Flo's Notes

Standard Terms & Consumer Protection

5 min read

References without law book default to BGB.

Resources

Standard Business Terms

In other words, terms and conditions.

Resources

Relevant Sections

§ 305 BGB, § 305c BGB, § 307 BGB

Standard business terms are terms applied to all contracts of a company, in the form of general terms and conditions (AGB). They are used to standardize contracts and make them more efficient, provide clarity or customize existing laws.

Standard business terms are also a way to develop standards for new business models, such as online platforms, where there are no established legal rules yet, which are then confirmed or rejected by courts.

The law on these terms ensures that the party setting up standard business terms does not put the other party at a disadvantage, for example by including unfair terms or by not properly informing the other party about the terms. Therefore, some clauses are fine in regular contract law, but prohibited in standard business terms, such as a clause that allows the seller to unilaterally change the price after the contract is concluded. In contrast to contracts, if an individual clause is invalid, the rest of the standard business terms can still be valid, unless the invalid clause is essential to the contract (e.g. price clause).

Standard Business Terms

A framework of terms and conditions intended for more than one contract and presented by one party (§ 305 (1) I BGB). They are:

  • Pre-formulated
  • Intended for multiple contracts
  • Unilaterally set by one party
  • Not individually negotiated

The other party must be given the opportunity to read them and must agree before the contract is entered. Unlike individually negotiated terms, standard business terms must not include unusual/surprising clauses (§ 305c). The individual contract prevails over T&Cs (§ 305b).

Content Control

  • § 308 and § 309 BGB provide a list of clauses that are considered unfair and therefore void in standard business terms in B2C relations (not B2B). Terms and conditions cannot reverse statutory provisions, such clauses must be negotiated in the individual contract.
  • § 307, which outlines particularly unfair clauses also applies to B2B relations.

When checking for unfairness, apply the more specific provisions first, then move to the general one (309 → 308 → 307). If a specific clause is found to be in violation, it’s not enforceable.

Consumer Protection

Resources

Because traders are typically in a stronger position than consumers, EU directives implemented in the member states’ jurisdiction provide for consumer protection, which includes a right of withdrawaltransactions for consumers in certain situations. This allows consumers to cancel a contract within a certain period of time without providing a reason and without incurring any costs (except for the cost of returning the goods).

This applies to B2C transactions, so contracts between trader and consumer:

  • Consumer (§ 13 BGB): Any natural person who enters into a legal transaction for purposes that are predominantly outside their trade, business, or profession.
  • Trader (§ 14 BGB): Any natural or legal person who, in a commercial or professional capacity, enters into a legal transaction.

Before checking for right of withdrawal, therefore, check if a given transaction was conducted between a consumer and a trader.

In effect, consumers have a 14-day (or longer) right of withdrawal (§ 312g BGB) and traders need to provide additional paperwork (§312d).

Scope

Consumer protection is granted for:

  • Situations where consumers might struggle to make up their mind: Distance contracts (e.g. online shopping), and contracts that are formed outside of business premises (e.g. door-to-door sales).
  • Contracts that put long-lasting obligations on consumers: Loan agreements, payments by installments

In these cases, the 14-day rule is active, unless an exception in § 312g II applies: for example newspapers and perishable goods, customized goods, and financial instruments.

Distance Contracts (§ 312c BGB)

Distance contracts are contracts that are concluded without the simultaneous physical presence of the trader and the consumer, and the use of one or more means of distance communication (e.g. online shopping, telephone sales).

Here, withdrawal according to § 355 BGB applies.

Contracts Out of Business Premises (§ 312b BGB)

Contracts that are made outside of a regular business location, where the consumer would not expect to make a purchase (e.g. supermarket vs. door-to-door sales or “Kaffeefahrten”) have been shown to be more likely to lead to impulsive buying and buyer’s remorse, and therefore consumers have a right of withdrawal for these contracts.

Here, withdrawal according to § 356 BGB applies.

Withdrawal

The declaration of withdrawal is a DoI and must be received by the other party, however, here the date the declaration is sent is relevant for the withdrawal period, not the date it is received. The 14 days start when the goods are received (§ 355 BGB). No reason or form is required, but in case of conflict the consumer has to prove they have withdrawn in time.

Because these rules are consumer-friendly, abuse is rather easy, when consumers treat the right of withdrawal as test purchase. As usual, there’s a difference between having a right and morally justifying its use.

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