Germany Labour & Tax Guide: Payroll, Tax & Compliance Guide

Full citation:  Civil Code in the version promulgated on 2 January 2002 (Federal Law Gazette [Bundesgesetzblatt] I page 42, 2909; 2003 I page 738), last amended by Article 1 of the Act of 10 August 2021 (Federal Law Gazette I p. 3515).

This statute serves to implement the following directives:

1.  Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions (OJ L 39 of 14 February 1976, p. 40),

2.  Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of businesses (OJ L 61 of 5 March 1977, p. 26),

3.  Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises (OJ L 372 of 31 December 1985, p. 31),

4.  Council Directive 87/102/EEC for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ L 42 of 12 February 1987, p. 48, last amended by Directive 98/7/EC of the European Parliament and of the Council of 16 February 1998 amending Directive 87/102/EEC for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ L 101 of 1 April 1998, p. 17),

5.  Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours (OJ L 158 of 23 June 1990, p. 59),

6.  Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L 95 of 21 April 1993, p. 29),

7.  Directive 94/47/EC of the European Parliament and of the Council of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis (OJ L 280 of 29 October 1994, p. 82),

8.  Directive 97/5/EC of the European Parliament and of the Council of 27 January 1997 on cross-border credit transfers (OJ L 43 of 14 February 1997, p. 25),

9.  Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts (OJ L 144 of 4 June 1997, p. 19),

10.  Articles 3 to 5 of Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (OJ L 166 of 11 June 1998, p. 45),

11.  Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees (OJ L 171 of 7 July 1999, p. 12),

12.  Articles 10, 11 and 18 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (“Directive on electronic commerce” OJ L 178 of 17 July 2000, p. 1),

13.  Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000 on combating late payment in commercial transactions (OJ L 200 of 8 August 2000, p. 35).

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Book 1
General part

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Division 1
Persons

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Title 1
Natural persons, consumers, traders

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Section 1
Beginning of legal capacity

The legal capacity of a human being begins on the completion of birth.

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Section 2
Beginning of majority

Majority begins at the age of eighteen.

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Sections 3 – 6
(repealed)

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Section 7
Residence; establishment and termination

(1) A person who settles permanently in a place establishes their residence in that place.

(2) There may be a residence in more than one place at the same time.

(3) Residence is terminated if the person abandons the place of residence with the intention of giving it up.

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Section 8
Residence of persons who lack full capacity to contract

A person who is incapable of contracting or who has limited capacity to contract can neither establish nor terminate residence without the consent of their legal representative.

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Section 9
Residence of a soldier

(1) Soldiers have their residence in their garrison. The residence of a soldier who has no garrison within the territory of Germany is deemed to be their last garrison within the territory of Germany.

(2) These provisions do not apply to soldiers who are merely doing compulsory military service or who cannot independently establish residence.

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Section 10
(repealed)

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Section 11
Residence of a child

Minor children share the residence of their parents; they do not share the residence of a parent who lacks the right to care for the person of the child. If neither parent has the right to care for the person of the child, then the child shares the residence of the person who has this right. The child retains the residence until the child validly abandons it.

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Section 12
Right to a name

If the right of a person to use a name is disputed by another person, or if the interest of the person entitled to the name is injured by the unauthorised use of the same name by another person, then the person entitled may require the other to remove the infringement. If there is the concern that further infringements may ensue, the person entitled may seek a prohibitory injunction.

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Section 13
Consumer

A consumer means every natural person who enters into a legal transaction for purposes that predominantly are outside the consumer’s trade, business or profession.

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Section 14
Trader

(1) A trader means a natural or legal person or a partnership with legal personality who or which, when concluding a legal transaction, acts in exercise of their trade, business or profession.

(2) A partnership with legal personality is a partnership that has the capacity to acquire rights and to enter into obligations.

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Sections 15 – 20
(repealed)

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Title 2
Legal persons

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Subtitle 1
Associations

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Chapter 1
General provisions

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Section 21
Non-commercial association

An association the object of which does not consist of commercial business operations acquires legal personality by entry in the register of associations maintained by the competent local court.

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Section 22
Commercial association

An association the object of which consists of commercial business operations acquires legal personality, for lack of special provisions under federal law, by state grant. The grant is in the power of the Land in the territory of which the association has its seat.

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Section 23
(repealed)

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Section 24
Seat

The seat of an association, unless otherwise provided, is the place at which the management is conducted.

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Section 25
Constitution

The constitution of an association with legal personality is, to the extent that it is not based on the following provisions, determined by the articles of association.

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Section 26
Board and representation

(1) An association must have a board. The board represents the association in court and out of court; it has the status of a legal representative. The extent of the power of agency may be restricted by the articles of association with effect in relation to third parties.

(2) Where the board consists of several persons, the association is represented by the majority of the board members. If a declaration of intent is to be submitted to an association, then it is sufficient to submit it to one member of the board.

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Section 27
Appointment of and management by the board

(1) The appointment of the board is by resolution of the general meeting.

(2) The appointment is revocable at any time, notwithstanding the claim to remuneration as contractually agreed. The revocability may be restricted by the articles of association to that case in which there is a compelling reason for the revocation; such a reason includes in particular a gross breach of duty or inability to effect proper management.

(3) The provisions on mandate in sections 664 to 670 apply accordingly to the management by the board. The members of the board act free of charge.

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Section 28
Passing of resolutions by the board

In case of a board consisting of more than one person, resolutions are passed under the provisions of sections 32 and 34, which govern the resolutions by the members of the association.

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Section 29
Emergency appointment by local court

To the extent that the board is lacking the necessary members, they are to be appointed, in urgent cases and for the period until such defect is corrected, on the application of a person concerned, by the local court maintaining the register of associations for the district in which the association has its seat.

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Section 30
Special representatives

It may be provided by the articles of association that, in addition to the board, special representatives are to be appointed for particular transactions. In case of doubt, the power of agency of such a representative extends to all legal transactions that the sphere of business allocated to them normally entails.

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Section 31
Liability of an association for organs

The association is liable for the damage to a third party that the board, a member of the board or another constitutionally appointed representative causes through an act committed by them in carrying out the business with which they have been entrusted, where the act gives rise to a liability in damages.

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Section 31a
Liability of members of organs and special representatives

(1) If members of organs or special representatives act free of charge, or if they receive remuneration for their activity which does not exceed 840 euros per year, they are liable towards the association for damage caused in performing their duties only in case of intent or gross negligence. Sentence 1 also applies to liability towards the members of the association. If it is in dispute as to whether a member of an organ or a special representative has caused damage with intent or gross negligence, then the burden of proof is on the association or on the member of the association.

(2) If members of organs or special representatives are obliged under subsection (1) sentence 1 to provide to another party compensation for damage which they caused in performing their duties, they may demand that the association release them from the obligation. Sentence 1 does not apply if the damage was caused with intent or gross negligence.

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Section 31b
Liability of members of the association

(1) If members of the association pursue activities for the association free of charge, or if they receive remuneration for their activity that does not exceed 720 euros per year, then they are liable to the association for damage they have caused in performing the duties of the association, in accordance with the articles of association, that have been assigned to them, only in case of intent or gross negligence. Section 31a (1) sentence 3 is to be applied accordingly.

(2) If members of the association are obliged under subsection (1) sentence 1 to provide to another party compensation for damage, which they caused in performing the duties of the association, in accordance with the articles of association, that have been assigned to them, they may demand that the association release them from the obligation. Sentence 1 does not apply if the members of the association have caused the damage with intent or gross negligence.

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Section 32
General meeting; passing of resolutions

(1) The affairs of the association, to the extent that they are not to be attended to by the board or another organ of the association, are dealt with by resolution in a meeting of the members. In order for the resolution to be valid, it is necessary for the subject to be stated when the meeting is convened. The resolution is decided by the majority of the votes cast.

(2) Even without a meeting of the members, a resolution is valid if all members declare their approval of the resolution in writing.

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Section 33
Amendment of articles of association

(1) A resolution containing an amendment of the articles of association requires a majority of three quarters of the votes cast. In order to alter the objects of the association, the approval of all members is necessary; the approval of the members not present must be declared in writing.

(2) If the legal personality of the association results from a grant, the ratification by the competent authority is necessary for every amendment of the articles of association.

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Section 34
Exclusion from voting

A member has no right to vote if the resolution concerns entering into a legal transaction with that member or commencing or disposing of litigation between that member and the association.

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Section 35
Special rights

Special rights of a member may not be adversely affected by a resolution of the general meeting without the member’s consent.

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Section 36
Convening the general meeting

(1) The general meeting is to be convened in the cases laid down in the articles of association and when the interests of the association require it.

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Section 37
Convening a meeting at the request of a minority

(1) The general meeting is to be convened if the proportion of the membership laid down in the articles of association or, in the absence of a provision, one-tenth of the members call in writing for a meeting to be convened, stating the purpose and the reasons.

(2) If the request is not granted, the local court may authorise the members who made the request to convene the meeting; it may make orders on the chairing of the meeting. The court with jurisdiction is the local court maintaining the register of associations for the district in which the association has its seat. The authorisation must be referred to in the notice convening the meeting.

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Section 38
Membership

Membership is not transferable and not inheritable. It is not possible to entrust the exercise of membership rights to another person.

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Section 39
Leaving the association

(1) The members have the right to leave the association.

(2) The articles of association may specify that leaving is admissible only at the end of a fiscal year or only after a notice period; the maximum notice period is two years.

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Section 40
Flexible provisions

The provisions of section 26 (2) sentence 1, section 27 (1) and (3), sections 28 and 31a (1) sentence 2 as well as sections 32, 33 and 38 do not apply where the articles of association provide otherwise. It is not possible to deviate from section 34 by way of the articles of association, even for the passing of resolutions by the board.

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Section 41
Dissolution of the association

An association may be dissolved by resolution of the general meeting. The resolution requires a majority of three-quarters of the votes cast, unless otherwise provided in the articles of association.

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Section 42
Insolvency

(1) An association is dissolved by the opening of insolvency proceedings and upon the order becoming final and binding by means of which the opening of the insolvency proceedings has been rejected for insufficiency of assets. If the proceedings are discontinued on the request of the debtor, or terminated after the confirmation of an insolvency plan that provides for the association to continue in existence, then the general meeting may pass a resolution that the association is to continue in existence. The articles of association may provide that, if insolvency proceedings are opened, the association is to continue as an association without legal personality; in this case as well, provided the prerequisites of sentence 2 are satisfied, a resolution may be passed to continue the association as an association with legal personality.

(2) If an association is insolvent or is overindebted, then the board is to apply for the opening of insolvency proceedings. If the filing of the request is delayed, the members of the board who are at fault are responsible to the creditors for the damage resulting from this; they are liable as joint and several debtors.

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Section 43
Deprivation of legal personality

An association the legal personality of which is the result of a grant may be deprived of its legal personality if it pursues objects different from those determined in the articles of association.

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Section 44
Jurisdiction and procedure

Jurisdiction and the procedure for the deprivation of legal personality under section 43 are governed by the law of the Land in which the association has its seat.

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Section 45
Devolution of the assets of the association

(1) Upon the dissolution of the association or its deprivation of legal personality, the assets devolve to the persons specified in the articles of association.

(2) The articles of association may stipulate that the persons entitled to receive the assets be specified by a resolution of the general meeting or by another organ of the association. If the objects of the association do not consist of commercial business operations, then the general meeting may, even if no such provision has been made, allocate the assets to a public foundation or institution.

(3) If no persons entitled to receive the assets are specified, then if, according to its articles, the association exclusively served the interests of its members, the assets will devolve in equal shares to the members at the date of the dissolution or the deprivation of legal personality, and failing this to the treasury of the Land in the territory of which the association had its seat.

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Section 46
Devolution on the treasury

If the assets of the association devolve to the treasury, the provisions on an inheritance that devolves to the treasury as the heir on intestacy apply accordingly. If at all feasible, the treasury is to use the assets in a manner corresponding to the objects of the association.

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Section 47
Liquidation

If the assets of the association do not devolve to the treasury, then there must be a liquidation, unless insolvency proceedings have been opened with regard to the assets of the association.

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Section 48
Liquidators

(1) The liquidation is effected by the board. Other persons also may be appointed as liquidators; the appointment is governed by the provisions for the appointment of the board.

(2) The liquidators have the legal status of the board, unless the purpose of the liquidation leads to a different conclusion.

(3) If there are several liquidators, then they will have authority to represent only jointly, and may take decisions only unanimously, unless otherwise provided.

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Section 49
Duties of the liquidators

(1) The liquidators are to bring to an end the current business, collect the receivables, convert the rest of the assets into cash, satisfy the creditors and pay out the surplus to those entitled to receive the assets. In order to complete transactions that are in progress, the liquidators also may enter into new transactions. The collection of receivables and the conversion of the rest of the assets into cash may be omitted to the extent that these measures are not necessary to satisfy the creditors or to distribute the surplus among those entitled to receive the assets.

(2) The association is deemed to continue in existence until the end of the liquidation if the purpose of the liquidation so requires.

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Section 50
Notice by publication of the association in liquidation

(1) Notice of the dissolution of the association or its deprivation of legal personality is to be given by the liquidators by publication. In the notice, the creditors are to be requested to register their claims. The notice by publication is made through the newspaper specified in the articles of association for this purpose. Notice by publication is deemed to have been effected at the end of the second day after the publication or first publication.

(2) Known creditors are to be requested by special invitation to register their claims.

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Section 50a
Newspaper for notices

If an association has not specified a newspaper in the articles of association, or if the newspaper specified for notices has ceased publication, then notices of the association are to be published in the newspaper that is specified for notices by publication of that local court in the district of which the association has its seat.

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Section 51
One-year waiting period

The assets may not be paid out to the persons entitled to receive the assets until a year has passed after publication of the notice as to the dissolution of the association or the deprivation of legal personality.

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Section 52
Security for creditors

(1) Where known creditors do not register their claim, the amount owed, if the right to deposit exists, is to be deposited for such creditors.

(2) If the discharge of an obligation is not possible at the time, or if an obligation is disputed, the assets may be distributed to the persons entitled to receive them only if security is provided to the creditor.

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Section 53
Liability in damages of the liquidators

Liquidators who commit breaches of their duties under section 42 (2) and sections 50, 51 and 52 or who, before the satisfaction of the creditors, distribute assets to the persons entitled to receive them are responsible, if they are at fault, to the creditors for the damage resulting from this; they are liable as joint and several debtors.

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Section 54
Associations without legal personality

Associations without legal personality are governed by the provisions on partnership. When a transaction is entered into with a third party in the name of such an association, the person acting is personally liable; if more than one person acts, then they are liable as joint and several debtors.

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Chapter 2
Registered associations

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Section 55
Jurisdiction over entry in the register

The entry of an association of the kind specified in section 21 in the register of associations is be made at the local court in the district of which the association has its seat.

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Section 55a
Electronic register of associations

(1) The Land governments may provide by statutory instrument that and to what extent the register of associations is maintained in electronic form as a computerised data file. In this context, it must be guaranteed that

1.  the principles of proper data processing are observed, in particular that precautions against a loss of data are taken, the necessary copies of the databases are kept current at least on a daily basis and the original databases and the copies thereof are kept in safe custody,

2.  the entries to be made are promptly entered into a memory and it remains permanently possible to reproduce their contents unchanged in readable form,

3.  the measures required by the schedule to section 126 (1) sentence 2 no. 3 of the Land Register Code (Grundbuchordnung) are taken.

The Land governments may confer, by statutory instrument, the authorisation under sentence 1 upon the Land departments of justice

(2) The electronic register of associations takes the place of one page of the previous register as soon as the entries on this page have been entered in the memory intended for the entries in the register of associations and made available as the register of associations. A note of closure is to be added to the corresponding pages of the previous register of associations.

(3) An entry comes into effect as soon as it is entered in the memory intended for the register entries and it is possible to permanently reproduce its contents unchanged and in readable form. It is to be verified by a confirmation message or in some other appropriate way whether these prerequisites have been met. As a rule, each entry is to show the date on which it came into effect.

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Section 56
Minimum number of members of the association

As a rule, the entry in the register is to be made only if the number of members is at least seven.

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Section 57
Minimum requirements of the articles of association

(1) As a rule, the articles of association are to set out the objects, the name and the seat of the association and indicate that it is intended to enter the association in the register.

(2) As a rule, the name is to differ appreciably from the names of the registered associations in existence in the same place or in the same municipality.

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Section 58
Recommended contents of the articles of association

As a rule, the articles of association are to contain provisions:

1.  on becoming a member of the association and leaving it,

2.  on whether the members are to make contributions, and if so, of what type these contributions are to be,

3.  on the composition of the board,

4.  on the prerequisites based on which the general meeting is to be convened, on the form required for convening it and on the notarial recording of the resolutions.

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Section 59
Application for registration

(1) The board is to apply for the association to be registered.

(2) Copies of the articles of association and of the documents on the appointment of the board are to be attached to the application.

(3) As a rule, the articles of association are to be signed by at least seven members and are to state the date of their establishment.

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Section 60
Rejection of the application

If the requirements of sections 56 to 59 have not been met, then the application is to be rejected by the local court, stating the reasons.

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Sections 61 – 63
(repealed)

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Section 64
Contents of the entry in the register of associations

On entry in the register, the name and seat of the association, the date of the execution of the Articles, the members of the board and their powers of agency are to be stated.

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Section 65
Addition to name

When the association is entered in the register, the name of the association is given the additional element “eingetragener Verein” (“registered association”).

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Section 66
Notice by publication of the entry and safekeeping of documents

(1) The local court is to publish the entry of the association in the register of associations by means of publication in the electronic information and communication system designated by the Land department of justice.

(2) The documents submitted with the application are kept by the local court.

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Section 67
Changes to the board

(1) The board is to apply for entry in the register of every change to the board. A copy of the document about the change is to be attached to the application.

(2) Board members appointed by the court are entered in the register by the court of its own motion.

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Section 68
Protection of public confidence by the register of associations

If a transaction is entered into between the previous members of the board and a third party, then the change of the board may be used as a defence against the third party only if, at the time the legal transaction is entered into, the change has been recorded in the register of associations or is known to the third party. If the change has been entered, then the third parties need not allow it to apply against them if they do not know of it and their lack of knowledge does not result from negligence.

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Section 69
Documentary proof of composition of the board

Documentary proof that the board consists of the persons entered in the register is furnished to public authorities in the form of a local court certificate confirming the entry.

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Section 70
Protection of public confidence in case of entries on power of agency

The provisions of section 68 also apply to provisions that restrict the scope of the power of agency of the board or that lay down different arrangements for the power of agency of the board than the provision in section 26 (2) sentence 1.

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Section 71
Amendments of the articles of association

(1) Amendments of the articles of association are effective only when entered in the register of associations. The board is to apply for entry of the amendment in the register. A copy of the resolution containing the amendment and of the wording of the articles of association is to be enclosed with the application for registration. In the wording of the articles of association, the amended provisions must agree with the resolution on the amendment of the articles of association, the unchanged provisions must agree with the most recently submitted full wording of the articles of association and, if the articles of association have been amended without the full wording of the articles of association being submitted, the unchanged provisions must also agree with the previously-entered amendments.

(2) The provisions of sections 60, 64 and section 66 (2) apply accordingly.

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Section 72
Certificate on number of members

At any time the local court so demands, the board is to file a written certificate on the number of members of the association.

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Section 73
Decrease to below the minimum number of members

If the number of members of the association falls below three, the local court is to deprive the association of legal personality on application by the board and, if the application is not made within three months, of its own motion after having heard the board.

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Section 74
Dissolution

(1) The dissolution of the association and the deprivation of legal personality are to be entered in the register of associations.

(2) If the association is dissolved by resolution of the general meeting or by the expiry of the time determined for the duration of the association, then the board is to apply for entry of the dissolution in the register. In the former case, a copy of the resolution for dissolution is to be attached to the notification.

(3) (repealed)

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Section 75
Entries in the case of insolvency

The opening of insolvency proceedings and the final and binding order by which the opening of the insolvency proceedings is rejected for insufficiency of assets, as well as the dissolution of the association pursuant to section 42 (2) sentence 1, are to be registered by the court of its own motion. The following also are to be entered of the court’s own motion

1.  the reversal of the order opening the insolvency proceedings,

2.  the appointment of a provisional insolvency administrator, if in addition the debtor is generally prohibited from disposing over the assets or if it is ordered that dispositions by the debtor are effective only with the approval of the provisional insolvency administrator, and the repeal of such a preservation measure,

3.  an order as to debtor-in-possession management by the debtor and the reversal of this order, as well an order that certain legal transactions of the debtor require approval,

4.  the discontinuance and termination of the proceedings and

5.  the monitoring of compliance with an insolvency plan and the termination of the monitoring.

(2) If the association is continued by resolution of the general meeting pursuant to section 42 (1) sentence 2, then the board is to apply for entry of the continuation in the register. A copy of the resolution is to be enclosed with the application.

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Section 76
Register entries in the event of liquidation

(1) In the event of the association being liquidated, the liquidators and their power of agency are to be entered in the register of associations. The same applies to the termination of the association subsequent to liquidation.

(2) The board is to file the application for entry of the liquidators in the register. The application for registration is to state the extent of the liquidators’ power of agency. The liquidators are to apply for entry in the register of changes to the liquidators or their power of agency, as well as the termination of the association. The application for registration of the liquidators appointed by resolution of the general meeting is to have attached to it a copy of the resolution so appointing them, and the application for registration of any power of agency determined in derogation from section 48 (3) is to have attached to it a copy of the document containing this provision.

(3) Liquidators appointed by the court are entered in the register by the court of its own motion.

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Section 77
Parties obliged to apply for entry in the register and form of applications

The applications for entry in the register of associations are to be submitted by members of the board and by the liquidators, who are entitled to represent the association in this regard, by way of publicly certified declaration. The declaration may be submitted to the court in the original or in a publicly certified copy.

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Section 78
Assessment of coercive fines

(1) The local court may enjoin the members of the board to comply with the provisions of section 67 (1), section 71 (1), section 72, section 74 (2), section 75 (2) and section 76 by imposing coercive fines.

(2) In the same manner, the liquidators may be enjoined to comply with the provisions of section 76.

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Section 79
Inspection of the register of associations

(1) Everyone is permitted to inspect the register of associations as well as the documents filed with the local court by the association. A copy of the entries may be required; on request, the copy is to be certified. Where the register of associations is maintained by computer, the copy is replaced by a hard copy and the certified copy by an official hard copy.

(2) The introduction of a computerised procedure enabling the data to be transmitted from electronic registers of associations by retrieval is admissible if it is assured that

1.  the retrieval of data does not exceed the inspection permitted under subsection (1) and

2.  it is possible to monitor the permissibility of the retrievals on the basis of a log.

The Länder may specify a nationwide electronic information and communication system for the proceedings.

(3) Users are to be informed that they may use the data transmitted only for information purposes. The competent agency is to verify (e.g. by spot checks) whether there is evidence that the inspection permitted under sentence 1 has been exceeded or transmitted data are being misused.

(4) The competent agency may exclude a user from taking part in the computerised retrieval procedure if the user endangers the functional reliability of the retrieval equipment, exceeds the inspection permitted under subsection (3) sentence 1 or abuses transmitted data; the same applies in cases in which the threat of the permissible inspection being exceeded or abused is imminent.

(5) The competent agency is the Land department of justice. The agency with local jurisdiction is the Land department of justice within the portfolio of which the competent local court falls. This provision on jurisdiction may be varied by statutory instrument of the Land government. The Land government may confer, by statutory instrument, this authorisation upon the Land department of justice. The Länder may also agree to the jurisdiction being transferred to the competent agency of another Land.

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Section 79a
Application of Regulation (EU) 2016/679 to registration proceedings

(1) The rights enshrined in Article 15 of Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation (OJ L 119 of 4 May 2016, p. 1; L 314 of 22 November 2016, p. 72; L 127 of 23 May 2018, p. 2) are provided under section 79 and the provisions of the Ordinance on the Maintenance of the Register of Associations (Vereinsregisterverordnung) enacted in its regard by the inspection of the register or the retrieval of registry data via the nationwide electronic information and communication system. The court of registration is not obliged to inform persons whose personal data are stored in the register of associations or in the files of the register of the disclosure of these data to third parties.

(2) The right to rectification enshrined in Article 16 of Regulation (EU) 2016/679 may be exercised with regard to personal data stored in the register of associations or in the files of the register only subject to those prerequisites and using that procedure stipulated for the erasure or rectification of entries in the Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction (Gesetz über das Verfahren in Familiensachen und in den Angelegenheiten der freiwilligen Gerichtsbarkeit – FamFG) and in the Ordinance on the Maintenance of the Register of Associations.

(3) The right to object enshrined in Article 21 of Regulation (EU) 2016/679 does not apply to personal data stored in the register of associations and in the files of the register.

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Subtitle 2
Foundations

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Section 80
Formation of a foundation having legal personality

(1) The formation of a foundation with legal personality requires an endowment transaction and recognition of the foundation by the competent public authority of the Land in which the foundation is to have its seat.

(2) A foundation is to be recognised as having legal personality if the endowment transaction satisfies the requirements of section 81 (1), if the long-term and sustained achievement of the object of the foundation appears guaranteed and if the object of the foundation does not endanger the common good. In the case of a foundation that is established for a certain period, the assets of which are to be depleted in pursuing its purpose (principal-depleting foundation), the ongoing performance of the object of the foundation is to be deemed secured if the foundation is to exist for a period defined in the endowment transaction that is at least 10 years.

(3) Provisions of the Land legislation on church foundations remain unaffected. The same applies accordingly to foundations which Land legislation treats as equivalent to church foundations.

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Section 81
Endowment transaction

(1) An endowment transaction inter vivos requires the written form. It must contain the binding declaration by the founder that they will dedicate assets, which also may be intended for depletion, to achieve an object they have specified. The endowment transaction must give the foundation a charter with provisions on

1.  the name of the foundation,

2.  the seat of the foundation,

3.  the objects of the foundation,

4.  the assets of the foundation,

5.  the composition of the foundation board.

If the endowment transaction does not satisfy the requirements of sentence 3 and if the founder is dead, then section 83 sentences 2 to 4 applies accordingly.

(2) Until the foundation is recognised as having legal personality, the founder has a right to revoke the endowment transaction. Where an application has been made for recognition by the competent public authority, the revocation may be declared only to that public authority. The heir of the founder is not entitled to revoke the endowment transaction if the founder made the application to the competent public authority, or, if the endowment transaction was recorded by a notary, the founder, at or after the notarial recording, instructed the notary to make the application.

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Section 82
Duty of founder to make transfers

If the foundation is recognised as having legal personality, the founder has a duty to transfer to the foundation the assets promised in the endowment transaction. Rights for the transfer of which the assignment contract suffices pass to the foundation upon its recognition, unless the endowment transaction indicates that the founder intended otherwise.

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Section 83
Testamentary foundation

If the endowment transaction is a testamentary disposition, then the probate court is to inform the competent public authority of this for the purpose of recognition, unless application is made by the heir or the executor. If the endowment transaction does not satisfy the requirements of section 81 (1) sentence 3, then the foundation will be given a charter or additions will be made to an incomplete charter by the competent public authority before recognition; in so doing, the will of the founder is to be taken into account. The seat of a foundation, unless otherwise provided, is the place at which the management is carried out. In case of doubt, the last residence of the founder within the territory of Germany is deemed the seat.

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Section 84
Recognition after the death of the founder

If the foundation is recognised as having legal personality only after the death of the founder, then for the purpose of the endowment payments made by the founder it will be deemed to have come into existence already prior to their death.

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Section 85
Constitution of foundation

The constitution of a foundation, to the extent that it is not based on federal or Land legislation, is determined by the endowment transaction.

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Section 86
Application of law on associations

The provisions of sections 26 and 27 (3) and of sections 28 to 31a and section 42 apply accordingly to foundations, but the provisions of section 26 (2) sentence 1, section 27 (3) and section 28 apply only to the extent that the constitution, in particular the administration of the foundation by a public authority, does not lead to a different conclusion. The provisions of section 26 (2) sentence 2 and of section 29 do not apply to foundations the administration of which is conducted by a public authority.

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Section 87
Change of objects; termination

(1) Where the objects of the foundation have become impossible to fulfil, or where they endanger the common good, the competent public authority may give the foundation another intended purpose or terminate it.

(2) In altering the objects, the intention of the founder as a rule is to be taken into account, and in particular, it generally is to be ensured that the income generated by the foundation assets is maintained for the group of persons that it was meant to benefit, as intended by the founder. The public authority may amend the constitution of the foundation to the extent that the alteration of the objects so requires.

(3) Before the objects are altered and the constitution is changed, the board of the foundation as a rule is to be heard.

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Section 88
Devolution of assets

When the foundation ceases to exist, the assets devolve to the persons specified in the constitution. If no persons entitled to receive the assets are specified, the assets devolve to the treasury of the Land in which the foundation had its seat, or upon another person entitled to so receive the assets under the law of this Land. The provisions of sections 46 to 53 apply accordingly.

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Subtitle 3
Legal persons under public law

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Section 89
Liability for organs; insolvency

(1) The provision of section 31 applies accordingly to the treasury and to corporations, foundations and institutions under public law.

(2) The same applies, to the extent that insolvency proceedings are admissible with regard to corporations, foundations and institutions under public law, to the provision set out in section 42 (2).

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Division 2
Things and animals

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Section 90
Concept of the thing

Only corporeal objects are things as defined by law.

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Section 90a
Animals

Animals are not things. They are protected by special statutes. The provisions that apply to things are to be applied accordingly to animals, unless otherwise provided.

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Section 91
Fungible things

Fungible things as defined by law are movable things that in business dealings are customarily specified by number, measure or weight.

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Section 92
Consumable things

(1) Consumable things as defined by law are movable things the intended use of which consists of their consumption or alienation.

(2) Movable things are also regarded as consumable if they are part of a warehouse store or another aggregate of things the intended use of which consists of the alienation of the individual things.

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Section 93
Essential parts of a thing

It is not possible for parts of a thing that cannot be separated without one or the other being destroyed or undergoing a change of nature (essential parts) to be the subject of separate rights.

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Section 94
Essential parts of a plot of land or a building

(1) The essential parts of a plot of land include the things firmly attached to the land, in particular buildings, and the produce of the plot of land, as long as it is connected with the land. Seed becomes an essential part of the plot of land upon being sown, and a plant upon being planted.

(2) The essential parts of a building include the things inserted in order to construct the building.

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Section 95
Merely temporary purpose

(1) The parts of a plot of land do not include things that are connected with the land only for a temporary purpose. The same applies to a building or other structure that has been connected with a plot of land belonging to another by a person exercising a right over that land.

(2) Things that are inserted into a building for a temporary purpose are not parts of the building.

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Section 96
Rights as parts of a plot of land

Rights that are connected to the ownership of a plot of land are regarded as parts of the plot of land.

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Section 97
Accessories

(1) Accessories are movable things that, without being parts of the main thing, are intended to serve the economic purpose of the main thing and are in a spatial relationship to it that corresponds to this intention. A thing is not an accessory if it is not regarded as an accessory in business dealings.

(2) The temporary use of a thing for the economic purpose of another thing does not give it the quality of an accessory. The temporary separation of an accessory from the main thing does not deprive it of the quality of an accessory.

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Section 98
Commercial and agricultural inventory

The following are intended to serve the economic purpose of the main thing:

1.  in the case of a building that is permanently equipped for commercial operations, in particular a mill, a smithy, a brewery or a factory, the machinery and other equipment intended for the business,

2.  in the case of a farm, the equipment and livestock intended for the commercial operations, the agricultural produce, to the extent that it is necessary to continue the farming until such time as it is expected that the same or similar produce will be obtained, as well as the fertiliser produced on the farm.

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Section 99
Fruits

(1) Fruits of a thing are the products of the thing and the other yield obtained from the thing in accordance with its intended use.

(2) Fruits of a right are the proceeds that the right produces in accordance with its intended use, in particular, in the case of a right to extract component parts of the soil, the parts extracted.

(3) Fruits are also the proceeds supplied by a thing or a right by virtue of a legal relationship.

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Section 100
Emoluments

Emoluments are the fruits of a thing or of a right and the benefits that the use of the thing or the right affords.

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Section 101
Division of fruits

If a person is entitled to receive the fruits of a thing or of a right until a particular time or from a particular time on, then the following will be owed that person, unless otherwise provided:

1.  the products and parts designated in section 99 (1), even if the person is to receive them as the fruits of a right, to the extent that they are separated from the thing during the period of entitlement,

2.  other fruits to the extent that they fall due during the period of entitlement; however, if the fruits consist of remuneration for the permission of use or of enjoyment of fruits and benefits, in interest, in profit shares or other periodically paid income, then a share corresponding to the duration of the person’s entitlement will be owed that person.

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Section 102
Reimbursement of costs of production

Anyone who has a duty to surrender fruits may claim reimbursement of the costs of producing the fruits to the extent that they reflect proper business practices and do not exceed the value of the fruits.

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Section 103
Allocation of charges

A person who has a duty to bear the charges on a thing or a right until a specified time or from a specified time on is to bear, unless otherwise provided, the periodically recurring charges in the proportion of the period of time of their duty, and bear other charges to the extent that they are payable during the period of time in which the person has the duty.

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Division 3
Legal transactions

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Title 1
Capacity to contract

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Section 104
Incapacity to contract

A person is incapable of contracting if

1.  the person has not yet attained the age of seven years,

2.  the person is in a state of pathological mental disturbance, which prevents the free exercise of will, unless the state by its nature is a temporary one.

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Section 105
Voidness of declaration of intent

(1) The declaration of intent of a person incapable of contracting is void.

(2) Also void is a declaration of intent that is made in a state of unconsciousness or temporary mental disturbance.

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Section 105a
Everyday transactions

If a person of full age incapable of contracting enters into an everyday transaction that it is possible to effect using means of low value, then the contract that person enters into is regarded as effective with regard to performance and, if agreed, consideration, as soon as performance has been effected and consideration rendered. Sentence 1 does not apply in the case of considerable danger to the person incapable of contracting or their assets.

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Section 106
Limited capacity for minors to contract

A minor who has reached the age of seven has limited capacity to contract under sections 107 to 113.

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Section 107
Consent of legal representative

For a declaration of intent as a result of which minors do not receive merely a legal benefit, the minors require consent by their legal representative.

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Section 108
Entry into a contract without consent

(1) If the minor enters into a contract without the necessary consent of the legal representative, the effectiveness of the contract is subject to approval by the legal representative.

(2) If the other party demands that the representative declare approval, the declaration may be made only to the other party; a declaration or refusal of approval made to the minor before the demand of the other party becomes ineffective. The approval may only be declared before the expiry of two weeks following receipt of the demand; if approval is not declared, then it is considered to have been refused.

(3) If the minor has become fully capable of contracting, then the approval by the minor will take the place of the approval by the representative.

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Section 109
Right of withdrawal by the other party

(1) Until the contract is ratified, the other party is entitled to withdraw from it. The declaration of withdrawal also may be made to the minor.

(2) If the other party knew that they were dealing with a minor, they may withdraw from the contract only if the minor untruthfully stated that the legal representative had given consent; they may not withdraw even in this case if, when the contract was concluded, they were aware of the lack of consent.

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Section 110
Performance effected with means of the minor’s own

A contract concluded by the minor without the approval of the legal representative is deemed effective from the outset if the minor effects performance under the contract with means that were made available to the minor for this purpose or for the minor’s free disposition by the legal representative or by a third party with the representative’s approval.

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Section 111
Unilateral legal transactions

A unilateral legal transaction that a minor undertakes without the necessary consent of the legal representative is ineffective. If the minor undertakes such a legal transaction with regard to another person with this consent, the legal transaction is ineffective if the minor does not present the consent in writing and the other person rejects the legal transaction for this reason without undue delay. Rejection is not possible if the representative had given the other person notice of the consent.

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Section 112
Independent operation of a trade or business

(1) If the legal representative, with the ratification of the family court, authorises the minor to operate a trade or business independently, the minor has unlimited capacity to contract for such transactions as the business operations entail. Legal transactions are exempt for which the representative needs to obtain the ratification of the family court.

(2) The authorisation may be revoked by the legal representative only with the ratification of the family court.

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Section 113
Service or employment relationship

(1) If the legal representative authorises the minor to enter service or employment, the minor has unlimited capacity to enter into transactions that relate to entering or leaving service or employment of the permitted nature or performing the duties arising from such a relationship. Contracts are exempt for which the legal representative needs to obtain the ratification of the family court.

(2) The authorisation may be revoked or restricted by the legal representative.

(3) If the legal representative is a guardian and they refuse to grant the authorisation, then on demand by the minor, the family court may grant a substitute authorisation. The family court is to grant substitute authorisation if this is in the interest of the ward.

(4) The authorisation given for an individual case in case of doubt is deemed to constitute a general authorisation to enter into relationships of the same kind.

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Sections 114, 115
(repealed)

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Title 2
Declaration of intent

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Section 116
Mental reservation

A declaration of intent is not void by virtue of the fact that the declaring person has made a mental reservation that they do not want what they are declaring to be realised. The declaration is void if it is to be made to another person and that person knows of the reservation.

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Section 117
Sham transaction

(1) If a declaration of intent that is to be made to another person is made, with that person’s consent, only for the sake of appearance, it is void.

(2) If a sham transaction hides another legal transaction, then the provisions applicable to the hidden transaction apply.

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Section 118
Lack of seriousness

A declaration of intent not seriously intended which is made in the expectation that its lack of serious intention will not be misunderstood is void.

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Section 119
Voidability for mistake

(1) A person who, when making a declaration of intent, was mistaken about its contents or had no intention whatsoever of making a declaration with this content, may avoid the declaration if it is to be assumed that the person would not have made the declaration had they been aware of the factual position and had they had a sensible understanding of the case.

(2) A mistake about such characteristics of a person or a thing as are regarded as essential in business dealings also is deemed a mistake about the content of the declaration.

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Section 120
Voidability for incorrect transmission

A declaration of intent that has been incorrectly transmitted by the person or facilities used for its transmission may be avoided subject to the same prerequisite as that governing the avoidance of a declaration of intent made by mistake under section 119.

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Section 121
Period for avoidance

(1) Avoidance must be effected, in the cases governed by sections 119 and 120, without culpable delay (without undue delay) after the person entitled to avoid obtains knowledge of the ground for avoidance. Avoidance effected to an absent person is deemed to have been effected in good time if the declaration of avoidance is forwarded without undue delay.

(2) Avoidance is excluded if 10 years have passed since the declaration of intent was made.

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Section 122
Liability in damages of the person avoiding a declaration

(1) If a declaration of intent is void under section 118, or if it is avoided on the basis of sections 119 and 120, then the declarant is to pay damages, if the declaration was to be made to another person, to that person, or failing this to any third party, for the damage that the other person or the third party suffers as a result of having relied on the validity of the declaration; but not in excess of the total amount of the interest that the other person or the third party has in the validity of the declaration.

(2) A duty to pay damages does not arise if the injured person knew the reason for the voidness or the voidability or did not know it as a result of negligence (ought to have known).

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Section 123
Voidability on the grounds of deceit or duress

(1) A person who has been induced to make a declaration of intent by deceit or unlawfully by duress may avoid the declaration.

(2) Where a third party committed this deceit, a declaration that had to be made to another person may be avoided only if the latter knew of the deceit or ought to have known of it. If a person other than the person to whom the declaration was to be made acquired a right as a direct result of the declaration, the declaration made to that person may be avoided if they knew or ought to have known of the deceit.

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Section 124
Period of time for avoidance

(1) The avoidance of a declaration of intent voidable under section 123 may be effected only within one year.

(2) In the case of deceit, the period commences at the time when the person entitled to avoid discovers the deceit, and, in case of duress, from the time at which the duress ends. The provisions in sections 206, 210 and 211 applicable to limitation apply accordingly to the running of the period.

(3) Avoidance is barred if 10 years have passed since the declaration of intent was made.

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Section 125
Voidness resulting from a defect of form

A legal transaction that lacks the form prescribed by statute is void. In case of doubt, lack of the form specified by legal transaction also results in voidness.

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Section 126
Written form

(1) If written form is prescribed by statute, the document must be signed by the issuer with their name in their own hand, or by their notarially certified mark.

(2) In the case of a contract, the signature of the parties must be made on the same document. If more than one counterpart of the contract is drawn up, it suffices if each party signs the document intended for the other party.

(3) The written form may be replaced by electronic form, unless the statute leads to a different conclusion.

(4) Notarial recording replaces the written form.

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Section 126a
Electronic form

(1) If electronic form is to replace the written form prescribed by statute, the issuer of the declaration must add their name to it and provide the electronic document with a qualified electronic signature.

(2) In the case of a contract, the parties must each provide a counterpart with an electronic signature as described in subsection (1).

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Section 126b
Text form

If text form is prescribed by statute, a readable declaration, in which the person making the declaration is named, must be made on a durable medium. A durable medium is any medium that

1.  enables the recipient to keep a record of or store a declaration included on the medium that is addressed to the recipient personally such that it is accessible to the recipient for a period of time adequate to its purpose, and

2.  that allows the unchanged reproduction of such declaration.

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Section 127
Agreed form

(1) The provisions of sections 126, 126a or 126b also apply, in case of doubt, to the form specified by legal transaction.

(2) For compliance with the written form required by legal transaction it suffices, unless a different intention is to be assumed, for the message to be transmitted using means of telecommunication and, in the case of a contract, by the exchange of letters. If such a form is chosen, notarial recording in accordance with section 126 may be demanded subsequently.

(3) For compliance with the electronic form required by legal transaction, unless a different intention is to be assumed, an electronic signature other than that provided for in section 126a also suffices and, in the case of a contract, the exchange of a declaration of an offer and of acceptance that are each provided with an electronic signature. If such a form is chosen, an electronic signature in accordance with section 126a may be demanded subsequently, or if this is not possible for one of the parties, notarial recording corresponding to the stipulations of section 126.

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Section 127a
Court settlement

In the event of a court settlement, the recording of declarations in a court record drawn up in accordance with the provisions of the Code of Civil Procedure (Zivilprozessordnung) replaces the notarial recording.

