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Construction delay and liquidated damages: your rights for a missed deadline on site

Your rights for construction delay: consequences and withdrawal under section 918 ABGB, contractual penalty and moderation under section 1336 ABGB, and the excess loss.

BRANDAUER Rechtsanwälte
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BRANDAUER Rechtsanwälte

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13 June 2026 · Mag. Bernhard Brandauer, Rechtsanwalt

The move-in was planned, the date is in the contract, and then it passes without a finished house. Construction delay is not merely annoying; it costs money, for example for an extended rental period, interim financing or substitute accommodation. The central question is: what leverage and which claims do you have if the firm exceeds the date?

Austrian law provides two tools for this. Section 918 ABGB governs the consequences of delay, from the grace period through damages to withdrawal. Section 1336 ABGB concerns the contractual penalty, often called Pönale, by which a delay damage is fixed in advance. The two interlock and both have clear limits.

This article explains when construction delay exists, which consequences section 918 ABGB triggers, and how the penalty under section 1336 ABGB works, including moderation and the relationship to further damage. From a lawyer’s perspective, much turns on whether a fixed date and a penalty were agreed, because that determines how easily claims can be enforced.

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Fixed date or not, penalty or damages?

Answer one or two questions about the date and the contractual penalty. You receive an initial assessment of your options.

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01 Question 1

How was the completion date agreed in the contract?

A fixed calendar date triggers default without a reminder. An approximate or missing date requires additional steps.

All paths at a glance

Overview of all answers.

01

Without a fixed day, default arises only after a reminder and grace period.

If the date is only approximate, you are not automatically in a position to assert consequences of delay. Set the firm a reasonable grace period for completion in writing. Only after this period has passed without success can you, under section 918 ABGB, demand performance together with damages or withdraw from the contract.

Document the reminder and the expiry of the period. A clear written request creates the basis for further steps.

02

Without an agreed date, delay is harder to establish.

If a completion date is missing, the firm owes the service within a reasonable time. Default then regularly requires a reminder with a reasonable grace period. Record in writing by when the work is to be finished, and set a specific period.

For the future, a binding date with a penalty in the contract is advisable. We deal with the key contract points in our article on reviewing the construction contract before signing.

03

With an agreed penalty you can proceed without proving damage.

With a fixed date and an agreed penalty, the contractual penalty falls due on delay without you having to prove a specific loss. The penalty is subject under section 1336(2) ABGB to the court’s power of moderation, so it can be reduced if excessive. If your actual loss exceeds the penalty, additional compensation may come into consideration under section 1336(3) ABGB.

Calculate the penalty incurred from the days of delay and assert it in writing. A legal review clarifies the amount and the enforcement.

04

Without a penalty you must prove the delay damage specifically.

Without an agreed penalty, the claim follows section 918 ABGB. You can demand performance and compensation for the delay damage, or withdraw after setting a reasonable grace period. The loss, such as extra costs for substitute accommodation or interim financing, must be specifically proven.

Collect evidence of the delay-related extra costs. A legal assessment clarifies which items are recoverable.

When does construction delay exist

Delay means that an owed service is not rendered at the agreed time. What is decisive is how the date was agreed. With a fixed calendar date, such as a specific day or a calendar week, the delay arises when the date passes, without the need for a separate reminder. The passage of time alone suffices.

If the date is only approximate or missing entirely, the delay regularly requires a reminder. You call on the firm to render the service within a reasonable grace period. Only after this period has passed without success can you assert the consequences of delay. The written form of the reminder is strongly advisable, because it makes the start of the period provable.

It also matters that the delay is attributable to the firm. Delays caused by the client, such as late preliminary work or missing decisions, do not fall to the firm’s charge. A clean documentation of the construction sequence helps to attribute the cause of a delay later. The contractual framework is explored on our focus page on construction contracts and remuneration.

Consequences of delay under section 918 ABGB

Where delay exists, section 918 ABGB opens a choice. On the one hand, you can hold on to performance and additionally demand compensation for the damage caused by the delay. This is often the practical route where the building is to be completed in any event and only the consequences of the delay are at issue.

On the other hand, you can declare withdrawal from the contract while setting a reasonable grace period. Withdrawal therefore requires that you have first set the firm a final reasonable period for making up the performance and that this has expired without success. If the performance is severable, the withdrawal may be limited to the outstanding parts.

