Contract law sits at the heart of every business transaction and a wide range of personal legal arrangements in Germany. Whether a company is entering a joint venture, putting general terms and conditions in place, or managing a dispute over a failed delivery, the quality of the underlying contracts determines the legal position of everyone involved. For private individuals, the stakes in contracts for the purchase of property or the terms on which tradespeople and contractors are engaged are equally significant.
German contract law is governed primarily by the Bürgerliches Gesetzbuch (BGB), Germany’s civil code, which establishes the framework for contract formation, performance, and termination across all contract types. Specialist areas – commercial law, corporate law, construction law, real estate law – layer further requirements on top of that framework, and a contract that fails to account for the relevant rules in each area can be void, voidable, or unenforceable in ways that only become apparent in a dispute.
At Schlun & Elseven Rechtsanwälte, our contract lawyers advise business clients and private individuals on the full range of contractual matters under German law – from drafting and negotiation through to enforcement and termination. Our team works in English and operates fully digitally, making our services accessible to international clients and companies entering the German market from abroad.
Contract Drafting and Review for Business Clients
Every commercial relationship rests on its contracts. Poorly drafted agreements – or contracts borrowed from online templates without legal review – create ambiguity that becomes expensive when a dispute arises. German courts interpret contracts according to the objective meaning of their terms, and clauses that seem clear to the parties at the time of signing regularly prove inadequate when performance breaks down or circumstances change.
Our contract lawyers advise business clients at every stage of the contracting process. Before signature, we draft contracts from scratch or review submissions from the other side, identifying clauses that are unclear, unenforceable under German law, or contrary to the client’s interests. We ensure that formal requirements are met – a contract that fails to comply with the written form or notarial certification requirements of Section 125 of the BGB is null and void – and that the agreed terms accurately reflect the outcome of negotiations. After a contract is signed, we advise on the assertion of rights and claims, defend against unjustified demands, and initiate court or out-of-court enforcement where required.
General Terms and Conditions (GTC) Under German Law
General terms and conditions – Allgemeine Geschäftsbedingungen, or AGB – govern the standard contractual framework that businesses use in dealings with customers and other companies. In Germany, GTCs are subject to strict content controls under Sections 305 to 310 of the BGB. Clauses that unreasonably disadvantage the other party are void, and the consequences of invalid GTCs can be serious: competitors and consumer protection associations can issue cease-and-desist warnings, and ineffective clauses can allow the other party to rescind contracts years after they were concluded.
The applicable rules differ between B2C and B2B contexts. Consumer-facing GTCs must satisfy a higher standard of transparency and fairness, shaped significantly by EU consumer law and the case law of the European Court of Justice. B2B GTCs allow somewhat more flexibility, but the limits are still routinely misunderstood. Our lawyers draft and review GTCs across a range of commercial and legal contexts – including sales law, commercial and corporate law, labor law, and banking and capital markets law – and advise on compliance with current legislative requirements and court rulings.
Non-Disclosure Agreements
Non-disclosure agreements (NDAs) protect sensitive business information when parties enter into negotiations, share proprietary data, or work together on a project. A bilateral NDA binds both parties to confidentiality; a unilateral NDA binds only the receiving party. The appropriate structure depends on the nature of the relationship and the information being protected. Our lawyers draft and review both forms of NDA, advise on scope, duration, and enforceability under German law, and assist with enforcement where a breach has occurred.
Commercial Contracts in Germany
Beyond the core drafting and review function, our contract law team advises on a number of specific commercial contract types that arise regularly in the context of business operations and transactions in Germany.
International Commercial Contracts
Contracts between German and foreign business partners raise a layer of complexity beyond domestic agreements. The applicable law must be identified or expressly chosen, jurisdiction clauses must be carefully structured, and key provisions — force majeure, liability limitations, arbitration clauses, and payment terms — must be drafted to work across legal systems. In German-American contracts in particular, the structural differences between German civil law and US common law regularly produce disputes over contract interpretation, warranty obligations, and the scope of damages.
For companies entering the German market or managing ongoing cross-border relationships, our lawyers draft and review international commercial contracts with these risks in mind — advising on choice of law, dispute resolution mechanisms, and the key clauses that determine each party’s exposure when circumstances change.
Franchise Agreements
The franchise agreement defines the legal relationship between franchisor and franchisee – the rights granted, the obligations assumed, and the conditions under which the arrangement can be varied or ended. For franchisors, agreements must be structured to reflect the specific model, industry, and standards the franchisor needs to protect. For franchisees, the terms of the agreement determine the practical and financial viability of the investment.
Our lawyers advise both franchisors and franchisees. We draft and negotiate franchise agreements, review existing agreements for compliance and enforceability, and advise both sides in disputes – including where breaches have occurred, and the question of available remedies arises.