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Section 128
Notarial recording

If the notarial recording of a contract is prescribed by statute, it suffices if first the offer and then the acceptance of the offer is recorded by a notary.

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Section 129
Official certification

(1) If the official certification of a declaration is prescribed by statute, then the declaration must be made in writing and the signature of the declarant must be certified by a notary. If the declaration is signed by the issuer making a mark, then the certification of the mark provided for in section 126 (1) will be required and sufficient.

(2) The notarial recording of the declaration replaces the official certification.

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Section 130
Effectiveness of a declaration of intent to absent parties

(1) A declaration of intent that is to be made to another person becomes effective, if made in that person’s absence, at the point in time at which said declaration reaches them. It does not become effective if a revocation reaches the other person previously or at the same time.

(2) The effectiveness of a declaration of intent is not affected if the declarant dies or loses capacity to contract after making a declaration.

(3) These provisions apply even if the declaration of intent is to be made to a public authority.

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Section 131
Effectiveness in relation to persons without full capacity to contract

(1) If a declaration of intent is made to a person incapable of contracting, then it does not become effective until it has reached that person’s legal representative.

(2) The same applies if the declaration of intent is made to a person with limited capacity to contract. If, however, the declaration merely provides a legal advantage to the person with limited capacity to contract, or if the legal representative has given consent, then the declaration becomes effective at the time it reaches the person with limited capacity.

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Section 132
Substitution of service for receipt

(1) A declaration of intent is also deemed to have been received if it is served through a court bailiff as intermediary. The service is effected in accordance with the provisions of the Code of Civil Procedure.

(2) If the declarant is unaware, through no negligence of their own, of the identity of the person to whom the declaration is to be made, or if the whereabouts of this person are unknown, then service may be effected in accordance with the provisions of the Code of Civil Procedure relating to service by publication. In the former case, the local court competent for the approval is the one in the district of which the declarant is resident, or in the absence of a residence within the territory of Germany, in which they have their abode; in the latter case, the local court competent for the approval is the one in the district of which the person to whom service is required to be effected last resided, or, in the absence of a residence within the territory of Germany, in which they had had their last abode.

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Section 133
Interpretation of a declaration of intent

When a declaration of intent is interpreted, it is necessary to ascertain the true intention rather than adhering to the literal meaning of the declaration.

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Section 134
Statutory prohibition

A legal transaction that violates a statutory prohibition is void, unless the statute leads to a different conclusion.

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Section 135
Statutory prohibition of alienation

(1) If the disposition over a thing violates a statutory prohibition against alienation intended solely for the protection of particular persons, the disposition is ineffective only in relation to these persons. A disposition by legal transaction is equivalent to a disposition that is effected by means of compulsory enforcement or enforcement of a seizure.

(2) The provisions to the benefit of those who derive rights from an unauthorised person apply accordingly.

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Section 136
Official prohibition of alienation

A prohibition of alienation that is issued by a court or by any other public authority in keeping with its competence is equivalent to a statutory prohibition of alienation of the kind described in section 135.

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Section 137
Prohibition of dispositions in a legal transaction

The power to dispose over an alienable right may not be excluded or restricted by a legal transaction. This effectiveness of an obligation not to dispose over such a right is not affected by this provision.

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Section 138
Legal transaction offending common decency; usury

(1) A legal transaction that offends common decency is void.

(2) In particular, a legal transaction is void by which a person, by exploiting the predicament, inexperience, lack of sound judgment or considerable weakness of will of another, causes a promise to be made to them or to a third party, in exchange for an act of performance, for pecuniary advantages that are clearly disproportionate to the performance, or causes such pecuniary advantages to be granted.

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Section 139
Partial invalidity

If a part of a legal transaction is void, then the entire legal transaction is void, unless it is to be assumed that it would have been undertaken even without the void part.

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Section 140
Re-interpretation

Where a void legal transaction meets the requirements of another legal transaction, the latter is deemed to have been entered into if it may be assumed that its validity would be intended if the invalidity were known.

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Section 141
Confirmation of a void legal transaction

(1) If a void legal transaction is confirmed by the person who undertook it, then the confirmation is to be seen as the transaction once again being entered into.

(2) If a void contract is confirmed by the parties, then in case of doubt they are obliged to grant to each other what they would have granted if the contract had been valid from the outset.

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Section 142
Effect of avoidance

(1) If a voidable legal transaction is avoided, it is to be regarded as having been void from the outset.

(2) A person who knew or ought to have known of the possibility of avoidance is treated, in case of avoidance, as if they had known or ought to have known of the invalidity of the legal transaction.

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Section 143
Declaration of avoidance

(1) Avoidance is effected by declaration to the opponent.

(2) The opponent is, in the case of a contract, the other contractual party and, in the case governed by section 123 (2) sentence 2, the person who has acquired a right directly under the contract.

(3) In the case of a unilateral legal transaction that was to be entered into in relation to another person, the other person is the opponent. The same applies to a legal transaction that is required to be entered into in relation to another person or to a public authority, even if the legal transaction has already been entered into in relation to the authority.

(4) In the case of any other kind of unilateral legal transaction, the person who has received a legal advantage directly on the basis of the legal transaction is the opponent. However, the avoidance may be made, if the declaration of intent was to be made to a public authority, by declaration to the authority; the public authority as a rule is to inform the person who was directly affected by the legal transaction of the avoidance.

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Section 144
Confirmation of a voidable legal transaction

(1) Avoidance is excluded if the voidable legal transaction is confirmed by the person entitled to avoid.

(2) The confirmation is not subject to the requirements as to form laid down for the legal transaction.

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Title 3
Contract

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Section 145
Binding effect of an offer

Any person who offers to another to enter into a contract is bound by the offer, unless the person has ruled out the offer’s being binding upon them.

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Section 146
Expiry of an offer

An offer expires if a refusal is made to the offeror, or if no acceptance is made to the offeror in good time in accordance with sections 147 to 149.

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Section 147
Period for acceptance

(1) An offer made to a person who is present may only be accepted immediately. This also applies to an offer made by one person to another using a telephone or some other technical system.

(2) An offer made to a person who is absent may be accepted only until the time at which the offeror may expect to receive the answer under ordinary circumstances.

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Section 148
Fixing a period for acceptance

If the offeror has determined a period of time for the acceptance of an offer, the acceptance may only be effected within this period.

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Section 149
Late receipt of a declaration of acceptance

If a declaration of acceptance received late by the offeror was sent in such a way that it would have reached the offeror in good time had it been forwarded in the usual way, and if the offeror ought to have recognised this, then the offeror is to notify the acceptor of the delay following receipt of the declaration without undue delay, unless this had been done already previously. If the offeror delays the sending of the notification, the acceptance is deemed not to be late.

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Section 150
Late acceptance and acceptance altering the offer

(1) The late acceptance of an offer is considered to be a new offer.

(2) An acceptance with expansions, restrictions or other alterations is deemed to be a rejection combined with a new offer.

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Section 151
Acceptance without declaration to the offeror

A contract comes into existence through the acceptance of the offer, without the offeror needing to be notified of acceptance, if such a declaration is not to be expected according to customary practice, or if the offeror has waived it. The point in time at which the offer expires is determined in accordance with the intention of the offeror, which is to be inferred from the offer or the circumstances.

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Section 152
Acceptance in the case of notarial recording

If a contract is recorded by a notary without both parties being present at the same time, then the contract comes into existence, unless otherwise provided, on the recording of acceptance effected in accordance with section 128. The provision of section 151 sentence 2 applies.

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Section 153
Death of the offeror or offeror’s incapacity to contract

The contract is not prevented from coming into existence by the offeror dying or losing capacity to contract before acceptance, unless a different intention of the offeror is to be presumed.

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Section 154
Overt lack of agreement; lack of notarial recording

(1) As long as the parties have not yet agreed on all points of a contract on which an agreement was required to be reached according to the declaration even of only one party, the contract is, in case of doubt, not concluded. An agreement on individual points is not legally binding even if they have been recorded.

(2) If notarial recording of the contract contemplated has been arranged, then the contract is, in case of doubt, not concluded until the recording has taken place.

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Section 155
Hidden lack of agreement

If the parties to a contract which they consider to have been concluded in fact have not agreed on a point on which an agreement was required to be reached, whatever is agreed is applicable if it is to be assumed that the contract would have been concluded even without a provision concerning this point.

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Section 156
Entry into contracts at auctions

At an auction, a contract does not come into existence until the fall of the hammer. A bid lapses if a higher bid is made, or if the auction is closed without the fall of the hammer.

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Section 157
Interpretation of contracts

Contracts are to be interpreted as required by good faith, taking customary practice into consideration.

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Title 4
Conditions and specification of time

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Section 158
Conditions precedent and subsequent

(1) If a legal transaction is entered into subject to a condition precedent, then the legal transaction that is subject to the condition comes into effect when the condition is satisfied.

(2) If a legal transaction is entered into subject to a condition subsequent, then the effect of the legal transaction ends when the condition is satisfied; at this point in time, the previous legal situation is restored.

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Section 159
Retroactive effect

If, under the terms of a legal transaction, the consequences linked to the satisfaction of the condition are to become effective from an earlier time onwards, then the parties are under a duty, when the condition is satisfied, to render each other the performance that they would have rendered if the consequences had occurred at the earlier time.

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Section 160
Liability during the period pending fulfilment of the condition

(1) Any person who has a right subject to a condition precedent may, in the case of the satisfaction of the condition, demand damages from the other party if the latter, during the period pending fulfilment of the condition, is at fault for frustrating or adversely affecting the right that is dependent on the condition.

(2) In the case of a legal transaction entered into subject to a condition subsequent, the person to the benefit of whom the former legal situation is restored has the same claim based on the same prerequisites.

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Section 161
Ineffectiveness of dispositions in the period pending fulfilment of the condition

(1) If a person has disposed over a thing, and the disposition is subject to a condition precedent, then any further disposition which the person makes as regards the thing during the period pending fulfilment of the condition is ineffective on the satisfaction of the condition to the extent that it would frustrate or impair the effect subject to the condition. Such a disposition is equivalent to a disposition that is effected, during the period pending fulfilment of the condition, by way of compulsory enforcement or enforcement of a seizure or by the insolvency administrator.

(2) In the case of a condition subsequent, the same applies to the dispositions of a person whose right expires on the fulfilment of the condition.

(3) The provisions to the benefit of those who derive rights from an unauthorised person apply accordingly.

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Section 162
Prevention of or bringing about the satisfaction of the condition

(1) If the satisfaction of a condition is prevented in bad faith by the party to whose detriment it would inure, then the condition is deemed to have been satisfied.

(2) If the satisfaction of a condition is brought about in bad faith by the party to whose advantage it would be, the condition is deemed not to have been satisfied.

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Section 163
Specification of time

If, when a legal transaction is undertaken, a time has been specified for the beginning or the end of its effect, then in the former case the provisions of sections 158, 160 and 161 applicable to conditions precedent and in the latter case the provisions of sections 158, 160 and 161 applicable to conditions subsequent apply accordingly.

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Title 5
Agency and authority

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Section 164
Effect of a declaration made by the agent

(1) A declaration of intent that a person makes within the scope of their own power of agency in the name of a principal takes effect directly for and against the principal. It is irrelevant whether the declaration is made explicitly in the name of the principal, or whether it may be gathered from the circumstances that it is intended to be made in the principal’s name.

(2) If the intent to act on behalf of another is not evident, then no regard will be had to the lack of intent on the part of the agent to act on their own behalf.

(3) The provisions of subsection (1) apply accordingly if a declaration of intent to be made to another is made to their agent.

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Section 165
Agent with limited capacity to contract

The effectiveness of a declaration of intent made by or to an agent is not adversely affected by the agent having limited capacity to contract.

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Section 166
Vitiation of intent; imputed knowledge

(1) Insofar as the legal consequences of a declaration of intent are influenced by a vitiation of intent or by the knowledge or the constructive notice of certain circumstances, regard will be had not to the person of the principal, but to that of the agent.

(2) If, in the case of a power of agency granted by a legal transaction (authority), the agent has acted in compliance with certain instructions given by the principal, then the latter may not invoke the lack of knowledge of the agent with regard to circumstances of which the principal was aware. The same rule applies to circumstances which the principal ought to have known, insofar as constructive notice is equivalent to knowledge.

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Section 167
Conferment of authority

(1) Authority is conferred by declaration to the person to be granted authority, or to the third party in relation to whom the authority is to have effect.

(2) The declaration is not required to be in the form laid down for the legal transaction to which the authority relates.

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Section 168
Expiry of authority

The expiry of the authority depends on the legal relationship on which its conferment is based. The authority is also revocable if the legal relationship is continued, unless this relationship leads to a different conclusion. The provision under section 167 (1) applies accordingly to the declaration of revocation.

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Section 169
Authority of the authorised representative and the managing partner

To the extent that the expired authority of an authorised representative or a managing partner is deemed to continue in accordance with sections 674 and 729, it is not effective to the benefit of a third party who, when a legal transaction is undertaken, knows or ought to know of the expiry.

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Section 170
Period of effectiveness of the authority

If authority is granted by declaration to a third party, it remains in force in relation to this third party until it is notified by the principal of the expiry thereof.

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Section 171
Period of effectiveness in the case of announcement

(1) If a person has announced by separate notification of a third party or by notice by publication that they have granted authority to another, then the latter, on the basis of the announcement, is authorised to represent the person to that third party in the former case, and to any third party in the latter case.

(2) The power of agency remains effective until the notice is revoked in the same manner in which it was made.

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Section 172
Letter of authorisation

(1) If the principal has delivered a letter of authorisation to the agent and the agent presents it to a third party, then this is equivalent to a separate notification of authorisation by the principal.

(2) The power of agency remains effective until the letter of authorisation is returned to the principal or declared to be invalid.

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Section 173
Period of effectiveness in the case of knowledge and negligent lack of knowledge

The provisions of section 170, section 171 (2) and section 172 (2) do not apply if the third party knows or ought to know of the termination of the power of agency when the legal transaction is entered into.

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Section 174
Unilateral legal transaction by an authorised representative

A unilateral legal transaction that an authorised representative undertakes in relation to another is ineffective if the authorised representative does not present a letter of authorisation and the other rejects the legal transaction without undue delay for this reason. Rejection is excluded if the principal notified the other of the authorisation.

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Section 175
Return of the letter of authorisation

After the expiry of the authority, the authorised representative is to return the letter of authorisation to the principal; the authorised representative is not entitled to a right of retention.

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Section 176
Declaration of invalidity of the letter of authorisation

(1) The principal may declare, by way of a notice by publication, the letter of authorisation to be invalid; the declaration of invalidity must be published in compliance with the provisions of the Code of Civil Procedure that govern the service of a summons by publication. The declaration of invalidity becomes effective at the end of one month after its last appearance in the official newspapers.

(2) The local court in the district of which the principal is subject to general jurisdiction and the local court that would have jurisdiction, irrespective of the value of the matter in dispute, over the action for the return of the letter of authorisation equally are competent to authorise the publication.

(3) The declaration of invalidity is ineffective if the principal may not revoke the authority.

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Section 177
Entry into contract by a representative having no power of agency

(1) If a person enters into a contract in the name of another without having power of agency, then the effectiveness of the contract to the benefit or detriment of the principal requires the ratification of the principal.

(2) If the other party demands that the principal make a declaration as to the ratification of the contract, the declaration may be made only to that other party; a ratification or a refusal of ratification declared to the representative before the demand becomes ineffective. The ratification may only be declared before the expiry of two weeks following receipt of the demand; if it is not declared, then it is considered to have been refused.

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Section 178
Right of revocation of the other party

Until the ratification of the contract, the other party is entitled to revoke it unless they knew of the lack of power of agency when they concluded the contract. The revocation also may be declared to the representative.

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Section 179
Liability of a representative having no power of agency

(1) A person who has concluded a contract as an agent is, unless they furnish proof of having been granted power of agency, obliged to the other party at the other party’s choice either to perform the contract or to pay damages to the latter, if the principal refuses to ratify the contract.

(2) If the agent was not aware of their lack of power of agency, they are obliged to provide compensation only for the damage which the other party suffers as a result of relying on the power of agency; but not in excess of the total amount of the interest which the other or the third party has in the effectiveness of the contract.

(3) The representative is not liable if the other party knew or ought to have known of the lack of power of agency. The representative also is not liable if they had limited capacity to contract, unless they acted with the approval of their legal representative.

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Section 180
Unilateral legal transactions

Agency without power of agency is not permitted for a unilateral legal transaction. However, if the person in relation to whom such a legal transaction was to be undertaken did not, when the legal transaction was undertaken, question the power of agency the representative claimed to have, or if they were in agreement that the representative was to act without power of agency, the provisions on contracts apply accordingly. The same applies if a unilateral legal transaction is undertaken in relation to a representative having no power of agency with the representative’s consent.

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Section 181
Contracting with oneself

Agents may not, unless otherwise permitted, enter into a legal transaction in the name of the principal with themselves in their own name or as the agent of a third party, unless the legal transaction consists solely in the performance of an obligation.

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Title 6
Consent and ratification

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Section 182
Approval

(1) If the effectiveness of a contract, or of a unilateral legal transaction to be undertaken in relation to another, depends on the approval of a third party, the grant and refusal of approval may be declared either to one party or to the other.

(2) The approval is not required to have the form specified for the legal transaction.

(3) If a unilateral legal transaction the effectiveness of which depends on the approval of a third party is undertaken with the consent of the third party, then the provisions of section 111 sentences 2 and 3 apply accordingly.

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Section 183
Revocability of consent

Prior approval (consent) may be revoked until the legal transaction is undertaken, unless the legal relationship on which this approval is based leads to a different conclusion. Revocation may either be declared to one party or to the other.

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Section 184
Retroactive effect of ratification

(1) Subsequent approval (ratification) operates retroactively from the point in time onwards at which the legal transaction was undertaken, unless otherwise provided.

(2) The retroactive effect does not cancel the effectiveness of dispositions made by the ratifying person before the ratification of the subject matter of the legal transaction, or made by way of compulsory enforcement or enforcement of a seizure or by the insolvency administrator.

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Section 185
Disposition by an unauthorised person

(1) A disposition over a thing made by a person without the authority to do so is effective if made with the consent of the person entitled.

(2) The disposition becomes effective if the person entitled ratifies it, or if the person disposing acquires the thing or if the person entitled has succeeded to the estate of the disposer and has unlimited liability for the obligations of the estate. In the last two cases, if more than one conflicting disposition has been made in respect of the thing, then only the earlier disposition is effective.

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Division 4
Periods of time and fixed dates

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Section 186
Scope of applicability

The provisions on interpretation stipulated in sections 187 to 193 apply to the fixing of periods of time and dates contained in statutes, court orders and legal transactions.

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Section 187
Beginning of a period of time

(1) If a period commences on the occurrence of an event or at a point in time falling in the course of a day, then the day on which the event or point in time occurs is not included in the calculation of the period.

(2) If the beginning of a day is the determining point in time for the commencement of a period, then this day is included in the calculation of the period. The same applies to the date of birth in computing the age of a person.

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Section 188
End of a period of time

(1) A period of time specified by days ends on expiry of the last day of the period.

(2) A period of time specified by weeks, by months or by a duration of time comprising more than one month – year, half-year, quarter – ends, in the case governed by section 187 (1), on the expiry of the day of the last week or of the last month which, in its designation or its number, corresponds to the day on which the event or the point in time occurs, or in the case governed by section 187 (2), on the expiry of the day of the last week or of the last month that precedes the day which corresponds in designation or number to the first day of the period of time.

(3) If, in the case of a period of time specified by months, the day on which it is due to expire does not occur in the last month, the period ends on the expiry of the last day of this month.

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Section 189
Calculation of individual periods of time

(1) A half-year is understood to mean a period of six months, a quarter is understood to mean a period of three months, and half a month is understood to mean a period of 15 days.

(2) If a period of time is specified as one or more than one whole month and a half-month, then the 15 days are to be counted last of all.

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Section 190
Extension of a period of time

If a period of time is extended, then the new period is calculated from the expiry of the previous period.

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Section 191
Calculation of periods of time

If a period of time is determined by months or by years with the meaning that they are not required to run consecutively, then a month is counted as 30 days and a year as 365 days.

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Section 192
Beginning, middle and end of a month

The beginning of the month is understood to be the first day, the middle of the month the fifteenth day, and the end of month the last day.

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Section 193
Sundays and holidays; Saturdays

If a declaration of intent is to be made or an act of performance to be done on a specified day or within a period, and if the particular day or the last day of the period falls on a Sunday, a general holiday officially recognised at the place of the declaration or performance, or on a Saturday, the next working day takes the place of this day.

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Division 5
Limitation

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Title 1
Subject-matter and duration of limitation

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Section 194
Subject-matter of limitation

(1) The right to demand that another person does or refrains from an act (claim) is subject to limitation.

(2) Claims based on a family-law relationship are not subject to limitation to the extent that they are directed towards creating a situation appropriate for the relationship for the future or towards consent to a genetic test to clear up biological descent.

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Section 195
Standard limitation period

The standard limitation period is three years.

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Section 196
Limitation period for rights to a plot of land

Claims to the transfer of ownership of land and to the creation, transfer or cancellation of a right to a plot of land or to a change of the subject-matter of such a right and entitlements to consideration are statute-barred after ten years.

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Section 197
Thirty-year limitation period

(1) Unless otherwise provided, the following are statute-barred after 30 years:

1.  damage claims based on intentional injury to life, limb, health, liberty or sexual self-determination,

2.  claims to surrender based on ownership, other rights in rem, sections 2018, 2130 and 2362, as well as claims serving to assert the claims to surrender

3.  claims that have been finally and bindingly established,

4.  claims under enforceable settlements or enforceable documents,

5.  claims that have become enforceable upon being recognised in insolvency proceedings and

6.  claims to reimbursement of the costs of compulsory enforcement.

(2) To the extent that claims under subsection (1) nos. 3 to 5 are concerned with periodically recurring acts of performance that will fall due in the future, the standard limitation period takes the place of the period of 30 years.

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Section 198
Limitation in the case of a successor in title

If a thing in respect of which a claim in rem exists comes into the possession of a third party by succession in title, that part of the limitation period that lapsed while possession was held by the predecessor in title is deemed to benefit the successor in title.

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Section 199
Commencement of the standard limitation period and maximum limitation periods

(1) Unless another commencement of limitation is determined, the standard limitation period commences at the end of the year in which:

1.  the claim arose and

2.  the obligee obtains knowledge of the circumstances giving rise to the claim and of the identity of the obligor, or would have obtained such knowledge if they had not shown gross negligence.

(2) Claims for damages based on injury to life, limb, health or liberty, notwithstanding the manner in which they arose and notwithstanding knowledge or a grossly negligent lack of knowledge, are statute-barred 30 years from the date on which the act, breach of duty or other event that caused the damage occurred.

(3) Other claims for damages become statute-barred

1.  notwithstanding knowledge or a grossly negligent lack of knowledge, 10 years after they arise and

2.  regardless of how they arose and of knowledge or a grossly negligent lack of knowledge, 30 years from the date on which the act, breach of duty or other event that caused the damage occurred.

The period that ends first is applicable.

(3a) Claims based on the devolution of an inheritance or whose claiming is contingent on knowledge of a disposition mortis causa become statute-barred 30 years from when the claim comes into being regardless of knowledge or of grossly negligent lack of knowledge.

(4) Notwithstanding knowledge or a grossly negligent lack of knowledge, claims other than those under subsections (2) to (3a) become statute-barred 10 years after the date on which they arise.

(5) If the claim is for forbearance, the date of the breach of such an obligation takes the place of the date on which the claim arose.

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Section 200
Commencement of other limitation periods

Unless another date for the commencement of limitation is specified, the limitation period of claims not subject to the standard limitation period commences when the claim arises. Section 199 (5) applies accordingly.

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Section 201
Commencement of the limitation period for recognised claims

The limitation period for claims of the kind referred to in section 197 (1) nos. 3 to 6 commences on the date on which the decision becomes final and binding, the enforceable instrument is executed or the claim is recognised in insolvency proceedings, but not before the claim arises. Section 199 (5) applies accordingly.

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Section 202
Inadmissibility of agreements on limitation

(1) In the case of liability for intent, the limitation period may not be eased in advance by legal transaction.

(2) The limitation period may not be extended by legal transaction beyond a period of 30 years from the commencement of the statutory limitation period.

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Title 2
Suspension, suspension of expiry and recommencement of the limitation period

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Section 203
Suspension of limitation in the case of negotiations

If negotiations between the obligor and the obligee are in progress in respect of the claim or the circumstances giving rise to the claim, the limitation period is suspended until one party or the other refuses to continue the negotiations. The claim is statute-barred at the earliest three months after the end of the suspension.

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Section 204
Suspension of limitation as a result of prosecution of rights

(1) The limitation period is suspended by:

1.  the bringing of an action for performance or for establishment of the existence of a claim, for the granting of a clause of execution or for the issuance of a judgment for enforcement,

1a.  the bringing of a model action for a declaratory judgment regarding a claim that an obligee effectively has applied to have entered in the complaint register maintained with regard to the action, where the claim registered is based on the same circumstances as the establishment objectives of the model action for a declaratory judgment,

2.  the service of an application in the simplified procedure for the maintenance of minors,

3.  the service of a payment order in summary proceedings for a payment order or of the European order for payment in the European order for payment procedure in accordance with Regulation (EC) No 1896/2006 of the European Parliament and of the Council of 12 December 2006 creating a European order for payment procedure (OJ EU L 399 p. 1),

4.  arranging for notice to be given of an application, by which the claim is being asserted, to a

a)  governmental dispute resolution body or state-recognised dispute resolution body, or

b)  some other dispute resolution body in cases in which the proceedings are being pursued by mutual agreement with the respondent;

the limitation period is suspended already upon the application being received by the dispute resolution body if notice of the application will be given shortly,

5.  the assertion of a set-off of a claim in a legal action,

6.  the service of a third-party notice,

6a.  the service of an application for registration for a model case proceedings of claims designated therein, insofar as they are based on the same circumstances as the establishment objectives of the model case proceedings, and if the action for performance or for the establishment of the existence of the claims designated in the registration is lodged within three months of the final termination of the model case proceedings,

7.  the service of an application for evidence to be taken in proceedings for the conservation of evidence,

8.  the beginning of agreed expert opinion proceedings,

9.  the service of an application for an attachment order, an injunction or an interim order, or, if the application is not served, the filing of the application if the order for attachment, the injunction or the interim order is served on the obligor within one month of its being pronounced or of its service on the obligee,

10.  the filing of a claim in insolvency proceedings or in proceedings for the distribution of assets under maritime law,

10a.  the ordering of a ban on enforcement in accordance with the Act on the Stabilisation and Restructuring Framework for Enterprises (Unternehmensstabilisierungs- und –restrukturierungsgesetz), by which ban the creditor is prevented from initiating compulsory enforcement for a claim,

11.  the beginning of arbitration proceedings,

12.  the filing of an application with a public authority, if the admissibility of the action depends on the prior decision taken by that public authority and the action is brought within three months after the application has been disposed of; this applies accordingly to applications required to be brought before a court or a dispute resolution body referred to in no. 4, the admissibility of which depends on the prior decision by a public authority,

13.  the filing of an application with the higher court, if the higher court is to decide which court has jurisdiction over the claim and the action is brought, or the application is filed for which a decision on jurisdiction is to be handed down, within three months after the application has been disposed of, and

14.  arranging for notice to be given of the first application for the grant of assistance with court costs or legal aid; if notice is arranged shortly after the filing of the application, the suspension of the limitation period takes effect immediately when the application is filed.

(2) Suspension under subsection (1) ends six months after the final and binding decision in the proceedings that have been commenced, or after the proceedings end in some other way. The suspension provided for in subsection (1) no. 1a also ends six months after retraction of the application for entry in the complaint register. If the proceedings come to a standstill because the parties do not pursue them, the date of the last act in the proceedings by the parties, the court or other body responsible for the proceedings takes the place of the date when the proceedings end. Suspension commences again if one of the parties continues to pursue the proceedings.

(3) Sections 206, 210 and 211 apply accordingly to the period governed by subsection (1), nos. 6a, 9, 12 and 13.

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Section 205
Suspension of limitation in the case of a right to refuse performance

Limitation is suspended for as long as the obligor, under an agreement with the obligee, is temporarily entitled to refuse performance.

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Section 206
Suspension of limitation in case of force majeure

Limitation is suspended for as long as, within the last six months of the limitation period, the obligee is prevented by force majeure from pursuing their rights.

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Section 207
Suspension of limitation for reasons of family relationship and similar reasons

(1) The limitation of claims between spouses is suspended for as long as the marriage continues. The same applies to claims between

1.  life partners for as long as the life partnership exists,

2.  the child, and

a)  the child’s parents or

b)  the spouse or life partner of one parent,

until the child attains the age of 21,

3.  a guardian and the ward, for the duration of the guardianship,

4.  a person placed under the care of a custodian and the custodian, for the duration of a care relationship, and

5.  a person subject to curatorship and the curator, for the duration of the curatorship.

The limitation of claims of a child against a legal adviser in litigation proceedings is suspended during the period when the latter is acting as a legal adviser.

(2) Section 208 remains unaffected.

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Section 208
Suspension of limitation in the case of claims for infringement of the right to sexual self-determination

The limitation period of claims for infringement of the right to sexual self-determination is suspended until the obligee attains the age of 21. If, when the limitation period commences, the obligee in respect of claims for infringement of the right to sexual self-determination is living with the obligor in a common household, then limitation is suspended until this common household ends.

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Section 209
Effect of suspension

A period in which limitation is suspended is not included in the calculation of the limitation period.

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Section 210
Suspension of expiry of the limitation period in the case of persons without full capacity to contract

(1) If a person who is incapable of contracting or who has limited capacity to contract has no legal representative, then a limitation period to their benefit or detriment does not end until the expiry of six months after the time at which the person acquires unlimited capacity to contract or the lack of representation is remedied. If the limitation period is shorter than six months, then the period specified for limitation takes the place of the period of six months.

(2) Subsection (1) does not apply to the extent that a person with limited capacity to contract is capable of suing and being sued.

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Section 211
Suspension of expiry of the limitation period in matters relating to estates

A claim that is part of or directed against an estate does not become statute-barred until at least six months have passed from the time at which the inheritance is accepted by the heir or at which insolvency proceedings in respect of the estate are opened or onwards of which the claim may be asserted by or against an agent. If the limitation period is shorter than six months, the period specified for limitation takes the place of the period of six months.

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Section 212
Recommencement of the limitation period

(1) The limitation period recommences if

1.  the obligor acknowledges the claim towards the obligee by making partial payment, paying interest, providing security or in some other manner, or

2.  a judicial or official act of execution is undertaken or applied for.

(2) The recommencement of the limitation period as a result of an act of execution is considered not to have occurred if the act of execution is cancelled on application by the obligee or because the statutory prerequisites are lacking.

(3) The recommencement of the limitation period as a result of an application for an act of execution is considered not to have occurred if the application is not granted or is revoked before the act of execution or if the act of execution obtained is cancelled under subsection (2).

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Section 213
Suspension, suspension of expiry of the limitation period and recommencement of limitation in the case of other claims

The suspension, suspension of expiry of the limitation period and recommencement of the limitation period also apply to claims which are available, for the same reason, either in addition to the claim or instead of the claim.

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Title 3
Legal consequences of limitation

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Section 214
Effect of limitation

(1) After limitation occurs, the obligor is entitled to refuse performance.

(2) Performance rendered in satisfaction of a claim that is statute-barred may not be claimed back even if performance was rendered without knowledge of the limitation. The same applies to an acknowledgement made in accordance with a contract and to a security provided by the obligor.

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Section 215
Set-off and right of retention after a claim is statute-barred

The limitation of actions does not exclude set-off and the assertion of a right of retention if the claim was not yet statute-barred at the time when the set-off first could have been made or performance first refused.

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Section 216
Effect of limitation in the case of secured claims

(1) The limitation of a claim for which a mortgage, ship mortgage or security right exists does not prevent the obligee from seeking satisfaction of their claim out of the object encumbered.

(2) If a right has been procured for the purpose of securing a claim, then the retransfer of the right may not be demanded on the basis of the claim having become statute-barred. If title has been retained, then the rescission of the contract may be effected even if the secured claim is statute-barred.

(3) Subsections (1) and (2) do not apply to the limitation of claims to interest and other recurring obligations.

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Section 217
Limitation of collateral performance

A claim for collateral performance contingent on the main claim becomes statute-barred at the same time as the main claim, even if the specific limitation period applying to the claim for collateral performance has not ended.

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Section 218
Ineffectiveness of rescission

(1) Rescission for non-performance or for the failure to perform as contractually agreed is ineffective if the claim for performance or the claim to cure has become statute-barred and the obligor invokes this. This applies even if, in accordance with section 275 (1) to (3), section 439 (4) or section 635 (3), the obligor is not required to perform and the claim for performance or cure would be statute-barred. Section 216 (2) sentence 2 remains unaffected.

(2) Section 214 (2) applies accordingly.

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Sections 219 to 225
(repealed)

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Division 6
Exercise of rights, self-defence, self-help

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Section 226
Prohibition of chicanery

The exercise of a right is not permitted if its only possible purpose consists of causing damage to another.

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Section 227
Self-defence against persons

(1) An act required for self-defence is not unlawful.

(2) Self-defence is the defence required to ward off a present unlawful assault on oneself or another.

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Section 228
Necessity

A person who damages or destroys a thing belonging to another in order to ward off from themselves or from another a danger threatened by the thing is not acting unlawfully if the damage or destruction is necessary to ward off the danger and the damage is not out of proportion to the danger. If the person acting in this manner is at fault for the danger, then they are obliged to pay damages.

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Section 229
Self-help

A person who, for the purpose of self-help, removes, destroys or damages a thing, or a person who, for the purpose of self-help, arrests an obliged person who is suspected of flight, or overcomes the resistance to an act of an obliged person who has a duty to tolerate that act, is not acting unlawfully if help cannot be obtained from the authorities in good time and there is the danger, if no immediate intervention takes place, that the realisation of the claim will be frustrated or become considerably more difficult.

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Section 230
Limits of self-help

(1) Self-help may not extend beyond what is required to ward off the danger.

(2) In the case in which things are removed, then, unless compulsory enforcement is being effected, a writ of attachment in rem is to be sought.

(3) In the case of the arrest of the person obliged, unless the person obliged is set free again, an application for their preventive custody is to be filed with the local court in the district of which the arrest took place; the person obliged is to be presented to the court without undue delay.

(4) If the application for arrest is delayed or rejected, the things seized are to be returned and the person arrested is to be released without undue delay.

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Section 231
Self-help by mistake

If a person does any of the acts described in section 229 in the mistaken assumption that the prerequisites necessary to exclude unlawfulness are satisfied, then that person is obliged to pay damages to the other party, even if the mistake does not result from negligence.

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Division 7
Provision of security

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Section 232
Types

(1) A person who is required to provide security may do so:

by the deposit of money or securities,

by the pledge of claims that are registered in the Federal Debt Register (Bundesschuldbuch) or the Debt Register of a Land (Landesschuldbuch),

by the pledge of movable things,

by the creation of ship mortgages on ships or ships under construction which are recorded in a German ship register or a ship construction register,

by the creation of mortgages on plots of land within the territory of Germany,

by the pledge of claims for which there is a mortgage on a plot of land within the territory of Germany, or

by the pledge of land charges or annuity land charges on plots of land within the territory of Germany.

(2) If security cannot be provided in this manner, it is admissible to furnish a qualified surety.

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Section 233
Effect of deposit

Upon the deposit being made, the person entitled acquires a security right over the money deposited or the securities deposited and, if the money or the securities devolve into the ownership of the treasury or the institution designated as the depository institution, then they acquire a security right over the claim for reimbursement.

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Section 234
Suitable securities

(1) Securities are only suitable as a means of providing security if they are made out to the bearer, have a market value and belong to a class of securities in which money held in trust for a ward may be invested. Instruments made out to order and furnished with a blank endorsement are equivalent to bearer instruments.

(2) The interest coupons, annuity coupons, dividend coupons and renewal coupons are to be deposited with the securities.

(3) Securities may be provided as security only up to the amount of three quarters of their market value.

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Section 235
Right to exchange

A person who has provided security by depositing money or securities is entitled to exchange the money deposited for suitable securities and the securities deposited for other suitable securities or for money.

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Section 236
Book-entry securities

A book-entry security against the Federal Government or a Land may be provided as security only up to the amount of three quarters of the market value of the securities the delivery of which the creditor may demand in return for cancellation of their claim registered in the debt book.

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Section 237
Movable things

A movable thing may be provided as security only up to the amount of two thirds of its estimated value. Things may be rejected as security if there is the concern that they will spoil or if their safekeeping entails special difficulties.

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Section 238
Mortgages, land charges and annuity land charges

(1) A mortgage claim, a land charge or an annuity land charge is suitable as a means of providing security only if it corresponds to the prerequisites to be met for the investment of money held in trust for a ward in mortgage claims, land charges or annuity land charges at the place at which security is provided.

(2) A claim secured by a debt-securing mortgage is not suitable as a means of providing security.

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Section 239
Surety

(1) A surety is qualified if they possess assets appropriate for the amount of security to be provided and if they have their general place of jurisdiction within the territory of Germany.

(2) The declaration of suretyship must contain a waiver of the defence of failure to pursue remedies.

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Section 240
Duty to supplement security

If the security provided becomes insufficient without this being the fault of the person entitled, then it is to be supplemented or security is to be provided in some other manner.

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Book 2
Law of obligations

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Division 1
Subject matter of obligations

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Title 1
Duty to render performance

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Section 241
Duties arising from an obligation

(1) By virtue of an obligation, an obligee is entitled to claim performance from the obligor. The performance may also consist of forbearance.

(2) By its contents, an obligation may oblige each party to take account of the rights, legal interests and other interests of the other party.

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Section 241a
Unsolicited performance

(1) The supply of movable things that are not being sold based on measures of compulsory enforcement or other judicial measures (goods), or the provision of other services to the consumer by a trader, does not give rise to a claim against the consumer if the consumer has not ordered these goods or other services.

(2) Statutory claims are not excluded if the performance was not intended for the recipient or was made in the mistaken belief that there had been an order, and the recipient was aware of this or could have been aware of this had they exercised the care required in business dealings.

(3) There may be no derogation from the stipulations of this provision to the disadvantage of the consumer. The stipulations apply even if they are circumvented by other arrangements.

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Section 242
Performance in good faith

An obligor has a duty to perform according to the requirements of good faith, taking customary practice into consideration.

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Section 243
Obligation described by class

(1) A person who owes a thing defined only by class is to supply a thing of average kind and quality.

(2) If the obligor has done what is necessary on their part to supply such a thing, then the obligation is restricted to that thing.

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Section 244
Foreign currency obligation

(1) If a money debt stated in a currency other than the euro is payable within the territory of Germany, then payment may be made in euros unless payment in the other currency has been expressly agreed.

(2) Conversion occurs at the rate of exchange in effect in the place of payment at the time of payment.

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Section 245
Obligation payable in a specific denomination of money

If a money debt is payable in a specific denomination of coin which is no longer in circulation at the time of payment, then payment is to be made in the same way as if the denomination of coin were not specified.

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Section 246
Statutory interest rate

Where interest is payable on a debt by law or under a legal transaction, the rate of interest is four per cent per year, unless otherwise provided.

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Section 247
Basic rate of interest

(1) The basic rate of interest is 3.62%. It changes on 1 January and 1 July each year by the percentage points by which the reference rate has risen or fallen since the last change in the basic rate of interest. The reference rate is the rate of interest for the most recent main refinancing operation of the European Central Bank before the first calendar day of the relevant six-month period.

(2) Deutsche Bundesbank announces the effective basic rate of interest in the Federal Gazette without undue delay after the dates referred to in subsection (1) sentence 2.

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Section 248
Compound interest

(1) An agreement made in advance that interest due is intended to in turn bear interest is void.

(2) Savings banks, credit institutions and owners of banking businesses may agree in advance that as a rule, interest not collected on deposits is to be considered as fresh interest-bearing deposits. Credit institutions entitled to issue interest-bearing bonds for the amount of the loans granted by them may have commitments made to them in advance, for such loans, to pay interest on interest in arrears.

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Section 249
Nature and extent of compensation of damages

(1) A person who is liable in damages is to restore the position that would exist if the circumstance obliging them to pay damages had not occurred.

(2) Where damages are payable for injury to a person or damage to a thing, the obligee may demand the required amount of money in lieu of restoration. Where a thing is damaged, the amount of money required under sentence 1 only includes value-added tax if and to the extent that it is actually incurred.

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Section 250
Damages in money after the specification of a period of time

The obligee may specify a reasonable time limit for the person liable in damages to undertake restoration and declare that they will reject restoration after the period of time ends. After the end of the period, the obligee may demand damages in money if restoration does not occur in good time; the claim to restoration is excluded.

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Section 251
Damages in money without the specification of a period of time

(1) To the extent that restoration is not possible or is not sufficient to compensate the obligee, the person liable in damages is to compensate the obligee in money.

(2) The person liable in damages may compensate the obligee in money if restoration is possible only at disproportionate expense. Expenses incurred as a result of the curative treatment of an injured animal are not disproportionate merely because they significantly exceed the value of the animal.

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Section 252
Lost profits

The damage to be compensated also comprises the profits lost. Those profits are considered lost that in the normal course of events or in the special circumstances, particularly due to the measures and precautions taken, could be expected to be attained as a matter of likelihood.

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Section 253
Intangible damage

(1) Money may be demanded in compensation for any damage that is not a pecuniary loss only in the cases stipulated by law.

(2) If damages are to be paid for an injury to body, health, freedom or sexual self-determination, then equitable compensation in money also may be demanded for any damage that is not a pecuniary loss.

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Section 254
Contributory negligence

(1) Where fault on the part of the injured person contributed to the occurrence of the damage, liability in damages as well as the extent of compensation to be provided depend on the circumstances, in particular on the extent to which the damage was caused mainly by one or the other party.

(2) This also applies if the fault of the injured person is limited to failing to draw the attention of the obligor to the danger of unusually extensive damage, where the obligor neither was aware of the danger nor ought to have been aware of it, or to failing to avert or mitigate the damage. The provision of section 278 applies accordingly.

