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In order to handle the economic consequences of the COVID-19-pandemic, the German legislator has issued a number of specific rules for certain contracts for a limited period of time. The fact that legislation saw the need for such measures raises the question whether established German contract law is not sufficient to deal with the consequences of a large-scale crisis. This contribution therefore outlines in a first step how the rules of general contract law in Germany apply to contracts affected by the COVID-19-crisis. The second step is dedicated to an analysis of the interaction between the particular rules within the emergency regulation and the general contract law and will conclude with some first tentative answers to the general question concerning the reasons to amend German law by the Corona Contract Law legislation.
The COVID-19-pandemic has so far caused unprecedented, far-reaching State intervention into the economy in many, if not all, States around the world. However, a complete public law takeover of the whole economy has not taken place. This results in the fact that COVID-19 has become a stress test also to established contract law: the consequences of the pandemic and of State interventions to contractual relationships have to be dealt with by contract law. However, many national legislators seem not to sufficiently trust the established contract law rules and their application by courts. They have been and still are enacting specific emergency legislation for (all or certain) contracts. Sometimes supervisory authorities are also stepping in to clarify the regulatory framework.
The German legislator has also become active and established some special rules of Corona Contract Law for a limited period of time and only for some particular situations: with the Act of 27 March 2020 a new Article 240 of the Einführungsgesetz zum Bürgerlichen Gesetzbuch (Introductory Act to the German Civil Code (Introductory Act)) was enacted. This Article 240 contains a moratorium for payments on so-called wesentliche Dauerschuldverhältnisse (essential long-term contracts) in favour of severely affected consumers and micro-entrepreneurs (Art 240 §1 Introductory Act), a ban on termination for delayed payments under real estate rental and lease contracts (Art 240 §2 Introductory Act), as well as statutory deferrals, termination bans and other changes for interest and redemption payments for consumer credit agreements including mortgages (Art 240 §3 Introductory Act).
Consumer sales law has been a demanding topic for both practising lawyers and legal scholars in the last decade because of the frequency of fundamental legislative changes and precedents set by the European Court of Justice. This particularly holds true for Germany, which in the past – and particularly with the Consumer Rights Directive 2011/83/EU – did not, and still does not, implement European Directives in a word for word manner, but tries to implement the European rules into the national system and terminology. Several legislative acts adjusting the original implementations have become necessary to correct these deviations in wording and system, when the ECJ has decided that the original transposition was contrary to European law.
Therefore, the implementation of the Consumer Rights Directive 2011/83/EU has also become a demanding task and only some of the issues discussed and re-discussed may be presented here. One of the peculiarities of implementing EU Consumer Law Directives into German law since 2002 had been the integration of European Consumer Law into national general sales law and general contract law. This was one of the basic decisions taken by the legislator when reforming the German Civil Code and implementing the Consumer Sales Directive 1999/44/EC in 2002 and this decision had been maintained in the following changes of the Civil Code. One characteristic consequence of this particularity has been a Civil Code that is permanently under (re-)construction.
THE IMPLEMENTATION OF THE CONSUMER RIGHTS DIRECTIVE 2011/83/EU
The first draft s for the implementation for the Act implementing the Consumer Rights Directive were presented rather early in 2013. The reason for the hurry was the threat of the German general elections in Autumn 2013 for which a kind of stoppage in most legislative processes was predictable (and which in fact took place until the middle of 2014). Therefore, the official draft by the Federal Government was presented on 6 March 2013. The legislative procedure moved at a rather fast pace and the final act was published in the official journal on 27 September 2013. Therefore, changes to several acts and in particular to the German Civil Code entered into force in time on 13 June 2014.
Agency is a legal device which enables an effective division of tasks within an economic system. Under German law, agency is understood as a concept which is separated from the underlying relationship, which in most cases is a contract to provide a service or a mandate contract. Agency takes place when one person, the agent, performs a legal act in the name of another, the principal. The most common legal act an agent would perform in the name of the principal is the conclusion of a contract with the third party.
Unauthorised agency (Vertretung ohne Vertretungsmacht) takes place when the legal act performed by the agent is not authorised by the principal whether there is an underlying contractual or other relationship or not. Consequently, questions as to the validity and enforceablity of contracts concluded with third parties will come to light. German law provides a comprehensive mechanism for dealing with issues arising out of acts of agents lacking authority. There are different situations in which an unauthorised agency may take place, such as when the agent has no authority or when he merely exceeds his authority. The main difficulty with unauthorised agency lies in the lack of control on the part of the principal. It is this lack of control which carries with it questions of liability, and/or extent of liability, of either the agent or the principal.
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