What is a contract? chapter 2 de

National law – DE– Legal system – module 2

A contract is a legally enforceable agreement between two or more parties that creates an obligation to do or not do particular things. The german word for it is “Vertrag”. The conditions of contract law are named “Vertragsrecht” (Richter 2011).

Contracts are usually governed and enforced by the laws of the state where the agreement was made. In this agreement, the parties put their mutual rights and duties in relation to the contract base. Legal persons can be humans (which are legally known as “individuals”) or corporations, limited liability companies, and other entities. Only those contracts can closed without the permission of third parties, which is unlimited legal capacity. This is possible for people in Germany with age of 18 years.

What is legal status of contractual terms in your jurisdiction?

Contract law is based on the civil code. In the civil code is by § § 145 et seq. Civil Code regulated the formation of a contract. There are treaties in the law of obligations, but also in the law, Family law and inheritance law.

Freedom of contract is a right protected by Basic Law. Contracts do not require consideration, can contain whatever the parties agree upon and, unless specifically required by law, do not have to be in any particular form. Therefore, compensation can be claimed both for the violation of a major obligation and of an ancillary obligation. However, some stipulations differ slightly from other terms agreed on:

  • One distinction that can be drawn is whether or not liability exists under the clause independent of fault. As a rule, this depends on an interpretation of the respective contractual arrangement.
  • German law also generally permits conditions precedent and conditions subsequent. These allow the validity of the relevant contractual provisions to be made contingent on external circumstances.

Contracts of sale and contracts for work and services (including the subcategory contracts for work and materials), which are of particular relevance in the business environment, are covered by the German Civil Code. This Code sets out a statutory regime of rights in relation to defects under these types of contract (Richter 2011).

Formal legal requirements

For a legally enforceable contract to be created there must be two corresponding declarations of intent. These are known as offer and acceptance. The declarations of intent must be sufficiently specific (for example, the offer must contain all the essential elements to be valid). In addition, the party giving the declaration must have capacity both to act and to contract (Rechts- and Geschäftsfähigkeit). This is the case where the party can be the holder of rights and duties, and can also carry out transactions with legal effect.

The content of contract are:

  1. An offer and the specific conditions
  2. The acceptance of the offer, fixed in form of a signature
  3. Contractual conditions, including terms of payment and the date of payment
  4. Both contracting parties be of legal capacity
  5. The intent of both parties to carry out their promise
  6. Legally enforceable terms and conditions, also called object of the contract

Contracts can be concluded in various forms. In general, it is not necessary to formalise the content of a contract. In addition it’s not necessary had collated all documents of the agreement to agree to them. If the parties specify the documents sufficiently accurately or attach them for example as annexes, they can become part of the agreement by reference alone and do not necessarily need to be handed over. In practice, a lot of agreements are also concluded orally or even by implied behaviour.

In a number of situations, the law will prescribe the contents of particular kinds of contracts. For example: rent-contracts, employment-contracts, marriage contract.

Employment-contract (Arbeitsvertrag): the contract of employment being used in labor law to attribute rights and responsibilities between the parties of “employee” and “employer”. Much of the contained conditions are obligatory.

In Germany the normal way of serious employers is sending a written work contract.

In reference to other contract conditions the agreements of German contracts are more transparent (Hill/ King 2004). There is much less explanation, qualification, and limitation in the language and the legalese is almost identical from contract to contract.

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