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Small print – the position in Germany

General Terms and Conditions (GTC), as defined in the German Civil Code (BGB), are any contractual terms which have been provided by one contracting party (user) to the other party, and which have not been individually negotiated but have been drafted for repeated use (even if only used on one occasion).

April 2014

Most online terms and conditions will qualify as GTC. GTC are subject to the strict laws on General Terms and Conditions (GTC law) set out in the BGB. GTC law applies not only to business to consumer contracts but also, partially, to business to business contracts.

Users need to comply with requirements in two principle areas when using GTC: incorporation and content.

Incorporation

tick boxesGTCs are only legally binding where the user has provided them to the other party and the other party has explicitly agreed to them.

With online contracts, the user must provide at least a link to the GTC on its website and provide a check-box requiring the other party to indicate that they have read and consented to the terms and conditions provided.  The GTC must be precise, unambiguous, not surprising, legible and written in plain and intelligible language in order to apply. A clause will be regarded as surprising if the other party is not expecting that clause with respect to the specific kind of contract.  For example, a stipulation that “this contract is subject to the laws of Seychelles” will not become part of the contract if neither of the parties nor the contract itself have any connection to the Seychelles and its laws.

Content

There are general requirements as to the content of GTC as well as requirements which deal with particular types of clause. GTC clauses which are unfair, unreasonable or unclear are void and are not part of the contract.

The clauses must also be transparent and the more onerous the clause, the more clearly it must be brought to the other party's attention.  GTC must be sufficiently clear for the other party to be able to understand all rights and obligations under the contract.  Where a clause is unclear and a dispute has arisen, the authority resolving the dispute (usually the courts) will look at the interpretation which is least favourable to the user.  If, under this interpretation, the clause would be unduly onerous to the other party, it will be deemed to be unfair and will be unenforceable.

mazeIn order to ensure GTC contracts are fair, they are subject to a specific legal enforceability review as set out in ss 307 to 309 BGB.  The BGB provides its own standard statutory clauses by way of guideline.  If the user deviates from the essential principles of a statutory provision to the substantial detriment of the other party which is not balanced by a corresponding advantage, the clause will be void. In this situation, the applicable statutory provision replaces the void clause and applies to the contract.

The German legislator gives specific examples of unfair contract terms (ss 308 and 309 BGB) which apply principally to business to consumer GTC contracts.  For example, it is not possible to exclude all liability, liability for gross negligence or liability for death or personal injury caused by negligence and any clause which attempts to do so will be void.  Clauses which purport to reduce the statutory limitation period of three years are also prohibited.

GTC clauses which are unenforceable under the BGB or other consumer protection law, will be struck out of contracts but the other clauses will continue to apply.  Where clauses have been struck out, they will be replaced by the relevant statutory provision.

gavelIn conclusion, if contractual clauses are regarded as GTC under German law, the very strict GTC law will apply. In this case, the mandatory statutory regulations of the BGB and comprehensive case law provide guidance regarding the possibilities of deviating from consumer friendly stipulations. Users should be careful to avoid drafting GTC which may be void under the BGB because they may then also fall foul of the German Unfair Competition Act.  Competitors may file warning letters and apply for cease and desist orders to stop further use of the offending GTC.  Crucially though, small print in Germany must comply with unfair contract terms laws and other consumer protection requirements or provisions which are more onerous for the user may be implied into the contract.

If you have any questions on this article please contact us.

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David Klein


David discusses the laws on General Terms and Conditions in Germany.

"Small print must comply with unfair contract terms requirements or less favourable statutory provisions may apply."