The delay damage covers the extra costs that arise precisely from the delay. It may include the costs of an extended rental period, substitute accommodation or interim financing. These items must be specifically proven. Anyone who collects evidence from the outset is in a clearly better position for enforcement.

Contractual penalty under section 1336 ABGB

The contractual penalty under section 1336 ABGB is an amount agreed in advance that is payable on non-performance or delayed performance. In a construction contract it is often set as a penalty per day or week of delay. Its great advantage is that you do not have to prove the specific loss. The penalty falls due on the delay alone, provided the delay is attributable to the firm.

The amount of the penalty is not unlimited. Under section 1336(2) ABGB an excessive contractual penalty is subject to the court’s power of moderation. If the debtor shows the penalty to be excessive, the court must moderate it, where appropriate after consulting experts. This power of moderation cannot be effectively excluded in advance. The court does not, however, examine excessiveness of its own motion; the debtor must invoke it.

If the actual loss exceeds the agreed penalty, the creditor can claim compensation for the excess loss under section 1336(3) ABGB. Towards a consumer as debtor, however, such an extension must be individually negotiated. The penalty therefore fixes the loss in advance but does not necessarily cap it.

The two routes

Penalty and damages compared

Whether a contractual penalty is agreed decides how you proceed on delay and what you have to prove.

Comparison of the contractual penalty under section 1336 ABGB and delay damages under section 918 ABGB
Point Penalty, sec. 1336 ABGB Damages, sec. 918 ABGB
Requirement What is needed An agreed penalty and attributable delay Attributable delay, after a reminder for an approximate date
Proof of loss Burden of proof for the loss No specific proof required Specific delay damage to be proven
Amount Limit Moderation if excessive under sec. 1336(2) ABGB Compensation for the loss actually incurred
Beyond that Further loss Excess loss possible under sec. 1336(3) ABGB Performance and damages or withdrawal after a grace period

Towards consumers as debtors, compensation for a loss exceeding the penalty under section 1336(3) ABGB must be individually negotiated.

Check the penalty rather than rely on it blindly: a contractual penalty is a strong lever, but not automatic. It requires an attributable delay and can be moderated by a court if excessive under section 1336(2) ABGB. On the contractor’s side, too, it is worth examining whether a demanded penalty is justified and reasonable in amount. Booking an initial consultation (EUR 72) quickly clarifies how strong your position is.

Enforcement and securing evidence of the date

Anyone who wants to enforce delay claims needs a clear evidential position. First secure the agreed date, that is, the contract with the date arrangement and any construction schedules. Record the actual construction progress with photos, a site diary and the correspondence with the firm. In this way you can later show when which service was finished.

For an approximate or missing date, set a written grace period and keep proof of delivery. With a penalty, calculate the days of delay precisely and assert the penalty in writing. For a specific loss, collect the evidence of the delay-related extra costs.

If, alongside the delay, a defect in the work already built also appears, the questions must be kept apart cleanly. How you give notice of defects and observe deadlines is dealt with in our article on notice of defects and deadlines for a building. Where it is about securing evidence before a dispute, our article on preserving evidence before construction litigation helps.

Frequently asked questions

Construction delay and the penalty.

Do I have to remind the firm first before I have claims? +

That depends on the date. With a fixed calendar date, the delay arises without a reminder when the date passes. If the date is only approximate or missing, the delay regularly requires a reminder with a reasonable grace period. A written reminder is advisable in any event.

Can an agreed penalty be reduced? +

Yes. Under section 1336(2) ABGB an excessive contractual penalty is subject to the court’s power of moderation. If the debtor shows the penalty to be excessive, the court must moderate it. This power cannot be effectively excluded in advance; the debtor must, however, invoke the excessiveness, as the court does not examine it of its own motion.

Do I also get the further loss compensated alongside the penalty? +

If the actual loss exceeds the contractual penalty, the creditor can claim the excess loss under section 1336(3) ABGB. Towards a consumer as debtor, however, such an extension must be individually negotiated. Without such an arrangement, the penalty remains the limit in relation to the consumer.

Further reading

Related topics around delay and the date

Construction contract and remuneration

The focus page on the works contract, the service, the remuneration and the completion date.

Reviewing a construction contract before signing

Why a binding date with a penalty should be in the contract and what else matters.

Notice of defects and deadlines for a building

How to give notice of defects in good time and which deadlines you must observe.

ÖNORM B 2110 explained

How the contractual standard handles deadlines, acceptance and delay where it has been agreed.

Topics
construction delaycontractual penaltyliquidated damagesABGBdamages

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