News Flash: German Civil Code (BGB) Update 2022

Contracts for digital content and services (hereinafter “digital products”) have become indispensable for a large section of society. 2022 will bring considerable innovations in the area of fair consumer protection, which are highly relevant for both entrepreneurs and consumers in everyday life. The application of existing laws to contracts with constantly changing digital products are often complex and can lead to unsatisfactory outcomes. This article provides an essential overview of the introduction of the new laws, the amendment of individual GTC regulations as well as the termination of consumer contracts in electronic legal transactions.

Contracts for digital products, Sections 327 et seq. BGB

Why is there a need for the new Section 327 et seq. BGB?

Trade in products and the use of services within Europe benefits from harmonised consumer rights in many areas. For consumers in particular, a uniform level of consumer protection within Europe is advantageous, as legal transactions can be carried out across the borders of one’s own country without increased risk. In the opinion of the European legislator, however, the existing regulations for the transfer and provision of digital products were insufficient, so that based on various EU directives (Reform of the Consumer Sales Directive 1999/44 by Directive 2019/771 for „goods with digital elements“, New Directive 2019/770 on contractual aspects of the provision of digital content and services), the new Sections 327 et seq. BGB were created in Germany.

When do the new Sections 327 et seq. BGB apply?

The provisions of section 327 and sections 327a to 327u BGB apply if four conditions are met:

• Consumer contract:
  The new Sections 327 et seq. BGB only apply to consumer contracts, i.e. contracts concluded between a consumer and a businessperson (“b2c”). Sections 327 et seq. BGB are not directly applicable to contracts between businesspersons (“b2b”) but it is possible that they may also have an effect in the context of supplementary contract interpretations or with regard to the general GTC model function.
• Provision of digital products:
  In the new Section 327 (1) BGB, digital content and services are legally defined together as “digital products”. The term digital products is to be understood broadly in this sense, so that it is sometimes difficult to distinguish precisely between digital content and services. Digital content includes all data that is created and provided in digital form, whereas the focus of digital services tends to be “activity-related”.
• In return for the payment of a price or the provision of personal data:
  It is also assumed that the digital products are provided in return for payment of a price or if companies collect more personal data from a consumer when providing a digital product than would actually be necessary for the provision of their service or for the fulfilment of a legal obligation.
  
  This prerequisite will probably lead to a need for discussion especially in the case of so-called “platforms”, which do not provide any digital products themselves, but merely offer a “marketplace”. The provision of an intermediary or purchasing platform itself could in any case be seen as a digital service, so that individual decisions could be necessary.
• No exception available:
  Sections 327 et seq. BGB shall not apply in the cases listed under Section 327 (6) BGB.

What else must be considered when applying the new Sections 327 et seq. BGB?

With the introduction of the new Sections 327 et seq. BGB, their relationship to the general as well as to the special provisions on contract law must also be taken into account. In particular, rules of priority and applicability in relation to other consumer protection provisions must be examined closely in each individual case. At EU level, it also remains essential to take into account the different general legal rules of the Member States, such as those on the conditions for the conclusion of a contract. The application of harmonised consumer protection rules may therefore continue to show differences in individual Member States.

When do the new sections 327 et seq. BGB come into force?

The new regulations will come into force on 1 January 2022, whereby the date of conclusion of the contract is decisive for their application. In addition, the potential applicability to old contracts that provide digital products from 1 January 2022 should be noted. This may include, in particular, subscriptions to digital products. Exceptions may arise in individual cases under sections 327r, t and u BGB. 

Fair Consumer Contracts Act – Amendment of the law on general terms and conditions

What is regulated?

The Fair Consumer Contracts Act already came into force on 1 October 2021. From 1 March and 1 July 2022, respectively, further amendments will now apply.

With the Fair Consumer Contracts Act, the Federal Ministry of Justice (BMJ) intends to strengthen the rights of consumers. The new general terms and conditions regulations should prevent, for example, contracts that have been foisted on consumers or overly long contract extensions. In addition, the creation of the so-called cancellation button on the internet will expand the cancellation options for consumers. In future, declarations of termination are to be as easy to submit as those for concluding a contract. What this means for businesses is explained briefly below:

What already applies since 1 October 2021?

• Prohibitions on assignment:
  With the addition of Section 308 no. 9 BGB exclusions of assignment for claims of the contracting party against the user for money are now ineffective if the user of the GTCs does not have an interest in the exclusion of assignment that is worth protecting or if the contracting party’s legitimate interests in the assignability of the right prevail.
• Explicit obligation to document consent to telephone advertising:
  In addition to the requirement of consent to telephone advertising, which was previously regulated in Section 7 Law Against Unfair Competition or UWG (unreasonable harassment), the new Section 7a UWG provides for a documentation and proof obligation of up to five years for companies (Section 7a para. 2 UWG).

What will apply from 1 March 2022?

• Automatic contract renewal:
  As from March 2022 for contracts concerning the regular delivery of goods or the regular performance of services or work by the user of the GTC, a tacit extension of the contract is only permissible in the form of a contractual relationship for an indefinite period with a right of termination within one month at any time, Section 309 no. 9 b) BGB. This means that a tacit extension by one year at a time is no longer possible for contracts concluded after 1 March 2022.
• Shortened notice periods:
  In the new version of Section 309 no. 9 c) BGB, the legislator has reduced the previous notice period of three months before the expiry of the contract term initially provided for to one month.

What will happen on 1 July 2022?

Cancellation button on the internet:

The newly introduced Section 312k BGB expands the termination options for contracts on the internet in which the company offers paid services within the framework of a continuing obligation. For contracts of this type, consumers must be provided with a cancellation button (so-called “cancellation button”).

The cancellation button must be clearly legible, permanently available and clearly labelled with a wording such as “Cancel contracts here”. If the consumer has not indicated the time of termination, the termination shall take effect at the earliest possible time in case of doubt.

The implementation of this innovation should not be underestimated, especially because of the sanction expressly provided for by the legislator. If companies do not comply with their obligations to implement the new § 312k BGB, consumers will be able to terminate the contractual relationship at any time and without observing a period of notice as of 1 July.

These obligations also apply to contracts that came into existence before 1 July. By way of comparison, the amendments in Section 308 BGB and Section 309 BGB apply exclusively to contracts concluded after their entry into force.

Conclusion

The innovations set out above require businesses to engage in a more in-depth discussion and to actively adapt their previous terms and conditions. Due to the increased action of consumer protection associations against well-known companies, these innovations should under no circumstances be neglected in the context of consumer contracts.