The Customer Is Always Right, They Say — But Every Rule Has Its Exceptions

"Your most unhappy customers

are your greatest source of learning."

Bill Gates

Many of our readers have renovated a flat or a house at least once in their lives. Anyone who has done so surely knows how tedious and labour-intensive the process is. If you want to renovate, you first have to develop a design concept, choose suitable materials, find a professional contractor, discuss and agree every detail of the building work with them, and conclude a suitably detailed contract. After that, the materials have to be procured and — so that the result meets your expectations — the work has to be supervised at every stage of the process. Unfortunately, in practice things rarely go entirely "smoothly". At the various stages of construction, details usually come up that call for further arrangements and compromises. A very important role is played here by how accurately and carefully the Werkvertrag (contract for work, the German contract type for building and renovation services) has been drafted. What it stipulates, how precisely it reflects the parties' agreements and how well it covers the possible risks of both sides determines how the further cooperation between customer and contractor will go and how quickly they can find a way out if a dispute arises. As a rule, a construction contract should list all the work to be carried out precisely; in addition, floor plans should be attached to the contract showing the intended final result in terms of room layout, type of flooring, and wall and ceiling finishes. The contract should also be accompanied by a Kostenvoranschlag (cost estimate) for the work, stating the type and quantity of the building materials to be used. The parties must agree in advance on the conditions for the Abnahme (formal acceptance of the work) and for payment for the work performed. Payment can be made in stages, after completion of an agreed part of the work, in advance, or, conversely, only once all the work entrusted to the contractor has been completed. Any complaints or misunderstandings should be discussed between customer and contractor promptly while the work is under way. If, however, the situation reaches a deadlock and negotiations do not lead to the desired result, it is advisable to turn to professionals who can assess the situation from a legal perspective and, while keeping the interests of both parties in balance, show the best way out. In this article, we would like to describe a case from our extensive legal practice in which we represented a contractor who had come to us for legal assistance.

A middle-aged man — let us call him Juri — came to our law firm for advice. He had been living in Germany for a relatively short time and worked as a self-employed sole trader in the field of flat renovation. About a month earlier, Juri had received a new order: an elderly lady living in central West Berlin needed her flat renovated. The client — let us call her Ljudmila — commissioned Juri to renovate the kitchen, hallway and bathroom. For the duration of the work, Ljudmila herself moved in with a friend. Customer and contractor discussed every detail of the planned renovation thoroughly. It was agreed that Juri would procure all materials himself in consultation with the customer, bring them to the flat in his own vehicle and then present all receipts to her. The parties also agreed on deadlines and payment terms and recorded their arrangements in a contract for work on the renovation of the flat.

Just three days after the contract was signed and the down payment received, our future client bought the materials needed for the first stage and started work. As agreed, he removed the existing floor coverings and was ready to begin the next stage. During one of her subsequent visits to the site, the customer said she wanted tiles of a particular type by a fashionable Italian designer laid in the kitchen, although the tile specification originally planned for the kitchen had been different. Juri looked at the tile samples Ljudmila had chosen and pointed out to her that they were thicker than the ones originally selected, which could later affect how well the kitchen furniture she had already chosen would fit, as well as the overall look of the kitchen. The customer nevertheless insisted on having precisely these tiles laid. Although the parties did not sign a formal supplementary agreement to the existing contract changing the material specification, Juri had kept his email correspondence with the customer, which showed clearly which tiles she had chosen and wanted laid in her flat. The contractor followed her instructions, bought the tiles she wanted and laid them in the flat on schedule. He also completed the work in the rest of the flat — namely the hallway and bathroom — without exceeding the deadlines. The trouble with the client began after the furniture company had installed the fitted kitchen: not only did the room look noticeably smaller because of the thicker wall and floor tiles, but the design of the chosen tiles also did not match the Provence-style kitchen in any way. After Juri sent the customer the Abnahmeprotokoll (acceptance record) for the completed work to sign, she declared that she would neither accept nor pay for the work, because in her view the problems with the kitchen were Juri's fault, as he had made numerous mistakes in carrying out her order. Our client first tried to reach an agreement with Ljudmila herself; he suggested meeting on site so that she could show him specifically what the defects in the renovation work were. The customer, however, flatly refused and even asked not to be bothered with the matter any further. Juri then turned to our law firm, asking us to provide legal assistance, help him obtain what he was owed and find a way out of the deadlock.

First, the lawyer at our firm who handles civil law matters asked the client to provide a copy of the contract for the renovation work. The contract clearly stipulated that acceptance of the work was to take place within ten days of its completion by the contractor. Under the terms of the contract, the balance, less the down payment already made, was payable within five working days of acceptance. It turned out that, even twenty days after receiving the acceptance record from the contractor, the customer had neither signed it and accepted the work nor submitted a reasoned refusal to sign it specifying particular defects. As there was no express objection, the work was therefore deemed to have been properly performed, accepted by the client and payable in full. The lawyer then set out these circumstances in a written Mahnschreiben (formal payment demand) drafted on the client's behalf and attached evidence that the renovation materials bought by our client had always been purchased in consultation with Ljudmila and solely on her instructions. The same applied to the Italian kitchen tiles, as the email correspondence between Juri and Ljudmila showed. In the payment demand the lawyer also pointed out that, should the client fail to accept and pay for the work carried out by our client within the following ten working days, we would be compelled to take legal action on our client's behalf.

As we had expected, the client responded quite quickly to the formal payment demand sent by the lawyer. The very day after receiving it, Ljudmila contacted Juri and proposed a meeting to settle the dispute. Since the deadline for submitting a reasoned refusal to accept the completed work had already expired, we would — should the client fail to accept and pay for the work — continue to represent our client's interests in court until a positive outcome was achieved.

This case illustrates very well our firm conviction that, whenever you enter into a business relationship, a properly drafted contract is a kind of guarantee that the parties' interests will be protected in the future. If you need legal support in discussing contract terms with the other party, in drafting a contract, or in performing a contract in the event of a dispute, we invite you to our law firm, where we will advise you in detail and provide comprehensive legal assistance — both when entering into contractual relationships and when implementing agreements that have already been put in writing.

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