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Section 255
Assignment of claims to compensation

A person who is to pay damages for the loss of a thing or a right is obliged to compensate only in return for the assignment of the claims which the person entitled to damages holds against third parties on the basis of ownership of the thing or on the basis of the right.

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Section 256
Payment of interest on expenses

A person who is obliged to reimburse expenses is to pay interest on the amount expended from the date of the expense onwards or, if other objects than money have been expended, on the amount payable as compensation for their value. Where expenses have been incurred on an object that is to be returned to the person liable in damages, interest need not be paid for the period of time for which the person entitled to damages is unremunerated for the emoluments or fruits of the object.

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Section 257
Claim to release

A person who is entitled to demand reimbursement of expenses they incur for a specific purpose may demand release, if they assume an obligation for this purpose, from the obligation. If the obligation is not yet due, then the person liable in damages may provide security to the person entitled instead of releasing them from the obligation.

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Section 258
Right of removal

Anyone entitled to remove an installation from a thing that they are to return to another person is to restore the thing, in the event of removal, to its previous condition at their own expense. If the other person obtains possession of the thing, then that other person is obliged to permit the installation to be removed; they may refuse permission until they have been provided with security for the damage connected to the removal.

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Section 259
Extent of duty to render accounts

(1) A person who is obliged to render accounts for management related to earnings or expenses is to provide the person entitled with accounts containing a structured compilation of earnings or expenses and, where receipts are customarily given, is to submit receipts.

(2) If there is reason to assume that the information on earnings contained in the accounts rendered has not been provided with the requisite care, then upon demand, the person obliged is to declare for the record in lieu of an oath that they have indicated the earnings as completely as they are able to.

(3) In matters of minor importance there is no duty to make a declaration in lieu of an oath.

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Section 260
Duties when surrendering objects or providing information on an aggregate of objects

(1) A person who is obliged to surrender an aggregate of objects or to provide information on the inventory of such an aggregate is to submit to the person entitled a list of the inventory.

(2) If there is reason to assume that the list has not been prepared with the requisite care, then, on demand, the person obliged is to declare for the record in lieu of an oath that to the best of their knowledge they have indicated the inventory as completely as they are able to.

(3) The provision of section 259 (3) applies.

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Section 261
Modification of a declaration in lieu of an oath; costs

(1) The court may order that the declaration in lieu of an oath be adjusted according to the circumstances.

(2) The costs of administering the declaration in lieu of an oath are to be borne by the person demanding that such declaration be made.

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Section 262
Alternative obligation; right of choice

Where more than one act of performance is owed in such a manner that only the one or the other is to be effected, then in case of doubt, the obligor has the right of choice.

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Section 263
Exercise of the right of choice; effect

(1) The right of choice is exercised by declaration to the other party.

(2) The performance chosen is deemed to have been the only performance owed from the outset.

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Section 264
Default by the person entitled to the right of choice

(1) If the obligor entitled to the right of choice does not exercise that right prior to the beginning of compulsory enforcement, then the obligee, at their choice, may direct the compulsory enforcement at one performance or the other; however, as long as the obligee has not received the performance chosen, as a whole or in part, the obligor may obtain release from their obligation through one of the other acts of performance.

(2) If the obligee entitled to the right of choice is in default, then the obligor may demand that they exercise that right, specifying a reasonable time limit. At the end of the period of time, the right of choice devolves to the obligor if the obligee does not undertake the choice in good time.

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Section 265
Impossibility in case of alternative obligations

If one of the acts of performance is impossible from the outset or if it later becomes impossible, the obligation is restricted to the other acts of performance. There is no restriction if performance becomes impossible due to a circumstance for which the party who is not entitled to the right of choice is responsible.

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Section 266
Part performance

The obligor is not entitled to render part performance.

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Section 267
Performance by third parties

(1) If the obligor need not perform in person, then a third party also may render performance. Consent by the obligor is not required.

(2) The obligee may reject the performance if the obligor objects.

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Section 268
Right of redemption of a third party

(1) If the obligee effects compulsory enforcement against an object belonging to the obligor, anyone who risks losing a right in the object due to the compulsory enforcement is entitled to satisfy the obligee. The possessor of a thing is entitled to the same right if they risk losing possession due to the compulsory enforcement.

(2) Satisfaction also may be effected by deposit or by set-off.

(3) To the extent that the third party satisfies the obligee, the claim devolves to the third party. The devolution of ownership may not be asserted to the disadvantage of the creditor.

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Section 269
Place of performance

(1) Where no place of performance has been specified or where it is not evident from the circumstances, in particular from the nature of the obligation, performance is to be made at the place at which the obligor had their residence at the time the obligation arose.

(2) If the obligation arose in the commercial undertaking of the obligor, then the place of the commercial establishment takes the place of the residence if the obligor maintains their commercial establishment at another place.

(3) It is not to be concluded solely from the circumstance that the obligor has assumed the costs of shipping that the place to which shipment is to be made is intended to be the place of performance.

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Section 270
Place of payment

(1) In case of doubt, the obligor is to transfer money at their own risk and their own expense to the obligee at the residence of the latter.

(2) If the obligation came about in the commercial undertaking of the obligee, then the place of the commercial establishment takes the place of the residence if the obligee maintains their commercial establishment at another place.

(3) If, as the result of a change in the obligee’s residence or commercial establishment occurring after the obligation arises, the costs or risk of transmission increase, the obligee is to bear the increased costs in the former case and is to bear the risk in the latter case.

(4) The provisions on the place of performance remain unaffected.

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Section 270a
Agreements on fees for the use of non-cash means of payment

An agreement obligating the obligor to pay a fee for the use of a SEPA core direct debit, a SEPA business-to-business direct debit, a SEPA credit transfer or a debit card is ineffective. Sentence 1 applies to the use of debit cards only in the case of payment transactions with consumers to which Chapter II of Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions (OJ L 123 of 19 May 2015, page 1) is applicable.

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Section 271
Time of performance

(1) Where no time for performance has been specified or where it is not evident from the circumstances, the obligee may demand performance immediately, and the obligor may effect it immediately.

(2) Where a time has been specified, then it is to be assumed, in case of doubt, that the obligee may not demand performance, but the obligor may effect it prior to that time.

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Section 271a
Agreements on payment deadlines, verification periods or periods for acceptance

(1) An agreement according to which the obligee may demand discharge of a claim for payment only after more than 60 days have lapsed following receipt of the consideration is effective only if it was made expressly and is not grossly inequitable with a view to the concerns of the obligee. Where, following receipt of the consideration, an invoice or an equivalent statement of payment is submitted to the obligor, the time at which said invoice or statement of payment is received will take the place of the time at which the consideration is received as set out in sentence 1. Until evidence of a different point in time is provided, the presumption will be that the point in time at which the invoice or the statement of payment was received was the same as the time at which consideration was received; where the obligee has stated a later time, this will take the place of the point in time at which the consideration was received.

(2) Where the obligor is a public contracting entity within the meaning of section 99 nos. 1 to 3 of the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen), then in derogation from subsection (1)

1.  an agreement according to which the obligee may demand discharge of a claim for payment only after more than 30 days have lapsed following receipt of the consideration is effective only if it was made expressly and if, due to the special nature or due to the characteristics of the obligation, it is based on an objectively justified reason;

2.  an agreement according to which the obligee may demand discharge of a claim for payment only after more than 60 days have lapsed following receipt of the consideration is ineffective.

Subsection (1) sentences 2 and 3 is to be applied accordingly.

(3) If a claim for payment is to be discharged only after the consideration has been verified or accepted, then an agreement according to which the time allowed for the verification or acceptance of the consideration is more than 30 days following receipt of the consideration is effective only if it was made expressly and is not grossly inequitable with a view to the concerns of the obligee.

(4) Where an agreement pursuant to subsections (1) to (3) is ineffective, the contract remains effective in all other respects.

(5) Subsections (1) to (3) are not to be applied to

1.  the agreement of part payments and other instalments;

2.  an obligation under which a consumer owes the discharge of the claim for payment.

(6) Subsections (1) to (3) leave other provisions unaffected that give rise to restrictions for agreements on payment deadlines, verification periods or periods for acceptance.

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Section 272
Interim interest

If the obligor pays an interest-free debt prior to its falling due, then they are not entitled to any deduction for interim interest.

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Section 273
Right of retention

(1) If the obligor has a claim that is due against the obligee under the same legal relationship as that on which the obligation is based, then unless the obligation leads to a different conclusion, the obligor may refuse the performance they owe until the performance owed to them is rendered (right of retention).

(2) A person who is obliged to surrender an object has the same right, if they are entitled to a claim that is due on account of outlays for the object or on account of damage caused to them by the object, unless they obtained the object by means of an intentionally committed tort.

(3) The obligee may avert the exercise of the right of retention by providing security. The provision of security by sureties is excluded.

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Section 274
Effects of the right of retention

(1) In comparison to a legal action brought by the obligee, the assertion of the right of retention only has the effect that the obligor is to be ordered by the court to render performance in return for receiving the performance owed to them (fulfilment in return for, and concurrently with, performance).

(2) On the basis of such a court order, the obligee may pursue their claim by way of compulsory enforcement, without effecting the performance they owe, if the obligor is in default of acceptance.

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Section 275
Exclusion of the duty of performance

(1) A claim for performance is excluded to the extent that performance is impossible for the obligor or for any other person.

(2) The obligor may refuse performance to the extent that performance requires an expenditure of time and effort that, taking into account the subject matter of the obligation and the requirement of acting in good faith, is grossly disproportionate to the obligee’s interest in performance. In determining what efforts reasonably may be required of the obligor, it also is to be taken into account whether they are responsible for the impediment preventing performance.

(3) In addition, the obligor may refuse performance if they are to render the performance in person and, having weighed the impediment preventing performance by them against the obligee’s interest in performance, performance cannot reasonably be required of the obligor.

(4) The rights of the obligee are governed by sections 280, 283 to 285, 311a and 326.

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Section 276
Responsibility of the obligor

(1) The obligor is responsible for intent and negligence if a higher or lower degree of liability neither is laid down nor is to be inferred from the other subject matter of the obligation, in particular the giving of a guarantee or the assumption of a procurement risk. The provisions of sections 827 and 828 apply accordingly.

(2) Anyone acts negligently who fails to exercise the care required in business dealings.

(3) The obligor may not be released in advance from liability for intent.

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Section 277
Standard of care in one’s own affairs

A person who owes only the care that they customarily exercise in their own affairs is not released from liability for gross negligence.

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Section 278
Responsibility of the obligor for third parties

The obligor is responsible for fault on the part of their legal representative, and of persons of whose services they avail themselves in order to perform their obligation, to the same extent they are responsible for fault on their own part. The provision of section 276 (3) does not apply.

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Section 279
(repealed)

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Section 280
Damages for breach of duty

(1) If the obligor breaches a duty arising from the obligation, then the obligee may demand compensation of the damage caused thereby. This does not apply if the obligor is not responsible for the breach of duty.

(2) The obligee may demand compensation of damages for delay in performance only subject to the additional prerequisite set out in section 286.

(3) Damages in lieu of performance may be demanded by the obligee only subject to the additional prerequisites set out in sections 281, 282 or 283.

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Section 281
Damages in lieu of performance for non-performance or failure to render performance as owed

(1) To the extent that the obligor does not render performance when it is due or does not render performance as owed, the obligee may, subject to the prerequisites set out in section 280 (1), demand damages in lieu of performance, if the obligee has set a reasonable time limit for the obligor for performance or cure and this has expired without result. If the obligor has performed only in part, then the obligee may demand damages in lieu of complete performance only if they have no interest in the part performance. If the obligor has not rendered performance as owed, then the obligee may not demand damages in lieu of performance if the breach of duty is trivial.

(2) Setting a period of time for performance may be dispensed with if the obligor seriously and definitively refuses performance or if there are special circumstances which, having weighed the interests of both parties against each other, justify the immediate assertion of a claim for damages.

(3) If the nature of the breach of duty is such that setting a period of time is not an available option, then a warning notice is to be given instead.

(4) The claim for performance is excluded as soon as the obligee has demanded damages in lieu of performance.

(5) Where the obligee demands damages in lieu of complete performance, the obligor is entitled to claim the return of their performance in accordance with sections 346 to 348.

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Section 282
Damages in lieu of performance for breach of a duty under section 241 (2)

If the obligor breaches a duty under section 241 (2), then the obligee may, subject to the prerequisites set out in section 280 (1) having been met, demand damages in lieu of performance if it cannot reasonably be required of the obligee any longer to accept performance by the obligor.

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Section 283
Damages in lieu of performance where the duty of performance is excluded

If, under section 275 (1) to (3), the obligor has not duty of performance, then the obligee may, subject to the prerequisites set out in section 280 (1) having been met, demand damages in lieu of performance. Section 281 (1) sentences 2 and 3 and subsection (5) apply accordingly.

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Section 284
Reimbursement of futile expenses

In place of damages in lieu of performance, the obligee may demand reimbursement of the expenses they have incurred and were entitled to so incur, on an equitable basis, in reliance on receiving performance, unless the purpose of the expenses would not have been achieved even if the obligor had not breached their duty.

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Section 285
Surrender of substitute benefit

(1) If the obligor, as a result of the circumstance by reason of which, under section 275 (1) to (3), the obligor has no duty of performance, obtains a substitute benefit or a claim to a substitute benefit for the object owed, the obligee may demand that what has been obtained as a substitute benefit be surrendered, or that the claim to the substitute benefit be assigned.

(2) If the obligee may demand damages in lieu of performance, then, if they exercise the right defined in subsection (1), the damages are reduced by the value of the substitute benefit or the claim to the substitute benefit they have obtained.

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Section 286
Default of the obligor

(1) If the obligor fails to perform, following a dunning letter from the obligee that is made after performance is due, then the obligor will be in default as a result of the dunning letter. Bringing an action for performance and serving an order for payment in summary proceedings for a payment order are equivalent to a dunning letter.

(2) There is no need for a dunning letter if

1.  a period of time defined in calendar terms has been specified,

2.  performance is to be preceded by an event, and a reasonable time limit for performance has been specified in such a way that it is possible to calculate it in calendar terms from the event onwards,

3.  the obligor seriously and definitively refuses performance,

4.  having weighed the interests of both parties against each other, the immediate commencement of default is justified for special reasons.

(3) The obligor of a claim for payment will be in default at the latest if they do not perform within 30 days after the due date and receipt of an invoice or equivalent statement of payment; this applies to an obligor who is a consumer only if these consequences specifically have been noted in the invoice or statement of payment. If the time at which the invoice or payment statement is received by the obligor is uncertain, then an obligor who is not a consumer will be in default at the latest 30 days after the due date and receipt of the consideration.

(4) The obligor is not in default for as long as performance is not made as the result of a circumstance for which they are not responsible.

(5) Section 271a (1) to (5) applies accordingly to an agreement made in derogation from subsections (1) to (3) concerning the time at which the obligor begins to be in default.

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Section 287
Responsibility during default

While the obligor is in default, they are responsible for all negligence. The obligor is liable for performance in the case of chance as well, unless the damage would have occurred even if performance had been made in good time.

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Section 288
Default interest and other damage caused by default *)

(1) Any money debt is to bear interest during the time of default. The default rate of interest per year is five percentage points above the basic rate of interest.

(2) In the case of legal transactions entered into by parties other than a consumer, the rate of interest for claims to payment is nine percentage points above the basic rate of interest.

(3) The obligee may demand higher interest on other legal grounds.

(4) The assertion of further damage is not excluded.

(5) Where the obligor is not a consumer and is in default in making payment, the obligee of such claim for payment moreover is entitled to payment of a lump sum in the amount of 40 euros. This applies also where the claim for payment consists of a part payment or of some other type of instalment. The lump sum pursuant to sentence 1 is to be set off from damages owed inasmuch as the damages are caused by the costs of litigation.

(6) An agreement is ineffective that is made in advance and rules out the entitlement to default interest of the obligee who has a claim for payment. The same applies to an agreement restricting such claim or ruling out or restricting the entitlement, of the obligee who has a claim for payment, to the lump sum defined in subsection (5) or to the compensation of the damages they have suffered by reason of the costs of litigation, if said agreement is grossly inequitable with a view to the concerns of the obligee. In case of doubt, an agreement ruling out the lump sum pursuant to subsection (5) or the compensation of the damage by reason of the costs of litigation is to be considered grossly inequitable. Sentences 1 to 3 are not to be applied if the claim is directed against a consumer.

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Section 289
Prohibition of compound interest

Default interest is not to be paid on interest. The right of the obligee to compensation for damage caused by the default remains unaffected.

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Section 290
Interest on compensation for value

If the obligor is obliged to compensate for the value of an object that has been destroyed during a period of default or that cannot be returned for a reason occurring during a period of default, then the obligee may demand interest on the amount to be compensated from that point in time onwards on which the determination of the value is based. The same applies if the obligor is obliged to compensate for the reduction in value of an object that deteriorates during the period of default.

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Section 291
Interest during legal proceedings

The obligor is to pay interest on a money debt from the date onwards on which litigation becomes pending, even if the obligor is not in default; if the debt falls due only later, then interest is to be paid from its due date onwards. The provisions of section 288 (1) sentence 2, subsections (2) and (3) and section 289 sentence 1 apply accordingly.

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Section 292
Liability in the case of a duty to surrender

(1) If the obligor is to surrender a specific object, then, from the date onwards on which litigation is pending, the claim the obligee has to damages for deterioration, destruction or for impossibility of surrender for another reason is determined in accordance with the provisions that apply to the relationship between an owner and a possessor from the date onwards on which litigation on a claim to ownership is pending, except where the obligation or the default of the obligor leads to a different conclusion to the benefit of the obligee.

(2) The same applies to the claim the obligee has to surrender or to payment of remuneration for emoluments and to the claim the obligor has to reimbursement of outlays.

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Title 2
Default by the obligee

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Section 293
Default in acceptance

The obligee is in default if they do not accept the performance offered to them.

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Section 294
Actual offer

The obligee must factually be offered performance exactly as it is to be rendered.

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Section 295
Verbal offer

A verbal offer by the obligor suffices if the obligee has declared to the obligor that they will not accept the performance, or if effecting the performance requires an act by the obligee, in particular if the obligee is to collect the thing owed. Demanding that the obligee undertake the act required is equivalent to an offer of performance.

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Section 296
Dispensability of the offer

If a period of time defined in calendar terms has been specified for the act that the obligee is to undertake, then making an offer will be necessary only if the obligee undertakes the act in good time. The same applies if the act is to be preceded by an event and a reasonable time limit is specified for the act in such a way that it is possible to calculate it in calendar terms from the event onwards.

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Section 297
Inability of the obligor

The obligee is not in default if the obligor is incapable of effecting performance at the time of the offer or, in the case of section 296, at the time determined for the action of the obligee.

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Section 298
Concurrent performance

If the obligor is obliged only to perform in return for an act of performance by the obligee, then the obligee is in default if, although they are willing to accept the performance offered, they do not offer the consideration demanded.

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Section 299
Temporary prevention of acceptance

If the time of performance is not specified or if the obligor is entitled to provide performance before the specified time, then the obligee is not in default merely because they are temporarily prevented from accepting the performance offered, unless the obligor notifies them of the performance at a reasonable time in advance.

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Section 300
Effects of default by the obligee

(1) During the period in which the obligee is in default, the obligor is responsible only for intent and gross negligence.

(2) If a thing designated only by class is owed, then the risk devolves to the obligee at the time at which the obligee is in default by not accepting the thing offered.

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Section 301
Cessation of interest

During the period in which the obligee is in default, the obligor need not pay interest on an interest-bearing money debt.

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Section 302
Emoluments

If the obligor is to surrender or reimburse the emoluments of an object, then the obligor’s obligation is limited, for the period in which the obligee is in default, to the emoluments they take.

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Section 303
Right to abandon possession

If the obligor is obliged to surrender a plot of land or a registered ship or ship under construction, they may abandon possession upon the obligee being in default. The obligee must be warned of the abandonment beforehand, unless issuing such a warning is inadvisable.

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Section 304
Compensation for extra expenses

If the obligee is in default, then the obligor may demand reimbursement of extra expenses they were obliged to incur for the futile offer as well as for safekeeping and preservation of the object owed.

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Division 2
Drafting contractual obligations by means of standard business terms

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Section 305
Incorporation of standard business terms into the contract

(1) Standard business terms are all contract terms that are pre-worded for more than two contracts which one contractual party (the user) presents to the other party when the contract is concluded. It is irrelevant whether the provisions take the form of a physically separate part of a contract or are made part of the contractual document itself, what their volume is, what typeface is used for them and what form the contract takes. Contract terms are not standard business terms insofar as they have been negotiated in detail by the contractual parties.

(2) Standard business terms become part of a contract only if the user, when concluding the contract,

1.  refers the other contractual party to them explicitly or if, due to the manner in which the contract is concluded, making such explicit reference would be possible only with disproportionate difficulty, if the user posts a clearly visible notice at the place at which the contract is concluded, and

2.  gives the other contractual party the opportunity to take notice of their contents in a manner that reasonably can be expected of the other party to accept and that also adequately takes account of any physical handicap of the other contractual party that is discernible to the user,

and if the other contractual party agrees to their applying.

(3) The contractual parties may agree in advance, while observing the requirements set out in subsection (2), that specific standard business terms are to govern a specific type of legal transaction.

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Section 305a
Incorporation in special cases

The following are incorporated, even without compliance with the requirements cited in section 305 (2) nos. 1 and 2, if the other contractual party agrees to their applying:

1.  the tariffs and regulations of the railways issued with the approval of the competent transport authority or on the basis of international conventions, and the terms of transport approved under the Passenger Transport Act (Personenbeförderungsgesetz), of trams, trolley buses and motor vehicles in regular public transport services,

2.  the standard business terms published in the gazette of the Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway (Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen) and kept available on the business premises of the user,

a)  into transport contracts concluded off business premises by the posting of items in post boxes,

b)  into contracts on telecommunications, information services and other services that are provided directly by the use of distance communication and at one time and without interruption during the supply of a telecommunications service, if it is disproportionately difficult to make the standard business terms available to the other party before the contract is concluded.

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Section 305b
Priority of individually agreed terms

Individually agreed terms take priority over standard business terms.

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Section 305c
Surprising and ambiguous clauses

(1) Provisions in standard business terms which in the circumstances, in particular with regard to the outward appearance of the contract, are so unusual that the party contracting with the user need not expect to encounter them, do not form part of the contract.

(2) Any doubts in the interpretation of standard business terms are resolved to the detriment of the user.

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Section 306
Legal consequences of non-incorporation and ineffectiveness

(1) If standard business terms as a whole or in part have not become part of the contract or are ineffective, then the remainder of the contract will remain in effect.

(2) To the extent that the terms have not become part of the contract or are ineffective, the contents of the contract are determined by the statutory provisions.

(3) The contract is ineffective if upholding it, even taking into account the alteration provided for in subsection (2), would constitute an unreasonable hardship for one party.

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Section 306a
Prohibition of circumvention

The provisions of this Division apply even if they are circumvented by other arrangements.

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Section 307
Test of reasonableness of contents

(1) Provisions in standard business terms are ineffective if, contrary to the requirement of good faith, they unreasonably disadvantage the party contracting with the user. An unreasonable disadvantage also may arise from the provision not being clear and comprehensible.

(2) In case of doubt, an unreasonable disadvantage is to be assumed to exist if a provision

1.  is not compatible with essential principles of the statutory provision from which it deviates, or

2.  limits essential rights or duties inherent in the nature of the contract to such an extent that attainment of the purpose of the contract is jeopardised.

(3) Subsections (1) and (2) as well as sections 308 and 309 apply only to provisions in standard business terms on the basis of which arrangements deviating from legal provisions, or arrangements supplementing those legal provisions, are agreed. Other provisions may be ineffective by virtue of subsection (1) sentence 2 in conjunction with subsection (1) sentence 1.

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Section 308
Prohibited clauses with the possibility of valuation

In standard business terms, the following in particular are ineffective:

1.  (Period of time for acceptance and performance) a provision by which the user reserves the right to unreasonably long or insufficiently specific periods of time for acceptance or rejection of an offer or for rendering performance; the reservation of the right not to perform until after the end of the period of time for withdrawal provided for in section 355 subsections (1) and (2) is exempt herefrom;

1a.  (Payment deadline)
a provision by which the user reserves the right to an unreasonably long period of time for discharging a claim for payment of the other contracting party; where the user is not a consumer, the presumption will be, in case of doubt, that a period of more than 30 days following receipt of the consideration or, if an invoice or an equivalent statement of payment is submitted to the obligor following receipt of the consideration, a period of more than 30 days following receipt of such invoice or statement of payment is unreasonably long;

1b.  (Verification period and period for acceptance)
a provision by which the user reserves the right to an unreasonably long period of time for verification or acceptance of the consideration before discharging a claim for payment of the other contracting party; where the user is not a consumer, the presumption will be, in case of doubt, that a period of more than 15 days following receipt of the consideration is unreasonably long;

2.  (Additional period of time) a provision by which the user, contrary to legal provisions, reserves the right to an unreasonably long or insufficiently specific additional period of time for the performance the user is to render;

3.  (Reservation of rescission) the agreement of a right of the user to free themselves from their obligation to perform without any objectively justified reason indicated in the contract; this does not apply to continuing obligations;

4.  (Reservation of the right to modify) the agreement of a right of the user to modify the performance promised or deviate from it, unless the agreement of the modification or deviation reasonably can be expected of the other party to the contract when the interests of the user are taken into account;

5.  (Fictitious declarations) a provision by which a declaration by the party contracting with the user, made when performing or omitting a specific act, is deemed to have been made or not made by the party contracting with the user unless

a)  the other contracting party is granted a reasonable time limit to make an express declaration, and

b)  the user agrees to especially draw the attention of the other contracting party, at the beginning of the period of time, to the intended consequences of the contracting party’s behaviour;

6.  (Fictitious receipt) a provision stipulating that a declaration by the user that is of special importance is deemed to have been received by the other party to the contract;

7.  (Winding up of contracts) a provision by which the user, in order to provide for the event that a contractual party revokes the contract or gives notice of termination of the contract, may demand

a)  unreasonably high remuneration for the use or deployment of a thing or for the exercise of a right or for performance rendered, or

b)  unreasonably high reimbursement of expenses;

8.  (Unavailability of performance) the agreement, admissible under no. 3, of the reservation by the user of a right to free themselves from the duty to perform the contract in the absence of availability of performance, if the user does not agree to

a)  inform the other contracting party, without undue delay, of the unavailability, and

b)  reimburse the other contracting party, without undue delay, for consideration.

9.  (Exclusion of assignment) a provision by which assignability is excluded

a)  for a claim to money of the other contractual party against the user, or

b)  for some other right that the other contractual party has against the user if

aa)  the user has no interest meriting protection in the exclusion of assignment or if

bb)  legitimate concerns of the other contractual party in the assignability of the right outweigh the user’s interest meriting protection in the exclusion of assignment;

letter (a) does not apply to claims under payment services framework contracts, and letters (a) and (b) do not apply to claims to benefits within the meaning of the Company Pensions Act (Betriebsrentengesetz).

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Section 309
Prohibited clauses without the possibility of valuation

Even to the extent that a deviation from the statutory provisions is permissible, the following are ineffective in standard business terms:

1.  (Price increases at short notice) a provision stipulating an increase in payment for goods or services that are to be delivered or rendered within four months of the contract having been concluded; this does not apply to goods or services delivered or rendered in connection with continuing obligations;

2.  (Right to refuse performance) a provision by which

a)  the right to refuse performance to which the party contracting with the user is entitled under section 320 is excluded or restricted, or

b)  a right of retention to which the party contracting with the user is entitled, insofar as it is based on the same contractual relationship, is excluded or restricted, or in particular is made contingent on the acknowledgement of defects by the user;

3.  (Prohibition of set-off) a provision by which the party contracting with the user is deprived of the power to set off a claim that is uncontested or has been finally and bindingly established;

4.  (Dunning letter, setting of a period of time) a provision by which the user is exempted from the statutory requirement of dunning the other party to the contract or of setting a period of time for the latter to provide performance or cure;

5.  (Lump-sum claims for damages) the agreement of a lump-sum claim by the user for damages or for compensation of a reduction in value if

a)  the lump sum, in the cases covered, exceeds the damage expected under normal circumstances or the customarily occurring reduction in value, or

b)  the other party to the contract is not expressly permitted to prove that damage or reduction in value either has not occurred or is substantially less than the lump sum;

6.  (Penalty for breach of contract) a provision by which the user is promised the payment of a contractual penalty in the event of non-acceptance or late acceptance of the performance, in the event of payment default or in the event that the other party to the contract frees itself from the contract;

7.  (Exclusion of liability for injury to life, limb or health and in case of gross fault)

a)  (Injury to life, limb or health) an exclusion or limitation of liability for damage from injury to life, limb or health due to negligent breach of duty by the user or intentional or negligent breach of duty by a legal representative or the user or by a person deployed to perform an obligation of the user;

b)  (Gross fault) an exclusion or limitation of liability for other damage arising from a grossly negligent breach of duty by the user or from an intentional or grossly negligent breach of duty by a legal representative of the user or by a person deployed to perform an obligation of the user;

letters (a) and (b) do not apply to limitations of liability in terms of transport and tariff rules, authorised in accordance with the Passenger Transport Act (Personenbeförderungsgesetz), of trams, trolley buses and motor vehicles in regular public transport services, to the extent that they do not deviate to the disadvantage of the passenger from the Order on Standard Transport Terms for Tram and Trolley Bus Transport and Regular Public Transport Services with Motor Vehicles (Verordnung über die Allgemeinen Beförderungsbedingungen für den Strassenbahn- und Obusverkehr sowie den Linienverkehr mit Kraftfahrzeugen) of 27 February 1970; letter (b) does not apply to limitations on liability for state-approved lotteries and gaming contracts;

8.  (Other exclusions of liability for breaches of duty)

a)  (Exclusion of the right to free oneself from the contract) a provision which, in the event of a breach of duty for which the user is responsible and which does not consist of a defect of the object of the purchase or the work, excludes or restricts the right of the other party to the contract to free itself from the contract; this does not apply to the terms of transport and tariff rules referred to in no. 7 under the prerequisites set out there;

b)  (Defects) a provision by which, in contracts relating to the supply of newly produced things and contracts relating to the performance of work

aa)  (Exclusion and referral to third parties) the claims against the user due to defects are excluded in their entirety or with regard to individual parts, are limited to the granting of claims against third parties or made contingent on prior court action taken against third parties;

bb)   (Limitation to cure) the claims against the user are limited in their entirety or with regard to individual parts to a right to cure, to the extent that the right is not expressly reserved for the other party to the contract to reduce the purchase price if the cure should fail or, except where building work is the object of liability for defects, at its option to revoke the contract;

cc)   (Expenses for cure) the duty of the user to bear, or reimburse, the expenses necessary for the purpose of effecting cure pursuant to section 439 subsections (2) and (3) or section 635 (2) is excluded or limited;

dd)   (Withholding cure) the user makes cure dependent upon prior payment of the entire fee or a portion of the fee that is disproportionate when taking the defect into account;

ee)   (Cut-off period for notice of defects) the user sets a cut-off period for the other party to the contract to give notice of non-obvious defects which is shorter than the permissible period of time under double letter (ff) below;

ff)   (Easing of limitation) the limitation of claims against the user due to defects in the cases governed by section 438 (1) no. 2 and section 634a (1) no. 2 is eased, or in other cases a limitation period of less than one year reckoned from the beginning of the statutory limitation period is attained;

9.  (Duration of continuing obligations) in a contractual relationship the subject matter of which is the regular supply of goods or the regular rendering of services or work performance by the user,

a)  a duration of the contract binding the other party to the contract for more than two years,

b)  a tacit extension of the contractual relationship that is binding on the other party to the contract, unless the contractual relationship is extended only for an indefinite period of time and the other contractual party is granted the right to terminate the extended contractual relationship at any time, observing a notice period of no longer than one month, or

c)  a notice period incumbent on the other party to the contract of longer than one month prior to the expiry of the duration of the contract as initially provided for;

this does not apply to contracts relating to the supply of things sold as belonging together, nor does it apply to insurance contracts;

10.  (Change of other contracting party) a provision according to which, in the case of purchase, loan or service contracts or contracts to produce a work, a third party enters into, or may enter into, the rights and duties under the contract in place of the user, unless, in that provision,

a)  the third party is identified by name, or

b)  the other party to the contract is granted the right to free itself from the contract;

11.  (Liability of an agent with power to conclude a contract) a provision by which the user imposes on an agent who concludes a contract for the other party to the contract

a)  a liability or obligation to assume liabilities for the principal on the part of the agent itself, without any explicit and separate declaration to this effect, or

b)  in the case of agency without authority, liability going beyond section 179;

12.  (Burden of proof) a provision by which the user modifies the burden of proof to the disadvantage of the other party to the contract, in particular by

a)  imposing on the latter the burden of proof for circumstances lying in the sphere of responsibility of the user, or

b)  having the other party to the contract confirm certain facts;

letter (b) does not apply to acknowledgements of receipt that are signed separately or provided with a separate qualified electronic signature;

13.  (Form of notices and declarations) a provision by which notices or declarations that are to be made to the user or a third party are tied

a)  to a more stringent form than the written form for a contract regarding which the law prescribes notarial recording,

b)  to a more stringent form than the text form for contracts other than those set out in letter (a), or

c)  to special receipt requirements;

14.  (Waiver of action) a provision by which the other party to the contract is permitted to assert its claims vis-à-vis the user in court only after it has attempted to amicably settle the matter in proceedings serving the out-of-court resolution of disputes.

15.  (Part payments and provision of security) a provision by which, in the case of a contract to produce a work, the user

a)  may demand part payments from the other party to the contract for part performance that are significantly higher than the part payments to be made pursuant to section 632a (1) and section 650m (1), or

b)  is not obliged to provide the security pursuant to section 650m (2) or only in a lower amount.

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Section 310
Scope of application

(1) Section 305 subsections (2) and (3), section 308 no. 1 and numbers 2 to 9, and section 309 do not apply to standard business terms that are used in contracts with a trader, a legal person under public law or a special fund under public law. Section 307 (1) and (2) nevertheless applies to the cases governed by sentence 1 insofar as this leads to the ineffectiveness of the contract provisions set out in section 308 no. 1 and numbers 2 to 8, and section 309; reasonable account is to be taken of the practices and customs that apply in business dealings. In the cases governed by sentence 1, section 307 (1) and (2) as well as section 308 nos. 1a and 1b do not apply to contracts in which the entire Award Rules for Building Works, Part B (Vergabe- und Vertragsordnung für Bauleistungen Teil B – VOB/B) in the version applicable at the time of conclusion of the contract are included without deviation as to their content, relating to an examination of the content of individual provisions.

(2) Sections 308 and 309 do not apply to contracts of electricity, gas, district heating or water suppliers for the supply of electricity, gas, district heating or water from the supply grid to special customers to the extent that the conditions of supply do not deviate, to the disadvantage of the customer, from ordinances on general conditions for the supply of standard-rate customers with electricity, gas, district heating and water. Sentence 1 applies accordingly to contracts for the drainage of sewage.

(3) In the case of contracts between a trader and a consumer (consumer contracts) the rules of this Division apply subject the following provisos:

1.  Standard business terms are deemed to have been presented by the trader, unless they were introduced into the contract by the consumer;

2.  Section 305c (2) and sections 306 and 307 to 309 of this Code and Article 46b of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) apply to pre-worded terms of contract even if the latter are intended only for non-recurrent use on one occasion, and to the extent that the consumer, by reason of the pre-worded text, had no influence on their contents;

3.  in judging an unreasonable disadvantage under section 307 (1) and (2), the other circumstances attending the conclusion of the contract also are to be taken into account.

(4) This Division does not apply to contracts in the field of the law of succession, family law and company law or to collective agreements and private-sector works agreements or public-sector establishment agreements. When it is applied to employment contracts, reasonable account is be taken of the special aspects that apply under labour law; section 305 (2) and (3) is not to be applied. Collective agreements and private-sector works agreements or public-sector establishment agreements are equivalent to legal provisions within the meaning of section 307 (3).

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Division 3
Contractual obligations

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Title 1
Creation, subject matter and termination

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Subtitle 1
Creation

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Section 311
Obligations created by legal transaction and obligations similar to legal transactions

(1) In order to create an obligation by legal transaction and to alter the contents of an obligation, a contract between the parties is required, unless otherwise provided by statute.

(2) An obligation with duties under section 241 (2) also comes into existence by

1.  the commencement of contract negotiations

2.  the initiation of a contract where one party, with regard to a potential contractual relationship, gives the other party the possibility of affecting its rights, legal interests and other interests, or entrusts these to the other party, or

3.  similar business contacts.

(3) An obligation with duties under section 241 (2) may also come into existence in relation to persons who are not themselves intended to be contractual parties. Such an obligation comes into existence in particular if the third party, by laying claim to being given a particularly high degree of trust, substantially influences the pre-contract negotiations or the conclusion of the contract.

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Section 311a
Impediment preventing performance at conclusion of contract

(1) A contract is not prevented from being effective by the fact that under section 275 (1) to (3), the obligor does not need to perform and the impediment preventing performance already exists when the contract is concluded.

(2) The obligee may, at its option, demand damages in lieu of performance or reimbursement of its expenses in the scope specified in section 284. This does not apply if the obligor was not aware of the impediment preventing when concluding the contract and is also not responsible for their lack of awareness. Section 281 (1) sentences 2 and 3 and subsection (5) apply accordingly.

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Section 311b
Contracts on plots of land, assets and an estate

(1) A contract by which one party agrees to transfer or acquire ownership of a plot of land is to be recorded by a notary. A contract not concluded in this form becomes valid with all its contents if a declaration of conveyance and registration in the Land Register are effected.

(2) A contract by which one party agrees to transfer its future assets or a fraction of its future assets or to charge them with a usufruct is void.

(3) A contract by which one party agrees to transfer its present assets or a fraction of its present assets or to charge them with a usufruct is to be recorded by a notary.

(4) A contract relating to the estate of a third party who is still alive is void. The same applies to a contract relating to a compulsory portion or a legacy from the estate of a third party who is still alive.

(5) Subsection (4) does not apply to a contract concluded between future heirs on intestacy relating to the hereditary share on intestacy or the compulsory portion of one of them. Such a contract is to be recorded by a notary.

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Section 311c
Application to accessories

If a person agrees to alienate or charge a thing, that duty, in case of doubt, also applies to accessories of the thing.

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Subtitle 2
Principles applying to consumer contracts; particular types of sale

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Chapter 1
Scope of application and principles applying to consumer contracts

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Section 312
Scope of application

(1) The provisions of Chapters 1 and 2 of this Subtitle are to be applied to consumer contracts in which the consumer enters into obligation to pay a price.

(1a) The provisions of Chapters 1 and 2 of this Subtitle also are to be applied to consumer contracts in which the consumer makes available personal data to the trader or enters into obligation to do so. This does not apply if the trader processes the personal data provided by the consumer exclusively in order to comply with its duty of performance or legal requirements made of it, and does not process them for any other purpose.

(2) Of the provisions set out in Chapters 1 and 2 of this Subtitle, solely section 312a (1), (3), (4), and (6) is to be applied to the following contracts:

1.  contracts that have been recorded by a notary

a)  and that relate to financial services, where such contracts are off-premises contracts,

b)  and that do not constitute a contract relating to financial services; this applies to contracts, regarding which the law does not require the contract or the declaration as to the conclusion of a contract to be recorded by a notary, solely in those cases in which the notary instructs the parties that the obligations to provide information pursuant to section 312d (1) and the right of withdrawal pursuant to section 312g (1) have ceased to apply;

2.  contracts relating to the creation, acquisition or transfer of ownership of plots of land or other rights to same,

3.  construction contracts with consumers pursuant to section 650i (1),

4.  (repealed)

5.  contracts relating to the carriage of passengers,

6.  timeshare contracts, long-term holiday product contracts, brokerage contracts and exchange system contracts pursuant to sections 481 to 481b,

7.  treatment contracts pursuant to section 630a,

8.  contracts relating to the supply of food products, beverages or other household objects of everyday use that are supplied to the residence, place of abode or place of employment of a consumer by a trader in the course of frequent and regular rounds,

9.  contracts that are concluded with the use of automatic vending machines and automated business premises,

10.  contracts for the use of public payphones that are concluded with telecommunications operators through such public payphones,

11.  contracts concluded for the use of one single connection by telephone, Internet or fax established by a consumer,

12.  off-premises contracts, in which the performance is immediately rendered and paid for at the conclusion of the negotiations and the remuneration to be paid by the consumer does not exceed 40 euros, and

13.  contracts relating to the sale of movable things by way of compulsory enforcement or other measures instructed by a court.

(3) Solely the following of the provisions set out in Chapters 1 and 2 of this Subtitle apply to contracts relating to social services, such as childcare and support of families and persons permanently or temporarily in need, including long-term care:

1.  the definitions of off-premises contracts and of distance contracts pursuant to sections 312b and 312c,

2.  section 312a (1) regarding the disclosure obligation in the case of telephone calls,

3.  section 312a (3) regarding the effectiveness of an agreement directed towards obtaining extra payment in addition to the remuneration agreed upon for the principal performance,

4.  section 312a (4) regarding the effectiveness of an agreement for fees for the use of means of payment,

5.  section 312a (6),

6.  section 312d (1) in conjunction with Article 246a section 1 (2) and (3) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) regarding the obligation to inform on the right of withdrawal, and

7.  section 312g regarding the right of withdrawal.

(4) Of the provisions made in Chapters 1 and 2 of this Subtitle, solely the stipulations set out in subsection (3) numbers 1 through 7 apply to contracts relating to the rental of accommodation for residential purposes. The stipulations set out in subsection (3) numbers 1, 6, and 7 do not apply, however, to the creation of a lease for accommodation serving residential purposes if the lessee has previously inspected the dwelling.

