Last Updated on June 27, 2021 by LawEuro
German Civil Code (BGB) German law
Division 3
Legal transactions
Title 1
Capacity to contract
Section 104
Incapacity to contract
A person is incapable of contracting if
1. he is not yet seven years old,
2. he is in a state of pathological mental disturbance, which prevents the free exercise of will, unless the state by its nature is a temporary one.
Section 105
Voidness of declaration of intent
(1) The declaration of intent of a person incapable of contracting is void.
(2) Also void is a declaration of intent that is made in a state of unconsciousness or temporary mental disturbance.
Section 105a
Everyday transactions
If a person of full age incapable of contracting enters into an everyday transaction that can be effected with funds of low value, the contract he enters into is regarded as effective with regard to performance and, if agreed, consideration, as soon as performance has been effected and consideration rendered. Sentence 1 above does not apply in the case of considerable danger to the person or the property of the person incapable of contracting.
Section 106
Limited capacity for minors to contract
A minor who has reached the age of seven has limited capacity to contract under sections 107 to 113.
Section 107
Consent of legal representative
For a declaration of intent as a result of which he does not receive only a legal benefit, a minor requires the consent of his legal representative.
Section 108
Entry into a contract without consent
(1) If the minor enters into a contract without the necessary consent of the legal representative, the effectiveness of the contract is subject to the ratification of the legal representative.
(2) If the other party requests the representative to declare his ratification, the declaration can only be made to the other party; a declaration or refusal of ratification made to the minor before the request of the other party is ineffective. The ratification may only be declared before the expiry of two weeks after receipt of the demand; if ratification is not declared, it is considered to have been refused.
(3) If the minor has become fully capable of contracting, the ratification of the minor takes the place of the ratification of the representative.
Section 109
Right of revocation of the other party
(1) Until the contract is ratified, the other party is entitled to revoke it. Declaration of revocation may also be made to the minor.
(2) If the other party realised that he was dealing with a minor, he may revoke the contract only if the minor untruthfully stated that the legal representative had given consent; he may not revoke in this case either if, when the contract was entered into, he had notice of the lack of consent.
Section 110
Payment by minor with own means
A contract entered into by the minor without the approval of the legal representative is deemed effective from the beginning if the minor effects performance under the contract with means that were given to him for this purpose or for free disposal by the legal representative or by a third party with the ratification of the representative.
Section 111
Unilateral legal transactions
A unilateral legal transaction that a minor undertakes without the necessary consent of the legal representative is ineffective. If the minor undertakes such a legal transaction with regard to another person with this consent, the legal transaction is ineffective if the minor does not present the consent in writing and the other person rejects the legal transaction for this reason without undue delay. Rejection is not possible if the representative had given the other person notice of the consent.
Section 112
Independent operation of a trade or business
(1) If the legal representative, with the ratification of the family court, authorises the minor to operate a trade or business independently, the minor has unlimited capacity to contract for such transactions as the business operations entail. Legal transactions are excluded for which the representative needs the ratification of the family court.
(2) The authorisation may be revoked by the legal representative only with the ratification of the family court.
Section 113
Service or employment relationship
(1) If the legal representative authorises the minor to enter service or employment, the minor has unlimited capacity to enter into transactions that relate to entering or leaving service or employment of the permitted nature or performing the duties arising from such a relationship. Contracts are excluded for which the legal representative needs the ratification of the family court.
(2) The authorisation may be revoked or restricted by the legal representative.
(3) If the legal representative is a guardian, the authorisation, if he refuses it, may, on the application of the minor, be replaced by the family court. The family court must give substitute authorisation if it is in the interest of the ward.
(4) The authorisation given for an individual case is in the case of doubt deemed to be general authorisation to enter into relationships of the same kind.
Sections 114, 115
(repealed)
Title 2
Declaration of intent
Section 116
Mental reservation
A declaration of intent is not void by virtue of the fact that the person declaring has made a mental reservation that he does not want the declaration made. The declaration is void if it is to be made to another person who knows of the reservation.
Section 117
Sham transaction
(1) If a declaration of intent that is to be made to another person is, with his consent, only made for the sake of appearance, it is void.
(2) If a sham transaction hides another legal transaction, the provisions applicable to the hidden transaction apply.
Section 118
Lack of seriousness
A declaration of intent not seriously intended which is made in the expectation that its lack of serious intention will not be misunderstood is void.
Section 119
Voidability for mistake
(1) A person who, when making a declaration of intent, was mistaken about its contents or had no intention whatsoever of making a declaration with this content, may avoid the declaration if it is to be assumed that he would not have made the declaration with knowledge of the factual position and with a sensible understanding of the case.
(2) A mistake about such characteristics of a person or a thing as are customarily regarded as essential is also regarded as a mistake about the content of the declaration.
Section 120
Voidability for incorrect transmission
A declaration of intent that has been incorrectly transmitted by the person or facilities used for its transmission may be avoided subject to the same condition as a declaration of intent made by mistake may be avoided under section 119.
