Flo's Notes

Trade Law

3 min read

References without law book default to HGB.

Resources

Trade Law

Merchant

A merchant is a professional trader who engages in commercial activities. The legal framework governing merchants is primarily found in the Handelsgesetzbuch (§§ 1-6 HGB), which provides specific rules and regulations for commercial transactions.

Compared to non-merchant traders, merchants are typically more experienced and knowledgeable in business matters. They are registered in the business register (Handelsregister, for public verifiability) and subject to stricter rules on some types of transactions.

In contrast to consumer contract law, trade law favors strict, predictable rules over fairness in each individual case. Clarity of rules is itself a form of fairness in commerce, because it allows merchants to plan and act reliably. There is also a higher reliance on business customs, as business tends to change quicker than law.

Who is a Merchant

  • § 1 HGB: A natural person whose business requires a commercially organized operation due to its nature or scope, regardless of registration.
  • § 2 HGB: Commercial businesses that do not need such organization may choose to register, which might be advantageous as business partners are also held to stricter rules.
  • § 6 HGB: All commercial companies and partnerships (GmbH, AG, oHG, KG) are merchants. Since most business operate in this form, most are merchants.

Special Rules for Merchants

A commercial transaction is a Sale of Goods where both parties are merchants. If not declared otherwise, the law assumes a merchant is acting in a commercial capacity.

  • § 377 I HGB: The buyer must examine the goods immediately (if possible) and notify the seller of any defects (like REWE using FruitCheck ;)).
  • § 377 II HGB: If the buyer fails to do so, the goods are deemed approved unless the defect was not detectable, and they lose their right to claim for defects.
  • § 377 III HGB: If a defect that was undetectable at first becomes apparent later, immediate notification is again required.

Due to customary law, there is a special case for silence. While it does not usually constitute acceptance of a contract, in commercial transactions, silence can be interpreted as acceptance if the parties have been working on a contract and one party does not object the other’s confirmation of what has been discussed. These customs are acknowledged in § 344 HGB, with the idea of speed and good faith.

Agency for Merchants

Power of Attorney (Prokura)

A prokura is a special type of agent with broad powers to act on behalf of a merchant. While the agent may not be allowed to do everything due to their employment contract, the power of attorney grants them the right to legally bind the company externally.

Contracts are still binding for the company, even if the agent breached their contract. Unlike common agency, the power of attorney allows the agent to perform almost all legal acts related to the merchant’s business.

It is granted by the merchant (owner or head management) and must be registered in the Handelsregister. It can also be split between people to avoid abuse.

Note that US Power of Attorney is not the same as the German Prokura.

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