(5) In the case of contractual relationships relating to banking services and services of a credit, insurance, personal pension, investment or payment nature (financial services), that consist of an initial agreement with transactions following upon it or a series of separate transactions following upon it of the same nature performed close in time, the provisions made in Chapters 1 and 2 of this Subtitle apply only to the first agreement. Section 312a (1), (3), (4) and (6) additionally applies to each transaction. Where the transactions set out in sentence 1 follow one another without such an agreement, the provisions on the duties of a trader to provide information apply only to the first transaction. However, if no transaction of the same type occurs for longer than one year, the next transaction is deemed to be the first transaction of a new series within the meaning of sentence 3.

(6) Of the provisions made in Chapters 1 and 2 of this Subtitle, solely section 312a (3), (4) and (6) applies to contracts relating to insurance policies as well as to contracts relating to the brokerage of such policies.

(7) Of the provisions made in this Subtitle, solely sections 312a (3) to (6), sections 312i, 312j (2) to (5) and section 312k are to be applied to package travel contracts as defined in sections 651a and 651c; these provisions are to be applied also if the traveller is not a consumer. If the traveller is a consumer, then section 312g (1) also is to be applied to package travel contracts defined in section 651a that are off-premises contracts, unless the oral negotiations on the basis of which the contract was concluded were conducted in response to a previous order placed by the consumer.

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Section 312a
General obligations and principles applying to consumer contracts; limits to the agreement of remuneration

(1) Where the trader or a person acting in the trader’s name or on the trader’s behalf makes a telephone call to the consumer with a view to concluding a contract with same, the caller is to disclose, at the beginning of the conversation, their identity and, where applicable, the identity of the person on whose behalf the caller is making the call, as well as the commercial purpose of the call.

(2) The trader is obliged to inform the consumer in accordance with the stipulations of Article 246 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche). The trader may demand that the consumer cover freight, delivery, or postal charges and other costs only inasmuch as the trader has informed the consumer of these costs in accordance with the requirements established in Article 246 (1) no. 3 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche). Sentences 1 and 2 apply neither to off-premises contracts nor to distance contracts nor to contracts relating to financial services.

(3) A trader may conclude an agreement with a consumer that is directed towards obtaining extra payment from the consumer in addition to the remuneration agreed upon for the principal performance only if this is done expressly. Where the trader and the consumer conclude a contract in electronic commerce, such an agreement will form part of the contract only if the trader does not bring about the agreement by means of a default option.

(4) An agreement obligating a consumer to pay a fee for the use of a certain means of payment by way of meeting their contractual obligations is ineffective if

1.  no customary and reasonable payment method is available to the consumer that is free of charge, or

2.  the fee agreed exceeds the cost borne by the trader for the use of such means of payment.

(5) An agreement obligating a consumer to pay a fee for those cases in which the consumer contacts the trader via a telephone line that the trader operates for the purpose of answering questions or providing explanations regarding a contract concluded by the parties is ineffective if the fee agreed upon exceeds the fee charged for the use merely of the telecommunications service as such. Where an agreement is ineffective pursuant to sentence 1, the consumer is not bound to pay a fee for the call to the telecommunications services provider, either. The telecommunications services provider has the right to demand the fee for the use merely of the telecommunications services from the trader who has concluded the ineffective agreement with the consumer.

(6) Where an agreement pursuant to subsections (3) to (5) has not come to form part of the contract or where it is ineffective, the contract remains effective in all other respects.

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Chapter 2
Off-premises contracts and distance contracts

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Section 312b
Off-premises contracts

(1) Off-premises contracts are contracts

1.  that are concluded with the simultaneous physical presence of the consumer and of the trader, in a place that is not the business premises of the trader,

2.  for which an offer was made by the consumer in the same circumstances as referred to in no. 1,

3.  that are concluded on the business premises of the trader or through any means of distance communication, but where, immediately prior to such conclusion, the consumer had been personally and individually addressed, in a place that is not the business premises of the trader, in the simultaneous physical presence of the consumer and the trader, or

4.  that are concluded during an excursion organised by the trader or with the trader’s assistance, with the aim of promoting goods or services to the consumer and entering into the corresponding contracts with them.

Any persons acting in the trader’s name or on the trader’s behalf are in a position equivalent to that of the trader.

(2) Business premises within the meaning of subsection (1) are any immovable retail premises in which the trader carries out their activity on a permanent basis and any movable retail premises in which the trader carries out their activity on a usual basis. Any retail premises in which the person acting in the trader’s name or on the trader’s behalf carries out their activity on a permanent basis or customarily are equivalent to the premises of the trader.

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Section 312c
Distance contracts

(1) Distance contracts are contracts for which the trader, or a person acting in the trader’s name or on the trader’s behalf, and the consumer exclusively avail themselves of means of distance communication in negotiating and concluding the contract, except where the conclusion of the contract does not take place in the context of a sales or service-provision scheme organised for distance sales.

(2) Means of distance communication within the meaning of this Code are all means of communication that may be used to initiate or to conclude a contract, without requiring the simultaneous physical presence of the contractual parties, such as letters, catalogues, telephone calls, faxes, emails, text messages sent via the mobile telephone service (SMS) as well as messages broadcast and sent via teleservices.

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Section 312d
Obligations to provide information

(1) In the case of off-premises contracts and of distance contracts, the trader is obliged to inform the consumer according to the stipulations of Article 246a of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche). Unless the contractual parties expressly have agreed otherwise, the information the trader provides by way of meeting this obligation becomes part of the contract’s content.

(2) In the case of off-premises contracts and of distance contracts for financial services, the trader is obliged, in derogation from subsection (1), to inform the consumer in accordance with the stipulations of Article 246b of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche).

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Section 312e
Violation of information obligations as to costs

The trader may demand that the consumer cover any freight, delivery or postal charges and other costs insofar as the trader has informed the consumer of these costs in accordance with the requirements set out in section 312d (1) in conjunction with Article 246a section 1 (1) sentence 1 no. 4 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche).

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Section 312f
Copies and confirmations

(1) In the case of off-premises contracts, the trader is obliged to forthwith provide the consumer with the following documents on paper:

1.  a copy of a contract document signed by the parties concluding the contract such that their identity is recognisable, or

2.  a confirmation of the contract reflecting the contract’s content.

If the consumer agrees, some other durable medium may be used for the copy or the confirmation of the contract. The confirmation pursuant to sentence 1 must include the information specified in Article 246a of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) unless the trader has provided the consumer with such information on a durable medium, by way of meeting the trader’s obligations to provide information pursuant to section 312d (1), already prior to concluding the contract.

(2) In the case of distance contracts, the trader is obliged to provide the consumer with a confirmation of the contract, on a durable medium, in which the content of the contract is set out, and to do so within a reasonable time limit after having concluded the contract, at the latest, however, at the time of the delivery of the goods or before the performance of the service. The confirmation pursuant to sentence 1 must include the information specified in Article 246a of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) unless the trader has provided the consumer with such information on a durable medium prior to concluding the contract by way of meeting the trader’s obligations to provide information pursuant to section 312d (1).

(3) In the case of contracts for the supply of digital content (section 327 (2) sentence 1) that is not made available in a tangible medium, the copy or the confirmation of the contract pursuant to subsections (1) and (2) likewise is to record, where appropriate, that prior to the performance of the contract, the consumer

1.  has expressly consented to the trader commencing with the performance of the contract prior to expiry of the withdrawal period, and

2.  has acknowledged that, by granting consent, the consumer will lose the right to withdraw from the contract upon the performance of the contract having commenced.

(4) This provision does not apply to contracts relating to financial services.

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Section 312g
Right of withdrawal

(1) In the case of off-premises contracts and of distance contracts, the consumer has a right of withdrawal in accordance with section 355.

(2) Unless otherwise agreed by the parties, the right of withdrawal does not exist for the following contracts:

1.  contracts for the supply of goods that are not pre-fabricated and the production of which is governed by an individual choice of, or decision by, the consumer, or that are clearly tailored to personal needs of the consumer,

2.  contracts for the supply of goods that are highly perishable, or that may quickly pass their expiration date,

3.  contracts for the supply of sealed goods that are not suitable for return due to health protection or hygiene reasons, if such goods were unsealed after delivery,

4.  contracts for the supply of goods that, by their nature, are inseparably mixed, after delivery, with other items,

5.  contracts for the supply of alcoholic beverages, the price of which has been agreed upon at the time of the conclusion of the sales contract, the delivery of which can only take place at the earliest after 30 days following the conclusion of the sales contract, and the current value of which is dependent on market fluctuations outside of the trader’s control,

6.  contracts for the supply of sealed audio or sealed video recordings or sealed computer software, if they were unsealed after delivery,

7.  contracts for the delivery of newspapers, periodicals or magazines with the exception of subscription contracts for the supply of such publications,

8.  contracts for the supply of goods or the provision of services including the provision of financial services, the price of which is dependent on fluctuations on the financial market that are outside of the trader’s control and that may occur within the withdrawal period, including in particular services in connection with stock, with shares in open-ended investment assets within the meaning of section 1 (4) of the Investment Code (Kapitalanlagegesetzbuch), and with other tradeable securities, foreign currencies, derivatives or money market instruments,

9.  contracts for the provision of services in the fields of accommodation other than for residential purposes, transport of goods, car rental services, deliveries of food and beverages, or further services related to leisure activities, if the contract provides for a specific date or period of performance,

10.  contracts that are concluded in the context of a method of sale where goods or services are offered by the trader to consumers, who attend or are given the possibility to attend the auction in person, through a transparent, competitive bidding procedure run by an auctioneer and where the successful bidder is obliged to purchase the goods or services (publicly accessible auction),

11.  contracts where the consumer has specifically requested a visit from the trader for the purpose of carrying out urgent repairs or maintenance; this does not apply as regards additional services provided on the occasion of such visit that the consumer has not specifically requested, or as regards any goods delivered on the occasion of such visit that are not absolutely required as replacement parts in carrying out the maintenance or in making the repairs,

12.  contracts for the provision of betting and lottery services, unless the consumer has made their declaration as to the conclusion of a contract by telephone or the contract is an off-premises contract, and

13.  contracts that are recorded by a notary; this will apply to distance contracts relating to financial services only in those cases in which the notary confirms that the rights of the consumer set out in section 312d (2) are safeguarded.

(3) In addition, the right of withdrawal does not exist for contracts regarding which the consumer, under sections 495 and 506 to 513, already is entitled to a right of withdrawal under section 355, nor does it exist in the case of off-premises contracts regarding which the consumer is already entitled to a right of withdrawal pursuant to section 305 subsections (1) to (6) of the Investment Code (Kapitalanlagegesetzbuch).

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Section 312h
Termination and authorisation to terminate

If a continuing obligation is established between a trader and a consumer pursuant to this Subtitle that is intended to substitute a continuing obligation existing between the consumer and another trader, and if on the occasion of the establishment of the continuing obligation the consumer

1.  declares the termination of the existing continuing obligation and commissions the trader or a third party commissioned by the latter to transmit the termination to the previous party contracting with the consumer, or

2.  authorises the trader or a third party commissioned by the latter to declare the termination towards the party thus far contracting with the consumer,

then the consumer’s termination or the authorisation will require text form.

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Chapter 3
Contracts concluded in electronic commerce

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Section 312i
General obligations in electronic commerce

(1) If a trader uses teleservices in order to conclude a contract for the supply of goods or the rendering of services (e-commerce contract), then the trader is to

1.  provide the customer with reasonable, effective and accessible technical means with the aid of which the customer may identify and correct input errors prior to placing their order,

2.  communicate to the customer clearly and comprehensibly the information specified in Article 246c of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) in good time prior to the customer placing their order,

3.  confirm receipt of the order without undue delay by electronic means for the customer, and

4.  provide the customer with the opportunity to retrieve the contract terms including the standard business terms when the contract is concluded, and to save them in a form that allows for their reproduction.

The order and the acknowledgement of receipt within the meaning of sentence 1 no. 3 are deemed to have been received if the parties for whom they are intended are able to retrieve them in normal circumstances.

(2) Subsection (1) sentence 1 no. 1 to 3 is not to be applied if the contract is concluded exclusively by way of personal communication. Subsection (1) sentence 1 no. 1 to 3 and sentence 2 is not to be applied if otherwise agreed in a contract between contractual parties who are not consumers.

(3) More extensive information obligations resulting from other stipulations of the law remain unaffected.

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Section 312j
Special obligations vis-à-vis consumers in electronic commerce

(1) On the websites used for electronic commerce with consumers, the trader is to indicate clearly and unequivocally at the latest at the beginning of the ordering process, in addition to the information provided pursuant to section 312i (1), whether any delivery restrictions apply and which means of payment are accepted.

(2) In the case of a consumer contract concluded in electronic commerce that has as its subject-matter a for-a-fee service provided by the trader, the trader must provide to the consumer the information required by Article 246a section 1 (1) sentence 1 no. 1, 4, 5, 11, and 12 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche), and must do so in a clear and comprehensible manner, displaying it prominently, immediately before the consumer places the order.

(3) In case of a contract in accordance with subsection (2), the trader is to arrange the ordering situation such that the consumer explicitly confirms by their order that they enter into obligation to effect a payment. If the order is placed using a button, the obligation of the trader under sentence 1 is deemed to have been met only if this button is marked in an easy-to-read manner with nothing but the words “Order and Pay” (zahlungspflichtig bestellen), or with equally unambiguous wording.

(4) A contract in accordance with subsection (2) comes into existence only if the trader meets the obligation under subsection (3).

(5) Subsections (2) to (4) are not to be applied if the contract is concluded exclusively by personal communication. The obligations set out in subsections (1) and (2) apply neither to websites concerning financial services nor to contracts relating to financial services.

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Chapter 4
Deviating agreements and burden of proof

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Section 312k
Deviating agreements and burden of proof

(1) No agreements deviating from the provisions of this Subtitle may be made, unless otherwise provided, that are to the disadvantage of the consumer or the customer. Unless otherwise provided, the provisions of this Subtitle apply even if they are circumvented by other arrangements.

(2) The burden of providing proof to the consumer that the information obligations provided for under the present Subtitle have been complied with is incumbent on the trader.

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Subtitle 3
Adaptation and ending of contracts

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Section 313
Interference with the basis of the transaction

(1) If circumstances that became the basis of a contract have undergone serious change since the contract was concluded and if the parties would not have concluded the contract or would have concluded it with different contents had they foreseen this change, then adaptation of the contract may be demanded to the extent that, taking account of all the circumstances of the specific case, in particular the contractual or statutory distribution of risk, one of the parties cannot reasonably be required to uphold the contract without alteration.

(2) It is equivalent to a change of circumstances if material conceptions that have become the basis of the contract are found to be incorrect.

(3) If adaptation of the contract is not possible or if one party cannot reasonably be required to accept it, then the disadvantaged party may rescind the contract. In the case of continuing obligations, the right to terminate takes the place of the right of rescission.

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Section 314
Termination, for a compelling reason, of contracts for the performance of a continuing obligation

(1) Each party may terminate a contract for the performance of a continuing obligation for a compelling reason without a notice period. A compelling reason is given if the terminating party, having taken into account all the circumstances of the specific case and having weighed the interests of both parties against each other, cannot reasonably be required to continue the contractual relationship until the agreed end or until the expiry of a notice period.

(2) Where the compelling reason consists of the breach of a duty under the contract, the contract may be terminated only after the expiry without result of a period of time specified for relief or after a warning notice has failed to obtain a result. Section 323 (2) no. 1 and 2 applies accordingly as regards the dispensability of specifying a period of time for such relief and as regards the dispensability of a warning notice. Specifying a period of time for relief and issuing a warning notice also may be dispensed with if special circumstances are given that, having weighed the interests of both parties against each other, justify immediate termination.

(3) The person entitled may give notice only within a reasonable time limit after obtaining knowledge of the reason for termination.

(4) The termination does not rule out the entitlement to demand compensation of damages.

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Subtitle 4
Unilateral rights to specify performance

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Section 315
Specification of performance by one party

(1) If performance is to be specified by one of the contracting parties, then in case of doubt it is to be assumed that the specification is to be made at the reasonably exercised discretion of the party making it.

(2) The specification is made by declaration to the other party.

(3) Where the specification is to be made at the reasonably exercised discretion of a party, the specification made is binding on the other party only if it is equitable. If it is not equitable, then the specification is made by judicial decision; the same applies if the specification is delayed.

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Section 316
Specification of consideration

If the extent of the consideration promised for an act of performance is not specified, then in case of doubt the party that is owed the consideration is entitled to make the specification.

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Section 317
Specification of performance by a third party

(1) Where specification of performance is left to a third party, then in case of doubt it is to be assumed that the specification is to be made at the reasonably exercised discretion of the third party.

(2) If the specification is made by more than one third party, then in case of doubt, the agreement of all parties is necessary; where an amount is to be specified and several amounts are specified, then in case of doubt, the average amount will apply.

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Section 318
Avoidance of specification

(1) The specification of performance left to a third party is effected by declaration to one of the contracting parties.

(2) Only the contracting parties are entitled to avoid the specification made for mistake, duress or deceit; the opponent is the other party. Avoidance must occur without undue delay after the opponent has obtained knowledge of the grounds for avoidance. Avoidance is excluded if 30 years have passed since the specification was made.

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Section 319
Ineffectiveness of the specification; substitution

(1) If the third party is to specify performance at its reasonably exercised discretion, then the specification made will not be binding on the contracting parties if it is evidently inequitable. The specification is made in this case by judicial decision; the same applies if the third party cannot or does not want to make the specification or if it delays it.

(2) If the third party is to make the specification at its free discretion, the contract is ineffective if the third party cannot or does not want to make the specification or if it delays it.

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Title 2
Reciprocal contract

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Section 320
Defence of unperformed contract

(1) A person who is a party to a reciprocal contract may refuse their part of the performance until the other party renders consideration, unless the person is obliged to perform in advance. If performance is to be made to more than one person, an individual person may be refused the part performance due to that person until the complete consideration has been rendered. The provision of section 273 (3) does not apply.

(2) If one party has performed in part, consideration may not be refused to the extent that refusal, in the circumstances, in particular because the part in arrears is relatively trivial, would be in bad faith.

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Section 321
Defence of uncertainty

(1) A person who is obliged to perform in advance under a reciprocal contract may refuse to render their performance if, after the contract is concluded, it becomes apparent that that person’s entitlement to consideration is jeopardised by the inability to perform of the other party. The right to refuse performance is not applicable if consideration is rendered or security is provided for it.

(2) The person required to perform in advance may specify a reasonable time limit within which the other party, at their choice, is to render consideration or provide security in return for, and concurrently with, performance. If the period of time lapses without result, the person required to perform in advance may revoke the contract. Section 323 applies accordingly.

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Section 322
Order to perform in return for, and concurrently with, performance

(1) If a party brings an action for performance due to them on the basis of a reciprocal contract, the assertion by the other party of their right to refuse performance until consideration is rendered merely has the effect that the latter party is to be ordered to meet their obligations in return for, and concurrently with, performance.

(2) If the party bringing the action is to perform in advance, then, if the other party is in default of acceptance, the party’s action may seek performance following receiving consideration.

(3) The provision in section 274 (2) applies to compulsory enforcement.

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Section 323
Rescission for non-performance or for performance not as contractually agreed

(1) If, in the case of a reciprocal contract, the obligor does not render an act of performance which is due, or does not render it as contractually agreed, then the obligee may rescind the contract, provided the obligee has specified, without result, an additional period of time for performance or cure.

(2) Specifying a period of time may be dispensed with if

1.  the obligor seriously and definitively refuses performance,

2.  the obligor does not render performance by a date specified in the contract or within a period of time specified in the contract, in spite of the fact that, according to a notice given by the obligee to the obligor prior to conclusion of the contract or based on other circumstances attending at the time of its conclusion, the performance as per the date specified or within the period of time specified is of essential importance to the obligee, or

3.  in the case of work not having been carried out as contractually agreed, special circumstances exist that, having weighed the interests of both parties against each other, justify immediate rescission.

(3) If the nature of the breach of duty is such that setting a period of time is not an available option, a warning notice takes the place of setting the period of time.

(4) The obligee may revoke the contract before performance is due if it is obvious that the prerequisites for rescission will be met.

(5) If the obligor has performed in part, the obligee may revoke the whole contract only if the obligee has no interest in part performance. If the obligor has not performed as contractually agreed, the obligee may not revoke the contract if the breach of duty is trivial.

(6) Rescission is excluded if the obligee is solely or very predominantly responsible for the circumstance that would entitle them to rescind the contract or if the circumstance for which the obligor is not responsible occurs at a time when the obligee is in default of acceptance.

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Section 324
Rescission for breach of a duty under section 241 (2)

If the obligor, in the case of a reciprocal contract, breaches a duty under section 241 (2), then the obligee may rescind the contract if the obligee no longer reasonably can be expected to uphold the contract.

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Section 325
Damages and revocation

The right to demand damages in the case of a reciprocal contract is not excluded by rescission.

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Section 326
Release from consideration and rescission where the duty of performance is excluded

(1) If, under section 275 (1) to (3), the obligor is not obliged to perform, there is no entitlement to consideration; in the case of part performance, section 441 (3) applies accordingly. Sentence 1 does not apply if the obligor, in the case of failure to perform as contractually agreed, does not, under section 275 (1) to (3), have to effect cure.

(2) If the obligee is solely or very predominantly responsible for the circumstance due to which the obligor does not, under section 275 (1) to (3), have to perform, or if this circumstance for which the obligor is not responsible occurs at a time when the obligee is in default of acceptance, the obligor retains the entitlement to consideration. However, the obligor must allow to be credited against them what they save due to their being released from performance or what they acquire or wilfully fail to acquire from other use of their labour.

(3) If the obligee demands, under section 285, the surrender of the substitute benefit obtained for the object owed or assignment of the claim to reimbursement, the obligee remains obliged to render consideration. However, the consideration is reduced under section 441 (3) to the extent that the value of the reimbursement or of the claim to reimbursement falls short of the value of the performance owed.

(4) To the extent that the consideration that is not owed under this provision is effected, what is performed may be claimed back under sections 346 to 348.

(5) If, under section 275 (1) to (3), the obligor does not have to perform, then the obligee may rescind the contract; section 323 applies accordingly to the rescission, subject to the proviso that setting a period of time may be dispensed with.

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Title 2a
Contracts on digital products

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Subtitle 1
Consumer contracts on digital products

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Section 327
Scope of application

(1) The provisions of this Subtitle are to be applied to consumer contracts the subject matter of which is the supply by the trader of digital content or digital services (digital products) against payment of a price. A price as defined in this Subtitle also is a digital presentation of a value.

(2) Digital content is data that are created and supplied in digital form. Digital services are services that allow

1.  the consumer to create, process, store or access data in digital form, or

2.  the sharing of or any other interaction with data in digital form uploaded or created by the consumer or other users of that service.

(3) The provisions of this Subtitle are to be applied also to consumer contracts on the supply of digital products under which the consumer provides or undertakes to provide personal data to the trader, except where the prerequisites stipulated in section 312 (1a) sentence 2 have been met.

(4) The provisions of this Subtitle are to be applied also to consumer contracts that have as their subject matter digital products that are developed in accordance with the consumer’s specifications.

(5) To the exception of sections 327b and 327c, the provisions of this Subtitle are to be applied also to consumer contracts that have as their subject matter the supply of tangible media serving exclusively as the carriers of digital content.

(6) The provisions of this Subtitle are not to be applied to:

1.  contracts on services other than digital services, regardless of whether digital forms or means are used by the trader to produce the output of the service or to deliver or transmit it to the consumer,

2.  contracts on electronic communications services as defined in section 3 no. 61 of the Telecommunications Act (Telekommunikationsgesetz – TKG) of 23 June 2021 (BGBl. (Federal Law Gazette I, p. 1858) with the exception of number-independent interpersonal communications services as defined in section 3 no. 40 of the Telecommunications Act,

3.  treatment contracts pursuant to section 630a,

4.  contracts on gambling services that involve wagering a stake with pecuniary value and that are provided by electronic means or any other technologies for facilitating communication and at the individual request of a recipient of such services,

5.  contracts relating to financial services,

6.  contracts on the supply of software by the trader under a free and open-source licence, where the consumer does not pay a price and the personal data provided by the consumer exclusively are processed by the trader for the purpose of improving the security, compatibility or interoperability of the software offered by the trader,

7.  contracts on the supply of digital content where the digital content is made available to the general public other than by signal transmission as part of a performance or event,

8.  contracts on the supply of information as defined in the Act on the Further Use of Information Held by Public Bodies (Informationsweiterverwendungsgesetz – IWG) of 13 December 2006 (BGBl. (Federal Law Gazette I, p. 2913), as amended by Article 1 of the Act of 8 July 2015 (BGBl. (Federal Law Gazette I, p. 1162).

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Section 327a
Application to bundle contracts and contracts relating to things with digital elements

(1) The provisions of this Subtitle are to be applied also to consumer contracts that, in a contract between the same contractual parties, have as their subject matter the supply of other things or the supply of other services besides the supply of digital products (bundle contract). Unless otherwise provided hereinbelow, the provisions of this Subtitle are to be applied only to those parts of the bundle contract, however, that relate to the digital products.

(2) The provisions of this Subtitle are to be applied also to consumer contracts concerning things that incorporate or are inter-connected with digital products. Unless otherwise provided hereinbelow, the provisions of this Subtitle are to be applied only to those parts of the contract, however, that relate to the digital products.

(3) Subsection (2) does not apply to sales contracts concerning goods that incorporate or are inter-connected with digital products in such a way that the absence of those digital products would prevent the goods from performing their functions (goods with digital elements). When a good with digital elements is purchased, it is to be assumed in case of doubt that the seller’s obligation includes the supply of the digital content or digital services.

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Section 327b
Supply of digital products

(1) Where the trader is obliged under a consumer contract as defined in section 327 or section 327a to supply a digital product to the consumer, the following provisions apply to the specification of the time of performance as well as to the modalities of the supply by the trader.

(2) If the contractual parties have not agreed a time for the supply of the digital product in accordance with subsection (1), then the consumer may demand that supply be effected without undue delay following the conclusion of contract and the trader may effect it immediately.

(3) Digital content is supplied as soon as the digital content or the means suitable for accessing or downloading said digital content has/have been supplied or made accessible to the consumer directly or via a facility chosen by the consumer for that purpose.

(4) A digital service is supplied as soon as the digital service has been made accessible to the consumer directly or via a facility chosen by the consumer for that purpose.

(5) If the trader is obliged under the contract to perform a series of individual acts of supply, then subsections (2) to (4) apply to each individual act of supply forming part of the series.

(6) In derogation from section 363, the burden of proof for the supply having been effected in accordance with subsections (1) to (4) is on the trader.

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Section 327c
Rights in the case of failure to effect supply

(1) If the trader’s obligation to supply the digital product has fallen due and the trader fails to comply with it without undue delay upon the consumer’s demand, then the consumer may terminate the contract. Once a demand as per sentence 1 has been made, it is possible to arrange a different time for the supply only by express agreement.

(2) Where the prerequisites for terminating the contract in accordance with subsection (1) sentence 1 have been met, the consumer may demand compensation of damages in accordance with sections 280 and 281 (1) sentence 1 or reimbursement of futile expense in accordance with section 284, provided that the prerequisites stipulated in said provisions have been met. Section 281 (1) sentence 1 is to be applied subject to the proviso that the specification of a reasonable period is replaced by the demand as per subsection (1) sentence 1. Claims of the consumer to compensation of damages as defined in sections 283 and 311a (2) remain unaffected.

(3) The demand as per subsection (1) sentence 1 and (2) sentence 2 may be dispensed with if

1.  the trader refuses to effect supply,

2.  it is clearly recognisable from the circumstances that the trader will not supply the digital product, or

3.  the trader fails to effect supply by a specified date or within a specified period of time despite its having been agreed, or its being evident to the trader from the clearly recognisable circumstances attending the conclusion of the contract that a specific time or period of time for the supply is essential for the consumer.

In the cases governed by sentence 1, the dunning letter defined in section 286 may be dispensed with in all cases.

(4) Sections 327o and 327p are to be applied accordingly the termination of the contract on the basis of subsection (1) sentence 1 and the legal consequences of such termination. The same applies in the event of the consumer demanding, in the cases governed by subsection (2), compensation of damages instead of the entire performance. Section 325 applies accordingly.

(5) Section 218 is to be applied accordingly to the termination of the contract on the basis of subsection (1) sentence 1.

(6) Should the consumer be in a position to terminate the contract on the basis of subsection (1) sentence 1, they may rescind the contract with regard to the entirety of the elements of the bundle contract if they have no interest in the other part of the bundle contract without the digital product that has not been supplied. Sentence 1 is not to be applied to bundle contracts in which the other element is a telecommunications service as defined in section 3 no. 61 of the Telecommunications Act.

(7) Should the consumer be in a position to terminate the contract on the basis of subsection (1) sentence 1, they may rescind the contract with regard to all elements of a contract in accordance with section 327a (2) if, because of the digital product not having been supplied, the thing is not suitable for customary use.

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Section 327d
Conformity of digital products

Where the trader is obliged under a consumer contract as defined in section 327 or section 327a to supply a digital product, the trader is to supply the digital product free of product deficiencies and defects of title within the meaning of sections 327e to 327g.

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Section 327e
Product deficiency

(1) The digital product is free of product deficiencies if it conforms, at the relevant time under the provisions of this Subtitle, to the subjective requirements, the objective requirements and the requirements regarding integration. Unless otherwise provided hereinbelow, the relevant time is the point in time at which supply is effected in accordance with section 327b. If the trader is obliged under the contract to continuously effect supply over a period of time (continuous supply), then the relevant period is the entire period of supply agreed (supply period).

(2) The digital product conforms to subjective requirements if

1.  the digital product

a)  is of the nature agreed in the contract, including the requirements as to its quantity, its functionality, its compatibility and its interoperability,

b)  is suitable for the use on which the contract is premised,

2.  it is supplied with the accessories, instructions and customer assistance as agreed in the contract and

3.  the updates agreed in the contract are supplied during the relevant period stipulated by the contract.

Functionality is the ability of a digital product to perform its functions in keeping with its purpose. Compatibility is the ability of a digital product to function with hardware or software with which, as a rule, digital products of the same type are used without having to be converted. Interoperability is the ability of a digital product to function with hardware or software different from that with which, as a rule, digital products of the same type are used.

(3) The digital product conforms to objective requirements if

1.  it is suitable for customary use,

2.  it is of a nature, including in relation to quantity, functionality, compatibility, accessibility, continuity and security, that is usual for digital products of the same type and that the consumer may reasonably expect, given the nature of the digital product,

3.  it corresponds to the nature of a trial version or preview made available to the consumer by the trader before the conclusion of the contract,

4.  it is supplied along with the accessories and instructions that the consumer may expect to receive,

5.  updates are supplied to the consumer in accordance with section 327f and the consumer is informed of such updates and,

6.  unless the parties have agreed otherwise,if it is supplied in the most recent version available at the time of the conclusion of the contract.

The usual nature as defined in sentence 1 no. 2 also includes requirements that the consumer may reasonably expect to be met based on public statements made by the trader or by other persons in previous links of the distribution chain, either themselves or on their behalf, particularly in advertisement or on labelling. This does not apply if the trader was not, and could not reasonably have been, aware of the public statement in question; if, by the time of conclusion of the contract, the public statement had been corrected in the same way as, or in a way comparable to how, it had been made; or if the decision to acquire the digital product could not have been influenced by the public statement.

(4) Inasmuch as an integration is to be performed, the digital product conforms to integration requirements if

1.  the integration has been performed correctly or

2.  if, despite the integration having been performed incorrectly, this is based neither on an incorrect integration by the trader nor on a deficiency in the instructions supplied by the trader.

Integration is the linking of a digital product with the components of the consumer’s digital environment or its incorporation into same in order to enable the use of the digital product in keeping with the requirements stipulated by the provisions of this Subtitle. Digital environment is hardware, software and network connections of any kind used by the consumer to access or make use of a digital product.

(5) It is equivalent to a product deficiency if the trader supplies a different digital product than the digital product owed under the contract.

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Section 327f
Updates

(1) The trader is to ensure that, over the relevant period of time, the consumer is informed of and supplied with updates that are necessary to keep the digital product in conformity. The necessary updates also include security updates. The relevant period of time as per sentence 1 is,

1.  where the contract provides for the continuous supply of a digital product, the supply period,

2.  in all other cases, the period that the consumer may reasonably expect, given the type and purpose of the digital product and taking into account the circumstances and nature of the contract.

(2) Where the consumer fails to install, within a reasonable time limit, an update supplied by the trader in accordance with subsection (1), the trader will not be liable for any product deficiency resulting solely from the lack of the relevant update, provided

1.  the trader informed the consumer about the availability of the update and the consequences of the failure of the consumer to install it, and

2.  the failure of the consumer to install the update or the incorrect installation by the consumer of the update was not due to shortcomings in the installation instructions provided by the trader.

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Section 327g
Defect of title

The digital product is free of defects of title if the consumer is able to use it in accordance with the subjective or objective requirements defined in section 327e (2) and (3) without violating the rights of third parties.

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Section 327h
Deviating agreements on product features

It is possible to deviate from the objective requirements set out in section 327e (3) sentence 1 nos. 1 to 5 and sentence 2, section 327f (1) and section 327g only if it was specially made known to the consumer prior to their making their declaration as to the conclusion of a contract that a certain feature of the digital product deviates from those objective requirements and this deviation was expressly and separately agreed in the contract.

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Section 327i
Rights of the consumer in the case of deficiencies

If the digital product is deficient, then the consumer may, provided the prerequisites set out in the following provisions have been met,

1.  demand cure as defined in section 327l,

2.  terminate the contract on the basis of section 327m (1), (2), (4) and (5) or abate the price under the terms of section 327n, and

3.  demand compensation of damages on the basis of section 280 (1) or section 327m (3) or reimbursement of futile expenses as defined in section 284.

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Section 327j
Limitation

(1) The claims designated in section 327i no. 1 and 3 will become statute-barred after two years. The limitation period commences upon supply.

(2) In the case of continuous supply, the claims will not become statute-barred prior to the expiry of 12 months following the end of the supply period.

(3) Claims for a violation of the obligation to provide updates will not become statute-barred prior to the expiry of 12 months following the end of the period of time relevant for the obligation to provide updates.

(4) Where a deficiency has become apparent in the course of the limitation period, the claims will not become statute-barred prior to the expiry of four months following that point in time at which the deficiency first became apparent.

(5) Section 218 applies accordingly to the rights designated in section 327i no. 2.

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Section 327k
Shifting the burden of proof

(1) If, within one year since its having been supplied, the lack of conformity of the digital product to the requirements set out in section 327e or section 327g becomes apparent, then the presumption will be that the digital product was deficient already at the time of supply.

(2) If, in the course of its supply, the lack of conformity of a digital product supplied on a continuous basis to the requirements set out in section 327e or section 327g becomes apparent, then the presumption will be that the digital product was deficient over the course of its supply thus far.

(3) Subject to subsection (4), the assumptions as per subsections (1) and (2) do not apply if

1.  the consumer’s digital environment was incompatible with the technical requirements of the digital product at the relevant time or

2.  the trader is unable to determine whether the prerequisites set out in no. 1 had been met because the consumer fails to perform an act of cooperation necessary for this purpose that would have been possible for it to perform and the trader intended to deploy technical means to make said determination that would have been least invasive for the consumer.

(4) Subsection (3) is to be applied only if the trader has informed the consumer, prior to the conclusion of contract, in clear and comprehensible terms, of

1.  the technical requirements as to the digitial environment of the digital product in the case of subsection (3) no. 1 or

2.  the obligations of the consumer as set out in subsection (3) no. 2.

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Section 327l
Cure

(1) If the consumer demands cure from the trader, the latter is to bring the digital product into conformity while bearing the expenses required for the cure. The trader is to effect the cure within a reasonable time limit from that point in time at which the consumer informed it of the deficiency, without causing any significant inconvenience to the consumer.

(2) The claim defined in subsection (1) is excluded if cure is impossible or possible for the trader only at disproportionate cost. In this context, regard is to be had in particular to the value of the digital product in a deficiency-free state and the significance of the deficiency. Section 275 (2) and (3) does not apply.

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Section 327m
Termination of the contract and compensation of damages

(1) If the digital product is deficient, the consumer may terminate the contract on the basis of section 327o if

1.  the claim to cure is excluded by virtue of section 327l (2)

2.  the consumer’s claim to cure was not complied with as stipulated in section 327l (1),

3.  a deficiency becomes apparent in spite of the trader’s attempts to effect cure,

4.  the deficiency is so serious that the immediate termination of the contract is justified,

5.  the trader has refused to effect the proper cure as defined in section 327l (1) sentence 2, or

6.  it is obvious from the circumstances that the trader will not effect the proper cure as defined in section 327l (1) sentence 2.

(2) A termination of the contract on the basis of subsection (1) is excluded if the deficiency is trivial. This does not apply to consumer contracts as defined in section 327 (3).

(3) In the cases governed by subsection (1) nos. 1 to 6, the consumer may demand compensation of damages instead of performance, provided the prerequisites stipulated in section 280 (1) have been met. Section 281 subsection (1) sentence 3 and subsection (4) are to be applied accordingly. Where the consumer demands compensation of damages instead of the full performance, the trader is entitled to claim the return of its performance under the terms of sections 327o and 327p. Section 325 applies accordingly.

(4) Should the consumer be in a position to terminate the contract on the basis of subsection (1), they may rescind the contract with regard to the entirety of the elements of the bundle contract if they have no interest in the other part of the bundle contract without the deficient digital product. Sentence 1 is not to be applied to bundle contracts in which the other element is a telecommunications service as defined in section 3 no. 61 of the Telecommunications Act.

(5) Should the consumer be in a position to terminate the contract on the basis of subsection (1), they may rescind the contract with regard to all elements of a contract in accordance with section 327a (2) if, because of the deficiency of the digital product, the thing is not suitable for customary use.

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Section 327n
Abatement

(1) Instead of terminating the contract on the basis of section 327m (1), the consumer may, by declaration to the trader, abate the price. The ground for exclusion defined in section 327m (2) sentence 1 does not apply. Section 327o (1) is to be applied accordingly.

(2) In abating the price, it is to be reduced in the ratio of the value that the deficiency-free digital product would have had to its actual value at the time it was supplied. In the case of contracts on the continuous supply of a digital product, the price is to be reduced, under corresponding application of sentence 1, only pro-rata for the duration of the deficiency.

(3) If required, the abatement is to be identified by way of an estimate.

(4) Where the consumer has paid more than the abated price, the trader is to reimburse the consumer for the amount overpaid. The amount overpaid is to be reimbursed without undue delay, but in any case within 14 days. The period of time commences upon the declaration as to the abatement being received by the trader. The trader must use the same means of payment for the reimbursement that the consumer used in making the payment, unless expressly agreed otherwise and provided the use of some other means of payment does not impose any costs on the consumer. The trader may not seek compensation from the consumer for the costs that it incurs for reimbursing the amount overpaid.

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Section 327o
Declaration of termination of contract and its legal consequences

(1) The termination of the contract is effected by a declaration being made to the trader in which the consumer’s decision to terminate is expressed. Section 351 is to be applied accordingly.

(2) In the case of the contract being terminated, the trader is to reimburse the consumer for the payments that the consumer has made in performance of the contract. The trader’s claim to payment of the agreed price ceases to exist in relation to performance that no longer is to be rendered due the contract’s termination.

(3) In derogation from subsection (2) sentence 2, the trader’s claim ceases to exist also for performance already rendered under contracts on the continuous supply of a digital product, but only for that phase of the supply period during which the digital product was deficient. The price paid for the period of time regarding which the claim has ceased to exist as per sentence 1 is to be reimbursed to the consumer.

(4) Section 327n (4) sentences 2 to 5 is to be applied accordingly to the reimbursements stipulated by subsections (2) and (3).

(5) The consumer is obliged to return to the trader without undue delay a tangible medium the latter has supplied if the trader so demands, such demand to be made no later than 14 days after termination of the contract. The trader is to bear the costs of the return shipment. Section 348 is to be applied accordingly.

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Section 327p
Continued use following termination of the contract

(1) Upon the contract having been terminated, the consumer may not continue to use the digital product, nor may the consumer make it available to third parties. The trader is entitled to prevent the consumer from continuing the use. Subsection (3) remains unaffected hereby.

(2) Upon the contract having been terminated, the trader may not continue to use the content that does not consist of personal data and that the consumer has supplied or created in using the digital product supplied by the trader. This does not apply if the content

1.  serves no use outside of the context of the digital product supplied by the trader,

2.  is connected exclusively to the consumer’s use of the digital product supplied by the trader,

3.  was aggregated by the trader with other data and it is not possible to disaggregate it or only at disproportionate expense or

4.  was created by the consumer together with others, insofar as other consumers are able to continue to use the content.

(3) Upon demand by the consumer, the trader is to supply to same the content defined in subsection (2) sentence 1. This does not apply to content defined in subsection (2) sentence 2 nos. 1 to 3. The content must be supplied to the consumer free of charge, without any impediments imposed by the trader, within a reasonable time limit and in a customary and machine-readable format.

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Section 327q
Consequences under contract law of declarations governed by data protection law made by the consumer

(1) Where, following the conclusion of the contract, the consumer exercises their rights as a data subject under data protection law and where they make declarations governed by data protection law, the effectiveness of the contract remains unaffected.

(2) Where the consumer revokes consent they have previously granted under the rules on the protection of personal data or where they object to the further processing of their personal data, the trader may terminate a contract obligating it to a series of individual acts of supply of digital products or to the continuous supply of a digital product without observing a period of notice if, having regard to the scope of data processing that continues to be permissible and weighing the parties’ interests against each other, it cannot reasonably be required of the trader to continue the contractual relationship up until the agreed end of the contract or the expiration of a statutory or contractual period of notice.

(3) Claims of compensation on the part of the trader against the consumer because of a restriction of the permissible data processing caused by the exercise of the rights under data protection law or the fact of declarations governed by data protection law having been made are excluded.

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Section 327r
Modifications of digital products

(1) In the case of continuous supply, the trader may make modifications to the digital product going beyond the degree required to keep it in conformity as defined in section 327e (2) and (3) and section 327f only if

1.  the contract provides for this possibility and sets out a valid reason for doing so,

2.  no additional costs are imposed on the consumer by the modification and

3.  the consumer is informed in clear and comprehensible terms of the modification.

