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The Bundestag passes a massive restriction on contractual freedom. The Federal Ministry of Justice has thus prevailed with its plan to limit the terms of consumer contracts to a maximum of one year.
Read my article from September 6, 2019 on this now serious legislative proposal, especially with regard to the resulting highly questionable restrictions on contractual freedom.
You can download the draft law passed by the Bundestag here.
The bill to restrict freedom of contract
As I commented in my article from September 6, 2019, the (further) restriction on the possibility of concluding contracts with a commitment period of at least two years that has now been adopted represents a massive curtailment of contractual freedom. There is also no justification for this in the draft bill now before us. On the contrary, it reveals a considerable misunderstanding of freedom of contract and its positive significance for consumers and the economy. It also continues the political line of denying consumers their maturity. Significantly, the draft bill states:
“(…) In many areas where open-ended contracts used to be common, consumers are now often only offered contracts with a two-year term on good terms, which are automatically renewed if the consumer does not terminate them in good time. The restrictions on contract terms that were previously in place are no longer appropriate. The long contract commitment inhibits consumers from switching to another provider and thus competition. The contract extension clauses are overlooked or forgotten by consumers. By limiting the term to one year, shortening the automatic renewal period and providing a shorter notice period of one month, the aim is to give consumers more freedom of choice with regard to their contract. The aim is to strengthen the position of the contractual partner and promote competition. (…)”
Rating
The Federal Ministry of Justice should consider whether the law that has now been passed will actually achieve the opposite of what is supposedly intended. This is because the ban on longer terms massively restricts the previous options for drafting contracts. Whereas the parties involved were previously still able to agree on contracts tailored to their respective needs, the planned restrictions will in fact significantly limit competition and freedom of choice. The losers of the proposed legislation are therefore almost everyone involved. The “winners” are at best those consumers who “forget” notice periods. The worthiness of protecting this group seems highly questionable when you consider that those affected who have “forgotten” to terminate their contract after a two-year contract period had previously benefited from very attractive contract conditions in most cases. In future, thanks to this group of “forgetters”, the aforementioned attractive contract conditions will no longer be available to anyone.
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Guide to GmbH law: The duties and liability risks of the managing director of a GmbH
In the external relationship, only the GmbH is liable, which can indemnify its managing directors. However, this does not mean that external liability of the managing directors is excluded.
In addition to personal liability in the area of tax and social security law, the managing director may also be liable on the basis of his own contractual obligations, on the basis of an induced legal appearance, on the basis of (personal) culpability when concluding the contract and in tort.
For the aforementioned reasons, every managing director of a GmbH is urgently recommended to be familiar with the requirements for proper managing director activities.
Estimation of fictitious defect rectification costs
For some time now, a landmark decision by the Federal Court of Justice has clarified that the contractual claim for damages in lieu of performance pursuant to Sections 437 No. 3, 280, 281 BGB can be assessed on the basis of the “fictitious” defect rectification costs that are likely to be necessary but have not yet been incurred, see BGH ruling of 12.03.2021, Ref. V ZR 33/19. In practice, it is of particular relevance how the court called upon to decide in an individual case is to determine the amount of such fictitious damage costs.
EUGH ruling “LKW Walter”
The possibility of being able to enforce one’s own rights as easily and quickly as possible in cross-border EU business transactions, which is very welcome in principle, has some pitfalls. The author’s experience shows that traders are often overwhelmed when they receive legally relevant mail from abroad. This is not least due to the fact that court documents received from abroad often do not meet the requirements of European law.
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