Contract Law: A Comparative Introduction, Second Edition by J.N Smits

Please see the below supplementary resources for this title..

Civil Code (Bürgerliches Gesetzbuch) (selection)*

* This text is partly based on the official translation of the German Civil Code by the German Ministry of Justice and Consumer Protection as available on http://www.gesetze-im-internet.de/englisch_bgb

2: Majority commences at the age of eighteen.

13: A consumer is any natural person who enters into a juridical act for a purpose that is outside his trade, business or profession.

14: (1) A business is a natural or legal person or a partnership with legal personality who or which, when entering into a legal transaction, acts in exercise of his or its trade, business or profession. (…)

104: A person is incapable of contracting if:

he is not yet seven years old,

he is in a state of pathological mental disturbance, which prevents the free exercise of will, unless the state by its nature is a temporary one.

105: (1) The declaration of intent of a person incapable of contracting is void.

(2) Also void is a declaration of intent that is made in a state of unconsciousness or temporary mental disturbance.

105a: If a person of full age incapable of contracting enters into an everyday transaction that can be realised with funds of low value, the contract he enters into is regarded as effective with regard to performance and, if agreed, counter performance, as soon as performance has taken place and counter performance rendered. Sentence 1 above does not apply in the case of considerable danger to the person or the property of the person incapable of contracting.

106: A minor who has reached the age of seven has limited capacity to contract under §§ 107 to 113.

107: For a declaration of intent as a result of which he does not receive only a legal benefit, a minor requires the consent of his legal representative.

108: (1) If the minor enters into a contract without the necessary consent of the legal representative, the effectiveness of the contract is subject to the ratification by the legal representative. (…)

110: A contract entered into by the minor without the approval of the legal representative is deemed effective from the beginning if the minor realises performance under the contract with means that were given to him for this purpose or for free disposal by the legal representative, or by a third party with the ratification of the representative.

113:
(1) If the legal representative authorises the minor to enter into service or employment, the minor has unlimited capacity to perform juridical acts that relate to entering or leaving service or employment of the permitted nature or performing the duties arising from such a relationship. (…)

119: (1) A person who, when making a declaration of intent, was mistaken about its contents or had no intention whatsoever of making a declaration with this content, may avoid the declaration if it is to be assumed that he would not have made the declaration with knowledge of the factual position and with a sensible understanding of the case.

(2) A mistake about such characteristics of a person or a thing that are usually regarded as essential is also regarded as a mistake about the content of the declaration.

122: (1) If a declaration of intent is void under § 118 or avoided under §§ 119 and 120, the person declaring must, if the declaration was to be made to another person, pay damages to this person, or failing this to any third party, for the damage that the other or the third party suffers as a result of his relying on the validity of the declaration; but not in excess of the total amount of the interest which the other or the third party has in the validity of the declaration.

(2) A duty to pay damages does not arise if the injured person knew the reason for the voidness or the voidability or did not know it as a result of his negligence (ought to have known it).

123: (1) Whoever has been induced to make a declaration of will by fraud or unlawfully by threat may avoid the declaration. (…)

125: A juridical act that lacks the form prescribed by statute is void. In case of doubt, lack of the form specified by juridical act also results in voidness.

126: (1) If written form is prescribed by statute, the document must be signed by the issuer with his name in his own hand, or by his notarially certified initials.

(2) In the case of a contract, the signature of the parties must be made on the same document. If more than one counterpart of the contract is drawn up, it suffices if each party signs the document intended for the other party.

(3) Written form may be replaced by electronic form, unless the statute leads to a different conclusion.

(4) Notarial authentication replaces the written form.

126a: (1) If electronic form is to replace the written form prescribed by law, the issuer of the declaration must add his name to it and provide the electronic document with a qualified electronic signature in accordance with the Electronic Signature Act.

(2) In the case of a contract, the parties must each provide a counterpart with an electronic signature as described in subsection (1).

126b: If text form is prescribed by law, the declaration must be made in a document or in another manner suitable for its permanent reproduction in writing, the person making the declaration must be named and the completion of the declaration must be shown through the reproduction of a signature of the name or otherwise.

130: (1) A declaration of intention to another, if it is made to another in his absence, is effective at the moment when it reaches him. It does not become effective if a revocation reaches the other previously or at the same time.

(2) The effectiveness of a declaration of intent is not affected if the person declaring dies or loses capacity to contract after making a declaration.

(3) These provisions apply even if the declaration of intent is to be made to a public authority.

133: When a declaration of intent is interpreted, it is necessary to ascertain the real intention rather than adhering to the literal meaning of the declaration.

134: A juridical act which violates a statutory prohibition is void, unless the statute leads to a different conclusion.

138: (1) A juridical act which violates good morals is void.

(2) In particular, a juridical act is void by which a person, by exploiting the predicament, inexperience, lack of sound judgement or considerable weakness of will of another, causes himself or a third party, in exchange for an act of performance, to be promised or granted pecuniary advantages which are strikingly disproportionate to the performance.

