Doing business in Germany is the most common international activity for Dutch exporters. Germany is our most important trading partner, accounting for approximately 25 percent of Dutch exports. At Musch Legal, we advise on hundreds of contracts with German parties every year. German law resembles Dutch law but differs on crucial points — particularly regarding general terms and conditions (AGB-Recht) and bankruptcy proceedings.
What is the legal issue? (What is different about German law?)
German law is civil law just like Dutch law, but features stricter consumer protection, more mandatory contract law, and more formal procedural procedures. General terms and conditions under AGB-Recht are strictly assessed for transparency and reasonableness. Bankruptcy proceedings are conducted via Insolvenzordnung with strict time limits. Dutch exporters often face surprises regarding retention of title, notice of default, and statute of limitations.
What does the law say? (Which German rules apply to you?)
The German Civil Code (BGB) governs general contract law; the German Commercial Code (HGB) governs commercial law; General Terms and Conditions (AGB) under paragraphs 305-310 BGB govern general terms and conditions; InsO governs bankruptcy. Statute of limitations is three years under paragraph 195 BGB. Notice of default (Mahnung) under paragraph 286 BGB. Retention of title under paragraph 449 BGB with extensions through case law. For company registration, the Commercial Register at the Amtsgericht applies (see handelsregister.de).
For EU claims, Brussels I-bis (Regulation 1215/2012) and EAPO (Regulation 655/2014) apply.
Part
Netherlands
Germany
General terms and conditions
Art 6:233 BW: delivery
General Terms and Conditions: strict content test
Status of commercial claims
5 years (art 3:307 BW)
3 years (Section 195 BGB)
Notice of default
Art 6:82 BW
Mahnung paragraph 286 BGB
Retention of title
Single (art 3:92 BW)
Verlängerter + erweiterter EVB
Bankruptcy
Bankruptcy Act
Insolvenzordnung (InsO)
Part
Netherlands
Germany
General conditions
Art 6:233 BW: delivery
AGB Law: strict content test
Prescription for commercial claims
5 years (Article 3:307 of the Dutch Civil Code)
3 years (paragraph 195 of the BGB)
Notice of default
Article 6:82 of the Dutch Civil Code
Mahnung paragraph 286 BGB
Retention of title
Single (Article 3:92 of the Dutch Civil Code)
Verlängerter + erweiterter EVB
Bankruptcy
Bankruptcy Act
Insolvenzordnung (InsO)
What risks do companies face? (Where do Dutch exporters stumble?)
General terms and conditions in Dutch only or without local adaptation are often unenforceable under Section 305, paragraph 2 of the German Civil Code (BGB). Far-reaching exoneration clauses fail due to the law governing the General Terms and Conditions. A late complaint under the CISG results in the loss of rights. Awkward simple retention of title loses value upon creation of a new object under Section 950 of the BGB. Unfamiliarity with the formal notice requirement leads to the rejection of a claim for damages.
Practical example from our practice (How did Musch Legal save a raw materials exporter?)
Musch Legal represented a Dutch supplier of raw materials to a German manufacturer under simple Dutch retention of title. The manufacturer processed the material and went bankrupt. Under Section 950 of the BGB, ownership passed to the manufacturer through creation of a new object. Client lost 420,000 euros as an unsecured claim. Upon renegotiation, we incorporated *Verlängerter en erweiterter Eigentumsvorbehalt*. In the subsequent bankruptcy, this resulted in full recovery.
What can you do? (What do you arrange for every German client?)
Translate general terms and conditions into German and align with AGB law. Incorporate *Verlängerter en erweiterter Eigentumsvorbehalt* (Section 449 BGB plus case law). Follow the *Mahnung* procedure in case of default (Section 286 BGB). Monitor the short German statute of limitations (Section 195 BGB). For bankruptcy notification: file quickly with the Insolvenzverwalter. For collection: use EAPO and *Mahnverfahren*. Engage Musch Legal for a German contract template.
When are general terms and conditions valid internationally?