(2) The trader may make a modification to the digital product that impairs the consumer’s ability to access the digital product or the usability of the digital product for the consumer only if the trader informs the consumer thereof via a durable medium within a reasonable time limit prior to the time of the modification. The information must provide the following details:

1.  features of the modification and the point in time at which it will be made,

2.  the rights of the consumer as defined in subsections (3) and (4).

Sentence 1 does not apply if the impairment of the ability to access the digital product or of its usability is merely trivial.

(3) Where a modification of the digital product impairs the ability to access it or its usability within the meaning of subsection (2) sentence 1, the consumer may terminate the contract within 30 days at no charge. The period of time commences running upon receipt of the information defined in subsection (2). Where the modification is made after the information has been received, the point in time at which the information is received is replaced by the point in time at which the modification is made.

(4) Termination of the contract on the basis of subsection (3) sentence 1 is excluded if

1.  impairment of the ability to access the digital product or of its usability is merely trivial or

2.  the consumer retains the ability to access the unmodified digital product and the unmodified digital product continues to be usable for the consumer without any additional cost.

(5) Sections 327o and 327p are to be applied accordingly to the termination of the contract on the basis of subsection (3) sentence 1 and to the legal consequences of such termination.

(6) Subsections (1) to (5) are not to be applied to bundle contracts in which the other element of the bundle contract has as its subject matter the supply of an internet access service or of a publicly accessible number-based interpersonal communications service as part of a bundle contract as defined in section 66 (1) of the Telecommunications Act.

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Section 327s
Deviating agreements

(1) The trader may not rely on an agreement with the consumer that deviates from the provisions of this Subtitle to the disadvantage of the consumer unless the agreement was made only after the consumer notified the trader of the failure to supply the digital product or of the digital product’s deficiency.

(2) The trader may not rely on an agreement with the consumer on a modification of the digital product that deviates from the provisions of this Subtitle to the disadvantage of the consumer unless the agreement was made after the consumer was informed of the modification of the digital product in accordance with section 327r.

(3) The provisions of this Subtitle apply even if they are circumvented by other arrangements.

(4) Subsections (1) and (2) do not apply to the exclusion or limitation of the claim to compensation of damages.

(5) Section 327h remains unaffected.

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Subtitle 2
Special provisions on contracts on digital products between traders

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Section 327t
Scope of application

By way of supplementation, the provisions of this Subtitle are to be applied to contracts between traders serving the supply of digital products in accordance with the consumer contracts defined in sections 327 and 327a that are included in the scope of application of Subtitle 1.

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Section 327u
Recourse of the trader

(1) The trader may demand reimbursement from the trader who has entered into obligation to it to supply a digital product (distribution partner) of the expenses it has incurred in its relationship with a consumer for failure to supply the digital product that was to be supplied to it by the distribution partner, such failure having been caused by the distribution partner, because the consumer exercised their right defined in section 327c (1) sentence 1. The same applies to the expenditures to be borne by the trader as per section 327l (1) if the deficiency asserted by the consumer vis-à-vis the trader was given already at the time of the supply by the distribution partner or if it consists of a violation caused by the distribution partner of the trader’s obligation to provide updates as stipulated in section 327f (1).

(2) The claims to reimbursement of the expenditures defined in subsection (1) will become statute-barred after six months. The limitation period commences running,

1.  in the case governed by subsection (1) sentence 1, at that point in time at which the consumer has exercised their right,

2.  in the case governed by subsection (1) sentence 2, at that point in time at which the trader has satisfied the consumer’s claims under section 327l (1).

(3) Section 327k (1) and (2) is to be applied accordingly, subject to the proviso that the period of time commences upon supply to the consumer.

(4) The distribution partner may not rely on an agreement concluded with the trader prior to the assertion of the claims to reimbursement of the expenditures defined in subsection (1) that deviates, to the disadvantage of the trader, from subsections (1) to (3). Sentence 1 is to be applied even if subsections (1) to (3) are circumvented by other arrangements.

(5) Section 377 of the Commercial Code (Handelsgesetzbuch) remains unaffected.

(6) The above subsections are to be applied accordingly to the claims of the distribution partner and of the other contracting parties in the distribution chain against the contracting parties respectively obliged to supply if the obligors are traders.

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Title 3
Promise of performance to a third party

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Section 328
Contract for the benefit of third parties

(1) Performance to a third party may be agreed by contract with the effect that the third party acquires the right to demand the performance directly.

(2) In the absence of a specific provision it is to be inferred from the circumstances, in particular from the purpose of the contract, whether the third party is to acquire the right, whether the right of the third party is to come into existence immediately or only based on certain prequisistes, and whether the power is to be reserved for the contracting parties to terminate or alter the right of the third party without its approval.

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Section 329
Interpretation rule where there is an assumption of the duty to perform

Where one party to a contract agrees to satisfy an obligee of the other party without assuming the obligation, then in case of doubt it is not to be presumed that the obligee is to acquire the right to demand satisfaction from that party directly.

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Section 330
Interpretation rule in the case of life annuity contracts

Where in a life annuity contract the payment of the life annuity to a third party is agreed, in case of doubt it is to be presumed that the third party is to acquire the right to demand performance directly. The same applies if, in the case of a gratuitous disposition, a duty of performance is imposed on the person provided for, or, in the case of assumption of assets or a landed estate, performance for a third party is promised by the assuming party for the purpose of providing satisfaction.

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Section 331
Performance after death

(1) If the performance for the third party is to occur after the death of the person to whom it is promised, the third party acquires the right to the performance, in case of doubt, upon the death of the promisee.

(2) If the promisee dies prior to the birth of the third party, the promise to perform to the third party may only be cancelled or modified if the power to do so was reserved.

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Section 332
Modification by disposition mortis causa in case of reservation

If the promisee reserves the power to place another in the place of the third party designated in the contract, then in case of doubt this also may be accomplished in a disposition mortis causa.

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Section 333
Rejection of the right by the third party

If the third party rejects the right under the contract towards the promisor, then the right is deemed to not have been acquired.

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Section 334
Objections of the obligor in relation to the third party

The promisor is entitled to raise objections under the contract also in relation to the third party.

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Section 335
Right of the promisee to make demands

Unless a different intention of the contractual parties is to be presumed, the promisee may demand performance for the third party even if the latter is entitled to the right to performance.

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Title 4
Earnest, penalty for breach of contract

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Section 336
Interpretation of earnest

(1) Where something is given as an earnest when a contract is entered into, this is deemed to be a sign that the contract has been concluded.

(2) The earnest is not deemed, in case of doubt, to be forfeit money.

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Section 337
Crediting or return of the earnest

(1) The earnest is, in case of doubt, to be credited against the performance owed by the giver of the earnest, or, where this cannot occur, is to be returned when the contract is performed.

(2) If the contract is cancelled, the earnest is to be returned.

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Section 338
Earnest in case of impossibility of performance for which the giver of earnest is responsible

If the performance owed by the giver of the earnest becomes impossible due to a circumstance for which they are responsible, or if the giver of the earnest is at fault for the cancellation of the contract concluded, then the recipient of the earnest may retain it. If the recipient demands damages for non-performance, then, in case of doubt, the earnest is to be credited against it, or if this cannot occur, it is to be returned when compensation for the damage is provided.

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Section 339
Payability of penalty for breach of contract

Where the obligor promises the obligee, in the event of their failing to perform their obligation or failing to do so properly, payment of an amount of money as a penalty, the penalty is payable upon the obligor being in default. If the performance owed consists of forbearance, the penalty is payable on breach.

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Section 340
Promise to pay a penalty for non-performance

(1) If the obligor has promised the penalty in the event of their failing to perform their obligation, then the obligee may demand the penalty that is payable in lieu of fulfilment. Where the obligee declares to the obligor that they are demanding the penalty, the claim for performance is excluded.

(2) If the obligee is entitled to a claim for damages for non-performance, then they may demand the penalty payable as the minimum amount of the damage. Assertion of additional damage is not excluded.

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Section 341
Promise of a penalty for improper performance

(1) If the obligor has promised the penalty in the event of their failing to perform their obligation properly, including performance at the specified time, the obligee may demand the payable penalty in addition to performance.

(2) If the obligee has a claim for damages for the improper performance, the provisions of section 340 (2) apply.

(3) If the obligee accepts performance, they may demand the penalty only if they reserved the right to do so on acceptance.

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Section 342
Alternatives to monetary penalty

If, as penalty, performance other than the payment of a sum of money is promised, the provisions of sections 339 to 341 apply; the claim for damages is excluded if the obligee demands the penalty.

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Section 343
Reduction of the penalty

(1) If a payable penalty is disproportionately high, it may be reduced, on application by the obligor, to a reasonable amount by judicial decision. In judging the appropriateness, regard is to be had to every legitimate interest of the obligee, not merely their property interests. Once the penalty is paid, reduction is excluded.

(2) The same also applies, except in the cases governed by sections 339 and 342, if someone promises a penalty in the event of their taking or failing to take an action.

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Section 344
Ineffective promise of a penalty

If the law declares that the promise of an act of performance is ineffective, then the agreement of a penalty made for the event of failure to fulfil the promise likewise is ineffective, even if the parties knew of the ineffectiveness of the promise.

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Section 345
Burden of proof

If the obligor contests the payability of the penalty on the basis of their having performed their obligation, they are to prove performance, unless the performance owed consisted in forbearance.

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Title 5
Revocation; right of withdrawal in consumer contracts

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Subtitle 1
Rescission

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Section 346
Effects of rescission

(1) If one party to a contract contractually has reserved rescission or if it has a statutory right of revocation, then, in the case of rescission, performance received and emoluments taken are to be returned.

(2) In lieu of restitution or surrender, the obligor is to provide compensation for value, to the extent that

1.  restitution or surrender is excluded by the nature of what has been obtained,

2.  the obligor has used up, alienated, encumbered, processed or redesigned the object received,

3.  the object received has deteriorated or has been destroyed; but deterioration that is caused by the object being used in accordance with its intended use is not taken into account.

If consideration is specified in the contract, then this is to be used as a basis when the compensation for value is calculated; if compensation for value for the benefit of use of a loan is to be paid, it may be proved that the value of the benefit of use was lower.

(3) The duty to compensate for value does not apply

1.  if the defect justifying revocation only became apparent during processing or transformation of the object,

2.  to the extent that the obligee is responsible for the deterioration or destruction or that the damage likewise would have occurred even if the object had remained with the obligee,

3.  if in case of a statutory right of revocation the deterioration or destruction occurred with the person entitled, although the latter exercised the care they customarily exercise in their own affairs.

Any remaining enrichment is to be returned.

(4) The obligee may demand damages, in accordance with sections 280 to 283, for breach of a duty under subsection (1).

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Section 347
Emoluments and outlays after rescission

(1) If the obligor fails to take emoluments contrary to the rules of proper management although they could have done so, then they are obliged to compensate the obligee for the value. In the case of a statutory right of rescission, the person entitled is to be responsible, with regard to emoluments, only for the care that they customarily exercise in their own affairs.

(2) If the obligor returns the object or provides compensation for the value or if their duty to compensate for value under section 346 (3) no. 1 or 2 is excluded, they are to be reimbursed for their necessary outlays. Other expenditures are to be reimbursed to the extent that the obligee is enriched by them.

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Section 348
Satisfaction of obligations in return for, and concurrently with, performance

The obligations of the parties resulting from rescission are to be satisfied in return for, and concurrently with, performance. The provisions of sections 320 and 322 apply accordingly.

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Section 349
Declaration of rescission

Rescission is effected by declaration to the other party.

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Section 350
Expiry of the right of rescission after a period of time has been specified

If a period of time has not been agreed for the exercise of the contractual right of rescission, then the other party may specify a reasonable time limit within which the person entitled to rescind is to exercise that right. The right of rescission becomes extinct unless rescission is declared before the end of that period of time.

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Section 351
Indivisibility of the right of rescission

If, in a contract, there is more than one person on one side or the other, the right of rescission may be exercised only by all and against all of them. If the right of rescission becomes extinct for one of the persons entitled, it also becomes extinct for the others.

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Section 352
Set-off after non-performance

Rescission for failure to perform an obligation is ineffective if the obligor was able to obtain release from the obligation by means of set-off and declares set-off without undue delay after the revocation.

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Section 353
Rescission in return for forfeit money

If the right of rescission in return for payment of forfeit money has been reserved, the rescission is ineffective if the forfeit money is not paid before the declaration or when the declaration is made and the other party, for this reason, rejects the declaration without undue delay. However, the declaration is effective if the forfeit money is paid without undue delay after the rejection.

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Section 354
Forfeiture of rights

If a contract has been concluded subject to the reservation that the obligor will lose their rights under the contract if they fail to perform their obligation, the obligee is entitled to rescind the contract if this circumstance occurs.

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Subtitle 2
Right of withdrawal in the case of consumer contracts

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Section 355
Right of withdrawal in the case of consumer contracts

(1) If a consumer is given, by statute, a right of withdrawal according to this provision, then the consumer and the trader are no longer bound by their declarations of intent to conclude the contract if the consumer withdraws from the declaration of intent within the period of time specified. The withdrawal is effected by a declaration being made to the trader. The declaration must unambiguously reflect the consumer’s decision to withdraw from the contract. The withdrawal does not have to provide any grounds. Dispatch of the withdrawal in good time is sufficient to comply with the time limit.

(2) The withdrawal period is fourteen days. Unless otherwise provided, it begins upon the contract having been concluded.

(3) In the case of the contract being withdrawn from, the performance received is to be returned without undue delay. Where the law has specified a maximum period within which restitution is to be made, this will commence running for the trader upon receipt of the declaration of withdrawal and, for the consumer, upon dispatch of the declaration of withdrawal. A consumer will be complying with this period by dispatching the goods in good time. In the event of withdrawal, the trader bears the risk of the return shipment of the goods.

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Section 356
Right of withdrawal in the case of off-premises contracts and distance contracts

(1) The trader may provide the consumer with the opportunity to complete and transmit the model withdrawal form pursuant to schedule 2 to Article 246a section 1 (2) sentence 1 no. 1 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche), or some other unambiguous declaration of withdrawal, on the trader’s website. Where the consumer avails himself or herself of this opportunity, the trader must confirm receipt of the withdrawal to the consumer without undue delay on a durable medium.

(2) The withdrawal period commences,

1.  in the case of a sale of consumer goods

a)  that is not governed by letters (b) to (d), as soon as the consumer or a third party named by the consumer, such third party not being a carrier, has received the goods,

b)  in the context of which the consumer has ordered several goods as part of a single order and the goods are delivered separately, as soon as the consumer or a third party named by the consumer, such third party not being a carrier, has received the last of the goods,

c)  in the context of which the goods are delivered in several partial shipments or items, as soon as the consumer or a third party named by the consumer, such third party not being a carrier, has received the last partial shipment or the last item,

d)  that is directed towards the regular delivery of goods over a specified period of time, as soon as the consumer or a third party named by the consumer, such third party not being a carrier, has received the first goods,

2.  in the case of a contract that has as its subject matter the supply of water, gas, electricity, district heating or digital content which is not contained in a tangible medium, without the supply having been offered for sale in a limited volume or set quantity, upon conclusion of the contract.

(3) The withdrawal period does not commence prior to the trader having informed the consumer in accordance with the requirements of Article 246a section 1 (2) sentence 1 no. 1 or of Article 246b section 2 (1) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche). The right of withdrawal becomes extinct at the latest twelve months and fourteen days following the point in time set out in subsection (2) or section 355 (2) sentence 2. Sentence 2 does not apply to contracts relating to financial services.

(4) In the case of a contract for the provision of services, the right of withdrawal becomes extinct also in those cases in which the trader has completely provided the service and began with the performance of the service only after the consumer had given express consent thereto and concurrently acknowledged that they would lose the right to withdraw from the contract once the trader had fully performed the contract. In the event a contract is negotiated away from business premises, the approval of the consumer must be transmitted on a durable medium. In the case of a contract relating to the provision of financial services, the right of withdrawal becomes extinct, in derogation from sentence 1, if the contract was performed in full by both parties at the express wish of the consumer before the consumer exercises their right of withdrawal.

(5) In the case of a contract for the supply of digital content that is not contained in a tangible medium, the right of withdrawal becomes extinct also if the trader began with the performance of the contract after the consumer

1.  had expressly consented to the trader beginning with the performance of the contract prior to expiry of the withdrawal period, and

2.  had acknowledged that by their consent, they would lose the right to withdraw from the contract upon the performance of the contract having commenced.

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Section 356a
Right of withdrawal in the case of timeshare contracts, long-term holiday product contracts, brokerage contracts, and exchange system contracts

(1) The withdrawal is to be declared in text form.

(2) The withdrawal period commences at the time of conclusion of the contract or of the conclusion of a preliminary contract. If the consumer does not receive the contractual document or the copy of the contract until after conclusion of the contract, the withdrawal period commences at the time of receipt.

(3) If the consumer has not been provided with the pre-contractual information designated in section 482 (1) or with the form designated in Article 242 section 1 (2) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) prior to conclusion of the contract, not completely or not in the language prescribed in section 483 (1), then the withdrawal period, notwithstanding subsection (2), will not commence until complete receipt of the pre-contractual information and of the form in the prescribed language. The right of withdrawal becomes extinct at the latest three months and fourteen days after the time designated in subsection (2).

(4) If the consumer has not been provided with the instruction regarding withdrawal designated in section 482a before the contract has been concluded, either not completely or not in the language prescribed in section 483 (1), then the withdrawal period, notwithstanding subsection (2), will not commence until the complete the instructions on withdrawal has been received in the prescribed language. Where appropriate, the right of withdrawal expires in derogation subsection (3) sentence 2 at the latest twelve months and fourteen days after the time cited in subsection (2).

(5) If the consumer has concluded a timeshare contract and an exchange system contract, and if these contracts have been offered to them at the same time, the withdrawal period for both contracts commences at the time applicable under subsection (2) to the timeshare contract. Subsections (3) and (4) apply accordingly.

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Section 356b
Right of withdrawal in the case of consumer credit agreements

(1) The withdrawal period does not commence before the lender has provided the borrower with a contract document intended for the latter, with the written application of the borrower or with a copy of the contract document or of their application.

(2) Where, in the case of a general-purpose consumer credit agreement, the contract document provided to the borrower pursuant to subsection (1) does not include the obligatory information regarding the right of withdrawal required by section 492 (2), the withdrawal period will commence only upon this information being provided subsequently in accordance with section 492 (6). Where, in the case of a consumer credit agreement relating to immovable property, the contract document provided to the borrower pursuant to subsection (1) does not include the obligatory information regarding the right of withdrawal required pursuant to section 492 (2) in conjunction with Article 247 section 6 (2) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche), the withdrawal period commences only upon the subsequent provision of this information pursuant to section 492 (6). In the cases governed by sentences 1 and 2, the withdrawal period amounts to one month. The right of withdrawal from consumer credit agreements relating to immovable property expires no later than twelve months and fourteen days after the time of conclusion of the contract or after the point in time designated in subsection (1), where this is after the time of conclusion of the contract.

(3) In the event provided for by section 494 (7), the period for withdrawing from a general-purpose consumer credit agreement commences only once the borrower has received the copy of the contract designated therein.

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Section 356c
Right of withdrawal in the case of contracts for delivery by instalments

(1) In the case of a contract for delivery by instalments that is neither a distance contract nor an off-premises contract, the withdrawal period does not commence prior to the trader having informed the consumer pursuant to Article 246 (3) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) as to the latter’s right of withdrawal.

(2) Section 356 (1) applies accordingly. The right of withdrawal expires no later than twelve months and fourteen days following the point in time set out in section 355 (2) sentence 2

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Section 356d
Withdrawal right of the consumer in the case of credit agreements for a gratuitous loan and in the case of gratuitous financial accommodation

In the case of a contract by which a trader grants to a consumer a gratuitous loan or gratuitous financial accommodation, the withdrawal period will not commence, in derogation from section 355 (2) sentence 2, prior to the trader having informed the consumer pursuant to the stipulations of section 514 (2) sentence 3 as to the latter’s right of withdrawal. The right of withdrawal expires no later than twelve months and fourteen days after the time of conclusion of the contract or after the point in time designated in sentence 1, where this is after the time of conclusion of the contract.

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Section 356e
Right of withdrawal in the case of construction contracts with consumers

In the case of a construction contract with a consumer (section 650i (1)), the withdrawal period will not commence prior to the trader having informed the consumer pursuant to Article 249 (3) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) as to the latter’s right of withdrawal. The right of withdrawal expires no later than twelve months and fourteen days after the time set out in section 355 (2) sentence 2.

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Section 357
Legal consequences of the withdrawal from off-premises contracts and distance contracts, to the exception of contracts relating to financial services

(1) The performance received is to be restituted at the latest after fourteen days.

(2) The trader must also restitute any payments the consumer may have made for the delivery. This does not apply inasmuch as the consumer has incurred additional costs because they opted for a type of delivery other than the least expensive type of standard delivery offered by the trader.

(3) In making the repayment, the trader must use the same means of payment that the consumer used in making the payment. Sentence 1 does not apply if the parties expressly have agreed otherwise and the consumer does not incur any costs as a result.

(4) In the case of a sale of consumer goods, the trader may refuse to make repayment until they have received the returned goods or the consumer has provided proof of having dispatched the goods. This does not apply if the trader has offered to collect the goods.

(5) The consumer is not obliged to arrange for the return shipment of the goods received if the trader has offered to collect the goods.

(6) The consumer bears the direct costs of return shipment of the goods if the trader has informed the consumer pursuant to Article 246a section 1 (2) sentence 1 no. 2 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) of this obligation. Sentence 1 does not apply if the trader has declared that they are prepared to bear these costs. In the case of off-premises contracts, in the context of which the goods were delivered to the consumer’s dwelling at the time the contract was concluded, the trader is obliged to collect the goods at their own costs if, by their nature, these goods cannot be returned by post.

(7) The consumer is to provide compensation for the diminished value of the goods if

1.  the diminished value results from the handling of the goods in any other manner than that necessary to establish the nature, characteristics, and functioning of the goods, and

2.  the trader has informed the consumer pursuant to Article 246a section 1 (2) sentence 1 no. 1 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) of their right of withdrawal.

(8) Where the consumer withdraws from a contract for the provision of services or the supply of water, gas, or electricity, without their supply having been offered for sale in a limited volume or set quantity, or for the supply of distance heating, the consumer will owe the trader compensation for the value of the performance made until the time of the withdrawal in those cases in which the consumer expressly has demanded that the trader begin with the performance prior to expiry of the withdrawal period. The claim pursuant to sentence 1 exists only in those cases in which the trader has properly informed the consumer pursuant to Article 246a section 1 (2) sentence 1 no. 1 and 3 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche). For off-premises contracts, the claim pursuant to sentence 1 exists only in those cases in which the consumer has transmitted their request pursuant to sentence 1 on a durable medium. In calculating the compensation for value, the total price agreed upon is to be used as a basis. If the total price agreed upon is excessive, the compensation for value is to be calculated on the basis of the market value of the performance made.

(9) Where the consumer withdraws from a contract for the supply of digital content that is not contained in a tangible medium, they are not to provide compensation for value.

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Section 357a
Legal consequences of the withdrawal from contracts relating to financial services

(1) The performance received is to be restituted at the latest after 30 days.

(2) Where off-premises contracts or distance contracts relating to financial services are withdrawn from, the consumer is obliged to pay compensation for the value of the services rendered by the trader until the time of the withdrawal if

1.  this legal consequence has been indicated to the consumer prior to their making the declaration as to the conclusion of a contract and

2.  the consumer has expressly agreed to the trader commencing performance of the service prior to the withdrawal period having ended.

Where contracts relating to non-gratuitous financial accommodation are withdrawn from that are covered by the exception set out in section 506 (4), section 357 subsections (5) to (8) likewise applies accordingly. Where the contract relating to non-gratuitous financial accommodation has as its subject matter the supply of digital content which is not contained in a tangible medium, the consumer is to compensate for the value of the digital content supplied until the time of the withdrawal if

1.  this legal consequence has been indicated to the consumer prior to their making the declaration as to the conclusion of a contract, and

2.  the consumer has expressly consented to the trader commencing with the supply of the digital content prior to the withdrawal period having ended.

Where consideration is specified in the contract, this is to serve as the basis for calculating the compensation for value. If the total price agreed upon is excessive, the compensation for value is to be calculated on the basis of the market value of the performance made.

(3) In the case of a withdrawal from a consumer credit agreement, the borrower is to pay the agreed interest for the period lapsing between the disbursement of the loan and its repayment. In the case of a consumer credit agreement relating to immovable property, proof may be submitted as to the value of the benefit of use having been lower than the interest agreed upon. In this case, solely the lower amount is owed. In cases in which contracts relating to non-gratuitous financial accommodation are withdrawn from that are not covered by the exception set out in section 506 (4), subsection (2) likewise applies accordingly, subject to the proviso that the information concerning the right of withdrawal is replaced by the obligatory information under Article 247 section 12 (1) in conjunction with section 6 (2) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche), each of which provisions concerns the right of withdrawal. Over and above this, the borrower is to refund to the lender solely the expenditure that the lender has incurred vis-à-vis public agencies and for which it cannot demand repayment.

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Section 357b
Legal consequences of the withdrawal from timeshare, long-term holiday product, brokerage contracts, and exchange system contracts

(1) The consumer does not incur any costs in the event of a withdrawal. The trader is to reimburse the consumer for the costs of the contract, its implementation, and its winding up. Remuneration for services rendered and for making residential buildings available for use is excluded.

(2) The consumer is to provide compensation for the diminished value of the accommodation within the meaning of section 481 only insofar as the diminishment in value is the result of the accommodation not being used in accordance with its designated purpose.

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Section 357c
Legal consequences of the withdrawal from contracts for delivery by instalments that are neither distance contracts nor off-premises contracts

Section 357 subsections (1) to 5 applies accordingly to the restitution of the performance received. The consumer bears the direct costs of the return shipment of the items of property received unless the trader has stated that they are prepared to bear these costs. Section 357 (7) is to be applied accordingly, subject to the proviso that the information pursuant to Article 246a section 1 (2) sentence 1 no. 1 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) is replaced by the information pursuant to Article 246 (3) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche).

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Section 357d
Legal consequences of the withdrawal from a construction contract with a consumer

Where, by its nature, the restitution of the performance received until the time of withdrawal is excluded, the consumer is to compensate the trader for value. The calculation of the compensation for value is to be based on the remuneration agreed upon. Where the remuneration agreed upon is excessive, the compensation for value is to be be calculated on the basis of the market value of the performance made.

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Section 358
Contracts linked to the contract from which the consumer has withdrawn

(1) If the consumer has effectively withdrawn their declaration of intent to conclude a contract for the supply of goods or for the provision of a service by a trader, they also no longer are bound by their declaration of intent to conclude a credit agreement linked to this contract.

(2) If the consumer has effectively withdrawn their declaration of intent to conclude a credit agreement on the basis of section 495 (1), or on the basis of section 514 (2) sentence 1, then the consumer also is no longer obliged by their declaration of intent to conclude a contract linked to that credit agreement for the supply of goods or for the provision of some other performance.

(3) A contract for the supply of goods or for the provision of some other performance and a credit agreement pursuant to subsections (1) or (2) are linked if the loan fully or partially serves to finance the other contract and both contracts constitute a single economic unit. An economic unit is to be assumed in particular if the trader itself finances the consideration of the consumer or, in the case of financing by a third party, if, in preparation for the credit agreement or in entering into it, the lender avails itself of the trader’s cooperation. In the case of a financed acquisition of a plot of land or of an equivalent right, an economic unit is to be assumed only if the lender itself provides the plot of land or the equivalent right to the consumer, or if the lender, beyond the provision of the loan, promotes the acquisition of the plot of land or the equivalent right in cooperation with the trader, by adopting as its own the interest of the trader in alienating the plot, as a whole or in part, by assuming functions of the alienating party in planning, advertising or carrying out the project, or by unilaterally favouring the alienating party.

(4) Section 355 (3) and, depending on the type of the linked contract, sections 357 to 357b are to be applied accordingly to the winding up of the linked contract, independently of the type of sale. Where the linked contract is a contract for the supply of digital content that is not contained in a tangible medium and the trader has provided the consumer with a copy or confirmation of the contract as stipulated by section 312f, the consumer is to pay, in derogation from section 357 (9) and subject to the prerequisites set out in section 356 (5) half-sentences 2 and 3, compensation for the value of the digital content supplied until the time of withdrawal. Where the linked contract is a contract for delivery by instalments that is a distance contract or an off-premises contract, section 357 also is to be applied accordingly, besides section 355 (3); in all other cases, section 355 (3) and section 357c apply accordingly to linked contracts for the delivery by instalments. In the case of subsection (1), however, claims against the consumer for payment of interest and costs arising from the winding up of the credit agreement are excluded. With regard to the legal consequences of withdrawal, the lender assumes the rights and duties of the trader under the linked contract if the loan already has been paid out to the trader when the withdrawal becomes effective.

(5) Subsections (2) and (4) are not to be applied to consumer credit agreements that serve to finance the acquisition of financial instruments.

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Section 359
Objections in the case of linked contracts

(1) The consumer may refuse to repay the loan to the extent that objections under the linked contract would entitle them to refuse performance to the trader with whom they have concluded the linked contract. This does not apply in the case of objections based on a contract amendment that was agreed between this trader and the consumer after the credit agreement had been concluded. If the consumer may demand a cure, then they cannot refuse to repay the loan until the cure has failed.

(2) Subsection (1) is not to be applied to credit agreements that serve to finance the acquisition of financial instruments, or if the financed remuneration is less than 200 euros.

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Section 360
Related contracts

(1) Where the consumer effectively has withdrawn their declaration of intent to conclude a contract and where the prerequisites for a linked contract have not been met, they also no longer will be bound to their declaration of intent to conclude a related contract. Section 358 (4) sentence 1 to 3 is to be applied accordingly to the winding up of the related contract. Where the consumer withdraws from a timeshare contract or a long-term holiday product contract, they are not to bear any costs for the related contract, either; section 357b (1) sentences 2 and 3 applies accordingly.

(2) A related contract is given wherever it relates to the contract from which the consumer has withdrawn and concerns a performance that is being provided by the trader under the contract from which the consumer has withdrawn, or by a third party on the basis of an agreement concluded by the third party and the trader who is party to the contract from which the consumer has withdrawn. A credit agreement is a related contract also in those cases in which the loan that a trader grants to a consumer exclusively serves to finance the contract from which the consumer has withdrawn and the performance by the trader, which is governed by the contract from which the consumer has withdrawn, has been specified exactly in the credit agreement.

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Section 361
Further claims, deviating agreements and burden of proof

(1) No further claims against the consumer over and above those pursuant to the provisions of this Subtitle exist as a result of the withdrawal.

(2) Unless otherwise provided, there may be no deviation from the provisions of this Subtitle to the disadvantage of the consumer. Unless otherwise provided, the provisions of this Subtitle apply even if they are circumvented by other arrangements.

(3) Where the commencement of the withdrawal period is in dispute, the burden of proof is on the trader.

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Division 4
Extinction of obligations

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Title 1
Performance

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Section 362
Extinction by performance

(1) An obligation is extinguished if the performance owed is rendered to the obligee.

(2) If performance is rendered to a third party for the purpose of performing the contract, then the provisions of section 185 apply.

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Section 363
Burden of proof in the case of acceptance as performance of contract

If the obligee has accepted performance offered to them as performance of contract, then they will bear the burden of proof if they do not wish to have the performance considered as performance of contract because it was different from the performance owed or because it was incomplete.

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Section 364
Acceptance in lieu of performance of contract

(1) The obligation expires if the obligee accepts, in lieu of performance of contract, performance other than that owed.

(2) If the obligor assumes a new obligation to the obligee for the purpose of satisfying the latter, then in case of doubt it is not to be presumed that they are assuming the obligation in lieu of performance of contract.

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Section 365
Warranty in the case of handover in lieu of performance of contract

If a thing, a claim against a third party or some other right is given in lieu of performance of contract, the obligor is to provide warranty for a defect of title or a material defect of the thing in the same manner as a seller.

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Section 366
Crediting of performance to more than one claim

(1) If the obligor owes performance of the same kind to the obligee under more than one obligation, and if what the obligor pays does not suffice to redeem all debts, that debt is redeemed that the obligor determines when they perform.

(2) If the obligor does not make a determination, then the first debt redeemed is the debt due for redemption; among more than one due debt, the one offering the obligee the least security; among more than one equally secure debts, the more onerous one; among more than one equally onerous debts, the oldest debt; and where all are equally old, each debt proportionally.

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Section 367
Crediting to interest and costs

(1) If the obligor is to pay interest and costs in addition to the principal performance, an act of performance not sufficient to redeem the entire debt is first credited to the costs, then to the interest and finally to the principal performance.

(2) If the obligor determines another method of crediting, the obligee may refuse to accept the performance.

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Section 368
Receipt

Upon receiving performance, the obligee is to issue, on demand, a written acknowledgement of receipt (receipt). Where the obligor has an interest of a legal nature in having the receipt issued in another form, then they may demand issue in that form.

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Section 369
Costs of the receipt

(1) The costs of the receipt are to be borne and advanced by the obligor, unless the legal relation existing between them and the obligee leads to a different conclusion.

(2) If more than one obligee takes the place of the original obligee as the result of a transfer of the claim or by way of inheritance, the increased costs are charged to the obligees.

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Section 370
Performance to the bringer of the receipt

The bringer of a receipt is deemed to be authorised to receive the performance to the extent that the circumstances of which the performing party is aware do not stand in the way of assuming such authorisation.

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Section 371
Return of the certificate of indebtedness

Where a certificate of indebtedness has been issued relating to the claim, the obligor may, besides demanding the receipt, also demand return of the certificate of indebtedness. If the obligee claims to be incapable of returning it, then the obligor may demand a publicly certified acknowledgement that the debt is extinguished.

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Title 2
Deposit

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Section 372
Prerequisites

Money, securities and other documents as well as valuables may be deposited by the obligor for the obligee with a public authority intended for this purpose if the obligee is in default of acceptance. The same applies if the obligor cannot meet their obligation or cannot do so with certainty for some other cause constituted by the person of the obligee or as the result of uncertainty, not due to negligence, as to the identity of the obligee.

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Section 373
Concurrent performance

If the obligor is obliged to perform only in return for performance by the obligee, then they may make the right of the obligee to receive the deposited thing dependent upon the rendering of consideration.

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Section 374
Place of deposit; duty to notify

(1) Deposit is to be made at the depository institution of the place of performance; if the obligor deposits at any other place, then they are to compensate the obligee for the damage arising therefrom.

(2) The obligor is to notify the obligee of the deposit without undue delay; in case of failure to do so, they will be liable in damages. The notice may be omitted if it is inadvisable.

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Section 375
Retroactive effect with dispatch by mail

Where the deposited thing has been dispatched to the depository institution by mail, the deposit has retroactive effect to the date on which the thing was put in the mail.

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Section 376
Right to take back

(1) The obligor has the right to take back the deposited thing.

(2) Taking back is excluded

1.  if the obligor declares to the depository institution that they waive the right to take back,

2.  if the obligee declares their acceptance to the depository institution,

3.  if the depository institution is presented with a final and binding judgment handed down in a dispute between the obligee and the obligor that declares the deposit to be lawful.

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Section 377
Unpledgeability of the right to take back

(1) The right to take back is not subject to pledge.

(2) If insolvency proceedings are initiated against the assets of the obligor, then for the duration of the insolvency proceedings, the right to take back may not be exercised by the obligor either.

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Section 378
Effect of deposit where taking back is excluded

If taking back the deposited thing is excluded, then the obligor is freed from their obligation by deposit in the same way as if they had rendered performance to the obligee at the time of deposit.

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Section 379
Effect of deposit where taking back is not excluded

(1) If taking back the deposited thing is not excluded, the obligor may refer the obligee to the deposited thing.

(2) As long as the thing is deposited, the obligee bears the risk and the obligor is not obliged to pay interest or provide compensation for emoluments not taken.

(3) If the obligor takes back the deposited thing, the deposit is deemed not to have occurred.

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Section 380
Proof of entitlement to receive

Insofar as, according to the provisions in place with the depository institution regarding proof of the entitlement of the obligee to take receipt, a declaration by the obligor acknowledging such entitlement is required or sufficient, the obligee may demand from the obligor the issuance of the declaration based on the same prerequisites as those based on which they would be entitled to demand performance if the deposit had not occurred.

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Section 381
Costs of deposit

The costs of deposit are charged to the obligee unless the obligor takes back the deposited thing.

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Section 382
Extinction of the right of the obligee

The right of the obligee to the deposited amount is extinguished at the end of 30 years following receipt of the notice of deposit, unless the obligor report to the depository institution before then; the obligor is entitled to take the thing back, even if they have waived the right to take back.

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Section 383
Auction of things not capable of deposit

(1) If the movable thing owed is not suitable for deposit, then the obligor may in case of default by the obligee have it auctioned at the place of performance and deposit the proceeds. The same applies in the cases governed by section 372 sentence 2 if there is the concern that the thing will spoil or if safekeeping would entail disproportionate costs.

(2) If reasonable success is not to be expected from an auction at the place of performance, the thing is to be auctioned at another suitable place.

(3) The auction is to be performed publicly by a court bailiff appointed for the place of auction or by some other official authorised to conduct auctions or by a publicly employed auctioneer (public auction). Notice of the time and place of the auction, with a general description of the thing, is to be given by publication.

(4) The provisions of subsections (1) to (3) do not apply to registered ships and ships under construction.

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Section 384
Warning of auction

(1) The auction is permitted only after the obligee has been warned about it; the warning may be omitted if the thing is vulnerable to spoilage and postponement of the auction entails danger.

(2) The obligor is to notify the obligee of the auction without undue delay; in the event of failure to do so, the obligor will be liable in damages.

(3) The warning and the notice may be omitted if they are inadvisable.

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Section 385
Sale by private agreement

If the thing has a stock exchange or market price, the obligor may effect the sale privately at the current price through a commercial broker officially authorised to effect such sales or through a person authorised to sell by public auction.

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Section 386
Costs of the auction

The costs of the auction or of the sale under section 385 are borne by the obligee unless the obligor takes back the deposited proceeds.

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Title 3
Set-off

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Section 387
Prerequisites

If two persons owe each other performance that is substantially of the same nature, each party may set off its claim against the claim of the other party as soon as it can claim the performance owed to it and effect the performance it owes.

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Section 388
Declaration of set-off

Set-off is effected by declaration to the other party. The declaration is ineffective if it is made subject to a condition or a stipulation as to time.

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Section 389
Effect of set-off

The effect of set-off is that the claims, to the extent that they correspond, are deemed to expire at the time when they are set against each other as being appropriate for set-off.

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Section 390
No set-off against a claim subject to a defence

A claim subject to a defence may not be set off.

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Section 391
Set-off in the case of different places of performance

(1) Set-off is not excluded by the fact that the claims concern different places of performance or of delivery. However, the party setting off is to provide compensation for the damage incurred by the other party due to the fact that they do not take receipt or cannot render performance at the specified place.

(2) If it is agreed that the performance is to take place at a specified time and in a specified place, then it is to be assumed, in case of doubt, that set-off against a claim for which there is another place of performance is to be excluded.

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Section 392
Set-off against a seized claim

By the seizure of a claim, the set-off of a claim to which the obligor is entitled in relation to the obligee is excluded only if the obligor acquired their claim after the seizure, or if their claim only became due after the seizure and later than the seized claim.

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Section 393
No set-off against a claim in tort

Set-off is not permissible for a claim on the basis of an intentionally committed tort.

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Section 394
No set-off against an unpledgeable claim

Insofar as a claim is not subject to pledge, no set-off occurs against the claim. However, contributions owed may be set off against withdrawals to be made from health insurance funds, assistance funds or burial funds, in particular from miners’ provident funds and funds of miners’ providential societies.

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Section 395
Set-off against claims of public-law corporations

Set-off is permissible against a claim of the Federal Government or of a Land or against a claim of a municipality or another association of municipalities only if the performance is to be rendered to the same fund from which the claim of the party setting off is to be discharged.

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Section 396
More than one claim

(1) If one or the other party has more than one claim suitable for set-off, the party setting off may specify the claims that are to be set off against each other. If the set-off is declared without such a specification or if the other party objects without undue delay, the provision of section 366 (2) applies accordingly.

(2) If the party setting off owes the other party interest and costs in addition to the principal performance, the provision of section 367 applies accordingly.

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Title 4
Forgiveness

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Section 397
Contract of forgiveness, acknowledgement of non-indebtedness

(1) The obligation expires if the obligee forgives the obligor the debt by contract.

(2) The same applies if the obligee acknowledges by contract with the obligor that there is no obligation.

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Division 5
Transfer of a claim

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Section 398
Assignment

A claim may be transferred by the obligee to another person by contract with that person (assignment). When the contract is concluded, the new obligee takes the place of the previous obligee.

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Section 399
Exclusion of assignment in case of change of content or by agreement

A claim may not be assigned if the performance cannot be made to a person other than the original obligee without a change of its contents or if the assignment is excluded by agreement with the obligor.

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Section 400
Exclusion in case of unpledgeable claims

A claim may not be assigned to the extent that it is not subject to pledge.

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Section 401
Devolution of accessory rights and preferential rights

(1) Upon the claim being assigned, the mortgages, ship mortgages or security rights attaching to it as well as the rights under a suretyship created for it devolve to the new obligee.

(2) A preferential right linked to the claim to provide for the case of compulsory enforcement or insolvency proceedings may be asserted also by the new obligee.

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Section 402
Duty to provide information; provision of documents

The previous obligee is obliged to provide the new obligee with the information required to assert the claim and to deliver to the new obligee the documents serving as proof of the claim, to the extent that they are in the previous obligee’s possession.

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Section 403
Duty of notarial recording

On demand, the previous obligee is to issue the new obligee with a publicly certified document on the assignment. The new obligee is to bear and advance the costs.

