News regarding the law on standard terms and conditions
Standard terms and contracts have to be adjusted from 1st October 2016
On 17th February 2016, the German Bundestag issued the “Law to improve the enforcement of consumer protection regulations with regard to data protection”. Without this being obvious on first view, this includes an amendment of the law on standard terms and conditions (section 305 at sec. of the German civil code – BGB); and this applies to all contracts that are formed from 1st October 2016!
From that time, section 309 No. 13 BGB requires that for notices and declarations by consumer for the user of the general terms or a third party, the required form must not be stricter than the so called “text form”. This means that such notices and declarations can be issued either in written or in electronic form. The section applies to all contracts except if the notice or declaration is regarding a contract that requires notarization by law (e.g. land sale or share deal).
What does this mean for business practice?
- In labor contracts, so called cut-off periods are often used and as such accepted by the jurisdiction. Such cut-off periods allow the parties of a labor contract to limit the period to claim financial compensation from the labor contract. Thus, the jurisdiction accepts that the claim of financial compensation from the labor contract might be excluded, if such claim is not asserted within three months after the claim is due. Until now, it was general practice to require a claim in written form. From 1st October 2016, such exclusion clauses must not require a stricter form than text form. If an employer does not respect this while formulating such exclusion period, he is at risk that the entire clause might be unenforceable and the employee is able to assert his claims within the legal limitation period of three years from the end of the year in which the claim became due.
- However, not only the wording of standard labor contracts but also all other contracts like e.g. tenancy agreements or loan agreements that have a consumer as a party, have to respect the new regulation.
- Finally, it should be considered that in recent years the German federal court applies most of the prohibitions under section 309 BGB, which includes the new clause, nearly without limitation on standard terms used in the B2B context. With respect to this clear tendency of the jurisdiction, there is a not negligible risk that any requirement of written form in B2B contracts for example for cancellation or notice of defect in favor the user of the general terms might not be enforceable.
Therefore, businesses should consider to legally recheck their standard terms and contracts.
Dr. Kerstin Kern
Antitrust Law, Company Law And Commercial Law, Distribution Law, Industrial Property Rights, International Legal Relations, Law Of General Terms And Conditions Of Business, Product Liability And Product Safety
Dr. Simon Zepf
Construction And Real Estate Law, Labour Law And The Law Of Contract For Services, Law On Commercial Leases
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