By Christoph Mank, K&L Gates, Berlin
The question of when warranty claims are time-barred according to the German Civil Code, may differ from contract to contract. Often, warranty claims are time-barred two or three years after transfer of risk; however, for construction works, longer periods of four or five years may be applicable, starting with the completion and acceptance of the works.
The civil division of the German Federal Supreme Court (“BGH“), which is ─ inter alia ─ in charge of construction law, had to decide a case recently in which rooftop solar panels were installed subsequently on the roof of an indoor tennis center. Three years ago, another civil division of the BGH ─ which is in charge of the law related to sale and purchase agreements ─ had to decide a very similar case in which rooftop panels were installed on a barn. In the case of 2013, the BGH ruled that warranty claims for the solar panels, which were only delivered and not installed by the vendor, are time-barred two years after delivery. According to that decision, the rooftop solar power station is not a building or a “structure,” which it needs to be considered to qualify for the five-year warranty period. Only the barn is a building, and the solar power system is not relevant for the construction and the continued existence of the building; the solar power system is only used for generating electricity.
In the recent decision published in June 2016, the civil division of the BGH, in charge of construction law, did not follow the earlier decision of 2013. The BGH now ruled that warranty claims for rooftop solar power stations are only time-barred after five years. The court argued that a solar power station is a “structure” itself. In addition, a subsequent installation of rooftop solar panels is similar to a comprehensive renovation or reconstruction of the building.
The civil division of the BGH, in charge of construction law, did not call the Grand Civil Senate of the Federal Supreme Court for a clarifying ruling. Hence, warranty claims will be interpreted in a different way by different divisions of the Federal Supreme Court for a while, depending on if the case is ruled by construction law or by the civil law related to the sale and purchase agreement. This is a situation that should be avoided by the modernization of the German Civil Law of Obligations in 2001 and will lead to uncertainties as to which rules are applicable. If the contract is mainly related to the delivery of the panels, the supplier should still calculate a two-year warranty period; warranty claims arising out of contracts that do not imply only the delivery of the solar panels, but also installation obligations, will only be time-barred five years after completion. This will also be the legal guideline for any judicial review of general terms and conditions that differ from that rule.