No right to self-remedy prior to acceptance of the commissioned work

In a recently published landmark decision, the Federal Court of Justice ruled that parties commissioning a work contract may only legally enforce statutory rights relating to defects against the contractor once the commissioned work has been accepted (Federal Court of Justice, January 19, 2017, VII ZR 301/13). In previous decisions, the Federal Court of Justice had always left open the issue of whether contractual rights relating to defects of work could also arise before acceptance.

The decision is primarily relevant to the customer’s right to eliminate defects of the produced work at the contractor’s expense and the corresponding right to request an advance payment from the contractor. Even if the Federal Court of Justice recognizes exceptional cases, according to the decision, the customer is only entitled to perform remedial measures after acceptance.

In the future, the party ordering the creation of an individual software must therefore accept the software reserving the existing defects, in order to take remedial measures itself or through a third party at the contractor’s expense.

Practical tip:

In order to assert the right to self-remedy, it is not sufficient for the project to appear to be failing prior to acceptance so that a proper performance of the commissioned service in accordance with the agreement can no longer be expected. In this event, contractual arrangements will therefore be necessary granting the customer the right to take remedial measures at the contractor’s expense prior to acceptance.