Austria: Loss of business basis in connection with COVID-1911 February 2021
The measures to contain corona virus currently make it more difficult to fulfill contracts that were concluded in the time before the spread of the virus. We have explained the problem of rental contracts in our previous articles (read via the website below) and the effects of COVID-19 on existing law. With our German neighbours in this context, the discontinuation of the business basis thematised. The question now arises as to whether this legal basis could also be used in Austria in order not to have to fulfill contracts due to the current circumstances without having to pay compensation to the contractual partner.
Loss of the business basis in Austria
In principle, the motivation to conclude a contract, which was not part of the contract, is irrelevant in the case of legal transactions against payment. As an exception, the loss of the business basis can be a solution in the current exceptional situation. This has so far been neglected in Austrian legal practice, but it represents a special right of avoidance. In contrast to Germany, the Austrian General Civil Code (ABGB) does not contain any general regulation for the loss of the business basis.
According to the jurisprudence (see e.g. OGH 8 Ob 585/88) the instrument of the discontinuation of the business basis is the last resort, a recourse to it is therefore not possible even if another instrument such as the adjustment of the contract according to 1104 f ABGB (available in detail in our article 'Do landlords have to accept massive interest losses due to corona?').
The business basis is understood to mean expectations that the parties did not specifically consider and contractually regulate when concluding the contract, but which are inherent in legal transactions such as the one that has been concluded. In order for the business basis to be taken into account at all, it must first be not just an individual motive, but a business-typical circumstance that is associated with this business at all times and by everyone. The change in circumstances must not have been foreseeable when the contract was concluded, because otherwise it would have been up to the parties to make a corresponding contractual arrangement. In addition, the change must not fall within the sphere of the part of the contract that refers to the absence or loss of the business basis.
The restrictions in (economic) life caused by the corona virus can undoubtedly justify the elimination of typical business circumstances, which the contracting parties assumed when the contract was concluded:
A tenant who has taken his business premises into inventory for sales purposes, but who is now prohibited from selling his goods due to the pandemic or who does not pay off due to customer failure, could try to argue with the loss of the basis of the business. After all, it is a typical business circumstance to be able to use the space for business purposes (and not just as a warehouse or office). This is also associated with it by everyone and at all times. Of course, the change in circumstances was also unpredictable and does not fall into the sphere of the tenant or the landlord.
However, it should be noted that the loss of the business basis does not lead to ineffectiveness, but to contestability of the contract, so that appropriate steps must be taken. As far as a contract adjustment is still possible, the adjustment has priority over a complete contract cancellation.
Conclusion: Due to corona-related restrictions, the business basis of a rental agreement may no longer be applicable. However, this is a subsidiary aid that entitles you to contest the contract. Other aids have priority in Austria, which is why case law on this point (§ 1104 f ABGB) will probably be decisive. Nevertheless, the specific contract must be checked in each case before a statement can be made.
For further information, contact:
Egbert Frimmel, Managing Partner
Frimmel | Anetter Rechtsanwälte GmbH, Klagenfurt am Wörthersee
t: +43 463 500002
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