commercial & contracts bodenheimer herzberg legal

In many jurisdictions, the use of General Terms and Conditions is subject to restrictions, primarily as far as business-to-consumer (B2C) transactions are concerned. Across the EU, Directive 93/13/EEC on Abusive Terms as well as transposing domestic legislation applies. In several member states, the transposing legislation goes beyond the minimum standard applied by the directive.

Under German domestic law, restrictions on the use of General Terms and Conditions apply even as far as business-to-business (B2B) relationships are concerned. Since any contract clause that has been drafted with the intention of being used in multiple contracts qualifies as “General Terms and Conditions”, freedom of contract is thus to some extent limited in B2B transactions, and B2B contracts require a careful legal analysis to minimise any regulatory hazards.

The German courts also hold that using invalid General Terms and Conditions constitutes an unfair business practice under the Act Against Unfair Competition, thus giving rise to claims to be brought by competitors and/or industry or consumer associations against the user of the terms in question.

Another issue arises when one of the parties suggests a standard form that has been prepared by an industry association, a notary, or some other third party. Whether or not such a fact pattern gives rise to the applicability of the regime for General Terms and Conditions must be examined on a case-by-case basis.