Legal assessment of the project

In my opinion, the planned limitation of contract terms is not compatible with the principle of freedom of contract. The arguments used by the Federal Ministry of Justice cannot justify the planned restriction:

The principle of freedom of contract

Freedom of contract is understood to mean the right of every individual to decide freely about

• to conclude a contract (so-called freedom to conclude a contract), and
• The parties are free to decide on the content of a contract (so-called freedom of design).

Freedom of contract is not expressly regulated by law; it is part of the constitutionally protected principle of private autonomy, according to which every individual is granted the right to freely organize their private living conditions.

Part of this is the freedom to conclude contracts and to determine their content. The latter is what is at issue here.

Permissible restrictions on freedom of contract

Both forms of freedom of contract – i.e. freedom to conclude contracts and freedom to form contracts – are subject to recognized restrictions.

In certain situations, there is an obligation to contract. One example is motor vehicle liability insurance. Here, insurance companies are obliged to contract in accordance with Section 5 of the German Compulsory Insurance Act (with the restrictions set out therein). The necessity here is obvious.

Freedom of design is also subject to certain restrictions in order to protect higher interests. For example, there are legal regulations in various areas of law that are of a mandatory nature and cannot be waived by contract; such regulations can be found, for example, in the law on general terms and conditions, which declares certain provisions in general terms and conditions null and void primarily for the protection of consumers. Further restrictions result from statutory formal requirements (written form, notarial form, etc.) as well as the statutory nullity order with regard to provisions that violate common decency(Section 138 BGB) or statutory prohibitions (Section 134 BGB).

No apparent justification for the planned restriction of design freedom

As stated at the beginning, I do not believe that the planned limitation of contract terms can be justified to any extent:

Act affects all future contracts in the sectors concerned

First of all, it should be noted that the law on general terms and conditions does not only apply to the proverbial “small print”. In practice – especially in the sectors affected here – every contract is subject to GTC law, as it would simply not be feasible to agree individual contract terms with every consumer. In short, the proposed legislation effectively covers every future contract in the affected sectors.

Complete elimination of the option of 2-year contracts

As a result, the option to conclude a two-year contract, which is extended by one year in the absence of termination, will no longer be available in future.

How can we justify taking this option away from the parties? In my opinion, nothing:

Freedom of contract means that the parties themselves can (and must) determine what is subjectively right for them within the limits of good morals and the recognized general laws limiting freedom of contract. No one can or may take this decision away from them.

The legislator, insofar as it wishes to uphold private autonomy, must respect this self-determination of the legal subjects and must not allow itself to be tempted – e.g. driven by political sentiment – to determine what is right through laws that (impermissibly) restrict contractual freedom.

“Consumer protection” as a mere pretext for limiting contract terms

In principle, consumer protection is an unquestionable motive for restricting freedom of contract. However, consumer protection must not be abused – as in my opinion in this case – to justify politically driven projects.

According to its own statements, the Federal Ministry of Justice is of the opinion that terms of two years are “unfair” and a “nuisance” for consumers. It overlooks the fact that consumers in all the sectors targeted (mobile telephony, energy supply, etc.) have a wide variety of contract models from a large number of providers to choose from. In particular, consumers always have the option of entering into contracts without any commitment. Conversely, they can – at least so far – choose to enter into commitments and often receive considerable benefits in return (e.g. significantly more favorable conditions, discounted hardware, etc.). In other words, consumers today can choose between a variety of contract models and decide for themselves what is “right” for them. This also includes the assessment of the disadvantages associated with a contract commitment, which is the sole responsibility of the consumer. It can therefore be of no relevance from a legislative perspective that consumers may be “annoyed” after some time by an existing contract commitment that they consciously entered into some time ago.

Competition law already offers sufficient protection

After all, the consumer only needs protection to the extent that he is not misled by a contract offer, e.g. in that essential contractual conditions are not sufficiently recognizable for him. However, this is the responsibility of competition law, which has always fulfilled this task adequately.