Amendment to GT&Cs – Text form clause instead of written form clause

Effective 1 October 2016, the revised section 309 No. 13 of the German Civil Code (Bürgerliches Gesetzbuch – BGB) requires “no stricter form for declarations than text form” for standard contracts entered into with consumers. The revised version therefore replaces the written form required to date (Sec. 126 BGB). This applies for (new) standard contracts and general terms and conditions of business (GT&Cs) that are used from 1 October 2016 onwards. If a user of GT&Cs – normally a business – does not comply with this change in the law, this means that an invalid clause is being used. This can for example entail the risk of warning letters being issued by third parties, involving costs with the demand to stop using such an invalid clause. It is therefore recommended that such (old) written form clauses are changed into (new) text form clauses.

Background

Sec. 309 No. 13 BGB limits the form requirements in general terms and conditions of business (such as standard residential leases or gym membership contracts) for declarations and notices – such as notice of termination in particular – which a consumer has to provide to a GT&Cs user. This also, however, concerns employment contracts. To date the requirement of written form (Sec. 126 BGB) has been permissible. The legislator has changed Sec. 309 No. 13 BGB with the “Law on the Improvement of Civil Law Enforcement of Consumer Protecting Privacy Law Regulations” (Federal Gazette. I 2016, page 233).

Consequences

Effective 1 October 2016, no stricter form than the text form described in Sec. 126 b BGB may be provided for in standard or GT&Cs contracts for termination notices (and other declarations). The requirement for text form is already met if for example the termination is declared by e-mail or (computer) fax. A personal signature, as needed to comply with the requirement of written form in accordance with Sec. 126 (1) BGB, is not necessary. It only has to be clear who the person is who is making the declaration or issuing the termination (e.g. by specifying their name in the declaration or in a facsimile signature). The requirement of any stricter form, such as electronic form in accordance with Sec. 126 a (1) BGB is invalid (electronic form would require a qualified electronic signature).

Although irrespective of this change a simplification for contractually agreed written form already applied to date, because in accordance with Sec. 127 (2) BGB it is in cases of doubt to be assumed for contractually agreed written form that it is sufficient to comply with this requirement if the declaration is transmitted by way of telecommunication, i.e. by e-mail or in text form. This was not sufficiently known in practice, which is why the amendment to the law has been carried out.

In accordance with the newly added Sec. 37 in Article 229 of the Introductory Act to the German Civil Code, the new provision in Sec. 309 No. 13 BGB is only to apply to contractual obligations which have arisen after 30 September 2016. The good news is therefore that existing (customer) agreements that run beyond 30 September 2016, which require notice of termination in written form, do not have to be changed and cannot even be challenged due to the amendment of Sec. 309 No. 13 BGB.

Conclusion

Irrespective of Sec. 127 (2) BGB, the possibility of submitting notice of termination (or any other declaration) in text form must in future be stated literally in general terms and conditions of business used with consumers. Businesses whose GT&Cs contain form requirements for declarations are therefore advised to review their GT&CS with respect to the new Sec. 309 No. 13 BGB by 1 October 2016. Any written form clause which has been used to date should be converted into a text form clause. Otherwise, if still used in unchanged form, the written form clause in standard contracts entered into after 1 October 2016 is invalid and may be subject to written warnings involving costs.