Lessees Do Not Have the Right to Withdraw from the Lease Contract in the Event of a Cancelled Event
Regional Court Munich I , Judgement of 29 April 2021 – File ref.: 29 O 8772/20
In its judgement of 29 April 2021, the Regional Court Munich I ssued a first decision on the interference with the basis of the transaction pursuant to Section 313 of the German Civil Code (BGB), which concerns the operation of event facilities. In the case at hand, the Regional Court dealt with a lease contract, the rental of event rooms for a wedding celebration, which was a one-time performance and not a continuing obligation.
In the context of Section 313 BGB, the Regional Court emphasised the principle of contractual fidelity. Even in the event that event facilities cannot be used as a result of pandemic-related contact restrictions, an interference with the basis of a transaction can generally be assumed. However, it was initially up to the lessor and the lessee to find a solution in line with their interests, such as agreeing on an alternative date, within the framework of the adjustment of the contract according to Section 313 BGB. A lessee's right to withdraw from the contract and consequently the non-payment of the contractually agreed rent is given only in exceptional cases in which a lessee cannot reasonably be expected to adhere to the contract.
The lessees, a wedding couple, had booked premises in the lessor's castle to hold their wedding reception, which was to take place in June 2020. Due to the official corona measures, in particular the imposed contact restrictions, the wedding celebration could not take place as planned. The lessor therefore offered the couple several alternative dates in the run-up to the wedding date, all of which the lessees refused. After the lessor demanded payment of the rent from the couple, the couple claimed that the lessor had not fulfilled his obligation to perform. The purpose of the contract had not been achieved, as it had been about celebrating a wedding in the rooms. Alternatively, the lessees declared their withdrawal from the contract. The lessor then made a claim for payment against the lessees. With success!
The Regional Court Munich I ordered the lessees to pay the rent in the full amount.
The Regional Court explained that the lessor's performance had neither become impossible nor did the couple have a right to withdraw from the contract. Since the lessor's main obligation to perform had not been to organise the wedding, but to provide the facilities, and since this in itself had not become impossible due to the contact restrictions, there was no case of impossibility pursuant to Section 275 BGB. In the court's view, it is hence irrelevant which specific use the couple had intended to make of the premises. The risk that the success intended by the rental would be realised lay with the lessee.
The court also denied the lessees' right to withdraw from the contract. It did indeed assume a serious change of circumstances after the conclusion of the contract and thus an interference with the basis of the transaction within the meaning of Section 313 BGB. Nevertheless, the Regional Court emphasised that at first the principle of contractual fidelity applied. Thus, an interference with the basis of the transaction always leads first to a claim for adjustment of the contract and, if this is unreasonable, only second to a right to withdraw from the contract.
The fact that the lessor had sought contact at an early stage and had offered the lessees several alternative dates did not speak in favour of an unreasonable adjustment of the contract in the present case. Rather, the lessees had refused to find a solution that was in line with their interests and had unilaterally pursued the goal of terminating the contract.
The decision of the Munich Regional Court I strengthens the position of commercial lessors. The fact that the Regional Court sets high hurdles for the lessee's withdrawal and affirms the lessee's obligation to pay, not only in the case of continuing obligations, but also in the case of one-time events and functions (in this case a wedding), should make things easier for lessors. Here, too, however, the circumstances of the individual case are always decisive for the adjustment of the contract according to Section 313 BGB. In any case, commercial lessors of event facilities are advised to contact the lessees in good time and seek an amicable solution, ideally combined with the offer of alternative dates.
Dr Angela Kogan