142: (1) If a voidable legal transaction is avoided, it is to be regarded as having been void from the outset.

(2) A person who knew or ought to have known of the possibility of avoidance is treated, in case of avoidance, as if he had known or ought to have known of the invalidity of the legal transaction.

145: One who has offered to conclude a contract with another is bound by that offer unless he states that he is not bound.

146: An offer expires if a refusal is made to the offeror, or if no acceptance is made to this person in good time in accordance with §§ 147 to 149.

147: (1) An offer made to a person who is present may only be accepted immediately. This also applies to an offer made by one person to another using a telephone or another technical facility.

(2) An offer made to a person who is absent may be accepted only until the time when the offeror may expect to receive the answer under ordinary circumstances.

148: If the offeror has determined a period of time for the acceptance of an offer, the acceptance may only take place within this period.

150: (1) The late acceptance of an offer is considered to be a new offer.

(2) An acceptance with expansions, restrictions or other alterations is deemed to be a rejection combined with a new offer.

157: Contracts are to be interpreted as required by good faith, taking into account general practice.§ 241: (1) By virtue of an obligation the creditor is entitled to claim performance from the debtor. The performance may also consist in forbearance.

(2) An obligation may also, depending on its contents, oblige each party to take into account the rights, legal interests and other interests of the other party.

242: The debtor is obliged to perform in such a manner as good faith requires, regard being had to general practice.§ 249: (1) A person who is liable in damages must restore the position that would exist if the circumstance obliging him to pay damages had not occurred. (…)§ 269: (1) Where no place of performance has been specified or is evident from the circumstances, in particular from the nature of the obligation, performance must be made in the place where the debtor had his residence at the time when the obligation arose.

(2) If the obligation arose in the commercial undertaking of the debtor, the place of the commercial undertaking takes the place of the residence if the debtor maintained his commercial undertaking at another place.

(3) From the circumstance that the debtor has assumed the costs of shipping it may not be concluded that the place to which shipment is to be made is to be the place of performance.

271: (1) Where no time for performance has been specified or is evident from the circumstances, the creditor may demand performance immediately, and the debtor may effect it immediately.

(2) Where a time has been specified, then in case of doubt it must be assumed that the creditor may not demand performance, but the debtor may effect it prior to that time.

273: (1) If the debtor has a claim that is due against the creditor under the same legal relationship as that on which the obligation is based, he may, unless the obligation leads to a different conclusion, refuse the performance owed by him, until the performance owed to him is rendered (right of retention).

(2) A person who is obliged to return an object has the same right, if he is entitled to a claim that is due on account of outlays for the object or on account of damage caused to him by the object, unless he obtained the object by means of an intentionally committed tort.

(3) The creditor may avert the exercise of the right of retention by providing security. The providing of security by guarantors is excluded.

275: (1) A claim for performance is excluded to the extent that performance is impossible for the debtor or for any other person.

(2) The debtor may refuse performance to the extent that performance requires expense and effort which, taking into account the contents of the obligation and the requirements of good faith, is grossly disproportionate to the interest in performance of the creditor. When it is determined what efforts may reasonably be required of the debtor, it must also be taken into account whether he is responsible for the obstacle to performance.

(3) In addition, the debtor may refuse performance if he is to render the performance in person and, when the obstacle to the performance of the debtor is weighed against the interest of the creditor in performance, performance cannot be reasonably required of the debtor.

(4) The rights of the creditor are governed by §§ 280, 283 to 285, 311a and 326.

276 BGB: ‘(1) The debtor is responsible for intention and negligence, if a higher or lower degree of liability is neither laid down nor to be inferred from the contents of the obligation, including but not limited to the giving of a guarantee or the assumption of a procurement risk. (…)

(2) A person acts negligently if he fails to exercise reasonable care. (…)’

280: (1) If the debtor breaches a duty arising from the obligation, the creditor may demand damages for the damage caused thereby. This does not apply if the breach of duty (Pflichtverletzung) is not attributable to the debtor.

(2) Damages for delay in performance may be demanded by the creditor only subject to the additional requirement of § 286.

(3) Damages in lieu of performance may be demanded by the creditor only subject to the additional requirements of § 281, of § 282 or of § 283.

281: (1) To the extent that the debtor does not render the due performance or does not render the performance as owed, the creditor may, subject to the requirements of § 280 (1), demand damages in lieu of performance, if he has without result set a reasonable period for the debtor for performance or cure. If the debtor has performed only in part, the creditor may demand damages in lieu of complete performance only if he has no interest in the part performance. If the debtor has not rendered performance as owed, the creditor may not demand damages in lieu of performance if the breach of duty is immaterial.

(2) Setting a period for performance may be dispensed with if the debtor seriously and definitively refuses performance or if there are special circumstances which, after the interests of both parties are weighed, justify the immediate assertion of a claim for damages.

(3) If the nature of the breach of duty is such that setting a period of time is out of the question, a warning notice (Abmahnung) is given instead.