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Section 404
Objections by the obligor

The obligor may raise against the new obligee the objections that they were entitled to raise against the previous obligee at the time of assignment.

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Section 405
Assignment with presentation of documents

If the obligor has issued a document relating to the debt then, if the claim is assigned and the document is presented at the same time, the obligor may not, in relation to the new obligee, invoke the fact that the entering into or acknowledgement of the obligation is occurring only for the sake of appearance or that the assignment is excluded by agreement with the original obligee, unless the new obligee was aware of the circumstances at the assignment or ought to have known of them.

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Section 406
Set-off in relation to the new obligee

The obligor may set off a claim against the previous obligee to which they are entitled against the new obligee as well, unless, when acquiring the claim, they were aware of the assignment or the claim only became due after they obtained knowledge of this and later than the assigned claim became due.

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Section 407
Legal acts in relation to the previous obligee

(1) The new obligee must allow performance that the obligor renders to the previous obligee after the assignment, as well as any legal transaction entered into after assignment between the obligor and the previous obligee in respect of the claim, to be asserted against them, unless the obligor is aware of the assignment upon performance or upon entering into the legal transaction.

(2) If, in a legal dispute that became pending at court between the obligor and the previous obligee after the assignment, a final and binding judgment on the claim has been rendered, the new obligee must allow the judgment to be asserted against them, unless the obligor was aware of the assignment when legal proceedings became pending.

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Section 408
Multiple assignments

(1) If an assigned claim is once again assigned by the previous obligee to a third party, and if the obligor renders performance to the third party, or if, between the obligor and the third party, a legal transaction is entered into or a legal dispute becomes pending, then the provisions of section 407 will be applied accordingly to the benefit of the obligor in relation to the previous acquirer.

(2) The same applies if the claim already assigned is transferred to a third party by court decision or if the previous obligee acknowledges to the third party that the claim already assigned has passed to the third party by operation of law.

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Section 409
Notice of assignment

(1) If the obligee notifies the obligor of the claim having been assigned, they must allow the notified assignment to be asserted against them in relation to the obligor, even if it does not occur or is not effective. It is equivalent to the notification if the obligee has issued a document relating to the assignment to the new obligee named in the document and the latter presents it to the obligor.

(2) The notification may be retracted only with the approval of the person who has been named as the new obligee.

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Section 410
Delivery of the assignment document

(1) The obligor is obliged to perform to the new obligee only against delivery of a document concerning the assignment issued by the previous obligee. Notice of termination or a dunning letter from the new obligee is ineffective if it occurs without presentation of such a document and if the obligor rejects it without undue delay for that reason.

(2) These provisions are not applicable if the previous obligee notified the obligor of the assignment in writing.

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Section 411
Assignment of salary

If a military person, an official, a member of the clergy or a teacher at a public institution of education assigns the transferable portion of their official income, inactive status pay or retirement pay, the disbursing fund is to be notified of the assignment by delivery of a publicly or officially certified document issued by the previous obligee. Pending notice, the fund is deemed to be unaware of the assignment.

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Section 412
Statutory devolution of claims

The provisions of sections 399 to 404 and 406 to 410 apply accordingly to the transfer of a claim by operation of law.

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Section 413
Transfer of other rights

The provisions relating to transfer of claims apply accordingly to the transfer of other rights unless otherwise provided by law.

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Division 6
Assumption of debt

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Section 414
Contract between obligee and transferee

A debt may be assumed by a third party by contract with the obligee in such a way that the third party takes the place of the previous obligor.

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Section 415
Contract between obligor and transferee

(1) If the assumption of the debt is agreed between the third party and the obligor, its effectiveness is subject to ratification by the obligee. Ratification may only occur when the obligor or the third party has informed the obligee of the assumption of the debt. Until ratification, the parties may alter or cancel the contract.

(2) If ratification is refused, assumption of the debt is deemed not to have occurred. If the obligor or the third party demands, specifying a period of time, that the obligee make a declaration relating to the ratification, the ratification may only be declared before the end of the period of time; if it is not declared it is deemed to be refused.

(3) As long as the obligee has not granted ratification, then in case of doubt the transferee is obliged to the obligor to satisfy the obligee in good time. The same applies if the obligee refuses ratification.

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Section 416
Assumption of a mortgage debt

(1) If the acquirer of a plot of land assumes a debt of the alienor for which there is a mortgage on the land, by contract with the latter, the obligee may only ratify the assumption of the debt if the alienor notifies the obligee of it. If six months have passed since receipt of the notice, the ratification is deemed to have been granted unless the obligee has previously refused it to the alienor; the provision of section 415 (2) sentence 2 does not apply.

(2) Notice by the alienor may only be made when the acquirer has been entered in the Land Register as owner. It must be made in writing and must include the statement that the transferee takes the place of the previous obligor unless the obligee declares their refusal within that period of six months.

(3) On demand by the acquirer, the alienor is to notify the obligee of the assumption of debt. As soon as the grant or refusal of the ratification is definite, the alienor is to inform the acquirer.

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Section 417
Objections of the transferee

(1) The transferee may raise against the obligee the objections that result from the legal relationship between the obligee and the previous obligor. The transferee may not set off a claim to which the previous obligor is entitled.

(2) The transferee may not derive objections relating to the obligee from the legal relationship between the transferee and the previous obligor on which the assumption of debt is based.

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Section 418
Extinction of security rights and preferential rights

(1) As a result of the assumption of debt, the suretyships and security rights created for the claim are extinguished. If there is a mortgage or a ship mortgage for the claim, the same thing occurs as if the obligee waives the mortgage or the ship mortgage. These provisions do not apply if the surety or the party that owns the mortgaged object at the time of the assumption of debt gives their consent.

(2) A preferential right linked to the claim in case of insolvency proceedings may not be asserted in the insolvency proceedings regarding the assets of the transferee.

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Section 419
(repealed)

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Division 7
More than one obligor and obligee

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Section 420
Divisible performance

If more than one person owes divisible performance or if more than one person are to demand divisible performance, then in case of doubt each obligor is only obliged to render an equal proportion and each obligee is only entitled to an equal proportion.

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Section 421
Joint and several debtors

If more than one person owes performance in such a way that each is obliged to effect the entire performance, but the obligee is entitled to demand the performance only once (joint and several debtors), the obligee may at their discretion demand full or part performance from each of the obligors. Until the entire performance has been effected, all obligors remain obliged.

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Section 422
Effect of performance

(1) Performance by a joint and several debtor is also effective for the other obligors. The same applies to performance in lieu of performance of contract, to deposit and to set-off.

(2) A claim to which a joint and several debtor is entitled may not be set off by the other obligors.

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Section 423
Effect of forgiveness

Forgiveness agreed between the obligee and a joint and several debtor also is effective for the other obligors if the contractual parties intended to terminate the whole obligation.

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Section 424
Effect of default by the obligee

The default of the obligee in relation to a joint and several debtor also is effective for the other obligors.

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Section 425
Effect of other facts

(1) Facts other than those cited in sections 422 to 424 are only effective, unless the obligation leads to a different conclusion, for and against the joint and several debtor personally affected by them.

(2) This applies in particular to notice of termination, to default, to fault, to impossibility of performance constituted by the person of a joint and several debtor, to limitation and to the new beginning, tolling and suspension of expiry of a period of limitation, to the merger of the claim with the debt and to a final and binding judgment.

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Section 426
Duty to adjust advancements, devolution of claim

(1) The joint and several debtors are obliged in equal proportion in relation to one another unless otherwise determined. If the contribution attributable to a joint and several debtor cannot be obtained from that debtor, the shortfall is to be borne by the other obligors obliged to adjust advancements.

(2) To the extent that a joint and several debtor satisfies the obligee and may demand adjustment of advancements from the other obligors, the claim of the obligee against the other obligors devolves to that debtor. The devolution of ownership may not be asserted to the disadvantage of the creditor.

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Section 427
Joint contractual duty

If more than one person jointly bind themselves by contract to render divisible performance then, in case of doubt, they are liable as joint and several debtors.

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Section 428
Joint and several obligees

If more than one person is entitled to demand performance in such a way that each may demand the entire performance but the obligor is only obliged to effect the performance once (joint and several obligees), the obligor may at their discretion effect performance to each of the obligees. This also applies if one of the obligees has already sued for performance.

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Section 429
Effect of changes

(1) The default of a joint and several obligee also is effective against the other obligees.

(2) If claim and debt are combined in the person of a joint and several obligees, then the rights of the other obligees against the obligor will expire.

(3) In all other cases, the provisions of sections 422, 423 and 425 apply accordingly. In particular if a joint and several obligee transfers their claim to another party, the rights of the other obligees remain unaffected.

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Section 430
Duty of the joint and several obligees to adjust advancements

The joint and several obligees are entitled in equal proportions in relation to each other unless otherwise specified.

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Section 431
More than one obligor of indivisible performance

If more than one person owes indivisible performance, then they are liable as joint and several debtors.

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Section 432
More than one obligee of indivisible performance

(1) If more than one person are to demand indivisible performance, then to the extent that they are not joint and several obligees, the obligor may only effect performance to all of them jointly and each obligee may only demand performance for all of them. Each obligee may demand that the obligor deposit the thing owed for all obligees or, if it is not suitable for deposit, that it be surrendered to a court-appointed depositary.

(2) In all other cases, a fact occurring on grounds constituted solely by the person of one of the obligees has no effect for and against the other obligees.

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Division 8
Particular types of obligations

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Title 1
Purchase, exchange

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Subtitle 1
General provisions

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Section 433
Contractual duties typical for a purchase agreement

(1) By a purchase agreement, the seller of a thing is obliged to deliver the thing to the buyer and to procure ownership of the thing for the buyer. The seller is to procure the thing for the buyer free from material defects and defects of title.

(2) The buyer is obliged to pay the seller the agreed purchase price and to accept delivery of the thing purchased.

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Section 434
Material defects

(1) The thing is free from material defects if, upon the devolution of the risk, it conforms to the subjective requirements, the objective requirements and the assembly requirements set out in this provision.

(2) The thing conforms to subjective requirements if

1.  it is of the nature agreed

2.  it is suitable for the use on which the contract is premised, and

3.  it is handed over together with the accessories agreed and the instructions agreed, including assembly and installation instructions.

The nature defined in sentence 1 no. 1 relates to, among other things, the type, quantity, quality, functionality, compatibility, interoperability and other features of the thing regarding which the parties have agreed requirements.

(3) Unless effectively agreed otherwise, the thing conforms to objective requirements if

1.  it is suitable for customary use,

2.  it is of a nature that is usual in things of the same kind and that the buyer may expect, taking account of

a)  the type of the thing and

b)  the public statements made by the seller or by some other link of the distribution chain, either themselves or on their behalf, particularly in advertisement or on labelling,

3.  it corresponds to the nature of a sample or model made available to the buyer by the seller before the conclusion of the contract, and

4.  it is handed over together with the accessories including packaging, assembly or installation instructions as well as other instructions the buyer may expect to receive.

The usual nature defined in sentence 1 no. 2 relates to, among other things, quantity, quality and other features of the thing, including its durability, functionality, compatibility and security. The seller is not bound by the public statements referred to in sentence 1 no. 2 (b) if the seller was not, and could not reasonably have been, aware of the public statement in question; if, by the time of conclusion of the contract, the public statement had been corrected in the same way as, or in a way comparable to how, it had been made; or if the decision to acquire the thing could not have been influenced by the public statement.

(4) Insofar as an assembly is to be performed, the thing will conform to assembly requirements if the assembly

1.  has been performed correctly or

2.  if, despite the assembly having been performed incorrectly, this is based neither on an incorrect assembly by the seller nor on a defect given in the instructions supplied by the seller.

(5) Delivery by the seller of a different thing is equivalent to a material defect.

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Section 435
Defects of title

The thing is free of defects of title if third parties, in relation to the thing, can assert either no rights, or only the rights taken over in the purchase agreement, against the buyer. It is equivalent to a defect of title if a right that does not exist is entered in the Land Register.

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Section 436
Public charges on plots of land

(1) Unless otherwise agreed, the seller of a plot of land is obliged to bear public services development charges and other municipal development charges for measures the construction of which began before the contract was concluded, irrespective of the point in time when they became payable.

(2) The seller of a plot of land is not liable for the land being free from other public levies and other public charges that are not suitable for entry in the Land Register.

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Section 437
Rights of buyer in the case of defects

If the thing is defective, the buyer may, provided the prerequisites set out in the following provisions are met and unless otherwise specified,

1.  demand cure as defined in section 439,

2.  rescind the contract on the basis of sections 440, 323 and 326 (5) or abate the price under the terms of section 441, and

3.  demand compensation of damages on the basis of sections 440, 280, 281, 283 and 311a or reimbursement of futile expenses as defined in section 284,.

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Section 438
Limitation of claims for defects

(1) The claims cited in section 437 nos. 1 and 3 become statute-barred

1.  after 30 years if the defect consists of

a)  a right in rem of a third party on the basis of which surrender of the object of the purchase may be demanded, or of

b)  some other right entered in the Land Register,

2.  after five years

a)  in relation to a building, and

b)  in relation to a thing that has been used for a building in accordance with the normal way it is used and has resulted in the defectiveness of the building, and

3.  in all other cases in two years.

(2) In the case of a plot of land the limitation period commences upon delivery of possession, in all other cases upon delivery of the thing.

(3) In derogation from subsection (1) nos. 2 and 3 and subsection (2), claims become statute-barred after the standard limitation period if the seller fraudulently concealed the defect. In the case governed by subsection (1) no. 2, however, claims are not statute-barred before the end of the period specified therein.

(4) The right of rescission designated in section 437 is subject to section 218. Notwithstanding the fact that a rescission is ineffective under section 218 (1), the buyer may refuse to pay the purchase price to the extent it would be entitled to do so on the basis of rescission. If the buyer makes use of this right, the seller may rescind the agreement.

(5) Section 218 and subsection (4) sentence 2 apply accordingly to the right to abate the price set out in section 437.

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Section 439
Cure

(1) As cure the buyer may, at their choice, demand that the defect be remedied or that a thing free of defects be supplied.

(2) The seller is to bear all expenses required for the purpose of cure, in particular transport, workers’ travel, work and materials costs.

(3) Where the buyer has installed the defective thing, in keeping with its nature and its purpose, into some other thing or has attached it to some other thing before the defect became apparent, the seller is obliged, in the context of curing the defect, to reimburse the buyer for the expenses required for removing the defective thing and installing or attaching the repaired thing, or the thing free of defects that has been delivered.

(4) Without prejudice to section 275 subsections (2) and (3), the seller may refuse to provide the type of cure chosen by the buyer if this cure is possible only at disproportionate expense. In this connection, account is to be taken in particular of the value of the thing when free of defects, the significance of the defect and the question as to whether recourse could be had to the alternative type of cure without substantial detriment to the buyer. The claim of the buyer in this case is restricted to the alternative type of cure; the right of the seller to refuse the alternative type of cure as well, subject to the prerequisites set out in sentence 1, remains unaffected.

(5) The buyer is to make available the thing to the seller for the purpose of cure.

(6) Where the seller supplies a thing free of defects for the purpose of cure, the seller may demand the return of the defective thing in accordance with sections 346 to 348. The seller is to take back, at its cost, the thing that has been replaced.

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Section 440
Special provisions on rescission and damages

Except in the cases governed by section 281 (2) and section 323 (2), it is not necessary to specify a period of time even if the seller has refused to carry out both types of cure under section 439 (4) or if the type of cure that the buyer is entitled to receive has failed or cannot reasonably be required of the buyer. A repair is deemed to have failed after the second unsuccessful attempt, unless in particular the nature of the thing or of the defect or the other circumstances lead to a different conclusion.

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Section 441
Abatement of price

(1) Instead of rescinding the agreement, the buyer may, by declaration to the seller, abate the purchase price. The ground for exclusion under section 323 (5) sentence 2 does not apply.

(2) If the party of the buyer or the seller consists of more than one person, the abatement may be declared only by all or to all of them.

(3) In abating the purchase price, it is to be reduced in the ratio of the value that the defect-free thing would have had to its actual value at the time of conclusion of the contract. If required, the abatement is to be identified by way of an estimate.

(4) If the buyer has paid more than the abated purchase price, then the amount overpaid is to be reimbursed by the seller. Section 346 (1) and section 347 (1) apply accordingly.

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Section 442
Knowledge of the buyer

(1) The rights of the buyer due to a defect are excluded if the buyer has knowledge of the defect at the time of conclusion of the contract. If the buyer has no knowledge of a defect due to gross negligence, the buyer may assert rights in relation to this defect only if the seller fraudulently concealed the defect or gave a guarantee as to the nature of the thing.

(2) A right entered in the Land Register is to be removed by the seller even if the buyer is aware of it.

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Section 443
Guarantee

(1) If the seller, the producer or some other third party enters into obligation, in addition to their statutory liability for defects, by way of making a declaration or in relevant advertising that was available prior to the purchase contract being concluded or at the time of its conclusion, such obligation being in particular to reimburse the purchase price, to exchange the thing, to repair it or to provide services in this context should the thing not be of the nature as described in the declaration or in the relevant advertisement or should it not conform to other requirements than those concerning its freedom from defects as described in the declaration or in the relevant advertisement (guarantee), then the buyer will be entitled, upon the requirements for asserting the guarantee having been met, and notwithstanding the buyer’s statutory claims, to the rights under the guarantee in relation to the person who has given the guarantee (guarantor).

(2) To the extent that the guarantor gives a guarantee as to the thing being of a specified nature for a specified period (guarantee of durability), the presumption will be that a material defect that becomes apparent during the guarantee period triggers the rights under the guarantee.

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Section 444
Exclusion of liability

The seller may not rely on an agreement that excludes or restricts the rights of the buyer with regard to a defect insofar as the seller fraudulently concealed the defect or gave a guarantee as to the nature of the thing.

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Section 445
Limitation of liability in the case of public auctions

If a thing is sold in exercise of a security right at a public auction in which it is described as a pledge, the buyer only has rights in respect of a defect if the seller fraudulently concealed the defect or gave a guarantee as to the nature of the thing.

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Section 445a
Recourse of the seller

(1) Where a newly manufactured thing is sold, the seller may demand that the seller who sold the thing to them (supplier) reimburse them for the expenses they had to bear in relation to the buyer under section 439 (2), (3) and (6) sentence 2 as well as under section 475 (4) if the defect asserted by the buyer already existed upon the devolution of the risk to the seller or if the defect is based on a violation of the obligation to provide updates in accordance with section 475b (4).

(2) Where the rights designated in section 437 that the seller enjoys vis-à-vis their supplier are concerned, it is not necessary to fix the period of time regarding the defect asserted by the buyer, which would otherwise be necessary, if the seller was obliged to take back the newly manufactured thing sold by them because it is defective, or if the buyer has abated the purchase price.

(3) Subsections (1) and (2) apply accordingly to the claims of the supplier and of the other buyers in the supply chain vis-à-vis their respective sellers if the obligors are traders.

(4) Section 377 of the Commercial Code (Handelsgesetzbuch) remains unaffected.

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Section 445b
Limitation of recourse claims

(1) The claims to reimbursement of expenses specified in section 445a (1) are subject to a two-year limitation period after delivery of the thing.

(2) The claims of the seller against their supplier, as specified in section 437 and section 445a (1), for a defect in a newly manufactured thing sold become statute-barred at the earliest two months after the point in time at which the seller has satisfied the claims of the buyer.

(3) Subsections (1) and (2) apply accordingly to the claims of the supplier and of the other buyers in the supply chain vis-à-vis their respective sellers if the obligors are traders.

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Section 445c
Recourse in the case of contracts on digital products

Where the last contract in the supply chain is a consumer contract on the supply of digital products as defined in sections 327 and 327a, sections 445a, 445b and 478 are not to be applied. The provisions of Division 3 Title 2a Subtitle 2 take the place of the provisions not to be applied in accordance with sentence 1.

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Section 446
Devolution of risk and of charges

The risk of accidental destruction and chance deterioration devolves to the buyer upon delivery of the thing sold. From the time of delivery, the emoluments of the thing accrue to the buyer and the buyer bears the charges on it. If the buyer is in default of acceptance of delivery, this is equivalent to delivery.

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Section 447
Devolution of risk in the case of sales shipment

(1) If the seller, at the request of the buyer, ships the thing sold to another place than the place of performance, then the risk devolves to the buyer as soon as the seller has delivered the thing to the haulage contractor, forwarding agent or other person or body specified for carrying out the shipment.

(2) Where the buyer has given a particular instruction on the method of shipping the thing and the seller, without a pressing reason, does not adhere to this instruction, the seller is liable to the buyer for the damage arising therefrom.

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Section 448
Costs of delivery and comparable costs

(1) The seller bears the costs of delivery of the thing, the buyer the costs of acceptance and of shipping the thing to a place other than the place of performance.

(2) The buyer of a plot of land bears the costs of the notarial recording of the purchase agreement and of the declaration of conveyance, the registration in the Land Register and the declarations necessary for registration.

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Section 449
Retention of title

(1) If the seller of a movable thing has retained title until payment of the purchase price, then in case of doubt it is to be assumed that ownership is transferred subject to the condition precedent that the purchase price is paid in full (retention of title).

(2) As a consequence of the retention of title, the seller may demand the return of the thing only if they have rescinded the agreement.

(3) An agreement on retention of title is void to the extent that the devolution of ownership is made subject to the satisfaction by the buyer of third-party claims, in particular those of an enterprise associated with the seller.

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Section 450
Excluded buyers in the case of certain sales

(1) When an object is sold by way of compulsory enforcement, the person instructed to carry out or manage the sale and the assistants used by that person, including the recording clerk, may not purchase the object to be sold either for themselves in person or through another person or as the agents of another person.

(2) Subsection (1) also applies to a sale other than by compulsory enforcement, if the order to sell the object has been given under a statutory provision authorising the mandator to have the object sold for the account of another person, in particular in the cases of a sale of a pledge, sale authorised by sections 383 and 385, and sale from an insolvency estate.

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Section 451
Purchase by excluded buyer

(1) The effectiveness of a purchase made in violation of section 450 and of the transfer of the object purchased is subject to the approval of the person taking part in the sale as obligor, owner or obligee. Where the buyer requests a person taking part to make a declaration of ratification, section 177 (2) applies accordingly.

(2) If, as a result of refusal of ratification, a new sale is undertaken, then the earlier buyer is liable for the costs of the new sale and for an amount by which the proceeds of sale are reduced.

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Section 452
Purchase of a ship

The provisions in this Subtitle on the sale of plots of land apply accordingly to the sale of registered ships and ships under construction.

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Section 453
Purchase of rights, consumer contract on the purchase of digital content

(1) The provisions governing the purchase of things apply accordingly to the purchase of rights and other objects. The following provisions are not to be applied to a consumer contract on the sale of digital content by a trader:

1.  section 433 (1) sentence 1 and section 475 (1) on the delivery of the object of the purchase and the time of performance, as well as

2.  section 433 (1) sentence 2, sections 434 to 442, 475 (3) sentence 1, (4) to (6) and sections 476 and 477 on the rights in the case of defects.

The provisions of Division 3 Title 2a Subtitle 1 take the place of the provisions not to be applied in accordance with sentence 1.

(2) The seller bears the costs of creation and transfer of the right.

(3) If a right comprising the right to possession of a thing is sold, then the seller is obliged to deliver the thing to the buyer free of material defects and defects of title.

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Subtitle 2
Special types of purchase

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Chapter 1
Purchase on approval

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Section 454
Coming into existence of the purchase agreement

(1) In a purchase on approval or on examination, approval of the object purchased is at the discretion of the buyer. In case of doubt, the purchase agreement is concluded subject to the condition precedent of approval.

(2) The seller is obliged to permit the buyer to examine the object.

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Section 455
Approval period

An object purchased on approval or on examination may be approved only within the agreed period of time or, if no such period has been agreed, only before the end of a reasonable time limit specified by the seller for the buyer. If the thing was delivered to the buyer for the purpose of approval or examination, the buyer’s silence is deemed to constitute approval.

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Chapter 2
Repurchase

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Section 456
Coming into existence of the repurchase agreement

(1) If, in the purchase agreement, the seller has reserved the right of repurchase, the repurchase agreement comes into existence when the seller declares to the buyer that they are exercising the right of repurchase. The declaration is not subject to the requirements as to form laid down for the purchase agreement.

(2) In case of doubt, the price at which the object was sold also applies to the repurchase.

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Section 457
Liability of the reseller

(1) The reseller is obliged to return to the repurchaser the purchased object with its accessories.

(2) If the reseller, before exercising the right of repurchase, was at fault for the deterioration or destruction of the purchased object or an impossibility of surrendering it that resulted in another way, or if the reseller materially altered the purchased object, they will be liable for the damage resulting from this. If the object deteriorated without the fault of the reseller or if it is only altered trivially, the reseller may not require the purchase price to be abated.

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Section 458
Removal of third-party rights

Where the reseller alienated the purchased object before exercising the right of repurchase, the reseller is obliged to remove the third-party rights created by this. A disposition that is made by way of compulsory enforcement or enforcement of a seizure or by the insolvency administrator is equivalent to a disposition by the reseller.

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Section 459
Reimbursement of outlays

The reseller may demand reimbursement for outlays they made on the purchased object before the resale to the extent that the value of the object is enhanced by the expenses. The reseller may remove an installation that they attached to the returnable thing.

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Section 460
Repurchase at estimated value

If the estimated value of the object purchased at the time of repurchase is agreed as the repurchase price, the reseller is not responsible for the deterioration or destruction of the purchased object or an impossibility of surrendering it that resulted in another way, and the repurchaser is not obliged to reimburse the outlays made.

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Section 461
More than one person entitled to repurchase

If more than one person jointly are entitled to the right to repurchase, the right may be exercised only in its entirety. If it has expired for one of the persons entitled or if one of them does not exercise their right, then the others are entitled to exercise the right of repurchase in its entirety.

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Section 462
Cut-off period

The right of repurchase may be exercised, in the case of plots of land, only before the expiry of 30 years from the date of the agreement of the reservation, and in the case of other objects, only before the end of three years from that date. If a period of time is specified for the exercise of the right, this period replaces the statutory period.

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Chapter 3
Preemption

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Section 463
Prerequisites for exercise

A person entitled to the right of preemption in respect of an object may exercise the right as soon as the person obliged by it has concluded a purchase agreement relating to the object with a third party.

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Section 464
Exercise of the right of preemption

(1) The right of preemption is exercised by declaration to the person obliged. The declaration is not subject to the requirements as to form laid down for the purchase agreement.

(2) When the right of preemption is exercised, the purchase comes into existence between the person entitled and the person obliged, subject to the terms that the person obliged agreed with the third party.

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Section 465
Ineffective agreements

An agreement made by the person obliged with the third party, which provides that the purchase is subject to the non-exercise of the right of preemption or which reserves for the person obliged the right to rescind the agreement in the event that the right of preemption is exercised, is ineffective in relation to the person entitled to preemption.

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Section 466
Collateral performance

If the third party has agreed in the contract to render an act of collateral performance that the person entitled to preemption is incapable of performing, the person entitled to preemption is to pay the value of the collateral performance instead of rendering it. If the collateral performance cannot be assessed in money, then the exercise of the right of preemption is excluded; the agreement to render collateral performance is not an available option, however, if the contract with the third party would have been concluded also without it.

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Section 467
Total price

If the third party purchased the object which is subject to the right of preemption together with other objects at a total price, then the person entitled to preemption is to pay a proportionate part of the total price. The person obliged may demand that the preemption be extended to all things that cannot be separated without disadvantage to the person obliged.

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Section 468
Deferral of the purchase price

(1) If the third party is granted deferral of payment of the purchase price in the contract, the person entitled to preemption may claim the deferral only if they provide security for the amount deferred.

(2) If a plot of land is the subject matter of the preemption, there is no need to provide security to the extent that there has been an agreement to create a mortgage on the plot of land for the deferred purchase price, or a debt for which a mortgage on the land exists has been assumed and credited towards the purchase price. This applies accordingly if a registered ship or ship under construction is the object of the right of preemption.

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Section 469
Duty to notify, exercise period

(1) The person obliged is to inform the person entitled to preemption without undue delay of the contents of the contract concluded with the third party. Notice by the third party takes the place of the notice by the person obliged.

(2) The right of preemption for plots of land may be exercised only before the end of a period of two months after notice has been received, and the right of preemption for other objects only before the end of a period of one week after notice has been received. If a period of time is specified for exercise of the right, this period replaces the statutory period.

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Section 470
Sale to heir on intestacy

The right of preemption, in case of doubt, does not apply to a sale that is made to an heir on intestacy with a view to a future right of succession.

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Section 471
Sale in case of compulsory enforcement or insolvency

The right of preemption is excluded if the sale occurs by way of compulsory enforcement or from an insolvency estate.

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Section 472
More than one person with a right of preemption

If the right of preemption jointly is held by more than one person, it may be exercised only in its entirety. If it has expired with regard to one of the persons entitled or if one of them does not exercise their right, then the others are entitled to exercise the right of preemption in its entirety.

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Section 473
Non-transferability

The right of preemption is not transferable and does not devolve to the heirs of the person entitled to it unless otherwise provided. If the right is limited to a specific period, then, in case of doubt, it is inheritable.

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Subtitle 3
Purchase of consumer goods

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Section 474
Purchase of consumer goods

(1) Purchases of consumer goods are contracts by which a consumer buys goods (section 241a (1)) from a trader. A contract likewise will constitute a purchase of consumer goods where its subject matter comprises, in addition to the sale of goods, the provision of a service by the trader.

(2) The following provisions of this Subtitle apply supplementally to the purchase of consumer goods. This does not apply to second-hand goods that are sold at a publicly accessible auction (section 312g (2) no. 10) if clear and comprehensive information was made easily available to the consumer as to the provisions of the present Subtitle not applying.

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Section 475
Applicable provisions

(1) Where no period of time has been determined for the respective performance to be rendered pursuant to section 433 and none can be inferred from the circumstances given, the obligee may only demand the rendering of such performance, in derogation from section 271 (1), without undue delay. In this case, the trader must deliver the goods at the latest 30 days after the contract has been concluded. The contractual parties may effect the respective performance immediately.

(2) Section 447 (1) applies subject to the proviso that the risk of accidental destruction and chance deterioration devolves to the buyer only if the buyer has instructed the haulage contractor, forwarding agent or other person or body tasked with carrying out the shipment and the trader has not previously named this person or body to the buyer.

(3) Section 439 (6) applies subject to the proviso that emoluments are not to be surrendered or to be substituted by their value. Sections 442, 445 and 447 (2) are not to be applied.

(4) The consumer may demand that the trader make advance payments towards the expenses the consumer will incur in the context of the cure pursuant to section 439 subsections (2) and (3) and that are to be borne by the trader.

(5) The trader is to effect the cure within a reasonable time limit from that point at which the consumer informed the trader of the defect, without causing any significant inconvenience to the consumer, whereby regard is to be had to the type of the goods and the purpose for which the consumer needs the goods.

(6) In the event of rescission or of compensation of damages instead of the full performance being rendered due to a defect of the goods, section 346 is to be applied subject to the proviso that the trader bears the costs of returning the goods. Section 348 is to be applied subject to the proviso that proof provided by the consumer as to the return shipment of the goods is equivalent to their return.

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Section 475a
Contract for the sale of consumer goods relating to digital products

(1) Section 433 (1) sentence 2, sections 434 to 442, section 475 subsection (3) sentence 1 and subsections (4) to (6), sections 475b to 475e and sections 476 and 477 on the rights in the case of defects are not to be applied to a contract for the sale of consumer goods that has as its subject matter a tangible medium serving exclusively as a carrier of digital content. The provisions of Division 3 Title 2a Subtitle 1 take the place of the provisions not to be applied in accordance with sentence 1.

(2) In the case of a contract for the sale of consumer goods relating to a good that incorporates or is inter-connected with digital products in such a way that the absence of those digital products would not prevent the goods from performing their functions, the following provisions are not to be applied with regard to those elements of the contract that pertain to the digital products:

1.  section 433 (1) sentence 1 and section 475 (1) relating to the handover of the object of the purchase and the time of performance, as well as

2.  section 433 (1) sentence 2, sections 434 to 442, section 475 subsection (3) sentence 1 and subsections (4) to (6), sections 475b to 475e and sections 476 and 477 on the rights in the case of defects.

The provisions of Division 3 Title 2a Subtitle 1 take the place of the provisions not to be applied in accordance with sentence 1.

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Section 475b
Material defect of a good with digital elements

(1) The stipulations of this provision apply supplementally to the purchase of a good with digital elements (section 327a (3) sentence 1), in the context of which the trader enters into obligation to supply the digital elements or to have them supplied by a third party. Section 327a (3) sentence 2 applies with regard to the question of whether the obligation of the trader comprises the supply of the digital content or of the digital services.

(2) A good with digital elements is free of material defects if, upon devolution of the risk and, with regard to an obligation to provide updates, also during the period defined in subsection (3) no. 2 and subsection (4) no. 2, it conforms to the subjective requirements, the objective requirements, the assembly requirements and the installation requirements.

(3) A good with digital elements conforms to subjective requirements if

1.  it conforms to the requirements set out in section 434 (2) and

2.  the updates agreed in the purchase agreement for the digital elements are supplied during the period of time relevant in accordance with the contract.

(4) A good with digital elements conforms to objective requirements if

1.  it conforms to the requirements set out in section 434 (3) and

2.  updates are supplied to the consumer during the period that the consumer may expect based on the nature and the purpose of the good and of its digital elements, taking account of the circumstances and óf the nature of the contract, that are necessary to keep the good in conformity, and if the consumer is informed of such updates.

(5) Where the consumer fails to install an update that was supplied to them in accordance with subsection (4) within a reasonable time limit, the trader will not be liable for a material defect that has been caused solely by the lack of this update if

1.  the trader has informed the consumer of the update’s availability and the consequences of a failure to install it and

2.  the fact that the consumer has failed to install the update or has installed it incorrectly is not due to the consumer having been supplied with defective installation instructions.

(6) Insofar as an assembly or an installation is to be performed, a good with digital elements conforms to

1.  the assembly requirements if it conforms to the requirements set out in section 434 (4) and

2.  the installation requirements if the installation

a)  of the digital elements was performed correctly or

b)  if, despite the installation having been performed incorrectly, this is based neither on an incorrect installation by the trader nor on a defect given in the instructions that were handed over by the trader or the party that supplied the digital elements.

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Section 475c
Material defect of a good with digital elements where the digital elements are supplied on a continuous basis

(1) The stipulations of this provision apply supplementally if, in purchasing a good with digital elements, a continuous supply is agreed for the digital elements. Section 475b (4) no. 2 applies accordingly if the parties have not specified the duration of the supply.

(2) The trader will be liable, above and beyond what has been stipulated in sections 434 and 475b, also for the digital elements conforming to the requirements of section 475b (2) during the supply period, but at a minimum for a period of time of two years from the delivery of the good.

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Section 475d
Special provisions on rescission and compensation of damages

(1) In derogation from section 323 (2) and section 440, there is no need, in order to rescind a contract for a defect of a good, to set a period of time for the cure as stipulated in section 323 (1) if

1.  the trader has not effected the cure despite expiry of a reasonable time limit from the point in time at which the consumer informed the trader of the defect,

2.  a defect becomes apparent in spite of the trader’s attempts to effect cure,

3.  the defect is so serious that the immediate rescission of the contract is justified,

4.  the trader has refused to effect the proper cure as defined in section 439 (1) or (2) or section 475 (5) or

5.  it is obvious from the circumstances that the trader will not effect the proper cure as defined in section 439 (1) or (2) or section 475 (5).

(2) There is no need to set the period of time stipulated in section 281 (1) in the cases governed by subsection (1) for a claim to compensation of damages due to a defect of the good. Section 281 (2) and section 440 are not to be applied.

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Section 475e
Special provisions on limitation

(1) In the case of a continuous supply of digital elements as defined in section 475c (1) sentence 1, claims for a defect of the digital elements will not become statute-barred before 12 months have lapsed following the end of the supply period.

(2) Claims for a violation of the obligation to provide updates as defined in section 475b (3) or (4) will not become statute-barred before 12 months have lapsed following the end of the period in which the obligation to provide updates is given.

(3) Where a defect has become apparent during the limitation period, claims will not become statute-barred before four months have lapsed following the point in time at which the defect first became apparent.

(4) Where the consumer has handed over the good to the trader or, at the traders’s behest, to a third party for purposes of effecting the cure or of satisfying claims under a guarantee, the claims being asserted for the defect will not become statute-barred before two months have lapsed following the point in time at which the repaired or replaced good was handed over to the consumer.

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Section 476
Deviating agreements

(1) The trader may not rely on an agreement made prior to the trader having been notified of a defect that deviates, to the disadvantage of the consumer, from sections 433 to 435, 437, 439 to 441 and 443 and from the provisions of this Subtitle. The requirements stipulated in section 434 (3) or section 475b (4) may be deviated from by a contract made prior to the trader having been notified of a defect, if

1.  it was specially made known to the consumer, prior to their making the declaration as to the conclusion of a contract, that a certain feature of the good deviates from the objective requirements and

2.  this deviation within the meaning of no. 1 was expressly and separately agreed in the contract.

(2) The limitation of the claims cited in section 437 may not be eased by a legal transaction entered into prior to the trader having been notified of a defect if the agreement results in a limitation period of less than two years from the statutory commencement of limitation or, in the case of second-hand goods, of less than one year. The agreement is effective only if

1.  it was specially made known to the consumer, prior to their making the declaration as to the conclusion of a contract, that the limitation period has been shortened and

2.  the shortening of the limitation period was expressly and separately agreed in the contract.

(3) Notwithstanding sections 307 to 309, subsections (1) and (2) do not apply to the exclusion or restriction of the claim for damages.

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Section 477
Shifting the burden of proof

(1) If, within one year after the devolution of the risk, the good’s lack of conformity to the requirements set out in section 434 or section 475b becomes apparent, the presumption will be that the good was already defective at the devolution of the risk, unless this presumption is incompatible with the nature of the good or of the defective state. This presumption applies for a period of six months after the devolution of the risk for the purchase of a live animal.

(2) Where the continuous supply of the digital elements has been agreed in the purchase contract for goods with digital elements and where the digital elements’ lack of conformity to the requirements set out in section 434 or section 475b becomes apparent in the course of the supply or within a period of two years after the devolution of the risk, the presumption will be that the digital elements were deficient over the course of their supply thus far.

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Section 478
Special provisions concerning recourse by the trader

(1) Where the last contract in the supply chain is for the sale of consumer goods (section 474), then section 477 applies in the cases governed by section 445a (1) and (2), subject to the proviso that the period commences running upon the risk devolving to the consumer.

(2) The supplier may not rely on an agreement made before the supplier was notified of the defect that, to the disadvantage of the trader, deviates from subsection (1) as well as from sections 433 to 435, 437, 439 to 443, 445a (1) and (2) as well as from sections 445b, 475b and 475c if the obligee with the right of recourse is not granted equivalent compensation. Notwithstanding section 307, sentence 1 does not apply to an exclusion or restriction of the claim for damages. The provisions referred to in sentence 1 apply even if they are circumvented by other arrangements.

(3) Subsections (1) and (2) apply accordingly to the claims of the supplier and of the other buyers in the supply chain vis-à-vis their respective sellers where the obligors are traders.

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Section 479
Special provisions for guarantees

(1) A declaration of guarantee (section 443) must be set out in simple and comprehensible terms. It must contain the following:

1.  the reference to the statutory rights of the consumer in the case of defects, the statement that asserting these rights is free of charge, and the statement that these rights are not restricted by the guarantee,

2.  the name and the address of the guarantor,

3.  the procedure to be followed by the consumer in asserting the guarantee,

4.  the good to which the guarantee refers, and

5.  the provisions of the guarantee, in particular the duration and the area of territorial application of the guarantee protection.

(2) The declaration of guarantee is to be provided to the consumer on a durable medium no later than at the point in time at which the good is delivered.

(3) Where the producer has guaranteed durability to the consumer, the consumer is entitled, at a minimum, to a claim to cure against the producer over the term of the guarantee such claim is provided for under section 439 (2), (3), (5) and (6) sentence 2 and section 475 subsection (3) sentence 1 and subsection (5).

(4) The effectiveness of the duty under the guarantee is not affected by the fact that one of the above requirements is not satisfied.

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Subtitle 4
Exchange

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Section 480
Exchange

The provisions governing purchase apply accordingly to exchange.

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Title 2
Timeshare contracts, long-term holiday product contracts, brokerage contracts and exchange system contracts

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Section 481
Time share contracts

(1) A timeshare contract is a contract by which a trader procures or promises to procure for a consumer the right, in return for the payment of a total price, to use a residential building several times for a period that is specified or to be specified, for the purposes of overnight stays, for the duration of more than one year. All extension possibilities provided for in the contract are to be taken into account when calculating the term of the contract.

(2) The right may be a right in rem or another right, and in particular also may be granted through membership of an association or a share in a company or partnership. The right may also consist of opting to use one of a group of residential buildings.

(3) A part of a residential building is equivalent to a residential building, as is a moveable thing or a part thereof intended as overnight accommodation.

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Section 481a
Long-term holiday product contract

A long-term holiday product contract is a contract for the duration of more than one year by means of which a trader procures or promises to procure for a consumer the right, in return for the payment of a total price, to receive price reductions or other benefits with regard to accommodation. Section 481 (1) sentence 2 applies accordingly.

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Section 481b
Facilitation contract, exchange system contract

(1) A brokerage contract is a contract by which a trader has a consumer promise them a fee for a demonstrable referral of the opportunity to conclude a contract or for facilitating a contract by which the rights of the consumer from a timeshare contract or a long-term holiday product contract are to be acquired or sold.

(2) An exchange system contract is a contract by which a trader has a consumer promise them a fee for a demonstrable referral of the opportunity to conclude a contract or for facilitating a contract by which individual rights of the consumer from a timeshare contract or a long-term holiday product contract are to be exchanged or acquired or sold by other means.

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Section 482
Preliminary contract information, advertising and prohibition of sale as an investment

(1) In good time prior to the submission of the consumer’s declaration as to the conclusion of a timeshare contract, of a long-term holiday product contract, of a brokerage contract or of an exchange system contract, the trader is to provide to the consumer the pre-contractual information under Article 242 section 1 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) in text form. The pre-contractual information must be clear and comprehensible.

