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Case:
BauR 2001, 1412 Bundesgerichtshof (seventh civil senate) VII ZR 222/99
Date:
26 April 2001
Note:
Translated German Cases and Materials under the direction of Professors P. Schlechtriem, B. Markesinis and S. Lorenz
Translated by:
Mr Raymond Youngs
Copyright:
Professor B.S. Markesinis

Facts

The two claimant architects were the subject of a successful claim against them in the previous proceedings by the B Metallbau GmbH (hereafter called B), as representatives of the defendant Land acting without authority, for payment for work in the sum of 152,261.82 DM. The claimants demand this sum, paid to B after judgment against them, together with interest and the costs of the proceedings, from the defendant Land (hereafter called the defendant).

The defendant had commissioned the claimants in the summer of 1989 to carry out architectural services for a building proposal in B "alterations to the W Square / children’s play area at the W Square". It had first commissioned the K & S GmbH (hereafter called K & S) to carry out the metal work which included the manufacture and erection of a pergola designed on artistic lines. As K & S did not observe the agreed date for completion, the claimants, acting on the defendant's behalf, took the work from it in so far as it concerned the delivery and erection of the pergola. On the same day the second claimant asked B to start these works on the basis of hourly payments. It is disputed between the parties whether the defendant had empowered the claimants to award the work on the pergola. In any case, so the claimants consider, the defendant, who had not opposed the work by the firm B, but had in fact now used its work for many years, was obliged to recompense them for the sum claimed.

The Landgericht rejected the claim for payment of a total sum of 225,658.97 DM. The claimants' appeal was rejected by the appeal court. Their appeal in law is directed against this decision and by it they pursue their claim.

Reasons

III.

1. The appeal court states that the claimants are not entitled to claims for compensation for positive breach of contract in respect of the architects' contracts. The defendant was not obliged to counter with K & S's bill a claim for reimbursement of costs for the work which B carried out or to demand refunds. Besides this the claimants had not argued in a sufficiently substantiated way that K & S's bill would have had to be reduced in accordance with their investigation of the bill.

2. That does not stand up to legal examination in so far as the appeal court has failed to recognise more extensive contractual duties by the defendant.

a) As with every obligation relationship, mutual duties of protection, care and explanation also apply to the parties of an architect's contract. These include the duty to explain to the contractual partner about circumstances which he does not recognise or recognisably inappropriately assesses, and which lead to risks for his legal interests and his interest in the integrity of his assets and in performance, in so far as these circumstances are recognisably of fundamental importance for the other party and he may expect explanation according to the general opinion (references omitted).

b) According to these principles the defendant as soon as it had recognised (or had consciously closed its mind to the knowledge) that B had been commissioned by the claimants in its name with the completion of the work on the pergola, had to point out to the claimants the fact that an effective contract between it and B did not exist. The defendant knew that the claimants were not entitled to give orders in its name without its agreement. The assumption that the claimants had wanted to commit themselves as architects in their own names to complete the pergola is contrary to experience. If the defendant did not intend to accept B's work as contractual performance and to pay the remuneration due to it, it should not have let B's work take place. It was obliged instead to explain to the claimants without delay and unambiguously that it did not regard itself as bound by an agreement with B made by them, in order to keep the duty of the claimants under § 179 (1) of the BGB small.

The duty to inform also has its purpose. According to experience, an architect acting without authority will, on the basis of such information, inform the contractor of this without delay so that he can stop his work and find an agreed solution with the client. If the client refuses to approve the contract, the contractor can no longer continue his work as he cannot build on another's land against the will of the landowner. In this case, the claims of the contractor against the architects under § 179 (1) of the BGB are limited in the outcome to compensation for non-fulfillment, as the architect, provided that the contractor chooses fulfillment, can claim the rights arising from §§ 320 ff of the BGB because of the counterperformance (references omitted).

3. The appeal court has made insufficient findings on the question of the point in time from which the defendant knew of the activities of B or deliberately closed its mind to the knowledge. According to the findings so far, early knowledge on the part of the defendant seems likely. The second claimant had commissioned B with the completion of the pergola on the 10th March 1992 and asked it to begin with the work. In the earlier case it was undisputed that B had begun its work on the 10th March 1992; the appeal in law must proceed on this basis. One thing which argues in favour of early knowledge by the defendant is that it had committed itself in clause 4.9 of the architects' contracts to co-operation in the surveillance of the subject matter, so that it ought to have received immediate knowledge of the start of B's activities. Another is the minutes prepared by the defendant of the discussion of the 17th March 1992 in which, besides other people, both claimants and several representatives of the defendant had taken part. It is recorded in these that the claimants had commissioned B with the completion of the pergola work after the partial withdrawal of the order given to K & S. According to the content of the minutes, there is no indication that the defendant had at this point in time still assumed that B would act as a sub-contractor for K & S.

IV.

1. The appeal court further states that a claim by the claimants for unjustified management of another person's affairs without a mandate (§§ 684, 812 ff of the BGB) was not present. The defendant was not enriched. An increase in assets did not occur. It saved no expenses as it paid the originally agreed price for the metal work to K & S as well as later to B.

2. That does not stand up to legal examination. The doubts of the appeal court do not support the rejection of a claim under §§ 684, 812 ff of the BGB.

a) The defendant obtained the building services of B, and therefore the completion of the pergola work, on the basis of the management of the matter of the claimants, without having spent anything for it. The scope of what it has to hand over, or what compensation for value it has to pay, arises from enrichment law.

b) The claimants' claims are not destroyed by the fact that the management of the matter is contrary to interests and was imposed. The absence of agreement with the interest and the intention of the person in charge of the matter only excludes claims on the basis of justified management of a matter without a mandate, but is on the other hand in fact a prerequisite for claims on the basis of unjustified management of a matter without a mandate.

c) The claimants' claim under §§ 684, 812 ff of the BGB is not excluded by the fact that an enrichment claim under § 812 (1) sentence 1 of the BGB against the defendant has at the same time accrued to B after conclusion of its work, besides the claim under § 179 (1) of the BGB against the claimants (reference omitted). The fulfillment of the claim under § 179 (1) of the BGB by the claimants excludes the possibility of B still being able to enforce its enrichment claim against the defendant, as it would otherwise receive double payment for the same service (references omitted). There is thus no priority of a person entitled to a performance condiction.

d) The appeal court makes no findings - logically from its point of view - on the level of the compensation for value owed (§ 818 (2) of the BGB). This will have to be provided. On this subject the Senate refers to the following:

The case law of the Bundesgerichtshof in relation to building on another's property takes into account an increase in the market value of the land to be measured objectively (reference omitted). But in the present case this determination of value is not decisive. The performance provided to the defendant as landowner corresponded with its planning; it accepted it and uses it.

The claims for enrichment are part of fairness law and are therefore to a special extent subject to the principles of good faith (reference omitted). It would not be reconcilable with these principles if the defendant did not have to reimburse saved expenditure. It would be contrary to good faith if the defendant could keep and use what had been obtained without payment through the pergola work because of the possible absence of an increase in value of its land. It will therefore in principle have to pay as compensation for value what it would have had to spend for the completion of the work if it had awarded the contract itself. Means were also available to it for this purpose, which it could if necessary have built up by a supplementary budget or by an active pursuit of its claims against K & S.

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