(4) The claim for performance is excluded as soon as the creditor has demanded damages in lieu of performance.

(5) If the creditor demands damages in lieu of complete performance, the debtor is entitled to claim the return of his performance under §§ 346 to 348.

282
: If the debtor breaches a duty under § 241 (2), the creditor may, if the requirements of § 280 (1) are satisfied, demand damages in lieu of performance if he can no longer reasonably be expected to accept performance by the debtor.§ 283: If, under § 275 (1) to (3), the debtor is not obliged to perform, the creditor may, if the requirements of § 280 (1) are satisfied, demand damages in lieu of performance. § 281 (1) sentences 2 and 3 and (5) apply with the necessary modifications.§ 286: (1) If the debtor, following a warning notice (Mahnung) from the creditor that is made after performance is due, fails to perform, he is in default (Verzug) as a result of the warning notice. Bringing an action for performance and serving a demand for payment in summary debt proceedings for recovery of debt have the same effect as a warning notice.

(2) There is no need for a warning notice if

a period of time according to the calendar has been specified,

performance must be preceded by an event and a reasonable period of time for performance has been specified in such a way that it can be calculated, starting from the event, according to the calendar,

the debtor seriously and definitively refuses performance,

for special reasons, weighing the interests of both parties, the immediate commencement of default is justified.

(3) The debtor of a claim for payment is in default at the latest if he does not perform within thirty days after the due date and receipt of an invoice or equivalent statement of payment; this applies to a debtor who is a consumer only if these consequences are specifically referred to in the invoice or statement of payment. If the time at which the invoice or payment statement is received by the debtor is uncertain, a debtor who is not a consumer is in default at the latest thirty days after the due date and receipt of the consideration.

(4) The debtor is not in default for as long as performance is not made as the result of a circumstance for which he is not responsible.

305

(1) Standard business terms are all contract terms pre-formulated for more than two contracts which one party to the contract (the user) presents to the other party upon the entering into of the contract. It is irrelevant whether the provisions take the form of a physically separate part of a contract or are made part of the contractual document itself, what their volume is, what typeface or font is used for them and what form the contract takes. Contract terms do not become standard business terms to the extent that they have been negotiated in detail between the parties.

Standard business terms only become a part of a contract if the user, when entering into the contract,

refers the other party to the contract to them explicitly or, where explicit reference, due to the way in which the contract is entered into, is possible only with disproportionate difficulty, by posting a clearly visible notice at the place where the contract is entered into, and

gives the other party to the contract, in an acceptable manner, which also takes into reasonable account any physical handicap of the other party to the contract that is discernible to the user, the opportunity to take notice of their contents,

and if the other party to the contract agrees to their applying.

(3) The parties to the contract may, while complying with the requirements set out in subsection (2) above, agree in advance that specific standard business terms are to govern a specific type of legal transaction.

305b: Individually agreed terms take priority over standard business terms.§ 305c: 1. Provisions in standard business terms which in the circumstances, in particular with regard to the outward appearance of the contract, are so unusual that the other party to the contract with the user need not expect to encounter them, do not form part of the contract.

Any doubts in the interpretation of standard business terms are resolved against the user.

307: (1) Provisions in general conditions are ineffective if, contrary to the requirement of good faith, they unduly disadvantage the other party to the contract with the user. An undue disadvantage may also arise from the provision not being clear and comprehensible. (…)§ 308: In standard business terms the following are in particular ineffective

(Period of time for acceptance and performance) a provision by which the user reserves to himself the right to unreasonably long or insufficiently specific periods of time for acceptance or rejection of an offer or for rendering performance; this does not include the reservation of the right not to perform until after the end of the period of time for revocation or return under §§ 355 (1) to (3) and 356;

(Additional period of time) a provision by which the user, contrary to legal provisions, reserves to himself the right to an unreasonably long or insufficiently specific additional period of time for the performance he is to render;

(Reservation of the right to terminate) the agreement of a right of the user to free himself from his obligation to perform without any objectively justified reason indicated in the contract; this does not apply to continuing obligations;

(Reservation of the right to modify) the agreement of a right of the user to modify the performance promised or deviate from it, unless the agreement of the modification or deviation can reasonably be expected of the other party to the contract when the interests of the user are taken into account;

(Fictitious declarations) a provision by which a declaration by the other party to the contract with the user, made when undertaking or omitting a specific act, is deemed to have been made or not made by the user unless

a) the other party to the contract is granted a reasonable period of time to make an express declaration, and

b) the user agrees to especially draw the attention of the other party to the contract to the intended significance of his behaviour at the beginning of the period of time;

(Fictitious receipt) a provision providing that a declaration by the user that is of special importance is deemed to have been received by the other party to the contract;

(Reversal of contracts) a provision by which the user, to provide for the event that a party to the contract terminates the contract or gives notice of termination of the contract, may demand

a) unreasonably high remuneration for enjoyment or use of a thing or a right or for performance rendered, or

b) unreasonably high reimbursement of expenses;

(Unavailability of performance) the agreement, admissible under no. 3, of the reservation by the user of a right to free himself from the duty to perform the contract in the absence of availability of performance, if the user does not agree to

a) inform the other party to the contract without undue delay, of the unavailability, and

b) reimburse the other party to the contract for consideration, without undue delay.

