OGH on the Right of Recourse by a General Contractor

Aug 19, 2022 Benn-Ibler Rechtsanwälte GmbH

In the case at hand, the Austrian Supreme Court (Oberster Gerichtshof, OGH) dealt with the question of a general contractor's recourse against his sub-subcontractor pursuant to Section 1313 second sentence of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch, ABGB).

Apartment owners as purchasers concluded a contract with the plaintiff for the renovation of their apartment building. The plaintiff engaged the services of another contractor, who in turn used the defendant as a sub-subcontractor. The defendant performed faulty work. In a previous lawsuit, the customers claimed damages against the plaintiff, and the defendant joined on the side of the customers. In the present case, the subcontractor assigned his claims over to the plaintiff. Now the plaintiff is seeking a ruling against the defendant that she is liable for damages that have already occurred as well as for future damages due to the construction defects. The defendant responded that the plaintiff lacked the right to sue.

The court of first instance upheld the claim in part. Although there was no contractual relationship, this circumstance does not exclude liability. The Court of Appeal again overturned the first judgment, since there was no contractual relationship and thus no violation of the internal relationship.

The Austrian Supreme Court also rejected the claim for restitution:

A claim for compensation according to Section 1313 second sentence ABGB only arises with the actual performance of the third party claimed against. An auxiliary is not contractually liable to a purchaser, which is compensated by the contractual liability of the general contractor. The latter uses other companies to pursue his interests. In principle, the separation of the contracts applies. This may be overridden by way of exception if a strict separation of these two legal relationships would lead to grossly disproportionate outcomes. However, the Austrian Supreme Court did not deem the findings referenced in this case to be in need of correction, as this case is different. The cases addressed in the referenced case rulings are characterized by the fact that general contractors' positions were not compromised, but they nevertheless wanted to enforce claims against their auxiliaries. In this case, a denial of a recourse to a prior party would not lead to a grossly disproportionate outcome.

OGH 4 Ob 99/22w (30.06.2022)