Revocation of construction and planning contracts with consumers
The right of consumers to cancel building contracts is often overlooked. This can result in major disadvantages for construction companies and architects. A distinction must be made between consumer building contracts and other building contracts concluded with a builder.
A consumer is anyone who concludes a legal transaction for purposes that cannot be predominantly attributed to their commercial or their independent professional activity. If a consumer (client) concludes building contracts, he is entitled to a right of withdrawal in many cases.
First of all, this applies to the so-called consumer building contract (“Verbraucherbauvertrag”), i.e. when a building contractor (entrepreneur) is obliged by a consumer to construct a new building or to carry out significant conversion work.
However, the consumer (client) can also revoke a building contract that does not reach the scope of a consumer building contract if it was concluded in person and at the same time at a location outside the business premises of the building contractor (entrepreneur). A classic case is the conclusion of building contracts at trade fairs and the conclusion of addenda.
The consumer (client) is also entitled to a right of withdrawal if the contract is not a consumer construction contract but was concluded using exclusively means of distance communication, i.e. in the case of a so-called distance selling contract.
The consumer (client) must be informed of his right of withdrawal in all of the above cases. Statutory law as well as case law place high demands on the content and form of such information. The withdrawal policy must be clear and comprehensible. This means that it must be legible, not “small print”. The instruction must be emphasized by means of design so that it stands out from the rest of the text and the consumer does not run the risk of overlooking it. The place (address, e-mail address, fax number) to which the revocation can be declared must also be named. The building contractor (entrepreneur) must be particularly careful if he wants to start work while the withdrawal period is still running. In this case, the consumer (client) must be informed separately that, in the event of withdrawal, he must pay compensation for the value of the services provided up to that point, which has recently been clarified once again by case law (ECJ ruling of 17.05.2023 – C-97/22). If the building contractor (entrepreneur) breaches his obligation to provide this separate information, he must bear the costs (incurred by) for the services already provided during the withdrawal period. This can mean a considerable economic disadvantage for the building contractor (entrepreneur).
The withdrawal period is 14 days from the conclusion of the contract if the consumer (client) has been properly informed. However, the period shall in any case only begin to run once the consumer (client) has received the withdrawal instructions in text form and the building contractor (entrepreneur) has informed the consumer (client) of his right of withdrawal. If the consumer (client) is not or not properly informed, the withdrawal period does not begin and the right of withdrawal only expires 12 months and 14 days after conclusion of the contract. In the event of inadequate withdrawal instructions, there is therefore a risk that the building contractor (entrepreneur) will work for months but not receive any money in return.
It is surprising that, despite the serious consequences of an omitted or inadequate revocation instruction, many entrepreneurs do not keep this issue in mind when concluding contracts with consumers (client). It is still often the case that no revocation policy is provided at all.
We will be happy to advise you on this topic, in which we are particularly specialized due to the potentially considerable economic effects!