309: Even to the extent that a deviation from the statutory provisions is permissible, the following are ineffective in standard business terms:

(Price increases at short notice) a provision providing for an increase in payment for goods or services that are to be delivered or rendered within four months of the entering into of the contract; this does not apply to goods or services delivered or rendered in connection with continuing obligations;

(Right to refuse performance) a provision by which

a) the right to refuse performance to which the other party to the contract with the user is entitled under § 320, is excluded or restricted, or

b) a right of retention to which the other party to the contract with the user is entitled to the extent that it is based on the same contractual relationship, is excluded or restricted, in particular made dependent upon acknowledgement of defects by the user;

(Prohibition of set-off) a provision by which the other party to the contract with the user is deprived of the right to set off a claim that is uncontested or has been finally and non-appealably established;

(Warning notice, setting of a period of time) a provision by which the user is exempted from the statutory requirement of giving the other party to the contract a warning notice or setting a period of time for the latter to perform or cure;

(Lump-sum claims for damages) the agreement of a lump-sum claim by the user for damages or for compensation of a decrease in value if

a) the lump sum, in the cases covered, exceeds the damage expected under normal circumstances or the customarily occurring decrease in value, or

b) the other party to the contract is not expressly permitted to show that damage or decrease in value has either not occurred or is substantially less than the lump sum;

(Contractual penalty) a provision by which the user is promised the payment of a contractual penalty in the event of non-acceptance or late acceptance of the performance, payment default or in the event that the other party to the contract frees himself from the contract;

(Exclusion of liability for injury to life, body or health and in case of gross fault)

a) (Injury to life, body or health) any exclusion or limitation of liability for damage from injury to life, body or health due to negligent breach of duty by the user or intentional or negligent breach of duty by a legal representative or a person used to perform an obligation of the user;

b) (Gross fault) any exclusion or limitation of liability for other damage arising from a grossly negligent breach of duty by the user or from an intentional or grossly negligent breach of duty by a legal representative of the user or a person used to perform an obligation of the user;

letters (a) and (b) do not apply to limitations of liability in terms of transport and tariff rules, authorised in accordance with the Passenger Transport Act, of trams, trolley buses and motor vehicles in regular public transport services, to the extent that they do not deviate to the disadvantage of the passenger from the Order on Standard Transport Terms for Tram and Trolley Bus Transport and Regular Public Transport Services with Motor Vehicles; letter (b) does not apply to limitations on liability for state-approved lotteries and gaming contracts;

(Other exclusions of liability for breaches of duty)

a) (Exclusion of the right to free oneself from the contract) a provision which, where there is a breach of duty for which the user is responsible and which does not consist in a defect of the thing sold or the work, excludes or restricts the right of the other party to free himself from the contract; this does not apply to the terms of transport and tariff rules referred to in no. 7 under the conditions set out there;

b) (Defects) a provision by which in contracts relating to the supply of newly produced things and relating to the performance of work

aa) (Exclusion and referral to third parties) the claims against the user due to defects in their entirety or in regard to individual parts are excluded,

bb) (Limitation to cure) the claims against the user are limited in whole or in regard to individual parts to a right to cure, to the extent that the right is not expressly reserved for the other party to the contract to reduce the purchase price, if the cure should fail or, except where building work is the object of liability for defects, at its option to terminate the contract;

cc) (Expenses for cure) the duty of the user to bear the expenses necessary for the purpose of cure, in particular to bear transport, workmen’s travel, work and materials costs, is excluded or limited;

dd) (Withholding cure) the user makes cure dependent upon prior payment of the entire fee or a portion of the fee that is disproportionate taking the defect into account;

ee) (Cut-off period for notice of defects) the user sets a cut-off period for the other party to the contract to give notice of non-obvious defects which is shorter than the permissible period of time under double letter (ff) below;

ff) (Making limitation easier) the limitation of claims against the user due to defects in the cases cited in § 438 (1) no. 2 and § 634a (1) no. 2 is made easier, or in other cases a limitation period of less than one year reckoned from the beginning of the statutory limitation period is attained;

(Duration of continuing obligations) in a contractual relationship the subject matter of which is the regular supply of goods or the regular rendering of services or work performance by the user,

a) a duration of the contract binding the other party to the contract for more than two years,

b) a tacit extension of the contractual relationship by more than one year in each case that is binding on the other party to the contract, or

c) a notice period longer than three months prior to the expiry of the duration of the contract as originally agreed or tacitly extended at the expense of the other party to the contract;

this does not apply to contracts relating to the supply of things sold as belonging together, to insurance contracts or to contracts between the holders of copyright rights and claims and copyright collecting societies within the meaning of the Act on the Administration of Copyright and Neighbouring Rights;

