apparent that hybrid forms, such as combined contracts for work and services and service contracts, are common in project business.

Content and essential contract elements

Project contracts regularly include provisions on:

• Service description and objective definition
• Schedule and milestones
• Remuneration and payment modalities
• Rights and obligations of the parties involved
• Liability provisions (delay, defects liability, damages)
• Contract termination (termination rights)
• Confidentiality and data protection
• Ownership and usage rights (especially when developing works)

The design should be tailored to specific features—such as complexity, technical requirements, or industry-specific regulations.

Special features in procurement law and the public sector

Projects under procurement law

In the public sector, large projects are generally awarded within the framework of procurement law. Compliance with procurement regulations (GWB, VgV, UVgO) is mandatory, especially with regard to transparency, equal treatment, and competition. Legally sound structuring of tenders, selection, and commissioning is essential. Violations can result in the invalidity of the project outcome or claims for damages.

Contract management in public projects

Public clients are obliged to continuously monitor contract fulfillment, for example, through contract and risk management throughout the project. In addition, there are special requirements regarding sustainability, anti-corruption, and subsidy law.

Liability and legal protection in projects

Liability issues

Liability in the project context can arise from a variety of causes. Typical liability cases include:

• Non-performance or poor performance of agreed services
• Delays and default
• Breach of confidentiality or data protection obligations
• Violation of statutory or regulatory provisions

The applicable liability regime depends on the contract type and on statutory as well as contractually agreed provisions.

Legal protection mechanisms

For disputes relating to projects, ordinary courts or frequently agreed arbitration procedures are available. Especially for cross-border projects, international arbitration is preferred to enable efficient and confidential dispute resolution. Project contracts may also provide for escalation or conciliation procedures.

Intellectual property and data protection in projects

Protection of work results

In projects, particularly in IT, construction, or research, special significance is attached to the protection of development results, know-how, and data. Relevant rules can be found, for example, in copyright law (protection of software, plans, texts) as well as in patent and trademark law. Contractual safeguarding of rights of use, exploitation, and ownership is thus an important part of any project agreement.

Data protection aspects

As soon as a project involves personal data, the requirements of the General Data Protection Regulation (GDPR) and the Federal Data Protection Act (BDSG) must be strictly observed. Particularly relevant are:

• Provisions on data processing on behalf
• Obligation of confidentiality
• Documentation duties
• Deletion and disclosure obligations

Non-compliance can lead to significant fines and liability risks.

Projects in insolvency and restructuring

Impact on ongoing projects

If insolvency proceedings are initiated over the assets of one of the parties during the course of the project, specific insolvency law provisions must be observed. Depending on their type, contracts may be classified under insolvency law as to be continued or subject to termination. The insolvency administrator decides whether further implementation is possible or not.

Securities and protection mechanisms

Often, security measures such as guarantees, assignments as security, or sureties are agreed upon at the time of contract conclusion to minimize the risk of insolvency of a project party.

Conclusion

The term “Project” exhibits high complexity and diversity in the legal context. Legal aspects permeate all phases of the project life cycle—from planning and execution to completion and follow-up. Legally compliant project implementation requires careful adherence to existing laws, detailed contract drafting, and proactive management of risks and liability situations.

Sources:

• German Civil Code (BGB)
• Commercial Code (HGB)
• Act Against Restraints of Competition (GWB)
• Regulation on the Award of Public Contracts (VgV)
• General Data Protection Regulation (GDPR)
• Federal Data Protection Act (BDSG)

Frequently asked questions

Who is liable for legal infringements within the scope of a project?

Liability for legal violations within a project is generally determined by the contractual agreements between the project participants and the relevant statutory provisions on liability. Project managers and involved companies are often jointly and severally liable if they have acted together or caused the violation jointly (§ 421 BGB). Individuals are liable for their own breaches of duty in accordance with the principles of tort and contract liability (§§ 280 ff., §§ 823 ff. BGB). If external service providers are involved in the project, their liability may also apply, especially in the case of poor performance or consulting errors. In addition, labor law implications must be considered: employees are generally only liable to a limited extent within the framework of so-called internal compensation for damages. Criminal liability remains unaffected and may apply to the individual based on the specific criminal offense (e.g., corruption, data protection violations, embezzlement). In cross-border projects, international liability provisions must also be observed.

