ARGE - construction partnership in Germany: legal issues in cooperation of different engineering firms (eBook)

Kenan Kaya (Autor)

eBook Download: PDF

2013 | 1. Auflage
81 Seiten
Anchor Academic Publishing (Verlag)
978-3-95489-526-7 (ISBN)

Infos

This survey investigates and evaluates the legal framework which an engineer faces when stepping into an ARGE partnership with other planning offices. ARGE, in the German construction industry an established form of partnership, becomes more and more important in acquiring and accomplishing construction projects. The ARGE underlies the regulations of the German Partnership under Civil Law; consequently, the ARGE partners are jointly and individually liable for the contract. Thus the principal of the overall project enjoys fundamental advantages: He reduces his risk should it come to an insolvency of an ARGE partner, he increases competition, and he gets services out of one hand. Engineering firms who want to participate in these projects have to handle their capacities and risks. Presently, many engineering firms are not interested in participating in ARGE partnerships as they see no reason for a voluntary sharing of liability and want to be responsible and liable only for services they performed. Therefore, engineering firms are interested in an ARGE agreement which divides the responsibilities and liabilities in consideration of the rendered services. In external discussions with principals, ARGE partner could not change the joint and individual liability. Principals will not deal with the limitation of ARGE partners' liabilities. However, other regulations could be defined in internal arrangements. Besides the law-related aspects, it is advisable to redefine other regulations in the ARGE agreement. Partners, for example, should define a fulfillment obligation. In case of insolvency of one partner, the other partners still have to fulfill the contract. If there are services which they cannot carry out by themselves, they have to involve other partners.

Dipl-Ing. (FH) Kenan Kaya, MBA, was born in 1980 in Bietigheim-Bissingen. He finished his studies of Elektrotechnik at the Fachhochschule Esslingen in 2006 and completed his Master of Business Administration at the Fachhochschule für Ökonomie und Manageme

Inhalt

ARGE – construction partnership in Germany: legal issues in cooperation of different engineering firms 1
I Executive Summary 3
II Table of Contents 5
III List of Abbreviations 7
IV List of Figures 9
1 Introduction 11
2 Problem Definition 13
3 Contract relationships in construction projects 16
3.1 Contract to produce a work and service contract 16
3.2 Architecture and Engineering relationships 18
3.3 Linkage to HOAI 20
3.4 General planner 22
4 Purpose and types of ARGE between engineering firms 24
4.1 Purpose of ARGE 24
4.2 Types of ARGE 26
5 Legal forms of ARGE 28
5.1 Basic legal form of ARGE: Partnership under Civil Law 28
5.2 Other legal forms 32
5.3 Differentiation from other coalitions 34
6 Foundation of ARGE for engineering firms 36
7 Internal relationship 40
7.1 Bodies and their tasks 40
7.2 Contributions and performance 44
7.3 Contravention 47
7.4 Internal Liability 49
7.5 Withdrawal or exclusion of an ARGE member 50
7.6 Performance Bond 54
8 External relationship 56
8.1 External representation 56
8.2 Liability 58
8.3 Insurance for external relationships 62
8.4 Insolvency of ARGE 63
9 Closing and disorganization of the ARGE 65
10 Partial invalidity of ARGE 69
11 Tax treatment of the ARGE 71
12 Conclusion 74
13 Bibliography 76
13.1 Literature 76
13.2 Other sources 78
13.3 Internet 79
14 List of Jurisdiction 81

Textauszug

Text Sample: Chapter 2, Problem Definition: Usually there are different persons involved in the construction of a building. There are the principal, who could be the building owner or investor, the architect, planners and building contractors. Architects and planners are assigned by the building owner to consult him and to consider building laws and technical regulations. Architects and planners act on behalf of the principal on the construction site. Based on this frame conditions, they are practically the contact persons for contractors and building authorities. Planners are employed in engineering firms. In Germany there are more than 35.000 engineering firms for building services. They are responsible for the different parts of the technical systems within the building. In general, the services are divided in mechanical engineering and electrical engineering. The majority of the companies only offer one of the before mentioned services. Many builders expect to have one contractor for consulting and planning the building services. Therefore many companies organized themselves by commissioning or subcontracting the missing half. However, subcontracting can also be problematic. First of all, subcontracts are independent of the main contract. The principal has no contractual access to the subcontractor. One example from market is a constellation which is common and wide spread: an engineering office for HVAC - Systems has none specialist for electrical systems, in consequence they have to engage an engineering firm for the electrical engineering. Nevertheless there may come up difficulties in the construction phase. For example the contractor for the electrical system may deliver and install the wrong devices. Because of bad construction site management the subcontracted engineering firm for electrical systems is involved. Due to the main contract between building owner and engineering firm for HVAC - systems they are also involved. Additionally there could arise some more problems at the end of the project. The acceptance and handover of the building is difficult in two ways, on the one hand due to the handover from the subcontractor to the main contractor and on the other hand due to the handover from the main contractor to the building owner. It could be that the subcontractor has finished his work earlier than the main contractor and wants to accomplish the acceptance in order to issue his final invoice. Another problem could come up when the builder runs into financial difficulties and is not able to bring up the project costs, which leads to insecurities with regards to the overall project funding. In this case the subcontractor could only deal with his contracting entity. These described problems are not minor losses. On the construction site all parts of constructing a building are closely linked to each other. That means that the end date for the hand over to the builder could be delayed and cause significantly higher costs. At this point, mistakes become very expensive. And due to the contractual constellation - the engineering firm for HVAC - Systems is also involved. A possible solution for remediation could be an ARGE. In Germany ARGE is known as a partnership between contractors for large construction projects which cannot be accomplished solely by one contractor. Organizing engineering firms in ARGE cooperation like contractors do could be a better instrument in working relationship for construction projects. The partners of the ARGE would then have a direct contract with the building owner. Nevertheless an ARGE contract also incorporates risks and difficulties. There are internal and external regulations which to be taken into consideration. For example there could come up problems with external authorization, internal and external rights and obligations of the ARGE partners. But also more difficult problems like the situation when one partner of the ARGE could not fulfill his contract by less service provision. Another question is: How to cope with the insolvency of one ARGE partner? The main problem for engineering firms in ARGE partnerships is that they are jointly and severally liable with other partners. Engineering firms want to handle or limit their share in liability . Literature is more focused on ARGE for contractors. Special literature for ARGE of engineering firms is not available. The regulations must be adapted to engineering firms, but not all subjects can be transferred. Engineering firms underlie different laws and regulations than contractors

Produkt-Details

• Erscheint lt. Verlag: 1.6.2013
• Sprache: englisch
• Themenwelt: Recht / Steuern ► Allgemeines / Lexika
• Themenwelt: Recht / Steuern ► Arbeits- / Sozialrecht ► Arbeitsrecht
• ISBN-10: 3-95489-526-9 / 3954895269
• ISBN-13: 978-3-95489-526-7 / 9783954895267