(Change of other party to contract) a provision according to which in the case of purchase, loan or service agreements or agreements to produce a result a third party enters into, or may enter into, the rights and duties under the contract in place of the user, unless, in that provision,

a) the third party is identified by name, or

b) the other party to the contract is granted the right to free himself from the contract;

(Liability of an agent with power to enter into a contract) a provision by which the user imposes on an agent who enters into a contract for the other party to the contract

a) a liability or duty of responsibility for the principal on the part of the agent himself, without any explicit and separate declaration to this effect, or

b) in the case of agency without authority, liability going beyond § 179;

(Burden of proof) a provision by which the user modifies the burden of proof to the disadvantage of the other party to the contract, in particular by

a) imposing on the latter the burden of proof for circumstances lying in the sphere of responsibility of the user, or

b) having the other party to the contract confirm certain facts;

letter (b) does not apply to acknowledgements of receipt that are signed separately or provided with a separate qualified electronic signature;

(Form of notices and declarations) a provision by which notices or declarations that are to be made to the user or a third party are tied to a more stringent form than written form or tied to special receipt requirements.

310: (1) § 305 (2) and (3) and §§ 308 and 309 do not apply to standard business terms which are used in contracts with an entrepreneur, a legal person under public law or a special fund under public law. § 307 (1) and (2) nevertheless apply to these cases in sentence 1 to the extent that this leads to the ineffectiveness of the contract provisions set out in §§ 308 and 309; reasonable account must be taken of the practices and customs that apply in business dealings. In cases coming under sentence 1, § 307 (1) and (2) do not apply to contracts in which the entire Award Rules for Building Works, Part B [Vergabe- und Vertragsordnung für Bauleistungen Teil B - VOB/B] in the version applicable at the time of conclusion of the contract are included without deviation as to their content, relating to an examination of the content of individual provisions.

(2) §§ 308 and 309 do not apply to contracts of electricity, gas, district heating or water suppliers for the supply of electricity, gas, district heating or water from the supply grid to special customers to the extent that the conditions of supply do not derogate, to the disadvantage of the customer, from orders on general conditions for the supply of standard-rate customers with electricity, gas, district heating and water. Sentence 1 applies with the necessary modifications to contracts for the disposal of sewage.

(3) In the case of contracts between an entrepreneur and a consumer (consumer contracts) the rules in this division apply with the following provisos:

Standard business terms are deemed to have been presented by the entrepreneur, unless they were introduced into the contract by the consumer;

§ 305c (2) and §§ 306 and 307 to 309 of this Code and Article 46b of the Introductory Act to the Civil Code [Einführungsgesetz zum Bürgerlichen Gesetzbuch] apply to preformulated contract terms even if the latter are intended only for non-recurrent use on one occasion, and to the extent that the consumer, by reason of the preformulation, had no influence on their contents;

in judging an unreasonable disadvantage under § 307 (1) and (2), the other circumstances attending the entering into of the contract must also be taken into account.

(4) This division does not apply to contracts in the field of the law of succession, family law and company law or to collective agreements and private-sector works agreements or public-sector establishment agreements. When it is applied to employment contracts, reasonable account must be taken of the special features that apply in labour law; § 305 (2) and (3) must not be applied. Collective agreements and private-sector works agreements or public-sector establishment agreements are equivalent to legal provisions within the meaning of § 307 (3).

311: (1) In order to create an obligation by legal transaction and to alter the contents of an obligation, a contract between the parties is necessary, unless otherwise provided by statute.

(2) An obligation with duties under § 241 (2) also comes into existence by

the commencement of contract negotiations

the initiation of a contract where one party, with regard to a potential contractual relationship, gives the other party the possibility of affecting his rights, legal interests and other interests, or entrusts these to him, or

similar business contacts.

(3) An obligation with duties under § 241 (2) may also come into existence in relation to persons who are not themselves intended to be parties to the contract. Such an obligation comes into existence in particular if the third party, by laying claim to being given a particularly high degree of trust, substantially influences the pre-contract negotiations or the entering into of the contract.

311b (1): A contract by which one party agrees to transfer or acquire ownership of a plot of land must be recorded by a notary. A contract not entered into in this form becomes valid with all its contents if a declaration of conveyance and registration in the Land Register are effected.

(2) A contract by which one party agrees to transfer his future property or a fraction of his future property or to charge it with a usufruct is void.

(3) A contract by which one party agrees to transfer his present property or a fraction of his present property or to charge it with a usufruct must be recorded by a notary.

(4) A contract relating to the estate of a third party who is still living is void. The same applies to a contract relating to a compulsory portion or a legacy from the estate of a third party who is still living.

(5) Subsection (4) above does not apply to a contract entered into between future heirs on intestacy relating to the hereditary share on intestacy or the compulsory portion of one of them. Such a contract must be recorded by a notary.

313: 1. If circumstances upon which a contract was based have significantly changed since the contract was entered into and if the parties would not have entered into the contract or would have entered into it upon different terms if they had foreseen this change, adaptation of the contract may be demanded to the extent that, taking account all the circumstances of the specific case, in particular the contractual or statutory distribution of risk, one of the parties cannot reasonably be expected to continue to be bound to the contract without adaptation.

