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BGH eliminates widespread misunderstanding of its case law on the application of warranty law for material defects when purchasing shares (judgment of 26.09.2018, case no. VIII ZR 187/17)

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BGH eliminates widespread misunderstanding of its case law on the application of warranty law for material defects when purchasing shares! A comprehensive exclusion of statutory warranty claims in the share purchase agreement does not fundamentally preclude the application of Section 313 BGB (frustration of contract)!

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Group Of Media Students Collaborating On Project

What do so-called media agencies do? – An analysis of the usual contractual relationships in the media business.

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“By their legal nature, media agency agreements are generally to be qualified as agency agreements in which one party (media agency) undertakes to carry out an independent economic activity to safeguard the financial interests of third parties (in particular media planning and buying) and the other party (advertising client) undertakes to pay a fee.” (BGH ruling from 16.6.2016, ref. III ZR 282/14)

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Successful Completion of Negotiations

The hurdles to an individual contract are high: when is a provision “negotiated” and therefore not subject to the restrictions of GTC law?

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Negotiation is more than negotiation. The party proposing an arrangement must seriously put its content up for negotiation and give the other contracting party recognizable freedom to protect its interests.

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Hand client signing contract paper a real estate or mortgage contract.

Overview: Law on general terms and conditions (GTC)

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General terms and conditions (GTC) affect everyone: whether commercial enterprises, which try to make their respective GTC the basis of the business relationship in their business dealings with each other, or private individuals, who are confronted with GTC in every situation in life – for example when boarding public transport, shopping on eBay or amazon or even when entering a department store. The importance of general terms and conditions is therefore immense.

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Landmark ruling by the BGH on the law of company acquisitions (judgment of September 26, 2018, case no. VIII ZR 187/17, reasons for judgment pending):

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The purchase of shares is a legal purchase to which the rules on liability for material defects generally do not apply. An exception only applies if the object of purchase is the entire company or, in the case of the purchase of shares, (almost) all shares. Contrary to a long-standing misconception in legal literature and the courts of lower instances, it is not sufficient if the purchaser holds all or almost all of the shares in a company as a result of the transaction.

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