Since April 1, 2025, the federal states have had the option of introducing commercial courts and commercial chambers by means of ordinances (see our blog posts “Eight advantages of the new commercial courts” and
“Update: Commercial Courts vs. Arbitration Tribunals”). However, despite all the enthusiasm, one frequent point of criticism (for example, from experts in the Bundestag’s Legal Affairs Committee) was the strict German law on general terms and conditions.
1. The problem: Law of general terms and conditions, lack of flexibility, and uncertainty
German law governing general terms and conditions can be challenging in B2B business relationships. While it is not applicable in essential parts here, i.e. between entrepreneurs, pursuant to Section 310 (1) sentence 1 of the German Civil Code (BGB), the Federal Court of Justice (BGH) has developed case law over the years which—based on Section 310 (1) sentence 2 BGB, also applies the grounds for invalidity of B2C contracts to B2B contracts (so-called “Gleichschritt-Rechtsprechung”). As a result, for example, limitations of liability are only effective to a very limited extent, and contractual penalties must be formulated with extreme caution.
In addition, case law sets the threshold for accepting general terms and conditions very low and the threshold for negotiation under Section 305(2) of the German Civil Code (BGB) very high. The element of unreasonable disadvantage in Section 307(1) BGB also creates legal uncertainty, even though case law regarding general terms and conditions is extensive.
Overall, however, German law on general terms and conditions can be regarded as – for B2B transactions between equal partners inappropriately – inflexible and, in some cases, insufficiently predictable. This raises the question of whether companies can exclude the application of the law on general terms and conditions by mutual agreement.
As always, the answer is: it depends. But on what exactly?
2. Exclusion of the law of general terms and conditions before state courts in purely domestic cases
First, it is worth taking a look at how state courts handle such an exclusion of the law of general terms and conditions. This depends on whether the case is purely domestic or has a foreign connection.
If it is a purely domestic case, the law of general terms and conditions is mandatory under German law. The parties cannot simply agree that the provisions of Sections 305 et seq. BGB do not apply. According to Section 306a BGB, the provisions on general terms and conditions also apply to circumvention arrangements.
The parties could now come up with the idea of choosing foreign law for this purely domestic case, which has fewer or no restrictions under the law of general terms and conditions when drafting contracts, such as the Swiss Code of Obligations. Such a choice of law is also permissible under Art. 3(1) of the Rome I Regulation in purely domestic cases; the Regulation does not require a foreign connection.
However, Article 3(3) of the Rome I Regulation stipulates that in purely domestic cases, the mandatory provisions of the law that is actually applicable shall nevertheless apply. In the case of German domestic cases, this applies to the law of general terms and conditions, so “escaping to Swiss law” does not help.
3. Exclusion of the right to invoke general terms and conditions before state courts in cases with a foreign connection
If there is a sufficient foreign connection, the result is different. Here, the limits of Article 9 of the Rome I Regulation (overriding mandatory provision) and Article 21 of the Rome I Regulation (ordre public) must also be observed. However, it is unanimously agreed that German law on general terms and conditions is neither a overriding mandatory provision nor ordre public outside consumer transactions. Since this discussion has so far only been conducted in literature, the opt-out of general terms and conditions law in contracts with a foreign connection should still be treated with caution, but the better arguments speak in favour of allowing an opt-out of general terms and conditions law in such cases—at least by “escaping to Swiss law.”.
It is more difficult to answer the initial question, namely whether it is possible to opt out of the law of general terms and conditions in cases with a foreign connection, in such cases. If German law is chosen or otherwise applies, opting out of the law of general terms and conditions is not possible under German law. It is conceivable to choose German law and partially choose other law (e.g., Swiss law) pursuant to Art. 3(1) sentence 3 of the Rome I Regulation. However, it would then be safer to choose foreign law (e.g., Swiss law) altogether.
Conclusion
The exclusion of German law of general terms and conditions is ineffective in proceedings before state courts in Germany in cases involving domestic matters. In cases with a foreign connection, the parties may choose the law of a country with more flexible rules on general terms and conditions. However, an isolated exclusion of the law of general terms and conditions alone is likely to be inadmissible even then. Parties should examine the implications of possible scenarios in detail.