It is equivalent to a change of circumstances if material assumptions that have become the basis of the contract turn out to be incorrect.

If adaptation of the contract is not possible or cannot reasonably be imposed on one party, the disadvantaged party may terminate the contract. In the case of a contract for the performance of recurring obligations, the right to terminate with notice takes the place of the right to terminate.

314: (1) Each party may terminate a contract for the performance of a continuing obligation for a compelling reason without a notice period. There is a compelling reason if the terminating party, taking into account all the circumstances of the specific case and weighing the interests of both parties, cannot reasonably be expected to continue the contractual relationship until the agreed end or until the expiry of a notice period.

(2) If the compelling reason consists in the breach of a duty under the contract, the contract may be terminated only after the expiry without result of a period specified for relief or after a warning notice without result. § 323 (2) applies with the necessary modifications.

(3) The person entitled may give notice only within a reasonable period after obtaining knowledge of the reason for termination.

(4) The right to demand damages is not excluded by the termination.

320: (1) A person who is a party to a reciprocal contract may refuse his part of the performance until the other party renders consideration, unless he is obliged to perform in advance. If performance is to be made to more than one person, an individual person may be refused the part performance due to him until the complete consideration has been rendered. The provision of § 273 (3) does not apply.

(2) If one party has performed in part, consideration may not be refused to the extent that refusal, in the circumstances, in particular because the part in arrears is relatively trivial, would be against good faith.

321: (1) A person who is obliged to perform in advance under a bilateral contract may refuse to render his performance if, after the contract is entered into, it becomes apparent that his entitlement to counter-performance is jeopardised by the inability to perform of the other party. The right to refuse performance is not applicable if counter-performance is rendered or security is given for it.

(2) The person required to perform in advance may specify a reasonable period in which the other party must, at his choice, render counter-performance or provide security reciprocally and simultaneously against performance. If the period ends without result, the person required to perform in advance may terminate the contract. § 323 applies with the necessary modifications.

323: (1) If, in the case of a bilateral contract, the debtor fails to perform or does not perform in accordance with the contract, then the creditor may terminate the contract if he has fixed, to no avail, an additional period for performance or cure (Nachfrist).

(2) The additional period need not be fixed if

the debtor seriously and definitively refuses performance,

the debtor fails to perform by a date or within a period specified in the contract and, in the contract, the creditor has made the continuation of his interest in performance subject to the punctuality of that performance, or

there are special circumstances which, when weighing the interests of both parties, justify immediate termination.

(3) If the nature of the breach of duty is such that it is not feasible to fix a period for performance, a warning notice (Abmahnung) is given instead.

(4) The creditor may terminate the contract before performance is due if it is obvious that the requirements for termination will be met.

(5) If the debtor has performed in part, the creditor may terminate the entire contract only if he has no interest in partial performance. If the debtor has not performed in conformity with the contract, the creditor may not terminate the contract if the breach of duty is trivial.

(6) Termination is excluded if the creditor is solely or very predominantly responsible for the circumstance that would entitle him to terminate the contract or if the circumstance for which the debtor is not responsible occurs at a time when the creditor is in default of acceptance.

324: If the debtor, in the case of a bilateral contract, breaches a duty under § 241 (2), the creditor may terminate the contract if he can no longer reasonably be expected to uphold the contract.

325: The right to demand damages in the case of a bilateral contract is not excluded by termination.

339: Where the debtor promises the creditor, in the event that he fails to perform his obligation or fails to do so properly, payment of an amount of money as a penalty, the penalty is payable if he is in default. If the performance owed consists in forbearance, the penalty is payable on breach.

343: (1) If a payable penalty is disproportionately high, it may on the application of the debtor be reduced to a reasonable amount by judicial decision. In judging the appropriateness, every legitimate interest of the creditor, not merely his financial interest, must be taken into account. Once the penalty is paid, reduction is excluded. (…)

346: (1) If one party to a contract has contractually reserved the right to terminate or if he has a statutory right of termination, then, in the case of termination, performance received and emoluments taken are to be returned.

(2) In lieu of restitution or return, the debtor must provide compensation for value, to the extent that

restitution or return is excluded by the nature of what has been obtained,

he has used up, disposed of, encumbered, processed or redesigned the object received,

the object received has deteriorated or has been destroyed; but deterioration that is caused by the object being used in accordance with its intended use is not taken into account.

If consideration is specified in the contract, then this is to be used as a basis when the compensation for value is calculated; if compensation for value for the benefit of use of a loan is to be paid, it can be shown that the value of the benefit of use was lower.

(3) The duty to compensate for value does not apply

if the defect justifying termination only became apparent during processing or transformation of the object,

to the extent that the creditor is responsible for the deterioration or destruction or that the damage would also have occurred if the object had remained with the creditor,

if in case of statutory termination the deterioration or destruction occurred with the person entitled, although the latter showed the care that he customarily exercises in his own affairs.

