Parties to a construction contract are generally free to agree the terms to govern their contractual relationship. The limits are provided by mandatory laws, including the law on standard terms. While there are no mandatory laws preventing the parties of a construction contract from assigning the risk of concurrent delays to either the contractor or employer, such a provision may be problematic if included in standard terms.
The statutory provisions on standard terms are included in §§ 305 et seq. German Civil Code. In international comparison, these provisions, and particularly the related case law, are very strict.
The law defines standard terms as contractual terms that have been drafted for a multitude of contracts and which one party presents to the other party. The courts' interpretation of this definition is very broad. For example, a sole clause which has been specifically drafted and negotiated for a previous contract and is then copied into a second contract by one party will regularly be considered a standard term.
Generally, standard terms are held invalid if they lead to an unreasonable disadvantage of the other party. This is assumed by the courts in two constellations:
- if a term is not compatible with the basic principles of the statutory provisions from which it deviates, or
- if a term restricts the essential rights and duties resulting from the nature of the contract in such manner that the purpose of the contract is jeopardised.
There is no relevant case law on the validity of standard terms dealing with the risk of concurrent delay. Nevertheless, the general jurisprudence on standard terms suggests that a clause that puts the full risk of a concurrent delay on either of the parties and releases the other party from all liability may well be invalid.
Accordingly, a party wishing to incorporate a term on the risk of concurrent delays into its construction contracts should take care that the term is either not a standard term or, were it is, that the clause does not unreasonably disadvantage the other party in the meaning of the laws on standard terms.