General Terms and Conditions (GTC)

General Terms and Conditions (GTC) / Allgemeine Geschäftsbedingungen (AGB)

January 12, 2023

General terms and conditions (GTC) are pre-formulated contractual conditions pursuant to Section 305 of the German Civil Code (BGB), which one party to a contract imposes on another party when concluding a contract.

They serve to simplify and standardise contracts, because the clauses of the GTC apply to a large number of contracts and therefore do not have to be formulated from scratch for each contract.

What does the GTC typically contain?

The specific content of the GTC depends on the type of business. Typically, provisions on prices, goods, users, payment modalities, liability for defects, deadlines, termination and revocation, among others, can be found in GTCs.

How are GTCs included?

According to Section 305 (2) of the German Civil Code (BGB), general terms and conditions are only valid if they are effectively included in the respective contract. The person drawing up the GTC must expressly refer to the GTC when concluding the contract, and his/her contractual partner must have the opportunity to take note of their content in a reasonable manner. Furthermore, the consent of the contractual partner is required.

When are general terms and conditions ineffective / content review

General terms and conditions must not only be effectively included in the contract, but are also subject to a content review pursuant to sections 307 to 309 of the German Civil Code (BGB). Content review means the review of the content of general terms and conditions for their effectiveness. Provisions in GTC are ineffective according to § 307 BGB if they unreasonably disadvantage the contractual partner.

Sections 308 and 309 of the German Civil Code list a number of clauses which, if inserted into GTCs, are generally invalid. For example, it is not permitted to insert a provision in the GTCs that obliges the other contracting party to pay a contractual penalty in the event of a delay in payment (section 309 no. 6 BGB).

Furthermore, GTCs may not contain any surprising or ambiguous clauses which the contracting party to whom the GTCs are addressed need not expect under the circumstances of the case (section 305 c BGB).

If GTC are not included in a contract or if they are ineffective, the rest of the contract remains effective in principle. The content of the contract is then governed by the statutory provisions (section 306 BGB).