Sale and Purchase Agreements
In M&A transactions, the sale and purchase agreement (SPA) is the document that sets out the binding terms of the deal – purchase price, payment terms, representations and warranties, indemnities, and any applicable restrictions. The quality of the SPA directly affects the risk exposure of both buyer and seller after closing.
Our lawyers have acted on behalf of buyers and sellers in M&A transactions across a range of industries. We prepare and negotiate SPAs, conduct and advise on commercial and legal due diligence, and advise on transaction structuring. As a full-service law firm, we handle the corporate, commercial, and contract law dimensions of a transaction within a single team.
eCommerce and Internet Contracts
Companies operating online in Germany must comply with a specific set of legal requirements that go beyond the general rules of contract law. These include mandatory revocation rights for consumers, data protection obligations, the legal requirements for a valid ordering process, and compliance with EU e-commerce regulations. Non-compliance creates exposure to warnings from competitors and consumer protection bodies, as well as potential claims from customers. Our team advises online retailers and platform operators on the full range of eCommerce contract law requirements – from terms and conditions and revocation instructions through to data protection declarations and the structuring of ordering processes.
SaaS and IT Contracts
Software as a Service has become the standard delivery model for business software, but the legal classification of SaaS arrangements under German law is more complex than the model’s commercial simplicity suggests. Depending on the structure of the arrangement, a SaaS contract may engage service contract law (Sections 611 ff. BGB), rental contract law (Sections 535 ff. BGB), or work contract law (Sections 631 ff. BGB) — or a combination of all three. This classification directly affects liability, warranty, and termination rights.
SaaS contracts typically incorporate pre-formulated terms, making the GTC controls of Sections 305 to 310 of the BGB fully applicable. International SaaS agreements in particular frequently contain clauses that conflict with German legal requirements and are unenforceable as drafted. Service Level Agreements must clearly address availability guarantees, response times, penalty clauses, and the legal consequences of service interruptions. Where AI components are integrated into SaaS products, liability and data processing provisions require particular attention, given the evolving regulatory framework. Our lawyers review and draft SaaS contracts and SLAs, advise on data protection compliance, including Data Processing Agreements under Article 28 of the GDPR, and represent clients in disputes with service providers.
Contract Formalities Under German Law
Not all contracts in Germany can be concluded informally. German law imposes specific formal requirements on a range of contract types, and failure to comply with those requirements has serious consequences – under Section 125 of the BGB, a contract that does not meet a mandatory formal requirement is null and void. There are three principal levels of formal requirement.
| Form | What it requires | Examples |
|---|---|---|
| Text form | Declaration in legible form on a permanent data medium; the person making it must be identified | Consumer contract cancellation policies (Section 312a BGB); instalment delivery contracts (Section 510 BGB); guarantee declarations for consumer goods purchases (Section 479 BGB) |
| Written Form | Handwritten signature by both parties on a physical document; in some cases, replaceable by a qualified electronic signature | Consumer loan agreements (Section 492 BGB); guarantees by natural persons (Section 766 BGB); promises and acknowledgments of debt (Sections 780–781 BGB); fixed-term employment contracts (Section 2 NachwG) |
| Notarial certification | Consumer loan agreements (Section 492 BGB); guarantees by natural persons (Section 766 BGB); promises and acknowledgments of debt (Sections 780–781 BGB); fixed-term employment contracts (Section 2 NachwG) | Property purchase contracts (Section 311b BGB); gift promises (Section 518 BGB); marriage contracts (Section 1410 BGB); inheritance contracts (Section 2276 BGB) |
Our lawyers advise on formal requirements before contracts are concluded and review existing contracts where non-compliance is suspected.
Contract Law for Private Clients
German contract law governs many of the most significant legal arrangements in private life — the purchase of property, the engagement of architects and construction companies, and the terms on which goods are bought and sold.
Sales Contracts and Property Purchase
The sales contract under Section 433 of the BGB is the most common contract type in everyday life, but it becomes legally complex when high-value assets are involved. Property purchase contracts must be notarially certified under Section 311b of the BGB — an agreement concluded without the required notarial form is void. The contract must record all agreements between buyer and seller, including the purchase price, handover date, and the condition of any encumbrances on the property, such as mortgages or land charges.
Where a purchased item is defective, or where agreed delivery has not taken place, our lawyers advise on the available remedies under Section 437 of the BGB — subsequent delivery, rectification of defects, reduction of the purchase price, withdrawal from the contract, or damages — and take the legal steps required to enforce them. Limitation periods for defect claims vary: quality defects in buildings are subject to a five-year limitation period; other defects generally become time-barred after two years.
