BEG Funding - New FAQ Entry on the Right of Withdrawal

No start of the project occurs if a contract is concluded, but a clear right of withdrawal is agreed upon in the event that the requested grant is denied. A contract concluded subject to dissolving or suspensive conditions relating to the approval of the funding is equivalent to withdrawal.

Contracts for consulting and planning services concluded beforehand are harmless. However, the conclusion of supply and service contracts for the implementation of the measure to be funded before submitting a funding application constitutes a so-called funding-damaging project start and fundamentally stands in the way of funding.
However, in grant law, it is recognized that a suspensive or dissolving condition in supply and service contracts with regard to the granting of the funding prevents the occurrence of a funding-damaging project start. However, a right of withdrawal alone is not sufficient; it must be a suspensive or dissolving condition. The difference from a right of withdrawal (which can be exercised but does not have to be) is that the suspensive or dissolving condition automatically takes effect when the condition occurs. This then unequivocally documents that these supply and service contracts are only concluded on the condition that funding is granted.

This contract design demonstrates the necessary incentive effect of the funding. It becomes apparent that the planned measure will only be carried out and the contract will only apply in case of funding. If the funding is denied, the contracting parties cannot decide, as with a right of withdrawal, to adhere to the contract, as it becomes ineffective. They can only conclude a new contract.

The exact wording of a suspensive or dissolving condition is up to the contracting parties. The following sample wording of a suspensive condition is recognized by the two implementing agencies BAFA and KfW:

“The obligations to (delivery) services provided for in this contract serve the implementation of [a renovation project / a new construction project], for which one of the contracting parties has applied for funding under the funding program „Bundesförderung für effiziente Gebäude“ (BEG) of the BMWi at BAFA or KfW [has applied [or will apply within […] days after conclusion of the contract]].
This contract shall come into effect with regard to these obligations only and to the extent that [BAFA / KfW] has approved the application and granted the funding with [a funding notice / a financing commitment] to the applying contracting party (suspensive condition). The applying contracting party shall inform the other contracting party immediately of the occurrence and the extent of the occurrence of the condition.”