Contract Law Basics

One partner must have given the other the possibility of influence, entrusting them with rights, goods, or interests with the intention of a possible relationship.

The initiation of a contract does not require a concrete agreement or actual contract conclusion. Non-binding discussions, offers, or even information visits can suffice.

Business contacts exist when potential parties interact regarding a possible business transaction, even in the preliminary information gathering phase.

Mere social proximity without any reference to a potential legal transaction is not considered a business contact under BGB § 311 (2) no. 3.

Both parties in a special relationship have duties of protection or consideration as outlined in BGB § 241 (2) to safeguard the other party.

A GTC is validly incorporated into a contract if both parties agree to it, even if it is not explicitly mentioned in the contract. This includes when a party accepts the delivery of goods knowing that the other has used their GTC.

A GTC in Germany must be written in text form according to § 126b BGB. This is a new requirement introduced by the amendment to § 309 No. 13 lit. b BGB.

A typical GTC often includes clauses on the application, jurisdiction, and the resolution of disputes. It also defines responsibilities for both parties, including how to handle individual agreements, notifications, and declarations.

No, GTCs are used by both buyers and sellers, but they may have different content. This is because a seller's GTC might focus on product specifications, while a buyer's GTC might focus on payment terms.

Deciding where to hold negotiations should be considered in advance. Factors include comfort levels with unfamiliar environments, potential for distractions, and negotiating partner's preferences.

It's crucial to clarify in advance who will be present at negotiations, especially if lawyers are involved. This helps establish expectations and avoid potential issues.

One party may feel disadvantaged if the other has legal representation, potentially leading to unfair bargaining or missed legal considerations.

While lawyers are essential for legal guidance, their behavior during negotiations must not hinder contract completion. Overemphasis on legal details can obstruct progress.

Summarise phone calls with negotiating parties immediately after each conversation. Briefly record key points and send to all involved promptly.

Thoroughly record meeting outcomes, ideally in minutes. These minutes must be reviewed and shared with the negotiating partner afterwards.

Comprehensive documentation of all negotiation processes is crucial. It allows for continuity of project management and provides proof if disagreements arise later.

Documentation like emails and meeting minutes can be used as evidence if negotiating parties later deny preliminary agreements or results.

A clause in a contract between an entrepreneur and a consumer that forbids the consumer from using set-off to pay a debt. This clause is invalid under German law if the consumer is left unable to use set-off for undisputed or legally established claims.

To enable the seller to receive payment quickly by preventing the buyer from delaying payment by using offsetting claims against the seller's debt.

A set-off claim is effective when it is certain in terms of both its reason and its amount. This means the buyer knows why they are owed money and how much they are owed.

Instead of a general prohibition, a seller can use individual agreements or other payment mechanisms like a letter of credit to ensure they receive payment without the risk of set-off.

The clause 'cash on delivery' implies a prohibition of set-off, as the buyer must pay immediately upon delivery without the possibility of using claims to offset the payment.

Similar to COD, 'cash against documents' requires the buyer to pay upon receiving the delivery documents, effectively barring them from using set-off.

The word 'cash' in payment clauses like 'cash against invoice' or 'net cash against invoice' indicates that payment must be made in cash or equivalent forms of payment, excluding set-off.

The buyer in a 'cash against documents' agreement has an advance performance obligation, meaning they must pay upon delivery of the documents without the right to examine the goods beforehand.

The seller or buyer can only withhold the goods or payment if they have a legally established or undisputed counterclaim against the other party.

The buyer can take possession of the goods by collecting them or the seller can deliver them. This can be done by the seller directly or through a third party.

The parties must agree on when and where the handover will occur. The BGB assumes the seller doesn't have to bring the goods to the buyer.

If no handover time is agreed upon, the seller must deliver immediately. This applies in case of doubt.

The "where" of delivery is determined by the parties' agreement. If none exists, the BGB states it's the seller's domicile, unless circumstances indicate otherwise.

If the debt arose from the seller's business and their business place differs from their domicile, the place of business takes precedence.

Simply paying for dispatch costs doesn't automatically mean the place of dispatch is the place of performance.

The BGB doesn't assume all debts are delivery debts. It means the delivery of goods is not the default expectation in every contract.

The supplier's liability for fault must be fair, according to § 307 (2) no. 1 BGB. This establishes a requirement for fairness that needs to be considered in assessing liability.

There's debate on whether purchase terms and conditions can eliminate the need for a reminder before defaulting on a contract. Some argue it's essential for warnings, while others prioritize strict deadlines in commercial settings.

Using fixed deadlines in purchase agreements according to § 286 (2) nos. 1 & 2 BGB makes reminders unnecessary. These fixed dates dictate expected performance, making a separate reminder redundant.

The highest courts haven't definitively ruled on whether purchase conditions can waive the reminder requirement for default in delivery. This creates ambiguity for businesses.

Using lump sums for delay-related damages in both purchasing and selling conditions simplifies the process. Instead of proving exact losses, a pre-determined amount compensates for the delay.

While useful, lump sum clauses place the onus on the buyer to prove all incurred damages. This can be challenging in court, potentially leading to incomplete compensation.

Purchase conditions typically focus on buyer's needs like payment terms, while sale conditions focus on seller's needs like product specifications.