What is an Acceptance, what options are there and what are the consequences?
Smartpedia: An acceptance is a declaration between the client and the contractor that a product or service meets the agreed criteria.
Confirmation of performance of a contract for work and services
Acceptance is a declaration that a product or service meets agreed criteria agreed between the client and the contractor. DIN 69901-5:2009-1 “Project management – Project management systems – Part 5: Concepts” understands acceptance as confirmation by the customer that the requirements have been fulfilled by the contractor.
In Germany the acceptance for work contracts, which are used in the vast majority of projects, is legally regulated in Section 640 BGB (German Civil Code)¹:
(1) The customer is obliged to accept the work produced in accordance with the contract, unless acceptance is excluded due to the nature of the work. It may not be refused due to insignificant defects.
(2) A work shall also be deemed to have been accepted if the contractor has set the custumer a reasonable deadline for acceptance after completion of the work and the customer has not refused acceptance within this deadline stating at least one defect. If the customer is a consumer, the legal consequences of sentence 1 shall only apply if the contractor has informed the customer, together with the request for acceptance, of the consequences of an acceptance not declared or refused without specification of defects; the information must be provided in text form.
(3) If the customer accepts a defective work under subsection (1) sentence 1, even though he knows of the defect, he only has the rights designated in section 634 nos. 1 to 3 if he reserves his rights with regard to the defect when he accepts the work.
Depending on the type of project and the contract between the contractor and the customer – i.e. the compnay and the purchaser – other legal regulations may also apply, e.g. the German Construction Procurement Rules (VOB/B) for construction projects or the EVB-IT contract for the procurement of IT services by the German federal authorities.
Options on acceptance
Acceptance is regarded as the most important milestone of a development, as the client decides whether the agreed project goals are achieved. He can do this with the help of a process including test and protocol. In some contracts, declarations or confirmations are also agreed. In principle, the client has three options at the time of acceptance:
- without reservations.
- subject to reservation, as minor defects are identified which can be repaired.
- Refusal due to significant defects.
Consequences of acceptance
If the acceptance takes place, this has concrete consequences:
- Payment for the product, performance or service becomes due.
- The risk of deterioration or loss passes from the contractor to the client – the so-called transfer of risk.
- The reversal of the burden of proof takes place unless a reservation is declared.
- The principal loses possible claims for the removal of defects, unless a reservation is declared.
- The client loses a claim to a contractual penalty forfeited by the contractor if no reservation is declared.
- The limitation period for defects begins.
- The contract for work and services can no longer be terminated.