Employment contract and entitlement to remuneration: Why “bad work” does not lead to refusal of payment

Yesterday, I presented an exciting judgment that I obtained from the Higher Regional Court of Karlsruhe, with which I was able to achieve a significant result for a client. It became clear that in the context of a service contract – in contrast to a contract for work and services – the focus is primarily on the proper performance of the agreed activity and not on commercial success. Today, I would like to highlight a particular aspect of this judgment that I consider to be particularly relevant, as it goes far beyond the field of influencer management and can also be of great importance for marketing agencies, web designers and other service providers.

In everyday practice, clients often attempt to reduce payments by assessing the service provided as defective or inadequate. This approach is often based on a purely subjective perception which, however, does not do justice to the contractual basis. As the judgment of the Higher Regional Court of Karlsruhe impressively demonstrates, a service contract already establishes the right to remuneration with the proper provision of services – even if the economic result falls short of expectations. A blanket reduction in payment due to subjective dissatisfaction is therefore not permissible as long as the service provided makes a useful contribution in the overall context.

This clarification not only creates legal certainty for service providers, but also strengthens the contractual position vis-à-vis clients. It shows that the focus is on the objective assessment of the service and not on individual expectations of success. Especially in areas where success depends on many variable factors – such as influencer management, but also marketing and website design – this differentiation is of crucial importance. In the event of a dispute, clients must substantiate the extent to which the service deviates significantly from the contractual agreements instead of relying solely on subjective dissatisfaction.

In the following, the legal basis of the service contract is discussed first, with particular emphasis on the differences to the contract for work and services.

Legal basis of the service contract

German contract law makes a fundamental distinction between service contracts and contracts for work. In contrast to a contract for work and services, a service contract focuses on the proper performance of the agreed activity without a specific result being owed. The provisions of Section 611 BGB (service contract) and Section 612 BGB (remuneration) are decisive here. Whereas in the case of a contract for work and services, claims for defects pursuant to Sections 633 et seq. BGB, the service contract already establishes the claim for remuneration with the proper provision of the service. The ruling of the Higher Regional Court of Karlsruhe makes it clear that a service that is subjectively perceived as defective may not automatically lead to a reduction or complete forfeiture of remuneration, provided that the service provided can be classified as usable in the overall context.

In addition, the Federal Court of Justice (BGH) has clarified that a service contract can only be rescinded if the service provided must be regarded as totally unusable – i.e. no longer has any functional or usable elements. Accordingly, mere underperformance or subjective dissatisfaction on the part of the client is not sufficient to rescind the contract. Only if the service provided no longer offers any objective benefit is it possible to rescind the contract in full. This supreme court ruling underpins the importance of an objective assessment of the provision of services and assures service providers that they remain entitled to the agreed remuneration even in the event of complaints, provided that the service provided still makes a useful contribution.

An important statement of the ruling can be summarized as follows: The decisive factor for the assessment of a service is whether the contractually owed activity was properly performed. Accordingly, subjective dissatisfaction on the part of the client does not justify a claim for an across-the-board reduction in payment. In the event of a dispute, it is up to the client to substantiate the extent to which the service provided deviates significantly from the contractual agreements. A mere statement of dissatisfaction is not sufficient for this. In addition, the ruling emphasizes that the service contract already establishes a claim for remuneration with the provision of the service – even if the economic result falls short of expectations.

Effects on practice

The decision of the Higher Regional Court of Karlsruhe has far-reaching practical consequences. Even if individual aspects of the service are assessed as less than optimal, there is a fundamental entitlement to remuneration, provided that the contractually agreed activity has essentially been performed. A unilateral reduction in payment by the client based solely on criticism of the economic success of the service is therefore inadmissible. This clarification strengthens the position of the service provider and reduces the potential for disputes in later disputes, as it establishes an objective assessment of the service provided as a reliable contractual basis.

Particularly in artistic and creative fields – such as the creation of logos, the design of websites or the support of clients by marketing agencies as well as in influencer and artist management – the view often circulates that even a subjectively perceived inferior performance is sufficient to assert warranty claims or even demand that the work be redone. Statements such as “Your work was bad, do it again” or “Try again, I have a warranty” misjudge the basis of a service contract. Within the framework of such a contract, the service provider owes the proper provision of the agreed service – without, however, guaranteeing any specific success. Mere subjective criticism can therefore not be used as a sufficient reason to justify a reduction in payment or even a reversal.

Notwithstanding the positive clarifications of case law, precise and comprehensive contract drafting remains essential. In particular, the following points should be taken into account in service contracts:

• Precise service description: A clear definition of the scope of services and the individual partial services prevents subsequent interpretation difficulties.
• Exclusion of guarantees of success: In marketing and influencer campaigns in particular, the contractual focus should be on the proper provision of services and not on the guarantee of commercial success.
• Regulations on the notification of defects: Clear deadlines and modalities for the notification of defects prevent complaints from being raised at a late stage.
• Payment modalities: Agreements on payments on account and clearly defined payment deadlines minimize the risk of subsequent disputes.
• Contractual penalties and limitations of liability: Appropriate provisions on contractual penalties in the event of significant defaults can serve as a preventive instrument – always taking into account current case law.

These additional points emphasize that the proper provision of the service – regardless of subjective expectations of success or artistic evaluation standards – is at the heart of the service contract. In this way, service providers in creative industries can also safeguard their contractual claims without exposing themselves to unjustified additional claims or repeated remakes.

Conclusion

The judgment of the Higher Regional Court of Karlsruhe impressively shows that the right to remuneration under a service contract is linked to the proper performance of the contractually owed activity – even if the performance is subjectively perceived as “poor”. For me personally, it was a success to obtain this judgment for a client. However, the principles derived from it also provide a solid legal basis for marketing agencies, web designers and other service providers to protect themselves against subsequent reductions in payment. The most effective way to avoid future disputes and secure your own remuneration claim in the long term is to draft a precise contract. Further details and an in-depth case analysis can be found in my blog post “Exciting influencer management ruling from Karlsruhe“.