Any remaining enrichment must be returned.

(4) The creditor may demand damages, in accordance with §§ 280 to 283, for breach of a duty under subsection (1) above.

349: Termination is realised by declaration to the other party.

433: (1) By a sales contract, the seller of a thing is obliged to deliver the thing to the buyer and to procure ownership of the thing to the buyer. The seller must procure the thing to the buyer free from material and legal defects.

(2) The buyer is obliged to pay the seller the agreed purchase price and to accept delivery of the thing purchased.

434: (1) The thing is free from material defects if, upon the passing of the risk, the thing has the agreed quality. To the extent that the quality has not been agreed, the thing is free of material defects

if it is suitable for the use intended under the contract,

if it is suitable for the customary use and its quality is usual in things of the same kind and the buyer may expect this quality in view of the type of the thing. (…)

494: (1) The consumer loan contract and the power of attorney given by the consumer to enter into such a contract are void if the written form is not complied with at all or if any of the items of information specified in § 247 sections 6 and 9 to 13 of the Introductory Act to the Civil Code for the consumer loan contract is lacking.

(2) Irrespective of a defect under subsection (1), the consumer loan contract is valid to the extent that the borrower receives the loan or draws on it. However, the lending rate on which the consumer loan contract is based is reduced to the statutory rate of interest if there is no information on the lending rate, on the effective annual rate of interest or on the total amount.

(3) If the effective rate of interest is stated at a rate that is too low, the lending rate on which the consumer loan contract is based is reduced by the percentage by which the effective rate of interest is too low.

(4) Costs not stated are not owed by the borrower. If the contract does not state under what preconditions costs or interest can be adjusted, the possibility to adjust these to the disadvantage of the borrower ceases to apply.

(5) If instalments have been agreed, their amount is to be re-calculated by the lender, taking account of the reduced interest or costs.

(6) If the contract does not contain information on the term or on the right of termination, the borrower is entitled to terminate at any time. If information on securities is missing, they cannot be demanded. Sentence 2 does not apply if the net loan amount is more than 75.000 euro.

(7) The lender must provide to the borrower a copy of the contract in which the contractual amendments are considered as revealed by subsections (2) to (6). Notwithstanding § 495, the revocation period commences in this case when the borrower has received this copy of the contract.

518: (1) For a contract by which performance is promised as a donation to be valid, notarial recording of the promise is required. (…)

(2) A defect of form is cured by rendering the promised performance.

536: (1) If the leased property at the time of surrender to the lessee has a defect which removes its suitability for the contractually agreed use, or if such a defect arises during the lease period, then the lessee is exempted for the period when suitability is removed from paying the rent. (…)

550: If a lease agreement [of residential space] for a longer period of time than one year is not entered into in written form, then it applies for an indefinite period of time. However, termination is only allowed at the earliest at the end of one year after use of the residential space has been permitted.

556b: (1) Rent is to be paid at the commencement of the periods of time according to which it is computed but at the latest by the third working day of each such period.

568 (1): The notice of termination of the lease [of residential space] must be in written form.

623: Termination of employment by notice of termination or agreement requires written form to be effective; electronic form is excluded.

657: Anyone offering by means of public announcement a reward for undertaking an act, including without limitation for producing an outcome, is obliged to pay the reward to the person who has undertaken the act, even if that person did not act with a view to the promise of a reward.

658 (1): The promise of a reward may be revoked until the act is undertaken. Revocation is only effective if it is announced in the same way as the promise of a reward was or if it occurs by means of a special announcement.

765: (1) By a contract of suretyship the surety puts himself under a duty to the creditor of a third party to be responsible for discharging that third party’s obligation.

(2) Suretyship may also be assumed for a future or contingent obligation.

766: For the contract of suretyship to be valid, the declaration of suretyship must be issued in writing. The declaration of suretyship may not be made in electronic form. If the surety discharges the main obligation, the defect of form is remedied.

817: If the purpose of performance was determined in such a way that that the recipient, in accepting it, was violating a statutory prohibition or public policy, then the recipient is obliged to make restitution. A claim for return is excluded if the person who rendered performance was likewise guilty of such a breach, unless the performance consisted in entering into an obligation; restitution may not be demanded of any performance rendered in fulfilment of such an obligation.

873: (1) The transfer of the ownership of a plot of land, the encumbrance of a plot of land with a right and the transfer or encumbrance of such a right require agreement between the person entitled and the other person on the occurrence of the change of rights and the registration of the change of rights in the Land Register, except insofar as otherwise provided by law.

(2) Before the registration, the parties are bound by the agreement only if the declarations are notarially recorded, or made before the Land Registry, or submitted to the Land Registry, or if the person entitled has delivered to the other person an approval of registration that satisfies the provisions of the Land Register Code.

