Retention of performance by the client
October 29, 2009 | 40,00 EUR | answered by Andreas Scholz
I am self-employed and install photovoltaic systems. My former client has modified the invoice amount and believes they only have to pay 872 euros instead of the requested 9000 euros. They justify this by saying it is a retention of security. In case something should happen with the systems, as there is a 5-year warranty on them and he fears he may not be able to reach me in the future. The issue was that we installed a small system, but it was not installed as it should have been. Our mistake, he can deduct the 2000 euros for that. The other systems, 2 of which have been properly accepted and connected to the grid, and two more we have handed over after weeks of waiting for materials, but everything is installed correctly. For the 2 systems, we only partially billed because we installed the substructures. Can the client simply withhold the money or do I have the option to challenge this, even legally)? So, after deducting the 2000 euros for the incorrect installation, there are still 7000 euros outstanding.
Dear inquirer,
legally, the contracting party is not entitled to retain payment in case of a defect. Instead, they would have warranty claims against you if defects were to occur that you were responsible for, according to §§ 633, 634 of the German Civil Code.
Your entitlement to payment became due upon acceptance of the installed systems, according to §§ 640, 641 of the German Civil Code. If the contracting party refuses to accept, you can have the acceptance replaced by an expert opinion, according to § 641a Abs. 2 No. 2 of the German Civil Code. The contracting party is also obligated to allow the expert to inspect your work.
Therefore, unless otherwise agreed in the contract, the contracting party is not entitled to retain payment once all your work has been completed.
If the contracting party refuses to pay the compensation, you can also take legal action. If your contracting party solely claims that they do not need to pay because defects might still occur, they will certainly lose in a legal proceeding.
I hope this information has been helpful. If you have any questions, please feel free to ask.
Kind regards,
Andreas Scholz, Attorney
