How COVID-19 Affects Rent, Memberships & Data Protection

Are rents affected by Covid-19?

Paragraphs 1104 and 1105 of the Austrian Civil Code (ABGB) could provide the possibility to reduce rent payments for the duration of mandatory closures.

Rent reduction (incl. Betriebskosten)

While rents could be reduced, that depends on a property’s degree of usability: If business premises cannot be used at all due to an official decree, no rent is required (§ 1104 ABGB). If limited use (e.g. for storing goods or processing delivery service) is still viable, only a proportionate reduction is justified. The relevant usability of a business space depends on the purpose of the contract and the agreed usage stated in the rental contract. Regarding lease agreements, a reduction might only be possible if the contract is limited to 1 year (§ 1105 ABGB). The right to reduce or suspend rent most likely includes Betriebskosten (operating costs or management fees) as well. Nevertheless, direct payments to providers (electricity , internet, etc.) usually cannot be reduced.

Attention – Regardless of the paragraphs mentioned above, these points may have been previously excluded or modified in the rental agreement. Therefore, it is important to read the agreement carefully.

The previous paragraphs generally do not apply if you are s ll allowed to keep the shop open but suffer considerable losses in revenue.

What to do

Have your rental con act checked! §§ 1104, 1105 ABGB can be con actually excluded. Depending on your contract and previous payments, you might have the option to off-set previous rent payments during closure against future rent payments. This might be of special interest in case of lack of liquidity.

In the interest of preserving a good business relationship, it is advisable to contact your landlord in advance and find an amicable solution. If a tenant transfers less rent without prior notice and without comment, they risk termination of their lease and eviction measures.

Termination of Memberships

No more direct debits

If, for example, a fitness studio operator is unable to provide services to their members due to official closures, your gym may no longer charge you without your consent: Memberships must be suspended, direct debit orders stopped.

If membership fees continue to be collected during closure without the explicit agreement of the customer, the customer can reclaim these amounts. Offers to extend memberships by the duration of the time of closure do not have to be accepted.

Customers’ right of termination

During a gym’s closure, customers might have been entitled to terminate their contract. However, if customers did not cancel proactively by the time the studio reopened, they usually no longer have the right to terminate once the gym provides all facilities again. Disputes could arise though regarding gyms with significant spa areas that cannot be used indefinitely.

Corona-related delivery diffculties

If a supplier is unable to provide their services or deliver goods through no fault of their own (e.g. due to official orders, closed borders, failures by their own suppliers), a so-called “objective default” exists.

In this case, the buyer (e.g. retailer) may withdraw from the contract by setting a reasonable deadline. The buyer may claim damages (including lost profits) only if the delay in performance was due to the supplier’s negligence. Nevertheless, concerning monetary claims, default interest is due.

Duty to warn

If a contractual partner cannot (or can no longer) fulfill its contractual obligations, it must inform its business partners to avoid possible claims for damages.

Who is a supplier or creditor?

Regulations apply not only to classic supplier-customer relationships, but also potentially between franchisor/licensor/importer and franchisee/licensee/authorized dealer.

Reduction of the franchise fee

If the franchisor is no longer able to provide the franchisee with contractually agreed services, the franchisee may be entitled to a reduction of the franchise fee and – in the event of prolonged delays – may even be entitled to terminate the franchise agreement by sending a reasonable period of notice. Legally, it is largely irrelevant that the franchisor is not at fault. Very relevant, however, are possible regulations in the franchise contract, which should be checked in advance.

What to do

Entrepreneurs are advised to have contracts with important suppliers reviewed in order to correctly assess their own legal standing. In order to avoid unnecessary disputes, it is advisable to approach contractual partners and find amicable solutions.

Data protection in times of Corona

Even in these trying times, the tiresome subjects of data protection and GDPR are still very relevant. Here are a few important points you should consider:

Be cautious with health data 

Health data is classified as sensitive (Article 9 GDPR). This naturally includes employee data related to the COVID-19 virus (e.g. positive/negative test results, health information about family members, etc.). Processing such data is subject to very strict standards: All of your employee data, especially health-related information, should be processed in strict confidence and used only for the specific purpose it was gathered for. If health-related data was collected but is no longer needed (e.g. due to the end of the pandemic), it must be deleted immediately.

Home office & data protection

Data protection regulations must also be enforced in home office settings. Pay particular attention to data security (e.g. a secure VPN connection).

DPO support

The website of the DPA (dsb.gv.at) contains some useful information and documents related to data protection and corona.

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