What legal requirements apply to contract drafting in projects?

General rules of contract law apply to project contracts, particularly the provisions of the German Civil Code (BGB) regarding contracts for work and services, service contracts, and, where applicable, hybrid contracts (§§ 611 ff., 631 ff. BGB). It is important that project-specific features—such as agile methods or the use of subcontractors—are expressly regulated in the contract to ensure legal certainty and transparency regarding duties, deadlines, liability, and scope of performance. Procurement regulations must be observed when public clients are involved. For international projects, international private law (in particular, the Rome I Regulation) applies to determine the law applicable to the contract and the jurisdiction. Data protection rules (GDPR/BDSG), non-disclosure agreements (NDA), and, where applicable, industry-specific regulations, must also be considered. Changes and amendments to the project contract should always be recorded in writing to ensure traceability and evidentiary value.

What data protection requirements must be observed in projects?

Projects in which personal data are processed are subject to the provisions of the General Data Protection Regulation (GDPR) as well as the supplementary Federal Data Protection Act (BDSG). In particular, determining the controller and processor responsibilities pursuant to Art. 4, 28 GDPR is relevant. Before starting the project, a data protection impact assessment (DPIA, Art. 35 GDPR) should be conducted if there is a high risk to the rights and freedoms of data subjects. In addition, technical and organizational measures (TOM) for data security must be implemented pursuant to Art. 32 GDPR. All parties must be bound to confidentiality, and data processing agreements must be lawfully signed. For international projects, transfers to third countries require special scrutiny and, where necessary, the use of standard contractual clauses. Documentation and accountability obligations under Art. 5(2) GDPR must be strictly observed.

How is legally compliant documentation of projects carried out?

Legally compliant project documentation requires the complete, traceable, and audit-proof recording of all project-related actions, decisions, arrangements, and relevant documents. Contract documents, service descriptions, change protocols, communication records, as well as documents on quality, risk, and resource management must be retained. Electronic documentation must comply with the requirements of the GoBD (Principles for the proper management and storage of books, records, and documents in electronic form). Written form clauses in the contract must be observed to ensure evidentiary effectiveness. The retention periods are determined by tax, commercial, and, if applicable, special statutory provisions (usually six to ten years, §§ 147 AO, 257 HGB). Data protection requirements (blocking/deletion of personal data once the purpose is no longer achieved) must also be observed.

What is the significance of copyright law in the context of a project?

Copyright law plays a central role, particularly in the creation of works of literature, science, and art in a project context (e.g., software, design, documentation). Rights generally arise with the author (the creator). In the context of employment, rights of use are transferred to the employer to a limited extent under § 43 UrhG; in the context of service or work contracts, explicit license agreements are required. A transfer of all rights (‘buy-out’) is also only possible by contract. Infringements of copyrights may result in injunction and compensation claims and may have criminal consequences under § 106 UrhG. In international projects, the copyright law applicable is that of the country where protection is claimed (territoriality principle). Open-source software is subject to its own license terms, which must be observed.

What is the legal procedure for disputes between project participants?

In the event of disputes, it is advisable to first review the dispute resolution clauses agreed in the project contract, in particular regarding mediation, arbitration, or ordinary jurisdiction. If arbitration has been agreed, it must have priority (§§ 1025 ff. ZPO). For public clients, formal review procedures under procurement law may become relevant (§§ 155 ff. GWB). Otherwise, an action may be brought before the court contractually or statutorily competent. Thorough documentation is crucial for proving legal positions. Alternatively, out-of-court settlement attempts or conciliation procedures may be pursued. In international projects, the requirements of the Rome I Regulation and the applicability of international arbitration courts must be verified.

What specific approval and notification requirements apply in projects?

Depending on the content of the project, specific approval and notification requirements may apply. Construction projects regularly require a building permit under the state building codes. For projects in the fields of environment, energy, or health, further official approvals may be required (e.g., emissions control, data protection oversight, permission under the IfSG or EnWG). Notification requirements may arise, for example, from the Money Laundering Act (GwG), export control regulations (§§ 4 ff. AWG/AWV), or, under labor law, for the employment of foreign workers (notification requirement to the Federal Employment Agency). Where personal data is processed, notification requirements to the data protection authority under Art. 33 GDPR may apply in the event of data protection breaches. Violations of these obligations may result in fines and the invalidity of the project.