OGH: Major Ruling on Rental Agreement Clauses (Part 6)

Aug 23, 2024 Benn-Ibler Rechtsanwälte

The first part of a rather extensive and practice-relevant ruling by the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) was published in the USANCEN Newsletter on 19 July 2002. This week, USANCEN focuses on the sixth part of the judgement.

Clause 17:

Clause 17 provides that tenants shall pay interest on arrears at the rate of 1.2% per month. According to the established OGH case law, default interest at a rate which exceeds the usual interest rate (i.e., the market rate; in the present case, an interest rate of 14.4% per annum) is equivalent to a contractual penalty. Contractual penalties are grossly unfair if the interest rate provided for is significantly higher than the average damage actually suffered by the creditor as a result of the delay. Moreover, the clause obliges the tenants to pay damages even if they are not at fault.

Clause 36:

‘The parties agree without prejudice to any other rights to a penalty equal to three times the then current gross monthly rent in the event that the tenant fails to surrender the premises by the agreed or court-imposed date for vacating the premises.’

This clause is unlawful because, in the most unfavourable interpretation for a consumer, it could be understood by consumers as allowing them to claim damages in addition to the contractual penalty. However, if the debtor is a consumer within the meaning of Section 1(1) no. 2, and (3) of the Austrian Consumer Protection Act (Konsumentenschutzgesetz, KSchG), the assertion of damages exceeding the contractual penalty must be negotiated in detail.

Clause 38:

‘Tenants shall be obliged to take out an appropriate household insurance/public liability insurance at their own expense.’

The OGH qualified this clause as a grossly unfair term within the meaning of Section 879(3) of the Austrian Civil Code (Allgemeines bürgerliches Gesetzbuch, ABGB) as it deprives tenants of the freedom to choose whether to insure against certain risks or to save the costs of insuring and to bear any damage themselves.

OGH 9 Ob 4/23p (24 January 2024)