Contracts for Work and Services
The contract for work (Werkvertrag) under Section 631 of the BGB covers agreements in which one party undertakes to produce a specific result, including construction and renovation projects, architectural and engineering contracts, expert reports, and freight contracts. Architectural and engineering contracts are governed by a dedicated subtitle of the BGB introduced in 2018, which sets out specific rules on planning objectives, cost estimates, acceptance procedures, and the special right of termination available to both parties during the planning phase.
In construction, work contracts are often complex, involve multiple parties, and must account for acceptance deadlines, defect-notification obligations, and coordinated liability among contractors. Our lawyers advise on drafting and reviewing work contracts, assist with coordinating multiple contracts for a single project, and assert warranty rights, including claims for subsequent performance, reduction, withdrawal, and damages, when the work is defective.
Enforcing and Terminating Contracts in Germany
Breach of Contract and Enforcement of Claims
Where a contractual obligation has not been met – whether through non-performance, defective performance, or late performance – German law provides a range of remedies. The appropriate course of action depends on the type of contract, the nature of the breach, and what the client is seeking to achieve. Options include demanding subsequent performance, claiming damages under Section 280 of the BGB, reducing the agreed price, or withdrawing from the contract altogether.
Our lawyers assess the legal position, advise on the most effective remedy in the circumstances, and pursue claims in and out of court. When the other side asserts claims that are unjustified, ineffective, or time-barred, we defend against them.
Terminating a Contract
Bringing a contract to an end in Germany requires a clear legal basis. Depending on the contract type and the circumstances, termination may be effected by notice (Kündigung), withdrawal (Rücktritt), or a mutual cancellation agreement (Aufhebungsvertrag). Each route has different prerequisites and consequences, and choosing the wrong mechanism can leave the terminating party exposed to claims.
Where an existing contractual relationship allows for termination – through a contractual right of withdrawal or an agreed notice period – we identify and exercise that right. Where only statutory grounds exist, we assess whether they are met. In longer-term commercial relationships, a negotiated cancellation agreement that addresses outstanding obligations, repayment claims, and any compensation due is often the most practical resolution.
Frequently Asked Questions about Contract Law in Germany
Under German law, a contract is formed when two parties exchange declarations of intent – an offer and an acceptance – that correspond in content. No written document is required for most contract types, but a written or notarial form is mandatory for certain agreements, including property purchases and marriage contracts. A contract that does not comply with a mandatory formal requirement under Section 125 of the BGB is null and void.
Yes. German courts apply strict controls to GTC clauses under Sections 305 to 310 of the BGB. A clause that unreasonably disadvantages the other party is void, regardless of whether both parties signed the contract. Void clauses are replaced by the applicable statutory rules, which are not always favorable to the party that drafted the GTCs. The standard applied is stricter in B2C contracts than in B2B agreements.
The remedies available depend on the type of contract and the nature of the breach. In sales contracts, the buyer can generally demand subsequent delivery or rectification before withdrawing from the contract or claiming damages. In work contracts, similar rules apply to defective performance. In other contracts, damages for non-performance or late performance are available where the conditions of Section 280 of the BGB are met. Limitation periods apply and vary by contract type.
Notarial certification is required for property purchase contracts, gift promises, marriage contracts, inheritance contracts, and certain corporate law documents, including the articles of association of a GmbH. A contract concluded without the required notarial form is void under Section 125 of the BGB.
Long-term contracts — supply agreements, franchise agreements, distribution agreements — can generally be terminated by notice at the end of an agreed term, where a contractual right of termination exists, or by extraordinary notice for good cause (außerordentliche Kündigung) where a material breach makes continuation of the relationship unreasonable. A mutual cancellation agreement is often the most practical route when both parties wish to end the arrangement and need to resolve outstanding obligations. Our lawyers assess the available options and advise on the consequences of each.
It may. Where parties have not made a valid choice of law, EU Regulation Rome I determines the applicable law for contracts within the EU. For commercial contracts, this is generally the law of the country where the party required to perform the characteristic obligation is habitually resident — often the supplier or service provider. Parties can choose German law expressly in the contract, which is common where one or both parties operate primarily in Germany.
A SaaS contract governed by or operating in Germany must comply with German GTC law if it uses pre-formulated standard terms, which most SaaS agreements do. Clauses that conflict with Sections 305 to 310 of the BGB are void and replaced by statutory defaults, which may not reflect the provider’s intentions. The contract should clearly address the legal classification of the service, availability and SLA terms, liability limitations that are enforceable under German law, data processing obligations under Article 28 of the GDPR, and termination rights. Clauses that are standard in US or UK SaaS agreements frequently do not satisfy German requirements without modification.
Practice Group: German Contract Law
Practice Group:
German Contract Law
Contact Schlun & Elseven Rechtsanwälte
Please use our online form to outline your request to us. After receiving your request, we will make a brief initial assessment based on the facts described and provide you with a cost offer. You can then decide whether you would like to engage our services.