(2) Any advertising for such contracts is to state that pre-contractual information is available and where such information may be requested. In inviting to promotional or sales events, the trader is to clearly indicate the commercial nature of the event. At such events, the consumer is to be provided with access to the pre-contractual information at any time.

(3) A timeshare right or a right from a long-term holiday product contract may not be advertised or sold as an investment.

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Section 482a
Instructions on the right of withdrawal

The trader must inform the consumer in text form prior to conclusion of the contract of the right of withdrawal, including of the withdrawal period, as well as of the prohibition of advance payments under section 486. Receipt of the appropriate provisions of the contract is to be confirmed by the consumer in writing. The details have been provided for in Article 242 section 2 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche).

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Section 483
Language of the contract and of the pre-contractual information

(1) The timeshare contract, the long-term holiday product contract, the brokerage contract or the exchange system contract is to be drafted in the official language, or, where there is more than one official language, in the official language selected by the consumer of the Member State of the European Union or of the state that is a Contracting Party to the Agreement on the European Economic Area in which the consumer has their residence. If the consumer is a national of another Member State, then instead of the language of the state in which they have their residence, they may alternatively choose the official language or one of the official languages of the state of which they are a national. Sentences 1 and 2 also apply to the pre-contractual information and to the instructions on the right of withdrawal.

(2) If the agreement is to be recorded by a German notary, sections 5 and 16 of the Law on Attestations (Beurkundungsgesetz) apply subject to the proviso that the consumer is to be provided with a certified translation of the agreement in the language chosen by the consumer in accordance subsection (1).

(3) Contracts that do not comply with subsections (1) sentences 1 and 2 or subsection (2) are void.

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Section 484
Form and content of the contract

(1) The timeshare contract, the long-term holiday product contract, the brokerage contract or the exchange system contract are to be made in writing, unless other provisions contain more stringent requirements as to form.

(2) The pre-contractual information provided to the consumer under section 482 (1) becomes part of the contract’s content insofar as it is not amended by mutual agreement of the parties or unilaterally by the trader. The trader unilaterally may amend the pre-contractual information only in order to adapt it to changes caused by force majeure. The amendments under sentence 1 must be provided to the consumer in text form prior to conclusion of the contract. They become effective only if they are included in the contract documents, indicating that they deviate from the pre-contractual information provided in accordance with section 482 (1). The contract documents are to include the following:

1.  the pre-contractual information pursuant to section 482 (1), notwithstanding its validity under sentence 1,

2.  the names of both parties and addresses at which documents may be served on them, as well as

3.  the date and place the declarations as to the conclusion of a contract were made that are contained in the contract documents.

(3) The trader is to provide the consumer with the contract document or a copy of the contract. In the case of a timeshare contract, if the language of the contract and the official language of the Member State of the European Union or of the Contracting Party to the Agreement on the European Economic Area in which the residential building is situated are different, the trader is to enclose a certified translation of the contract in an official language of the state in which the residential building is situated. The duty to enclose a certified translation does not apply if the timeshare contract relates to a group of residential buildings that are situated in different states.

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Section 485
Right of withdrawal

In the case of a timeshare contract, a long-term holiday product contract, a brokerage contract, or an exchange system contract, the consumer is entitled to a right of withdrawal under section 355.

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Section 486
Prohibition of down payment

(1) The trader may not demand or accept payments by the consumer prior to the expiry of the withdrawal period.

(2) No payments of the consumer in connection with a brokerage contract may be demanded or accepted until the trader has complied with their obligations under the brokerage contract or this contractual relationship has been terminated.

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Section 486a
Special provisions for long-term holiday product contracts

(1) In the case of a long-term holiday product contract, the form sheet designated in Article 242 section 1 (2) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) includes an instalment plan. The trader may not deviate from the payment methods designated therein. The trader may only demand or accept the annual instalment from the consumer that is due according to the form sheet if the trader previously has requested in text form that the consumer pay this instalment. The payment request must be received by the consumer at least two weeks prior to the due date of the annual instalment.

(2) From the point in time provided for under subsection (1) for the payment of the second instalment, the consumer may terminate the contract within two weeks of receipt of the payment request on the due date defined in subsection (1).

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Section 487
Deviating agreements

There may be no deviation from the provisions of this Title to the disadvantage of the consumer. Unless otherwise provided, the provisions of this Title apply even if they are circumvented by other arrangements.

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Title 3
Loan contract; financial accommodation and contracts for delivery by instalments between a trader and a consumer

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Subtitle 1
Loan contract

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Chapter 1
General provisions

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Section 488
Contractual duties typical for a credit agreement

(1) The credit agreement obliges the lender to make available to the borrower a amount of money in the agreed amount. The borrower is obliged to pay the interest owed and, at the due date, to repay the loan made available.

(2) The agreed interest, unless otherwise provided, is to be paid at the end of each year and, if the loan is to be repaid before the end of a year, upon repayment.

(3) If a time is not specified for repayment of the loan, its due date is subject to the lender or the borrower giving notice of termination. The notice period is three months. If interest is not owed, the borrower also is entitled to repay without giving notice of termination.

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Section 489
Right of the borrower to give notice of termination in accordance with usual procedure

(1) The borrower may terminate a credit agreement with a pegged borrowing rate, as a whole or in part,

1.  if the pegging of the borrowing rate ends prior to the time determined for repayment and no new agreement is reached on the borrowing rate, observing a notice period of one month that is to end at the earliest at midnight of the day on which the pegging of the borrowing rate ends; if an adjustment of the borrowing rate is agreed at certain intervals of up to one year, then the borrower may give notice of termination only as per midnight of the day on which the pegging of the borrowing rate ends;

2.  in any case following the expiry of 10 years after complete receipt, observing a notice period of six months; if, after the loan is received, a new agreement is reached on the repayment period or the borrowing rate, the date of this agreement takes the place of the date of receipt.

(2) The borrower may terminate a credit agreement with a variable rate of interest at any time, giving three months’ notice of termination.

(3) Termination by the borrower is deemed not to have been given if the borrower does not repay the sum owed within two weeks after the notice of termination takes effect.

(4) The borrower’s right of termination under subsections (1) and (2) may not be excluded or made more difficult by contract. This does not apply to loans to the Federal Government, to a special fund of the Federal Government, a Land, a municipality, an association of municipalities, the European Communities or foreign regional or local authorities.

(5) The borrowing rate is the pegged or variable periodic percentage that is applied per year to the loan that has been taken out. The borrowing rate is pegged if a borrowing rate or several borrowing rates is/are agreed for the entire term of the contract, which is/are expressed as a fixed percentage. If no borrowing rate is agreed for the entire term of the contract, the borrowing rate is deemed to be pegged only for those periods for which it is determined by a fixed percentage.

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Section 490
Right to terminate for cause

(1) If there is or threatens to be a substantial deterioration in the financial circumstances of the borrower or in the value of a security given for the loan as a result of which the repayment of the loan is jeopardised even if the security is realised, the lender may give notice of termination of the credit agreement with immediate effect; in case of doubt, the notice of termination with immediate effect is an available option under all circumstances before the loan is paid out, while after the loan has been paid out, it is an available option only as a general rule.

(2) The borrower may give early notice of termination of a credit agreement where the borrowing rate is pegged and the loan is secured by a security right in land or a maritime lien, observing the notice periods defined in section 488 (3) sentence 2 if the borrower’s legitimate interests require this and six months have expired since the complete receipt of the loan. Such an interest is given in particular if the borrower has the need to otherwise realise the thing pledged to secure the loan. The borrower is to compensate the lender for the damage incurred by the lender as a result of this early termination (compensation for early repayment of the loan).

(3) The provisions of sections 313 and 314 remain unaffected.

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Chapter 2
Special provisions for consumer credit agreements

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Section 491
Consumer credit agreement

(1) Unless otherwise provided, the provisions of this Chapter apply to consumer credit agreements. Consumer credit agreements are general-purpose consumer credit agreements and consumer credit agreements relating to immovable property.

(2) General-purpose consumer credit agreements are non-gratuitous credit agreements between a trader as lender and a consumer as borrower. The following contracts are not general-purpose consumer credit agreements:

1.  contracts in which the net loan amount (Article 247 section 3 (2) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche)) is less than 200 euros,

2.  contracts by which the liability of the borrower is restricted to a thing surrendered to the lender as a pledge,

3.  contracts according to which the borrower is to repay the loan within three months and only low costs are agreed,

4.  contracts which employers conclude with their employees as an additional benefit to the employment contract at a lower effective annual interest rate than the going market rate (section 6 of the Ordinance on Price Information (Preisangabenverordnung)) and which are not offered to other persons,

5.  contracts which are only concluded with a limited group of individuals on the basis of legal provisions in the public interest if conditions are agreed in the contract for the borrower that are more favourable to the borrower than the going market rates and a maximum of the going borrowing rate on the market is agreed.

6.  contracts which are consumer credit agreements relating to immovable property or equity release credit agreements as defined in subsection (3).

(3) Consumer credit agreements relating to immovable property are non-gratuitous credit agreements between a trader as lender and a consumer as borrower if

1.  they are secured by a mortgage or by a charge on land or

2.  they are intended to serve the acquisition or the preservation of the property right to plots of land, to existing buildings or buildings yet to be constructed, or the acquisition or preservation of rights equivalent to real property.

Agreements in accordance with subsection (2) sentence 2 no. 4 are not consumer credit agreements relating to immovable property. Solely section 491a (4) is applicable to consumer credit agreements relating to immovable property in accordance with subsection (2) sentence 2 no. 5. Equity release credit agreements are not consumer credit agreements relating to immovable property if the creditor

1.  makes lump-sum payments or periodic payments or disburses the credit in other forms and in return receives merely a sum deriving from the future proceeds of the sale of a residential immovable property, or acquires a right to a residential immovable property and

2.  demands repayment only after the death of the consumer, unless the consumer violates the provisions of the contract, which will allow the creditor to terminate the contract.

(4) Section 358 subsections (2) and (4), as well as sections 491a to 495 and sections 505a to 505d, do not apply to credit agreements incorporated in a court record drawn up in compliance with the provisions of the Code of Civil Procedure (Zivilprozessordnung) or determined by a court order on the establishment and the content of a settlement concluded between the parties if the record or order sets out the borrowing rate, the costs of the loan invoiced when the contract was concluded, and the prerequisites based on which the borrowing rate or the costs may be adjusted.

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Section 491a
Preliminary contract information obligations with consumer credit agreements

(1) The lender is obliged to inform the borrower in accordance with the provisions of Article 247 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche).

(2) The borrower may require from the lender a draft of the consumer credit agreement. This does not apply for as long as the lender is not willing to conclude the contract. Where, in the case of a consumer credit agreement relating to immovable property, the lender submits to the borrower an offer or a binding suggestion for certain provisions of the contract, the lender must offer to the borrower to hand over or to transmit to the borrower a draft of the agreement; where no right of withdrawal pursuant to section 495 exists, the lender is under obligation to hand over or to transmit to the borrower a draft of the agreement.

(3) The lender is obliged to provide suitable explanations to the borrower prior to conclusion of a consumer credit agreement so that the borrower is enabled to judge whether the contract does justice to the purpose pursued by hem and is in keeping with their assets. To this end, where appropriate the pre-contractual information under subsection (1), the main features of the contracts offered by the lender, as well as the effects such contracts typically have on the borrower, including the consequences of payment default, are to be explained. Where financial products or financial services are offered as a package with a consumer credit agreement relating to immovable property, it must be explained to the borrower whether or not it is possible to terminate them separately and what the consequences of a termination will be.

(4) In the case of a consumer credit agreement relating to immovable property as defined in section 491 (2) sentence 2 no. 5, the lender is under obligation to inform the borrower on a durable medium, in due time prior to the latter making their declaration as to the conclusion of a contract, of the features pursuant to Chapters 3, 4 and 13 of the template set out in Article 247 section 1 (2) sentence 2 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche). Article 247 section 1 (2) sentence 6 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) applies.

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Section 492
Written form, contents of the contract

(1) Consumer credit agreements are to be concluded in writing unless a more stringent form is required. The requirement as to the written form is satisfied if the offer and the acceptance are declared in writing by the contractual parties in separate documents. The statement of the lender need not be signed if it is made using automatic equipment.

(2) The contract must contain the information stipulated for the consumer credit agreement in Article 247 sections 6 to 13 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche).

(3) After the contract has been concluded, the lender provides to the borrower a copy of the contract. Where a time has been determined for the repayment of the loan, the borrower may demand from the lender at any time a repayment plan under Article 247 section 14 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche).

(4) Subsections (1) and (2) apply also to the power of attorney granted by a borrower for purposes of concluding a consumer credit agreement. Sentence 1 does not apply to a power of attorney for legal proceedings or to a power of attorney recorded by a notary.

(5) Declarations on the part of the lender to be submitted to the borrower after the contract has been concluded must be made on a durable medium.

(6) If the contract does not contain the information under subsection (2), or not all of it, it may be provided subsequently on a durable medium after the contract has been effectively concluded, or, in the cases governed by section 494 (2) sentence 1, after the contract has become valid. If the lack of information under subsection (2) has led to amendments in the contractual conditions in accordance with section 494 (2) sentence 2 to subsection (6), the information may be subsequently provided only by the borrower receiving the copy of the contract that is required under section 494 (7). In the other cases, at the latest at the time of subsequently providing the information, the borrower must receive one of the documents designated in section 356b (1). In subsequently providing the information under subsection (2), the borrower is to be informed on a durable medium that the withdrawal period of one month commences following receipt of the subsequently-provided information.

(7) The agreement of a variable borrowing rate oriented by an index or a reference interest rate is effective only if the index or the reference interest rate is objective, has been specified unambiguously, and is available to the lender and the borrower and verifiable by them.

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Section 492a
Tying practices in the case of consumer credit agreements relating to immovable property

(1) Notwithstanding the provisions of section 492b, the lender may not make the conclusion of a consumer credit agreement relating to immovable property subject to the borrower or a third party acquiring further financial products or financial services (tying practice). Where the lender is willing to conclude the consumer credit agreement relating to immovable property without the consumer acquiring further financial products or financial services, even those cases will not constitute a tying practice in which the terms of the consumer credit agreement relating to immovable property deviate from those at which the said agreement is being offered together with the further financial products or financial services.

(2) Insofar as a tying practice is impermissible, the transactions linked to the consumer credit agreement relating to immovable property are void; the effectiveness of the consumer credit agreement relating to immovable property remains unaffected.

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Section 492b
Permissible tying practices

(1) A tying practice is permissible if the lender makes the conclusion of a consumer credit agreement relating to immovable property subject to the borrower, a member of the borrower’s family or both together

1.  opening a Payment account or savings account, the sole purpose of which is to accumulate capital in order to

a)  repay or service the consumer credit agreement relating to immovable property,

b)  make available the funds required for the loan to be granted, or

c)  provide additional security to the lender in the event of default;

2.  acquiring or maintaining an investment product or a private pension product that

a)  primarily serves to provide income during retirement and

b)  provides additional security to the lender in the event of default, or that serves the accumulation of capital in order to repay or service the consumer credit agreement relating to immovable property, or in order to in this way make available the funds required for the loan to be granted;

3.  concluding a further credit agreement under which the capital repayable is based on a contractually set percentage of the value of the immovable property at the time of the capital repayment or repayments (shared equity credit agreement).

(2) A tying practice is permissible if the lender makes the conclusion of a consumer credit agreement relating to immovable property subject to the borrower taking out, in the context of the consumer credit agreement relating to immovable property, a relevant insurance policy and if the borrower is permitted to take out such insurance also from a supplier other than the lender’s preferred supplier.

(3) A tying practice is permissible if the supervisory authority responsible for the lender has approved the further financial products or financial services as well as their being tied to the consumer credit agreement relating to immovable property under the terms of section 18a (8a) of the Banking Act (Kreditwesengesetz).

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Section 493
Information during the contractual relationship

(1) If the borrowing rate in a consumer credit agreement is pegged, and if the pegging of the borrowing rate ends prior to the time determined for repayment, the lender informs the borrower at the latest three months prior to the end of the pegging of the borrowing rate whether they are willing to reach a new agreement as regards the borrowing rate. If the lender declares their willingness thereto, the notification must set out the borrowing rate offered by the lender at the time of notification.

(2) The lender notifies the borrower at the latest three months prior to termination of a consumer credit agreement whether they are willing to continue the loan relationship. Where the lender declares that they are willing to continue, the notification must set out the obligatory information under section 491a (1) applicable at the time of notification.

(3) The adjustment of the borrowing rate of a consumer credit agreement with a variable borrowing rate is not effective until the lender has informed the borrower of the details resulting from Article 247 section 15 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche). Deviating agreements on effectiveness are permissible within the framework of Article 247 section 15 (2) and (3) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche).

(4) In the case of a contract for a consumer credit agreement relating to immovable property that denominates in a foreign currency as defined in section 503 (1) sentence 1, also in conjunction with sentence 3, the lender is to inform the borrower without undue delay should the value of the amount remaining to be paid, or the value of the regular instalments, increase by more than 20 per cent, expressed in the national currency of the borrower, as compared to the value it/they would have based on the exchange rate at the time of the conclusion of the contract. Said information

1.  is to be transmitted on a durable medium,

2.  is to include the statement as to the amount remaining to be paid having changed, citing the amount in the national currency of the borrower,

3.  is to indicate the option of converting the credit agreement to an alternative currency based on section 503 and the conditions applying thereto, and, if applicable, is to explain further mechanisms for limiting the exchange rate risk, and

4.  is to be provided at regular intervals until such time as the difference has fallen below 20 per cent again.

Sentences 1 and 2 are to be applied accordingly if a consumer credit agreement relating to immovable property was concluded in the currency of that Member State of the European Union in which the borrower is resident at the time of the conclusion of the contract, and if, at the time of the relevant creditworthiness assessment, the borrower primarily receives income, or holds assets from which the loan is to be repaid, in a different currency.

(5) If the borrower of a consumer credit agreement relating to immovable property notifies the lender that they intend to repay the loan early, the lender is obliged to provide the lender,without undue delay and on a durable medium, with the information necessary to consider that option. This information must include the following in particular:

1.  information regarding the permissibility of early repayment,

2.  in the event of permissibility, the amount to be repaid, and,

3.  the amount of the compensation for early repayment of the loan, if any.

Inasmuch as the information is based on assumptions, these must be logically understandable and objectively justified and must be disclosed as such to the borrower.

(6) Where claims under the credit agreement were assigned, the obligations under subsections (1) to (5) also affect the new creditor unless the previous lender has agreed with the new creditor that only the previous lender is to be identified in the relationship with the borrower.

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Section 494
Legal consequences of defects of form

(1) The consumer credit agreement and the power of attorney given by the consumer for purposes of concluding such a contract are void if the requirement as to written form is not complied with at all or if any of the items of information stipulated for the consumer credit agreement in Article 247 section 6 and sections 10 to 13 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) is lacking.

(2) Irrespective of a defect under subsection (1), the consumer credit agreement is valid to the extent that the borrower receives the loan or draws on it. However, the borrowing rate on which the consumer credit agreement is based is reduced to the statutory rate of interest if there is no information on the borrowing rate, on the effective annual rate of interest or on the total amount.

(3) If the effective rate of interest is stated at a rate that is too low, the borrowing rate on which the consumer credit agreement is based is reduced by that percentage by which the effective rate of interest is too low.

(4) Costs not stated are not owed by the borrower. If the contract does not state the prerequisites based on which costs or interest may be adjusted, the possibility to adjust these to the disadvantage of the borrower ceases to apply.

(5) If instalments have been agreed, then their amount is to be re-calculated by the lender, taking account of the reduced interest or costs.

(6) If the contract does not contain information on the term or on the right of termination, then the borrower is entitled to terminate at any time. If information on securities is missing, thensecurities cannot be demanded; this does not apply in the case of general-purpose consumer credit agreements if the net loan amount is greater than 75,000 euros. If a consumer credit agreement relating to immovable property in a foreign currency does not contain information on the right to convert the currency of the loan, then such a right to convert the currency may be exercised at any time.

(7) The lender provides to the borrower a copy of the contract in which the contractual amendments are taken into account that result from subsections (2) to (6).

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Section 495
Right of withdrawal; reflection period

(1) In the case of a consumer credit agreement, the borrower has a right of withdrawal under section 355.

(2) There is no right of withdrawal in the case of credit agreements

1.  that replace or supplement, by means of repayment agreements, a credit agreement which the lender is entitled to terminate because of payment default on the part of the borrower, if this serves to prevent court proceedings and if the total amount (Article 247 section 3 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche)) is lower than the residual debt of the original contract,

2.  that are to be recorded by a notary if the notary confirms that the rights of the borrower under sections 491a and 492 are safeguarded, or

3.  that correspond to section 504 (2) or to section 505.

(3) In the case of consumer credit agreements relating to immovable property, the borrower is to be granted, in the cases governed by subsection (2), a reflection period of at least seven days prior to the conclusion of the contract. For the duration of that period, the lender is bound by their offer. The reflection period commences upon the offer of contract being handed over to the borrower.

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Section 496
Waiver of objections, prohibition of bills of exchange and cheques

(1) An agreement by which the borrower waives their right under section 404 to raise objections against an assignee of the obligation that they are entitled to raise against the lender, or their right under section 406 to set off also against an assignee of the obligation a claim they have against the lender, is ineffective.

(2) Where a claim of the lender under a consumer credit agreement is assigned to a third party, or if the identity of the lender is changed, the borrower is to be notified of this without undue delay, as well as of the contact data of the new creditor in accordance with Article 246b section 1 (1) nos. 1, 3, and 4 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche). The notification may be dispensed with in the case of assignments if the previous lender has agreed with the new creditor that only the previous lender is identified in the relationship with the borrower. If the prerequisites of sentence 2 cease to exist, the notification is to be effected subsequently without undue delay.

(3) The borrower may not be obliged to incur a bill of exchange commitment for the claims of the lender under the consumer credit agreement. The lender may not take receipt of a cheque from the borrower to secure their claims under the consumer credit agreement. The borrower may require the lender at any time to surrender a bill of exchange or cheque that has been issued in violation of sentence 1 or 2. The lender is liable for all damage incurred by the borrower as a result of the issuance of such a bill of exchange or cheque.

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Section 497
Default of the borrower

(1) To the extent that the borrower is in default in making payments owed on the basis of the consumer credit agreement, the borrower is to pay interest as stipulated in section 288 (1) on the amount owed. In an individual case, the lender may prove that the damage was greater or the borrower may prove that the damage was less.

(2) Interest incurred after default has occurred is to be booked to a separate account and may not be paid into a current account together with the amount owed or other claims of the lender. Section 289 sentence 2 applies with regard to such interest, subject to the proviso that the lender may only demand damages up to the amount of the statutory rate of interest (section 246).

(3) Payments by the borrower that are insufficient to repay the entire debt due are credited, in derogation from section 367 (1), first, towards costs of litigation, then towards the remainder of the amount owed (subsection (1)) and finally towards interest (subsection (2)). The lender may not reject partial payments. Limitation of the claims to repayment of the loan and interest is suspended from the date on which default begins under subsection (1) until they are established in a manner described in section 197 (1) nos. 3 to 5, but not for longer than 10 years from the date on which they come into existence. Section 197 (2) does not apply to claims to interest. Sentences 1 to 4 do not apply insofar as payments are made in response to judicially enforceable instruments the main claim of which is for interest.

(4) In the case of consumer credit agreements relating to immovable property, the default rate of interest for the year is, in derogation from subsection (1), 2.5 percentage points above the basic rate of interest. Subsections (2) and (3) sentences 1, 2, 4 and 5 are not to be applied to consumer credit agreements relating to immovable property.

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Section 498
Calling in entire loan in the case of loans repayable in instalments

(1) The lender may terminate a consumer credit agreement on account of the default in payment by the borrower with regard to a loan that is to be repaid in instalments only if

1.  the borrower

a)  is in default in the payment of at least two consecutive instalments as a whole or in part

b)  is in default, in the case of a contract term of up to three years, by at least 10 per cent, or, in the case of a contract term running for more than three years, by at least five per cent of the nominal amount of the loan, and

2.  the lender has set the borrower a period of two weeks for payment of the amount in arrears, declaring that in the case of failure to pay within that period of time, the lender will demand the entire residual debt, and this period has expired without result.

At the latest in specifying a period of time, the lender is to offer to the borrower the opportunity to discuss the possibility of an arrangement by mutual consent.

(2) In the case of a consumer credit agreement relating to immovable property, the borrower must be in default, in derogation from subsection (1) sentence 1 no. 1 (b), by at least 2.5 per cent of the nominal amount of the loan.

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Section 499
Right of the lender to terminate; right to refuse performance

(1) In a general-purpose consumer credit agreement, an agreement on a right of termination by the lender is ineffective if a specific contract term was agreed or the termination period is less than two months.

(2) In the event of a corresponding agreement having been made, the lender is entitled to refuse to disburse a general-purpose consumer credit agreement, for an objective reason, where no time is determined for repayment. If the lender intends to exercise this right, they are to notify the borrower of this promptly and inform the borrower of the reasons, where possible prior to, but at the latest promptly after, the exercise of the right. Information with regard to the reasons is not provided insofar this would jeopardise public security or order.

(3) The lender may not terminate a consumer credit agreement, otherwise end it, or demand that it be amended solely by reason of the information provided by the borrower prior to conclusion of the contract having been incomplete, or because the assessment of the borrower’s creditworthiness was not performed properly. Sentence 1 does not apply should the defect of the creditworthiness assessment have been caused by the borrower having knowingly withheld from the lender information relevant to the creditworthiness assessment or having falsified such information.

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Section 500
Termination right of the borrower; early repayment

(1) The borrower may terminate a general-purpose consumer credit agreement, regarding which no time for repayment has been determined, as a whole or in part without observing a period of notice. An agreement on a notice period of more than one month is ineffective.

(2) The borrower may discharge their obligations under a consumer credit agreement early, and may do so at any time and as a whole or in part. In derogation from sentence 1, the borrower of a consumer credit agreement relating to immovable property, for which a pegged borrowing rate was agreed, may discharge their obligations early, whether as a whole or in part, in the corse of the period in which the borrowing rate is pegged only if there is a legitimate interest on the part of the borrower to do so.

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Section 501
Cost reduction in the case of early repayment and in the case of termination

(1) Insofar as the borrower discharges their obligations under a consumer credit agreement early under section 500 (2), the overall costs of the credit are reduced by the interest and the costs to correspond to the remaining term of the contract.

(2) Insofar as the residual debt of a consumer credit agreement falls due prior to the agreed period by notice being given, the overall costs of the credit are reduced by the interest and the other term-linked charges which, if graduated calculation is used, apply to the period after the due date.

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Section 502
Compensation for early repayment of a loan

(1) In the case of early repayment , the lender may require suitable compensation for early repayment of the loan to cover the damage directly related to early repayment if the borrower at the time of repayment owes interest at a pegged borrowing rate. In the case of general-purpose consumer credit agreements, sentence 1 applies only if the pegged borrowing rate was agreed at conclusion of the contract.

(2) The claim to compensation for early repayment of the loan is excluded if

1.  the repayment is effected from funds from an insurance policy concluded on the basis of a corresponding obligation in the credit agreement in order to ensure repayment, or

2.  the information contained in the contract on the term of the contract, the right of termination of the borrower or the calculation of the compensation for early repayment of the loan is inadequate.

(3) In the case of general-purpose consumer credit agreements, the compensation for early repayment of a loan may not exceed the following amounts in each case:

1.  1 per cent of the amount repaid early, or, if the period between the early and the agreed repayment is not more than one year, 0.5 per cent of the amount repaid early,

2.  the amount of the interest that the borrower would have paid in the period between early and agreed repayment.

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Section 503
Conversion to an alternative currency of a foreign-currency consumer credit agreement relating to immovable property

(1) In the case of a consumer credit agreement relating to immovable property that is not denominated in the currency of the Member State of the European Union in which the borrower is resident at the conclusion of the contract (national currency of the borrower) (consumer credit agreement relating to immovable property and denominating in a foreign currency), the borrower may demand that the foreign-currency loan be converted to their national currency. The right to such conversion is given in those cases in which the value of the amount remaining to be paid or the value of the regular instalments increases as a result of the change of the exchange rate by more than 20 per cent, expressed in the national currency of the borrower, as compared to the value it/they would have had based on the exchange rate at the conclusion of the contract. In derogation from sentence 1, it may be agreed in the credit agreement that the national currency of the borrower will be exclusively or supplementally that currency in which, at the time of the relevant creditworthiness assessment, the borrower primarily receives income or holds assets from which the loan is to be repaid.

(2) The conversion to an alternative currency is to be carried out at the exchange rate corresponding to the market exchange rate valid on the day of the application for conversion. Sentence 1 applies only if nothing has been agreed otherwise in the credit agreement.

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Section 504
Granted overdraft

(1) Where a consumer loan is grantedsuch that, in a contractual relationship concerning a current account, the lender grants to the borrower the right to overdraw their account up to a specific amount (overdraft facility), the lender is to provide to the borrower, at regular intervals, the information evident from Article 247 section 16 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche). A right to compensation for early repayment of the loan under section 502 is excluded. Section 493 (3) is to be applied only in case of an increase in the borrowing rate and applies accordingly to an increase in the other costs that have been agreed. Section 499 (1) is not to be applied.

(2) If it is agreed in an overdraft facility taking the form of a general-purpose consumer credit agreement that, after disbursement, the term is at most three months or the lender may terminate without observing a period of notice, sections 491a (3), sections 495, 499 (2) and section 500 (1) sentence 2 are not to be applíed. Section 492 (1) is not to be applied if apart from the interest no further ongoing costs are agreed, the interest is not due at intervals of less than three months, and the lender informs the borrower of the contract’s content on a durable medium no later than without undue delay after conclusion of the contract.

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Section 504a
Obligation to provide advisory services where the overdraft facility is used

(1) The lender is to offer to the borrower advisory services within the meaning of subsection (2) if the borrower has made use of the overdraft facility made available to them continuously for a period of six months and, on average, in an amount in excess of 75 per cent of the maximum amount agreed upon. If the account statement for the current account is issued on a quarterly basis, then the point in time relevant for the prerequisites set out in sentence 1 to be given is the respective account statement. The offer to provide advisory services is to be made to the borrower in text form using that channel of communications that is customarily used in contacting the borrower. The offer to provide advisory services is to be documented.

(2) If the borrower accepts the offer, then they are to be advised on the low-cost alternatives to using the overdraft facility that are potentially available, as well as on the potential consequences of continuing the overdraft of the current account, and, depending on the circumstances, the borrower is to be made aware of suitable advisory agencies. The advisory services are to be provided in the form of a personal conversation. Means of distance communication also may be used for this purpose. The place and the date of the advisory conversation are to be documented.

(3) If the borrower does not accept the offer of advisory services, or if no agreement is concluded for a suitable financial product at lower cost, the lender is to repeat the offer to provide advisory services if the prerequisites set out in subsection (1) are met once again. This does not apply if the borrower expressly declares that they do not wish to receive any further corresponding offers of advisory services.

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Section 505
Tolerated overdraft

(1) If a trader agrees in a contract with a consumer on a current account for which no overdraft facility has been granted that a fee will be payable in the event of the trader tolerating the overdrawing of the account, then this contract must contain the information under Article 247 section 17 (1) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) on a durable medium, and the consumer must be notified of such information at regular intervals on a durable medium. Sentence 1 applies accordingly if a lender agrees with a borrower in a contract on a current account for which an overdraft facility has been granted that a fee will be payable in the event of the trader tolerating the overdrawing of the account beyond the amount agreed by contract.

(2) Where, in the case governed by subsection (1), there is a considerable overdraft for a period longer than one month, the lender will inform the borrower promptly on a durable medium of the details evident from Article 247 section 17 (2) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche). If, in the case governed by subsection (1), there is a continuous overdraft lasting longer than three months and the average overdraft amount is in excess of half of the average amount credited monthly to this account within the last three months, then section 504a applies accordingly. If the account statement for the current account is issued on a quarterly basis, then the point in time relevant for the prerequisites set out in sentence 1 to be met is the respective account statement.

(3) If the trader acts in breach of subsection (1) or subsection (2), then the lender may not demand costs and interest beyond the repayment of the loan.

(4) Sections 491a to 496 and 499 to 502 are not to be applied to general-purpose consumer credit agreements that come into existence subject to the prerequisites set out in subsection (1).

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Section 505a
Obligation to perform a creditworthiness assessment for consumer credit agreements

(1) Prior to concluding a consumer credit agreement, the lender is to assess the creditworthiness of the borrower. The lender may conclude the consumer credit agreement only if the creditworthiness assessment shows that no significant doubts exist, where a general-purpose consumer credit agreement is concerned, and that it is likely, where a consumer credit agreement relating to immovable property is concerned, that the borrower will comply with their obligations in connection with the credit agreement as stipulated by the contract.

(2) If the net loan amount is significantly increased following conclusion of the credit agreement, the creditworthiness is to be newly assessed on an updated basis, unless the amount by which the net loan was increased already had been included in the original creditworthiness assessment.

(3) In the case of consumer credit agreements relating to immovable property that

1.  grant, following a credit agreement concluded between the contractual parties, a new right to utilise capital in order to achieve the purpose pursued by the borrower with the preceding credit agreement, or

2.  replace or supplement some other credit agreement between the contractual parties in order to avoid terminations for default on the part of the borrower or in order to avoid measures by way of compulsory enforcement against the borrower,

a new assessment of the creditworthiness will be required only if the prerequisites set out in subsection (2) have been met. Where no creditworthiness assessment is necessary according to this provision, the lender may not conclude the new consumer credit agreement relating to immovable property if the lender already is aware that the borrower permanently will not be able to comply with the obligations connected to that credit agreement. Section 505d applies accordingly in the event of breaches.

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Section 505b
Basis of the creditworthiness assessment in the case of consumer credit agreements

(1) In the case of general-purpose consumer credit agreements, information provided by the borrower may serve as the basis for a creditworthiness assessment and, where necessary, information from agencies that, for the purpose of transmission, commercially collect, store, alter or use personal data which may be used to evaluate consumers’ credit worthiness.

(2) In the case of consumer credit agreements relating to immovable property, the lender is to assess in detail the creditworthiness of the borrower on the basis of information on the borrower‘s income and expenses and other financial and economic circumstances which is necessary, sufficient, and proportionate. In so doing, the lender is to have due regard to factors that are relevant for estimating whether or not the borrower likely will be able to comply with their obligations under the credit agreement. The assessment of creditworthiness may not rely predominantly on the value of the residential immovable property exceeding the amount of the loan, or on the assumption that the residential immovable property will increase in value, unless the purpose of the credit agreement is to construct or renovate the residential immovable property.

(3) The lender obtains the information required under subsection (2) from relevant internal or external sources, including the borrower. The lender also takes account of information provided to a credit intermediary. The lender is under obligation appropriately to confirm the information, to the extent necessary also by inspecting independently verifiable documentation.

(4) In the case of consumer credit agreements relating to immovable property, the lender is under obligation to determine and document the processes and information on which the creditworthiness assessment relies, and to keep a record of such documentation.

(5) The provisions regarding the protection of personal data remain unaffected.

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Section 505c
Further obligations in the case of consumer credit agreements relating to immovable property secured by a mortgage or by a charge on land

Lenders granting consumer credit agreements relating to immovable property secured by a mortgage or by a charge on land are to

1.  apply reliable standards in appraising the residential immovable property, and are to

2.  ensure that the internal and external appraisers conducting property valuations on their behalf are professionally competent and sufficiently independent from the credit underwriting process that they can provide an objective valuation, and are to

3.  document on a durable medium and keep a record of the appraisals of immovable property serving as security for consumer credit agreements relating to immovable property.

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Section 505d
Breach of the obligation to conduct an assessment of creditworthiness

(1) Where the lender has breached their obligation to conduct a creditworthiness assessment, this will have the following effects:

1.  any pegged borrowing rate agreed upon in the credit agreement will be reduced to the interest rate prevailing on the capital market for investments in mortgage bonds and public-sector debenture bonds (öffentliche Pfandbriefe), the term of which corresponds to the term for which the borrowing rate has been pegged, and

2.  any variable borrowing rate agreed upon in the credit agreement will be reduced to the interest rate prevailing on the market at which European banks grant each other bonds denominating in euros having a term of three months.

The point in time relevant for determining the interest rate prevailing on the market pursuant to sentence 1 is the time of conclusion of the contract and, as the case may be, the respective point in time at which adjustments of the interest rate are contractually agreed. The borrower may terminate the credit agreement without notice at any time; no claim to compensation for early repayment of a loan exists. The lender makes available to the borrower a copy of the contract in which the amendments to the contract have been taken into account that result from sentences 1 to 3. If the credit agreement could have been concluded had the assessment of creditworthiness been duly conducted, sentences 1 to 4 do not apply.

(2) If the borrower is unable to comply with their obligations in connection with the credit agreement as contractually agreed, then the lender cannot assert claims due to breach of duty if such breach of duty is based on a circumstance that would have led to the conclusion of the credit agreement not being permitted had the assessment of creditworthiness been conducted duly and properly.

(3) Subsections (1) and (2) do not apply inasmuch as the deficiency of the creditworthiness assessment is based on the fact that the borrower intentionally or grossly negligently provided to the lender information in the sense of section 505b subsections (1) to (3) that was false or that the borrower withheld such information.

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Section 505e
Authorisation to issue statutory instruments

The Federal Ministry of Finance and the Federal Ministry of Justice and Consumer Protection are authorised to determine, by a joint statutory instrument that is not subject to approval by the Bundesrat, guidelines for the criteria and methods to be applied in conducting assessments of creditworthiness for consumer credit agreements relating to immovable property pursuant to sections 505a and 505b subsections (2) to (4). The statutory instrument particularly may determine guidelines

1.  concerning the factors relevant for the assessment of whether or not the borrower likely will be able to comply with their obligations under the credit agreement,

2.  concerning the procedures to be applied and the collection of information and its verification.

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Subtitle 2
Financial accommodation between a trader and a consumer

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Section 506
Deferment of payment, other financial accommodation

(1) The provisions of sections 358 to 360 and sections 491a to 502 as well as sections 505a to 505d applying to general-purpose consumer credit agreements are to be applied accordingly, to the exception of section 492 (4) and subject to subsections (3) and (4), to contracts by which a trader grants a consumer a non-gratuitous deferment of payment or grants the consumer some other non-gratuitous financial accommodation. Where the non-gratuitous deferment of payment or the other non-gratuitous financial accommodation relates to the acquisition or preservation of the property right to plots of land, to existing buildings or buildings yet to be constructed, or where it relates to the acquisition or preservation of rights equivalent to real property, or where the claim of the trader is secured by a mortgage or a charge on land, the provisions applying to consumer credit agreements relating to immovable property set out in sentence 1 as well as section 503 apply accordingly. A gratuitous deferment of payment is considered a non-gratuitous deferment of payment in accordance with sentence 2 if it is made subject to the claim being secured by a mortgage or a charge on land.

(2) Contracts between a trader and a consumer on the non-gratuitous use of an object are deemed to constitute non-gratuitous financial accommodation if it is agreed that

1.  the consumer is obliged to acquire the object,

2.  the trader may demand that the consumer acquire the object, or

3.  the consumer is to pay for a specific value of the object on termination of the contract.

Section 500 (2), section 501 (1) and section 502 are not to be applied to contracts under sentence 1 no. 3.

(3) Subject to subsection (4), the special provisions contained in sections 507 and 508 apply additionally to contracts for the supply of a specified thing or the provision of a specified other service in return for instalment payments (instalment payment transactions).

(4) The provisions of this Subtitle are not to be applied in the scope determined in section 491 (2) sentence 2 nos. 1 to 5, subsection (3) sentence 2 and subsection (4). Insofar as in accordance with the type of contract there is no net loan amount (section 491 (2) sentence 2 no. 1), it is replaced by the cash payment price or, if the trader has acquired the object for the consumer, by the acquisition price.

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Section 507
Instalment payment transactions

(1) Section 494 subsections (1) to (3) and subsection (6) sentence 2 second half-sentence, is not to be applied to instalment payment transactions. If the consumer submits their offer to conclude a contract in distance selling on the basis of a sales prospectus or of a comparable electronic medium, from which the cash payment price, the borrowing rate, the effective annual interest rate, a redemption plan based on example total amounts, as well as the securities to be provided and insurance are evident, section 492 (1) also is not to be applied if the trader informs the consumer of the content of the contract on a durable medium at the latest without undue delay following conclusion of the contract.

(2) The instalment payment transaction is void if the requirement as to written form in section 492 (1) is not observed or if one of the items of information required by Article 247 sections 6, 12, and 13 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) is omitted in the contract. Notwithstanding a defect under sentence 1, the instalment payment transaction becomes valid if the thing is delivered to the consumer or the performance is rendered. However, the maximum rate of interest on the cash payment price is the statutory rate of interest if the information on the total amount or the effective annual rate of interest is missing. If a cash payment price is not stated, then in case of doubt the market price is deemed to be the cash payment price. If information on the effective annual rate of interest states a rate that is too low, the total amount is reduced by the percentage by which the effective annual rate of interest is too low.

(3) In derogation from sections 491a and 492 (2) of the present Code, and in derogation from Article 247 sections 3, 6, and 12 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche), the cash payment price and the effective annual interest rate do not need to be stated in the pre-contractual information or in the contract if the trader delivers things or renders performance only against payments in instalments. In cases covered by section 501, the calculation of the cost reduction is to be based on the statutory interest rate (section 246). A right to compensation for early repayment of the loan is excluded.

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Section 508
Revocation with regard to instalment payment transactions

The trader may revoke an instalment payment transaction by reason of default in payment by the consumer only if the prerequisites designated in section 498 (1) sentence 1 are met. The total amount corresponds to the nominal amount. The consumer also is to compensate the trader for the expenses incurred as a result of the contract. The reduction in value that has since occurred is to be taken into account in the calculation of remuneration for the emoluments of a thing to be returned. If the trader takes back the thing supplied under the instalment payment transaction, this is deemed an exercise of the right of revocation, unless the trader agrees with the consumer to pay the latter the usual market value of the thing at the time of its removal. Sentence 5 applies accordingly if a contract for the supply of a thing is linked to a consumer credit agreement (section 358 (3)) and if the lender takes the thing; in the case of rescission, the legal relationship between the lender and the consumer is governed by sentences 3 and 4.

