Bundesgerichtshof (Seventh Civil Senate) 31 January 1990, BGHZ 111, 308 = NJW 1990, 2524

The plaintiff raises against the defendant an assigned claim for remaining payments under a works contract amounting to DM 20,505 plus interest. In 1985 and 1986, S, the plaintiff's husband, carried out works for the defendant, without having been entered in the crafts registry, and without having his trade registered. Both facts were known to the defendant. The defendant paid at least DM 4,500 to S for his work. S failed to pay either tax or social insurance contributions on this amount. S then assigned the remainder of his alleged claim for payment under a works contract to the plaintiff.

The Landgericht ordered the defendant to pay DM 11,880 plus interest, and dismissed the remainder of the claim. The Oberlandesgericht (NJW-RR 1990, 251) dismissed the action in its entirety. On appeal, this judgment was quashed and the case referred back.

Reasons

1. The Appeal Court assumes that not only the defendant, but also S as his contractual partner have violated the Gesetz zur Bekämpfung der Schwarzarbeit (Act to Combat Illicit Work, SchwArbG).

In the Appeal Court's view, S did exercise a craft profession without being registered in the crafts registry (§ 11 Nr. 3 SchwArbG). S did this in order to gain considerable economic advantages. His endeavour was therefore covered by the aforementioned provision. In consequence, S had neither contractual nor non-contractual claims which he could have assigned to the plaintiff.

2. The first part of these considerations are correct.

...

3. The contracts concluded between S and the defendant were therefore void under § 134 BGB. As has been set forth in more detail by the present Senate (reference omitted), by imposing fines on both the contractor and the client, the Act to Combat Illicit Labour intends to prohibit illicit labour jobs as such, and to prevent any exchange of performances between the "parties to the contract". This already strongly indicates that the legal order wants to deprive of any effect a contract which contravenes the prohibition on illicit labour jobs. In particular, as has been said elsewhere by this Senate (reference omitted) - the purpose of the Act to Combat Illicit Labour can be achieved only if such contracts are considered to have no legal effect. This is at least the case if - as presently - both parties have violated the provisions of the Act to Combat Illicit Labour. Even so, in individual cases it may nevertheless offend good faith if one party relies on a contract being void for violation of a statutory provision (reference omitted).

4. The contracts under consideration being void, the plaintiff can at best raise claims for the return of performances made. According to the jurisdiction of the present Senate, §§ 677 et seq. [negotiorum gestio] do, in principle, apply to such cases (BGHZ 37, 258 (263), remainder of reference omitted). However, in the present case, the "expenditure" incurred by S consisted in an activity which was prohibited by law. Therefore, S could not consider this "expenditure" to be "necessary according to the circumstances"; for this reason alone, claims for remuneration under §§ 683, 670 cannot succeed.

5. However, contrary to the opinion of the Appeal Court, the plaintiff can rely on the provisions on unjustified enrichment. Such a claim under § 812 I 1 BGB is, ultimately, not excluded by the provision of § 817 2 BGB. It is true that this provision does, in principle, apply to situations such as the present. This defence can also be raised against somebody who succeeds the original creditor as a new claimant (reference omitted).

Through his exercise of a craft, S, the assignor, has violated the Act to Combat Illicit Labour. According to the findings by the Appeal Court, both parties wanted their contracts to be carried out precisely as illicit labour jobs. Therefore, there can be no doubt that S was conscious of the violation, and nevertheless decided to carry on.

6. Enrichment claims, however, form part of the law which is governed by equity, and are therefore particularly influenced by the principle of good faith (reference omitted). It would be irreconcilable with this principle if the defendant were not to pay for the value of what he obtained without legal ground, but were rather entitled to keep it for free.

In a case which involved the sale of a brothel, and where the vendor had already performed, the Reichsgericht ruled that it amounted to deceitful conduct if the buyer refused to pay, and at the same time refused to return the house in reliance on § 817 2 BGB. Such conduct was not protected by the legal order (RGZ 71, 432). The present case is similar. § 817 2 BGB, which prevents the creditor from reclaiming the enrichment, comes as a severe blow to that party (reference omitted). Whenever this rule is applied, one must not lose sight of the purpose which the prohibitory norm intends to serve (reference omitted). In individual cases, it can be necessary to opt for a restrictive interpretation of § 817 2 BGB, a provision which is problematic as a matter of legal policy, and disputed as concerns its scope of application. The Act to Combat Illicit Labour does not primarily intend to protect one or both parties to the contract; above all, it serves public interests. When the Act was passed, concerns for the labour market were to the fore. According to the Official Reasons for the draft legislation, illicit labour leads to increased unemployment in many professions, causes loss of tax revenue, and damages the social insurance bodies; it also threatens self-employed business owners, who cannot work as cheaply as those engaged in illicit labour. It is only second to these concerns that the the client should also be protected against his loss of remedies for defective works (BT-Drucksache 2/1111 and 9/192). The Act was designed as a protective norm within the meaning of § 134 BGB, because the purposes which it intended could only be achieved by rendering the prohibited transactions void (reference omitted). Given the fact that the Act pursues mainly political aims of a general nature, these aims are, on the other hand, mostly served by excluding all contractual claims. In order to fulfil the aims of the Act, it is not absolutely necessary that a client who orders an illicit labour job be allowed to keep the advance performance for free and at the expense of the contractor. For the general deterrent effect, which the legislator was aiming for, is already achieved by the exclusion of contractual claims, combined with the threat of criminal prosecution and liability for outstanding tax and social insurance contributions once the illicit labour job becomes known. This Senate does not believe that this general deterrent effect would be undermined by allowing an enrichment claim (which, as will be shown infra, must at any rate be subject to certain restrictions). The client, who is normally in a stronger economic position, should, in the legislator's view, on no account be treated more favourably than the contractor, who is economically in the weaker position (BT-Drucksache 2/1111, p. 10). Under these circumstances, a viewpoint based on good faith will gain the upper hand, namely that it would be inequitable if the client, who has benefitted from an advance performance, is allowed to keep this benefit for free (references omitted).

According to § 818 II BGB, the enrichment claim should compensate for the value which has accrued to the defendant without legal ground. When assessing what has been obtained by an illicit labour job, one must first consider that the contractor, by way of an enrichment claim, is on no account allowed to recover for amounts in excess of those stipulated by his void agreement with the client (reference omitted). As a rule, very considerable deductions will have to be made from this amount to cover the risks which are connected with illicit labour jobs. In particular, the value is much reduced by the fact that the client can have no contractual claims for defective works from the outset, since the contract is void. If any defects have emerged, these must be additionally considered when calculating the balance of the enrichment.
 

©1997 Gerhard Dannemann. HTML edition © 1998 Gerhard Dannemann. This translation first appeared in The German Law of Obligations, Vol. I: The Law of Contracts and Restitution, by B.S. Markesinis, W. Lorenz and G. Dannemann, Oxford University Press 1997, as case no. 136 on pp. 799 et seq. Reproduced by permission of Oxford University Press.The contents of this page may be downloaded and printed out in single copies for individual use only. Making multiple copies without permission is prohibited.