Facts
On May 11, 1961, the company Gebr. Klaiber Söhne as the contractor and Tannerberg AG as the client concluded a contract for work for the construction of four multi-family houses and a garage complex. The construction company undertook to complete the shell construction of House A including the garages by the end of November 1961 and to commence work on House B in December 1961/January 1962. In the event of non-compliance with these deadlines, it was to pay a contractual penalty of CHF 100.- per day of delay.
House A was not completed until the end of March 1962, and the construction of House B was completed in August 1962. Tannerberg AG then claimed that the final invoice of the construction company was not yet due, as it served as a "guarantee retention" for Houses A and B, and it intended to offset the debt with the contractual penalty of CHF 36,500.- to which it was entitled.
In September 1966, Klaiber AG sued Tannerberg AG for payment of the balance of CHF 26,841.40 plus interest. The defendant asserted a claim for a contractual penalty of CHF 60,000.- which it intended to offset.
Considerations
The Federal Supreme Court dismissed the defendant's appeal and confirmed the judgment of the Higher Court, which had rejected the defendant's plea of set-off.
Pursuant to Art. 160 para. 2 CO, the contractual penalty agreed for non-compliance with the performance deadline lapses if the client does not assert it at the latest upon delivery of the work. The defendant had first invoked the contractual penalty in its letter of…