925: (1) The agreement between the alienor and the acquirer necessary for the transfer of ownership of a plot of land under § 873 must be declared in the presence of both parties before a competent agency. Any notary is competent to receive the declaration of conveyance, notwithstanding the competence of other agencies. A declaration of conveyance may also be made in an in-court settlement or in an insolvency plan that has been finally and non-appealably confirmed.

(2) A declaration of conveyance that is made subject to a condition or a stipulation as to time is ineffective.

1408: (1) The spouses may provide for their matrimonial property arrangements by contract (marriage contract), and in particular even after entering into marriage terminate or alter the matrimonial property regime.

(2) If the spouses conclude agreements on the equalisation of pension rights in a marriage contract, §§ 6 and 8 of the Equalisation of Pension Rights Act are applicable in this respect.

1410: The marriage contract must be recorded by a notary, and both parties must be present.

1591: The mother of a child is the woman who gave birth to it.

1896: (1) If a person of full age, by reason of a mental illness or a physical, mental or psychological handicap, cannot in whole or in part take care of his affairs, the custodianship court, on his application or of its own motion, appoints a custodian for him. The application may also be made by a person incapable of contracting. To the extent that the person of full age cannot take care of his affairs by reason of a physical handicap, the custodian may be appointed only on the application of the person of full age, unless the person is unable to make his will known.

(1a) A custodian may not be appointed against the free will of the person of full age.

(2) A custodian may be appointed only for groups of tasks in which the custodianship is necessary. The custodianship is not necessary to the extent that the affairs of a person of full age may be taken care of by an authorised person who is not one of the persons set out in § 1897 (3), or by other assistants for whom no legal representative is appointed, just as well as by a custodian.

(…)

1903: (1) To the extent that this is necessary to prevent a substantial danger for the person or the property of the person under custodianship, the custodianship court orders that the person under custodianship requires the consent of the custodian for a declaration of intention that relates to the group of tasks of the custodian (reservation of consent).

(2) A reservation of consent may not extend to declarations of intention that are directed to entering into a marriage or creating a civil partnership, to dispositions mortis causa and to declarations of intention for which a person with limited capacity to contract under the provisions of Books Four and Five does not need the consent of his legal representative.

(3) Where a reservation of consent is ordered, the custodian nevertheless does not require the consent of his custodian if the declaration of intention merely confers a legal advantage on the person under custodianship. To the extent that the court does not order otherwise, this also applies if the declaration of intention relates to a trivial matter of everyday life. (…)

2231: A will may be made in a regular form

by declaration to a notary,

by a declaration made by the testator in accordance with § 2247.

2232: A will made by declaration to a notary is made by the testator declaring his last will to the notary or handing the notary a document with the statement that the document contains his last will. The testator may hand over the document either unsealed or sealed; it is not required to be written by him.

2247: (1) The testator may make a will by a declaration written and signed in his own hand.

(2) The testator should state in the declaration the time when (day, month and year) and the place where he wrote it down.

(3) The signature should contain the first name and the last name of the testator. If the testator signs in another manner and this signature suffices to establish the identity of the testator and the seriousness of his declaration, such a signature does not invalidate the will.

(4) A person who is a minor or is incapable of reading text may not make a will in accordance with the provisions above.

(5) Where a will made under subsection (1) does not contain any information about the time when it was made and where this causes doubts about its validity, the will is to be deemed to be valid only if the necessary ascertainments about the time when it was made can be established in some other manner. The same applies with the necessary modifications to a will that does not contain any information about the place where it was made.

German Commercial Code (Handelsgesetzbuch) (selection)

348: A contractual penalty, promised by a merchant operating a business, cannot be reduced on the basis of the provisions of § 343 BGB.

350: If the debtor to a suretyship (…) is a commercial party, the formal requirements of § 766 (1) and 781, first and second sentence, do not apply.

369: (1) A merchant shall have a right of lien, in respect of claims against another merchant due and owing to him arising out of their mutual commercial dealings, over movable goods and securities belonging to the debtor which have come into his possession with the debtor’s consent in connection with commercial transactions, insofar as they are still in his possession, in particular by virtue of a right of disposal under a bill of lading or warehouse receipt. Such a right of lien shall also exist where title to the article in question has passed from the debtor to the creditor or has been transferred to the creditor by a third party on the debtor’s behalf but subject to an obligation to transfer title back to the debtor.

(2) The right of lien shall be effective as against a third party insofar as the grounds upon which the debtor’s claim to recover possession of the article is denied can also be relied upon against that third party.

(3) The right of lien is excluded if retention of possession of the object is contrary to an instruction given by the debtor before or upon transferring possession or an obligation entered into by the creditor to deal with the article in a particular manner.

(4) The debtor can avoid the exercise of the right of lien by giving security for his debt. Security for this purpose shall not include a surety by a third party.

Authentication Act (Beurkundungsgesetz) (selection)

17 (1): The notary must ascertain the intention of the parties, explain the content of the transaction, inform the parties about the legal consequences of the transaction, and record their statements in a clear and unequivocal way. In doing so, he must avoid mistakes and doubt and guard against inexperienced parties being disadvantaged.