IT Project Contracts: Service Contract or Contract for Work? The Judgment of the Regional Court of Hanau of 3 February 2026

In the underlying proceedings, a software development company and a client disputed substantial fee claims for the development of a mobile application. The parties had agreed that the IT company would provide specialised staff on a service-contract basis (dienstvertraglich) at fixed daily rates, with billing based on the time actually worked and overall operational responsibility expressly remaining with the client. After the programming services had been rendered, the customer refused to pay the invoices on account of alleged quality defects, although it had previously confirmed proper performance in a written payment agreement.

In its official headnote, the court made clear that agreements on the development of software may in principle be structured either as a service contract (Dienstvertrag) or as a contract for work (Werkvertrag). Since no specific overall result had been agreed here, and the legal nature of the contract was instead characterised by time-based billing and operational control by the customer, the chamber classified the contract as a pure service contract. As regards the payment confirmation, the judges held that such a declaration is to be treated as an admission against interest (Zeugnis des Anerkennenden gegen sich selbst) and brings about a momentous reversal of the burden of proof in litigation. Anyone who carelessly structures software programming as a service contract billed purely by time, but manages the project in day-to-day practice in an agile manner as if it were a contract for work, runs the risk of bearing the entire financial risk of an economic failure alone.

Even though the Regional Court (Landgericht) of Hanau, sitting as a civil chamber, ruled exclusively on the civil-law fee claims, the underlying contract structure has significant employment-law implications for IT practice. If day-to-day cooperation is characterised by criteria such as close integration of the external developer into the client's work organisation and direct subjection to instructions within the meaning of § 611a of the German Civil Code (BGB), there is a risk under the German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz, AÜG) that a genuine employment relationship with the client arises by operation of law. To avoid loss of fees on the one hand and social security and employment-law back payments on the other, IT project contracts must be drafted clearly, in a legally robust manner and in strict alignment with the project practice actually lived from the outset.