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Section 509
(repealed)

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Subtitle 3
Contracts for delivery by instalments between a trader and a consumer

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Section 510
Contracts for delivery by instalments

(1) The written form is required for the contract between a consumer and a trader if the contract

1.  has as its subject matter the supply of more than one thing sold as belonging together by way of performance in instalments and remuneration is to be paid for the totality of the things in instalments,

2.  has as its subject matter the periodic supply of things of the same kind, or

3.  has as its subject matter the duty of recurrent acquisition or procurement of things.

This does not apply if the consumer is given the opportunity to retrieve the terms of the contract, including the standard business terms, at conclusion of the contract, and to store them in a reproducible form. The trader is to provide the consumer with the contents of the contract in text form.

(2) Subject to subsection (3), the consumer is entitled to a right of withdrawal as defined in section 355 in the case of contracts under subsection (1) that are neither distance contracts nor off-premises contracts.

(3) The right of withdrawal under subsection (2) does not apply to the extent specified in section 491 subsection (2) sentence 2 nos. 1 to 5, subsection (3) sentence 2 and subsection (4). The net loan amount referred to in section 491 (2) sentence 2 no. 1 is equal to the sum of all instalments to be paid by the consumer prior to the earliest termination date.

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Subtitle 4
Advisory services provided in the case of consumer credit agreements relating to immovable property

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Section 511
Advisory services provided in the case of consumer credit agreements relating to immovable property

(1) Before the lender issues to the borrower individual recommendations regarding one or several transactions that are connected to a consumer credit agreement relating to immovable property (advisory services), the lender is to inform the borrower of the details evident from Article 247 section 18 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) in the form provided for therein.

(2) Prior to providing the advisory services, the lender is to obtain information regarding the borrower‘s needs, their personal and financial situation, and their preferences and objectives insofar as this is necessary for the recommendation of a suitable credit agreement. On the basis of this current information, and relying on reasonable assumptions about the risks to the borrower’s situation that are to be expected over the term of the credit agreement, the lender is to consider a sufficiently large number of credit agreements, at a minimum from among its product range, in terms of their suitability.

(3) Based on the review in accordance with subsection (2), the lender is to recommend one suitable product or several suitable products to the borrower, or the lender is to indicate to the borrower that the lender is unable to recommend a product. The recommendation or the indication is to be made available to the borrower on a durable medium.

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Subtitle 5
Mandatory nature, application to founders of new businesses

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Section 512
Deviating agreements

A deviation from the provisions of sections 491 to 511, sections 514 and 515 to the disadvantage of the consumer is not permissible unless otherwise provided for. These provisions apply even if they are circumvented by other arrangements.

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Section 513
Application to founders of new businesses

Sections 491 to 512 also apply to natural persons who are granted a loan, deferment of payment or other financial accommodation to take up a trade or self-employed professional occupation or who conclude a contract for delivery by instalments for this purpose, unless the net loan amount or the cash price exceeds 75,000 euros or the Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (OJ L 347 of 20 October 2020, p. 1) is applicable.

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Subtitle 6
Gratuitous credit agreements and gratuitous financial accommodation between a trader and a consumer

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Section 514
Gratuitous credit agreements

(1) Section 497 (1) and (3) as well as section 498, and sections 505a to 505c as well as section 505d (2) and (3) as well as section 505e are to be applied accordingly to agreements by which a trader grants a gratuitous loan to a consumer. This does not apply in the scope specified in section 491 (2) sentence 2 no. 1.

(2) In the case of credit agreements for a gratuitous loan in accordance with subsection (1), the consumer is entitled to a right of withdrawal pursuant to section 355. This does not apply if a right of withdrawal pursuant to section 312g (1) already exists, nor does it apply in the case of agreements corresponding to section 495 (2), no. 1. The trader is to inform the consumer of their right of withdrawal in due time prior to the latter making their declaration of intent in accordance with Article 246 (3) of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche). The trader may comply with this obligation by transmitting to the consumer the template provided for in Annex 9 to the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche) for the notification of revocation, duly completed, in text form.

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Section 515
Gratuitous financial accommodation

Section 514 as well as sections 358 to 360 apply accordingly where a trader grants to a consumer a gratuitous deferment of payment or some other gratuitous financial accommodation.

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Title 4
Donation

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Section 516
Concept of donation

(1) A disposition by means of which someone, using their own assets, enriches another person is a donation if both parties are in agreement that the disposition occurs gratuitously.

(2) If the disposition has occurred without the intention of the other party, then the donor may, specifying a reasonable time limit, request the other party to make a declaration as to acceptance. Upon expiry of the period of time, the donation is deemed to be accepted unless the other party has previously rejected it. In the case of rejection, surrender of what has been bestowed may be demanded in accordance with the provisions on the surrender of unjust enrichment.

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Section 516a
Consumer contract on the donation of digital products

(1) Sections 523 and 524 governing the liability of the donor for defects of title or material defects are not to be applied to a consumer contract under which the trader gives to the consumer, by way of donation,

1.  digital products or

2.  a tangible medium serving exclusively as a carrier of digital content,

and the consumer supplies to the trader personal data under the terms of section 327 (3) or enters into bligation to do so. The provisions of Division 3 Title 2a take the place of the provisions not to be applied in accordance with sentence 1.

(2) The exclusion of application under subsection (1) applies accordingly, in the case of a consumer contract under which the trader gives to the consumer, by way of donation, a thing that incorporates or is inter-connected with digital products, to those elements of the contract that relate to the digital products.

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Section 517
Failure to acquire assets

It is not a donation if someone, to the advantage of another person, does not acquire assets or waives a right that has become available but not yet been definitively acquired, or declines an inheritance or a legacy.

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Section 518
Form of promise of donation

(1) For a contract to be valid by which performance is promised as a donation, notarial recording of the promise is required. The same applies to a promise or a declaration of acknowledgement if the promise to fulfil an obligation or the acknowledgement of a debt is made as a donation in the manner designated in sections 780 and 781.

(2) A defect of form is cured by rendering the performance promised.

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Section 519
Defence of paying for necessaries

(1) The donor is entitled to refuse to fulfil a promise given by way of making a donation to the extent that the donor, taking account of their other duties, is incapable of fulfilling the promise without jeopardising their reasonable maintenance or the performance of duties of maintenance incumbent upon them by operation of law.

(2) If the claims of more than one donee coincide, the earlier claim takes precedence.

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Section 520
Expiry of the promise of an annuity

If the donor promises maintenance consisting of recurrent performance, the obligation expires with the donor’s death unless the promise leads to a different conclusion.

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Section 521
Liability of the donor

The donor is responsible only for intent and gross negligence.

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Section 522
No default interest

The donor is not obliged to pay default interest.

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Section 523
Liability for defects of title

(1) If the donor fraudulently conceals a defect of title, they are obliged to compensate the donee for the resulting damage.

(2) If the donor promised to provide an object that they had to acquire first, the donee may demand damages for non-performance for a defect of title if the defect was known to the donor upon acquisition of the thing or remained unknown as a result of gross negligence. The provisions of section 433 (1) and sections 435, 436, 444, 452 and 453 on the liability of the seller for defects of title apply accordingly.

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Section 524
Liability for material defects

(1) If the donor fraudulently conceals a defect in the donated thing, they are obliged to compensate the donee for the resulting damage.

(2) If the donor promised to provide a thing designated only by class that the donor was still to acquire, the donee may, if the thing provided is defective and the donor was aware of the defect when the thing was acquired or remained unaware of it due to gross negligence, demand that in place of the defective thing a thing free of defects is supplied. If the donor fraudulently concealed the defect, the donee may demand damages for non-performance in place of supply of a thing free of defects. The provisions applicable to a warranty for defects in a thing sold apply to these claims accordingly.

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Section 525
Donation subject to conditions

(1) Anyone who makes a donation subject to a condition may demand that the condition is fulfilled if they themselves have performed.

(2) If fulfilment of the condition is in the public interest, then the competent public authority may also demand fulfilment after the death of the donor.

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Section 526
Refusal to fulfil the condition

Insofar as, due to a defect of title or a defect in the donated thing, the value of the disposition does not reach the amount of the expenses required to fulfil the condition, the donee is entitled to refuse to fulfil the condition until the deficit caused by the defect is made up for. If the donee fulfils the condition without knowledge of the defect, then the donee may demand from the donor reimbursement of the expenses caused by fulfilment to the extent that, as a result of the defect, they exceed the value of the disposition.

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Section 527
Non-fulfilment of the condition

(1) If fulfilment of the condition fails to occur, the donor may demand the surrender of the gift based on the prerequisites specified for the right of revocation of reciprocal contracts under the provisions on surrender of unjust enrichment to the extent that the gift would have had to be used to fulfil the condition.

(2) The claim is excluded if a third party is entitled to demand fulfilment of the condition.

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Section 528
Claim for return due to impoverishment of the donor

(1) To the extent that the donor, after fulfilment of the condition, is incapable of maintaining themselves reasonably and to meet the maintenance obligation incumbent upon them by law in relation to their relatives, spouse, life partner or previous spouse or life partner, they may demand surrender of the gift from the donee in accordance with the provisions on the surrender of unjust enrichment. The donee may avoid surrender by paying the amount required for maintenance. The provision of section 760 and the provision applicable to the maintenance obligation of relatives under section 1613, and in the case of the death of the donor also the provision of section 1615, apply accordingly to the duty of the donee.

(2) Among more than one donee, the earlier donee is liable only to the extent that the later donee is not obliged.

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Section 529
Exclusion of claim for return

(1) The claim to have the gift returned is excluded if the donor has brought about their indigence by intent or gross negligence or if, at the time of onset of their indigence, 10 years have passed since the donated object was provided.

(2) The same applies to the extent that the donee, taking into account their other duties, is incapable of returning the gift without jeopardising the maintenance suitable to their station in life or the discharging of the duties of maintenance incumbent upon them by operation of law.

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Section 530
Revocation of donation

(1) A donation may be revoked if the donee is guilty of gross ingratitude by doing serious wrong to the donor or a close relative of the donor.

(2) The heir of the donor only has the right of revocation if the donee intentionally and unlawfully has killed the donor or prevented the donor from revoking.

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Section 531
Declaration of revocation

(1) Revocation is effected by declaration to the donee.

(2) If the donation is revoked, return of the gift may be demanded in accordance with the provisions on the surrender of unjust enrichment.

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Section 532
Exclusion of revocation

Revocation is excluded if the donor has forgiven the donee or if one year has passed since the time when the person entitled to revoke obtained knowledge that the prerequisites for them to have the right had been met. Revocation is no longer permissible after the death of the donee.

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Section 533
Waiver of the right of revocation

The right of revocation may be waived only when the person entitled to revoke has become aware of the ingratitude.

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Section 534
Donations for duty and decency

Donations made in order to comply with a moral duty or out of considerations of decency are not subject to a claim for return or to revocation.

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Title 5
Lease, usufructuary lease

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Subtitle 1
General provisions for leases

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Section 535
Contents and primary duties of the lease agreement

(1) A lease agreement imposes on the lessor a duty to grant the lessee use of the leased property for the lease period. The lessor is to make available the leased property to the lessee in a condition suitable for use as contractually agreed and maintain it in this condition for the lease period. The lessor is to bear all costs to which the leased property is subject.

(2) The lessee is obliged to pay the lessor the agreed rent.

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Section 536
Abatement of the rent for material defects and defects of title

(1) If the leased property at the time it is made available to the lessee for their use has a defect which removes its suitability for the contractually agreed use, or if such a defect arises during the lease period, then the lessee is exempted from paying the rent for the period during which suitability is removed. For the period of reduced suitability, the lessee need only pay reasonably reduced rent. A trivial reduction of suitability is not taken into account.

(1a) For the duration of three months, a reduction of suitability will not be taken into account insofar as it occurs because of a measure which serves the purpose of energy efficiency modernisation under section 555b no. 1.

(2) Subsection (1) sentences 1 and 2 also applies if a warranted characteristic is lacking or later ceases to exist.

(3) If the lessee is fully or partially deprived by a third-party right of the use of the leased property, then subsections (1) and (2) apply accordingly.

(4) With regard to a lease for residential space, a deviating agreement to the disadvantage of the lessee is ineffective.

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Section 536a
Claim of lessee for damages and reimbursement of expenses due to a defect

(1) If a defect within the meaning of section 536 exists at conclusion of the lease agreement, or if such a defect arises subsequently due to a circumstance for which the lessor is responsible, or if the lessor is in default in remedying a defect, then the lessee may, notwithstanding the rights under section 536, demand damages.

(2) The lessee may remedy the defect themselves and demand reimbursement of the necessary expenses if

1.  the lessor is in default in remedying the defect, or

2.  immediate remedy of the defect is necessary to preserve or restore the state of the leased property.

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Section 536b
Lessee knows of the defect at conclusion of the contract or upon acceptance

If the lessee knows of the defect when concluding the contract, then they do not have the rights under sections 536 and 536a. If the lessee remains unaware of the defect due to gross negligence, then they have these rights only if the lessor fraudulently concealed the defect. If the lessee accepts a defective thing despite being aware of the defect, then they may only assert the rights under sections 536 and 536a if they reserved their rights at the time of acceptance.

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Section 536c
Defects occurring during the lease period; notice of defect by the lessee

(1) If a defect in the leased property becomes apparent during the lease period or if action to protect the leased property from an unforeseen hazard becomes necessary, then the lessee is to report this, without undue delay, to the lessor. The same applies if a third party arrogates to themselves a right to the thing.

(2) If the lessee fails to report this, then they are liable to the lessor for damage resulting therefrom. To the extent that the lessor was prevented from providing relief due to the failure of the lessee to report it, the lessee is not entitled

1.  to assert the rights specified in section 536,

2.  to demand damages under section 536a (1), or

3.  to give notice without specifying a reasonable period for relief under section 543 (3) sentence 1.

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Section 536d
Contractual exclusion of rights of lessee with regard to defects

The lessor may not rely on an agreement by which the rights of the lessee are excluded or restricted with regard to a defect in the leased property if they fraudulently concealed the defect.

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Section 537
Payment of rent when the lessee is unable to be present in person

(1) The lessee is not released from the obligation to pay rent due to the fact that, for a reason relating to their person, they are unable to exercise their right of use. However, the lessor must allow to be credited against them the value of the expenses saved and of the advantages they enjoy from exploiting the use in another way.

(2) As long as the lessor is incapable of granting the lessee use because use has been permitted to a third party, the lessee is not obliged to pay the rent.

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Section 538
Wear and tear on the leased property from contractually agreed use

The lessee is not responsible for modifications to or deterioration of the leased property brought about by use as contractually agreed.

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Section 539
Reimbursement of other expenses and right of removal of the lessee

(1) The lessee may, under the provisions on voluntary agency without specific authorisation, demand reimbursement from the lessor for expenses on the leased property for which the lessor need not compensate them under section 536a (2).

(2) The lessee is entitled to remove an installation with which they have furnished the leased property.

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Section 540
Making available the leased property for use use by third parties

(1) Without the permission of the lessor, the lessee is not entitled to make available the leased property to a third party for the latter’s use, in particular not to sublet it. If the lessor refuses permission, then the lessee may terminate the lease for cause, observing the statutory period of notice, unless the person of the third party constitutes cause.

(2) If the lessee makes the property available to a third party for the latter’s use, then the lessee is responsible for the culpability in the use of the property attributable to that third party even if the lessor has given permission for the property to be made available.

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Section 541
Application for prohibitory injunction in the case of use in breach of contract

If the lessee persists with the use of the leased property in breach of contract despite a warning notice having been issued by the lessor, then the latter may seek a prohibitory injunction.

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Section 542
End of the lease

(1) If the lease period is indefinite, then each of the contractual parties may give notice of termination in accordance with the statutory provisions.

(2) A lease entered into for a definite period of time ends at the end of that period unless it

1.  has been terminated for cause in the cases permissible under law, or

2.  is extended.

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Section 543
Termination for cause without notice for a compelling reason

(1) Each contractual party may terminate the lease for cause without notice for a compelling reason. A compelling reason is given if the party giving notice, with all circumstances of the individual case having been taken into account, in particular fault of the contractual parties, and having weighed the interests of the parties against each other, cannot reasonably be required to continue the lease until the end of the notice period or until the lease ends in another way.

(2) A compelling reason is given in particular in cases in which

1.  the lessee is not permitted in good time the use of the leased property as contractually agreed, as a whole or in part, or is deprived of such use,

2.  the lessee violates the rights of the lessor to a substantial degree by substantially endangering the leased property by neglecting to exercise the care incumbent upon them or by making avaible, without authorisation, the leased property to a third party for the latter’s use, or

3.  the lessee

a)  is in default, on two successive dates, in payment of the rent or of a portion of the rent that is not insignificant, or

b)  over a period of time spanning more than two dates is in default of payment of the rent in an amount that is as much as the amount of rent for two months.

In the case governed by sentence 1 no. 3, termination is excluded if the lessor has by then obtained satisfaction. It becomes ineffective if the lessee obtains release from their debt by set-off and declares set-off without undue delay after notice of termination is given.

(3) If the compelling reason consists of the violation of an obligation under the lease, then the notice of termination is permissible only after the expiry without result of a reasonable period specified for the purpose of obtaining relief or after a warning notice has failed to obtain a result. This does not apply if

1.  a notice period or a warning notice obviously shows no chance of succeeding,

2.  immediate termination is justified, having weighed the interests of both parties against each other, for special reasons or

3.  the lessee is in default in payment of rent within the meaning of subsection (2) no. 3.

(4) Sections 536b and 536d are to be applied accordingly to the right to notice of termination to which the lessee is entitled under subsection (2) no. 1. Where it is in dispute whether the lessor granted use of the leased property in good time or provided relief prior to expiry of the period specified for this purpose, the lessor bears the burden of proof.

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Section 544
Lease for more than 30 years

If a lease agreement is signed for a period longer than 30 years, then each of the contractual parties may terminate the lease for cause, observing the statutory notice period, after 30 years have lapsed since the leased property was made available for use. Termination is not permissible if the agreement has been signed for the duration of the life of the lessor or lessee.

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Section 545
Tacit extension of the lease

If the lessee continues to use the leased property after the end of the lease period, then the lease is extended for an indefinite period of time unless one of the contractual parties has declared their intention to the contrary to the other party within two weeks. The period commences

1.  for the lessee: upon continuation of use,

2.  for the lessor: at the point in time at which they become aware of the continuation.

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Section 546
Duty of lessee to return

(1) The lessee is obliged to return the leased property after termination of the lease.

(2) If the lessee has made the leased property available to a third party for the latter to use, the lessor may also demand return of the leased property from the third party after termination of the lease.

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Section 546a
Compensation of the lessor in the case of late return

(1) If the lessee fails to return the leased property after termination of the lease, then the lessor may for the duration of retention demand as compensation the agreed rent or the rent that is customarily paid for comparable properties in the locality.

(2) The assertion of further damage is not excluded.

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Section 547
Reimbursement of rent paid in advance

(1) Where rent has been paid in advance for the period after termination of the lease, the lessor is to reimburse it with interest accrued since receiving it. If the lessor is not responsible for termination of the lease, then they are to reimburse their gains in accordance with the provisions on the surrender of unjust enrichment.

(2) In the case of a lease for residential space, any deviating agreement to the disadvantage of the lessee is ineffective.

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Section 548
Limitation of compensation claims and of the right of removal

(1) The compensation claims of the lessor for modifications to or deterioration of the leased property are subject to a six-month limitation period. The limitation period commences at the time the leased property is returned to the lessor. Upon the claim of the lessor to return of the leased property becoming statute-barred, the compensation claims of the lessor likewise become statute-barred.

(2) The claims of the lessee to reimbursement of expenses or to permission to remove an installation are subject to a six-month limitation period after the termination of the lease.

(3) (repealed)

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Section 548a
Lease of digital products

The provisions governing the lease of things are to be applied accordingly to the lease of digital products.

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Subtitle 2
Leases for residential space

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Chapter 1
General provisions

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Section 549
Provisions applicable to leases of residential space

(1) Sections 535 to 548 apply to leases relating to residential space, to the extent that sections 549 to 577a do not lead to a different conclusion.

(2) The provisions regarding the rent amount at commencement of the lease in areas in which the housing market is under pressure (sections 556d to 556g), relating to rent increases (sections 557 to 561) and to lessee protection upon termination of the lease as well as when title to residential premises is created (section 568 (2), sections 573, 573a and 573d (1), sections 574 to 575, 575a (1) and sections 577 and 577a) do not apply to leases of

1.  residential space that is leased only for temporary use,

2.  residential space that is part of the dwelling inhabited by the lessor themselves and that largely is to be furnished with furniture and fixtures by the lessor, provided that the residential space has not been made available for permanent use to the lessee with their family or with persons with whom the lessee maintains a joint household set up on a long-term basis,

3.  residential space that a legal person under public law or a recognised welfare organisation under private sponsorship has leased in order to make it available to persons in urgent need of accommodation if, when the lease was concluded, said legal person drew the attention of the lessee to the intended purpose of the residential space and to its exemption from the provisions referred to above.

(3) Sections 556d to 561 and sections 573, 573a and 573d (1) and sections 575, 575a (1) and sections 577 and 577a do not apply to residential space in a student hostel or a hostel for young people.

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Section 550
Form of the lease agreement

If a lease agreement for a longer period of time than one year is not concluded in written form, then it is valid for an indefinite period of time. However, termination is permissible only at the earliest at the end of one year after the residential space has been made available for use.

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Section 551
Restriction and investment of rent security deposits

(1) If the lessee is to provide to the lessor a security deposit for the performance of their duties, then this security deposit, subject to subsection (3) sentence 4, may amount at most to three times the rent for one month, exclusive of the operating costs shown as a lump sum or as an advance payment.

(2) If security is to be provided in the form of a sum of money, then the lessee is entitled to pay in three equal monthly instalments. The first instalment is due upon commencement of the lease. The further instalments are due together with the immediately ensuing rent payments.

(3) The lessor is to invest a sum of money made available to them as a deposit with a banking institution at the usual rate of interest for savings deposits to which a withdrawal notice of three months applies. The contractual parties may agree on another form of investment. In either case, the investment must be made separately from the assets of the lessor and the lessee is entitled to the income. It accrues to the security deposit. For residential space in a student hostel or a hostel for young people, there is no duty for the lessor to pay interest on the security deposit.

(4) A deviating agreement to the disadvantage of the lessee is ineffective.

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Section 552
Warding off the right of removal of the lessee

(1) The lessor may ward off exercise of the right of removal (section 539 (2)) by payment of appropriate compensation unless the lessee has a legitimate interest in removal.

(2) An agreement excluding the right of removal is only effective if reasonable compensation is provided for.

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Section 553
Making residential space available for use by third parties

(1) If the lessee, after entering into the lease agreement, acquires a legitimate interest in making available the residential space to a third party for the latter’s use, then the lessee may demand permission to do so from the lessor. This does not apply if the person of the third party constitutes compelling cause, if the residential space would be overcrowded or if the lessor cannot reasonably be required for other reasons to permit third-party use.

(2) If the lessor reasonably can be required to permit third-party use only in return for a reasonable increase of the rent, then they may make permission dependent upon the lessee agreeing to such an increase in rent.

(3) A deviating agreement to the disadvantage of the lessee is ineffective.

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Section 554
Improved accessibility, e-mobility and burglary protection

(1) The lessee may demand that the lessor permit them to make structural changes to the leased property that enable use by people with disabilities, the charging of electrically powered vehicles or protection against burglary. The claim does not exist if the lessor cannot reasonably be required to accept the structural changes also taking into account the lessee’s interests. The lessee may enter into obligation in connection with the structural change to provide a special security deposit; section 551 (3) applies accordingly.

(2) An agreement deviating to the disadvantage of the lessee is ineffective.

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Section 555
Ineffectiveness of a penalty for breach of contract

An agreement by which the lessor has the lessee promise a penalty for breach of contract is ineffective.

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Chapter 1a
Structural maintenance and modernisation measures

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Section 555a
Structural maintenance measures

(1) The lessee is to tolerate measures that are necessary for the structural maintenance or repair of the leased property (structural maintenance measures).

(2) The lessee is to be given notice of structural maintenance measures in good time unless they only entail an insignificant impact on the leased property or it is imperative for them to be implemented immediately.

(3) The lessor is to reimburse expenses the lessee must incur as a result of a structural maintenance measure in a reasonable scope. On demand, the lessor is to make an advance payment.

(4) An agreement deviating from subsection (2) or (3) to the disadvantage of the lessee is ineffective.

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Section 555b
Modernisation measures

Modernisation measures are building alterations

1.  by means of which final energy is saved with lasting effect in relation to the leased property (energy efficiency modernisation),

2.  by means of which non-renewable primary energy is saved with lasting effect or the climate is protected with lasting effect, unless energy efficiency modernisation has already been carried out in accordance with no. 1,

3.  by means of which water consumption is reduced with lasting effect,

4.  by means of which the utility value of the leased property is increased with lasting effect,

4a.  by means of which the leased property is connected, for the first time, by an optical fibre cable, to a public network with a very high capacity as defined in section 3 no. 33 of the Telecommunications Act (Telekommunikationsgesetz),

5.  by means of which the general living conditions are permanently improved,

6.  which are carried out due to circumstances for which the lessor is not responsible, and which do not constitute structural maintenance measures in accordance with section 555a, or

7.  by means of which new residential space is created.

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Section 555c
Announcement of modernisation measures

(1) The lessor is to announce a modernisation measure to the lessee at the latest three months prior to its commencement in text form (modernisation notice). The modernisation notice must include information on:

1.  the nature and the likely extent of the modernisation measure in its essentials,

2.  the likely commencement and the likely duration of the modernisation measure,

3.  the amount of the anticipated rent increase where it is intended to demand an increase in accordance with section 559 or section 559c, as well as the anticipated future operating costs.

(2) As a rule, the lessor is to notify the lessee in the modernisation notice of the form and the time limit of the hardship objection defined in section 555d (3) sentence 1.

(3) The lessor may refer, in the modernisation notice concerning a modernisation measure under section 555b nos. 1 and 2, to generally-recognised standard values, in particular with regard to the quality of construction components in terms of energy efficiency.

(4) Subsections (1) to (3) do not apply to modernisation measures that only entail an insignificant impact on the leased property and merely will lead to an insignificant rent increase.

(5) A deviating agreement to the disadvantage of the lessee is ineffective.

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Section 555d
Toleration of modernisation measures, time limit

(1) The lessee is to tolerate a modernisation measure.

(2) There is no obligation of toleration in accordance with subsection (1) if the modernisation measure would constitute a hardship for the lessor, their family or a member of their household that is not justifiable even considering the legitimate interests of both the lessor and other lessees in the building, as well as energy saving and climate protection concerns. The anticipated rent increase, as well as the anticipated future operating costs, are not included in weighing the parties’ interests against each other as regards the obligation of toleration; they are to be taken into account only in accordance with section 559 (4) and (5) in case of a rent increase.

(3) The lessee is to inform the lessor, in text form, of circumstances constituting a hardship with regard to the toleration or to the rent increase by the end of the month following receipt of the modernisation notice. The time limit will commence running only if the modernisation notice complies with the stipulations of section 555c.

(4) Once the time limit has expired, circumstances constituting hardship with regard to the toleration or to the rent increase still are to be taken into account if the lessee was prevented without their being at fault from meeting the deadline and if they inform the lessor without undue delay of the circumstances as well as of the reasons for the delay in text form. Circumstances which constitute a hardship with regard to the rent increase are to be taken into account only if they are notified at the latest by the time of commencement of the modernisation measure.

(5) If the lessor has not referred in the modernisation notice to the requirements as to form and the time limit applying to the hardship objection (section 555c (2)), the notice of the lessee in accordance with subsection (3) sentence 1 does not have to be submitted in the form and time limit specified therein. Subsection (4) sentence 2 applies accordingly.

(6) Section 555a subsection (3) applies accordingly.

(7) A deviating agreement to the disadvantage of the lessee is ineffective.

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Section 555e
Special right of termination of the lessee in case of modernisation measures

(1) On receipt of the modernisation notice, the lessee may give extraordinary notice with regard to the tenancy with effect for the end of the month after next. Notice of termination must be given by the end of the month following receipt of the modernisation notice.

(2) Section 555c (4) applies accordingly.

(3) A deviating agreement to the disadvantage of the lessee is ineffective.

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Section 555f
Agreements on structural maintenance or modernisation measures

Where structural maintenance or modernisation measures are to be carried out, the contracting parties may reach agreements following conclusion of the tenancy agreement, in particular with regard to

1.  the time and technical implementation of the measures,

2.  the lessee’s guarantee rights and rights to compensation for expenditure,

3.  the future rent amount.

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Chapter 2
Rent

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Subchapter 1
Agreements on rent

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Section 556
Agreements on operating costs

(1) The contractual parties may agree that the lessee is to bear the operating costs. Operating costs are the costs that are incurred on an ongoing basis by the owner or the holder of the heritable building right as a result of the ownership of or the heritable building right to the plot of land or as a result of the use of the building, the outbuildings, facilities, installations and the land in accordance with the purpose for which they are intended. The drawing up of the statement of operating costs continues to be governed by the Ordinance on Operating Costs (Betriebskostenverordnung) of 25 November 2003 (Federal Law Gazette I pp. 2346, 2347). The Federal Government is authorised to enact provisions on the drawing up of the statement of operating costs by statutory instrument without the approval of the Bundesrat.

(2) The contractual parties may agree, subject to other provisions, that operating costs may be reported as a lump sum or as an advance payment. Advance payments for operating costs may only be agreed in a reasonable amount.

(3) Accounts for advance payments for operating costs are to be settled once per year; in this context, the principle of economic efficiency is to be observed. The lessee is to be notified of the settlement of accounts at the latest by the end of the twelfth month subsequent to the accounting period. After this period, assertion of a subsequent demand by the lessor is excluded unless the lessor is not responsible for the lateness of the assertion. The lessor is not obliged to provide interim settlements of accounts. The lessee is to raise any objections against the settlement of accounts with the lessor no later than by the end of the twelfth month following receipt of the settlement of accounts. After expiry of this period, objections may no longer be asserted unless the lessee is not responsible for the lateness of the assertion.

(3a) The lessee is to bear an optical fibre provision fee as defined in section 72 (1) of the Telecommunications Act (Telekommunikationsgesetz) only if the measure constitutes an economic application of this technology. Where the measure is complex as defined in section 72 (2) sentence 4 of the Telecommunications Act, the lessee is to bear the costs only if the lessor, prior to agreeing the provision of optical fibre, has obtained three proposals, insofar as possible, and has selected the most economical one.

(4) An agreement deviating to the disadvantage of the lessee from subsection (1), subsection (2) sentence 2, subsections (3) or (3a) is ineffective.

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Section 556a
Accounting criterion for operating costs

(1) If the contractual parties have not agreed otherwise, and subject to other provisions, operating costs are to be apportioned in proportion to the residential floor space. Operating costs that depend on recorded consumption or causation by the lessees are to be apportioned according to criteria that take into account the differing consumption or causation.

(2) If the contractual parties have agreed otherwise, the lessor may by declaration in text form specify that, contrary to the agreement reached, the operating costs in future may be apportioned as a whole or in part according to a criterion that takes into account the recorded differing consumption or the recorded differing causation. The declaration is permissible only prior to commencement of an accounting period. If the costs previously have been included in the rent, the rent is to be reduced accordingly.

(3) If premises for which title is held by an owner are let on a lease and the contractual parties have not agreed otherwise, then in derogation from subsection (1) the operating costs are to be apportioned in accordance with the criterion applying to the allocation scheme in place between the owners of residential properties. Where this criterion is not in keeping with the principle of equitably exercising discretion, the apportionment is to be performed in accordance with subsection (1)

(4) An agreement deviating from subsection (2) to the disadvantage of the lessee is ineffective.

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Section 556b
Due date of rent, right to set-off and right of retention

(1) Rent is to be paid at the commencement of the individual periods of time according to which it is computed but at the latest by the third working day of each such period.

(2) The lessee may, notwithstanding a contract provision to the contrary, set off a claim based on sections 536a and 539 or a claim for unjust enrichment for excess payment of rent against a claim for rent, or may exercise a right of retention in relation to such a claim if they have notified the lessor in text form of their intention to do so at least one month prior to the due date of the rent. A deviating agreement to the disadvantage of the lessee is ineffective.

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Section 556c
Costs of heat supply as operating costs, authorisation to issue statutory instruments

(1) If the lessee is to bear the operating costs for heating or hot water, and if the lessor converts the supply from internal supply to an independent commercial supply from a heat supplier (heat supply), then the lessee is to bear the costs of heat supply as operational costs if

1.  the heat is supplied more efficiently, either from a new system constructed by the heat supplier or from a heat network, and

2.  the costs of heat supply do not exceed the operating costs for the previous internal supply of heat or hot water.

Where the annual utilisation rate of the existing system prior to conversion is at least 80 per cent, the heat supplier may restrict itself to improving the operation of the system instead of the measures in accordance with no. 1.

(2) The lessor is to announce the conversion at the latest three months in advance and in text form (conversion notice).

(3) The Federal Government is authorised to enact provisions, by statutory instrument without the approval of the Bundesrat, for heat supply contracts that are concluded in the case of conversion under subsection (1), as well as for the requirements in accordance with subsections (1) and (2). In this context, the concerns of lessors, lessees and heat suppliers are to be adequately taken into account.

(4) A deviating agreement to the disadvantage of the lessee is ineffective.

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Subchapter 1a
Agreements on the rent amount at commencement of the lease in areas in which the housing market is under pressure

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Section 556d
Permissible rent amount at commencement of the lease; authorisation to issue statutory instruments

(1) Where a lease agreement is concluded for residential space that is located in an area in which the housing market is under pressure, as determined by a statutory instrument in accordance with subsection (2), the rent charged at commencement of the lease may be in excess of the reference rent customary in the locality (section 558 (2)) by no more than 10 per cent.

(2) The Land Governments are authorised to determine areas in which the housing market is under pressure by means of a statutory instrument for a maximum duration of five years in each case. Areas in which the housing market is under pressure are given if the adequate supply of the population with rented dwellings at appropriate terms is particularly at risk in a municipality or a part of a municipality. This may be the case especially if

1.  the rents are increasing by a significantly higher rate than they are, on average, throughout the Federal Republic of Germany,

2.  the rent accounts for a significantly higher portion of household expenses, on average, than is the average throughout the Federal Republic of Germany,

3.  the residential population is growing without the housing required in this regard being created by new construction, or

4.  a low vacancy rate is faced with high demand.

A statutory instrument in accordance with sentence 1 must cease to be in force no later than on midnight of 31 December 2025. The reasoning for it must be provided. The reasoning must show the facts based on which an area in which the housing market is under pressure is given in the individual case. Furthermore, it must be evident from the reasoning which measures the Land Government will take in the area and in the period of time respectively determined by the statutory instrument pursuant to sentence 1 in order to remedy the situation.

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Section 556e
Consideration of the rent paid previously, or of modernisation work done

(1) Where the rent last owed by the previous lessee (rent paid previously) is higher than the rent permissible pursuant to section 556d (1), a rent may be agreed in an amount up to the amount of the rent paid previously. Abatements of the rent as well as those rent increases that were agreed upon with the previous lessee in the course of the last year prior to termination of the lease are not taken into account in determining the rent paid previously.

(2) Where the lessor has taken modernisation measures in the sense of section 555b in the course of the last three years prior to commencement of the lease, the rent permissible under section 556d (1) may be exceeded by that amount that would result in the event of a rent increase pursuant to section 559 subsections (1) to (3a) and section 559a subsections (1) to (4). In performing the calculation pursuant to sentence 1, the reference rent customary in the locality (section 558 (2)) is to be used as a basis that would be charged at the commencement of the lease without taking account of the modernisation.

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Section 556f
Exceptions

Section 556d is not to be applied to a dwelling that is being used and let on a lease for the first time at a point in time after 1 October 2014. Sections 556d and 556e are not to be applied to the first-time lease of a dwelling following comprehensive modernisation.

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Section 556g
Legal consequences; information on the rent

(1) An agreement deviating to the disadvantage of the lessee from the provisions of the present Subchapter is ineffective. This applies to agreements on the rent amount at commencement of the lease only insofar as the permissible rent is exceeded. The lessor is to surrender to the lessee the rent that has been paid in excess in accordance with the provisions on the surrender of unjust enrichment. Section 814 and section 817 sentence 2 are not to be applied.

(1a) To the extent the permissibility of the rent is based on section 556e or section 556f, the lessor is under obligation to inform the lessee, without this needing to be requested, of the following prior to the lessee making their declaration as to the conclusion of a contract:

1.  in the case governed by section 556e (1), the amount of the rent paid previously,

2.  in the case governed by section 556e (2), that modernisation measures were performed in the last three years prior to commencement of the lease,

3.  in the case governed by section 556f sentence 1, that the dwelling was used and let on a lease for the first time after 1 October 2014,

4.  in the case governed by section 556f sentence 2, that the lease is the first-time lease following comprehensive modernisation.

Insofar as the lessor has not provided the information, they may not rely on a rent that is permissible under the terms of section 556e or section 556f. Where the lessor has not provided the information and has done so subsequently in the form required, they may rely on a rent that is permissible under the terms of section 556e or section 556f only two years after having provided the information subsequently. Where the lessor has not provided the information in the form required, they may rely on a rent that is permissible under the terms of section 556e or section 556f only once they have subsequently provided the information in the form required.

(2) The lessee may demand that the lessor repay rent that is not owed pursuant to sections 556d and 556e only if the lessor has objected to a breach of the provisions of this Subchapter. Where the lessor has provided information in accordance with subsection (1a) sentence 1, the objection must refer to the information so provided. Where the lessee objects to the violation more than 30 months after commencement of the lease or where the lease already had come to an end at the time the objection is received, the lessee may demand repayment only of the rent that fell due after receipt of the objection.

(3) Upon the lessee’s demand, the lessor is obliged to provide information regarding those facts that are relevant to the permissibility of the agreed rent under the provisions of this Subchapter, inasmuch as these facts are not generally accessible and it is easily possible for the lessor to provide information in this regard. Section 559b (1) sentences 2 and 3 applies accordingly to information regarding modernisation measures (section 556e (2)).

(4) All declarations pursuant to subsections (1a) to (3) require text form.

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Subchapter 2
Provisions on the rent amount

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Section 557
Increases in rent by agreement or law

(1) During the lease, the parties may agree an increase in rent.

(2) Future changes in the amount of rent may be agreed by the contractual parties as stepped rent under section 557a or as indexed rent under section 557b.

(3) In all other cases, the lessor may only demand rent increases under the provisions of sections 558 to 560 to the extent that an increase is not excluded by agreement or the exclusion is evident from the circumstances.

(4) A deviating agreement to the disadvantage of the lessee is ineffective.

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Section 557a
Stepped rent

(1) The rent may be agreed in writing in varying amounts for specific periods of time; in the agreement, each rent amount or each increase is to be indicated as an amount of money (stepped rent).

(2) The rent must remain unchanged in each case for at least one year. During the term agreed for stepped rent, an increase under sections 558 to 559b is excluded.

(3) The right of the lessee to give notice of termination may be excluded for a maximum of four years after the stepped rent agreement is concluded. Termination is permissible at the earliest with effect for the end of this period at.

(4) Sections 556d to 556g are to be applied to any stage of the stepped rent. Instead of the commencement of the lease, that point in time is relevant for the calculation of the amount of the second stage of the stepped rent and all further stages permissible pursuant to section 556d (1) at which the first rent of the respective stage of the stepped rent falls due. The rent amount effectively established in a previous stage of the stepped rent continues in force.

(5) A deviating agreement to the disadvantage of the lessee is ineffective.

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Section 557b
Indexed rent

(1) The contractual parties may agree in writing that the rent is to be determined by means of the price index for the cost of living of all private households in Germany computed by the Federal Statistics Office (Statistisches Bundesamt) (indexed rent).

(2) While an indexed rent is applicable, the rent, except for increases under sections 559 to 560, must remain unchanged for at least one year in each case. An increase under section 559 may only be demanded to the extent that the lessor has carried out structural measures due to circumstances for which they are not responsible. An increase under section 558 is excluded.

(3) A change in rent under subsection (1) must be asserted by declaration in text form. In this declaration, the change in the price index that has occurred as well as the rent in the individual case or the increase are to be indicated as an amount of money. The revised rent is to be paid at the commencement of the second month beginning after receipt of the declaration.

(4) Sections 556d to 556g are to be applied only to the initial rent of an agreement providing for an indexed rent

(5) A deviating agreement to the disadvantage of the lessee is ineffective.

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Section 558
Increase in rent up to the reference rent customary in the locality

(1) The lessor may demand approval of an increase in rent up to the reference rent customary in the locality if, at the time at which the increase is to occur, the rent has remained unchanged for 15 months. The demand for a rent increase may be made at the earliest one year after the most recent rent increase. Increases under sections 559 to 560 are not taken into account.

(2) The reference rent customary in the locality is formed from the usual payments that have been agreed or, with the exception of increases under section 560, that have been changed in the last six years in the municipality or in a comparable municipality for residential space that is comparable in type, size, furnishings, nature and location, including the energy systems and its characteristic features. Residential space for which the amount of rent has been stipulated by law or in connection with a promise of sponsorship is exempt.

(3) In the case of increases under subsection (1), the rent may not be raised within three years, except for increases under sections 559 to 560, by more than 20 per cent (capping limit). The percentage in accordance with sentence 1 is 15 per cent if the adequate supply of the population with rented dwellings at appropriate terms in a municipality or a part of a municipality is particularly jeopardised and these areas have been specified in accordance with the sentence 3. The Land Governments are authorised to determine these areas by means of a statutory instrument for a maximum duration of five years in each case.

(4) The capping limit does not apply