Section 121
Period for avoidance
(1) Avoidance must be effected, in the cases set out in sections 119 and 120, without culpable delay (without undue delay) after the person entitled to avoid obtains knowledge of the ground for avoidance. Avoidance made to an absent person is regarded as effected in good time if the declaration of avoidance is forwarded without undue delay.
(2) Avoidance is excluded if ten years have passed since the declaration of intent was made.
Section 122
Liability in damages of the person declaring avoidance
(1) If a declaration of intent is void under section 118, or avoided under sections 119 and 120, the person declaring must, if the declaration was to be made to another person, pay damages to this person, or failing this to any third party, for the damage that the other or the third party suffers as a result of his relying on the validity of the declaration; but not in excess of the total amount of the interest which the other or the third party has in the validity of the declaration.
(2) A duty to pay damages does not arise if the injured person knew the reason for the voidness or the voidability or did not know it as a result of his negligence (ought to have known it).
Section 123
Voidability on the grounds of deceit or duress
(1) A person who has been induced to make a declaration of intent by deceit or unlawfully by duress may avoid his declaration.
(2) If a third party committed this deceit, a declaration that had to be made to another may be avoided only if the latter knew of the deceit or ought to have known it. If a person other than the person to whom the declaration was to be made acquired a right as a direct result of the declaration, the declaration made to him may be avoided if he knew or ought to have known of the deceit.
Section 124
Period for avoidance
(1) The avoidance of a declaration of intent voidable under section 123 may be effected only within one year.
(2) In the case of deceit, the period commences at the time when the person entitled to avoid discovers the deceit, and in case of duress, from the time when the duress stops. The provisions in sections 206, 210 and 211 applicable to limitation apply with the necessary modifications to the running of the period.
(3) Avoidance is barred, if ten years have passed since the declaration of intent was made.
Section 125
Voidness resulting from a defect of form
A legal transaction that lacks the form prescribed by statute is void. In case of doubt, lack of the form specified by legal transaction also results in voidness.
Section 126
Written form
(1) If written form is prescribed by statute, the document must be signed by the issuer with his name in his own hand, or by his notarially certified initials.
(2) In the case of a contract, the signature of the parties must be made on the same document. If more than one counterpart of the contract is drawn up, it suffices if each party signs the document intended for the other party.
(3) Written form may be replaced by electronic form, unless the statute leads to a different conclusion.
(4) Notarial recording replaces the written form.
Section 126a
Electronic form
(1) If electronic form is to replace the written form prescribed by statute, the issuer of the declaration must add his name to it and provide the electronic document with a qualified electronic signature in accordance with the Electronic Signature Act [Signaturgesetz].
(2) In the case of a contract, the parties must each provide a counterpart with an electronic signature as described in subsection (1).
Section 126b
Text form
If text form is prescribed by statute, a readable declaration, in which the person making the declaration is named, must be made on a durable medium. A durable medium is any medium that
1. enables the recipient to retain or store a declaration included on the medium that is addressed to him personally such that it is accessible to him for a period of time adequate to its purpose, and
2. that allows the unchanged reproduction of such declaration.
Section 127
Agreed form
(1) The provisions under sections 126, 126a or 126b also apply, in case of doubt, to the form specified by legal transaction.
(2) For compliance with the written form required by legal transaction, unless a different intention is to be assumed, it suffices if the message is transmitted by way of telecommunications and, in the case of a contract, by the exchange of letters. If such a form is chosen, notarial recording in accordance with section 126 may be demanded subsequently.
(3) For compliance with the electronic form required by legal transaction, unless a different intention is to be assumed, an electronic signature other than provided for in section 126a also suffices and, in the case of a contract, the exchange of a declaration of an offer and of acceptance which are each provided with an electronic signature. If such a form is chosen, an electronic signature in accordance with section 126a may be demanded subsequently, or if this is not possible for one of the parties, notarial recording in compliance with section 126.
Section 127a
Court settlement
In the event of a court settlement, the recording of declarations in a court record drawn up in accordance with the provisions under the Code of Civil Procedure [Zivilprozessordnung] replaces notarial recording.
Section 128
Notarial recording
If the notarial recording of a contract is prescribed by statute, it suffices if first the offer and then the acceptance of the offer is recorded by a notary.
Section 129
Official certification
(1) If the official certification of a declaration is prescribed by law, the declaration must be put in writing and the signature of the person declaring be certified by a notary. If the declaration is signed by the issuer making his mark, the certification of the initials provided for in section 126 (1) is necessary and sufficient.
(2) The notarial recording of the declaration replaces the official certification.
Section 130
Effectiveness of a declaration of intent to absent parties
(1) A declaration of intent that is to be made to another becomes effective, if made in his absence, at the point of time when this declaration reaches him. It does not become effective if a revocation reaches the other previously or at the same time.
(2) The effectiveness of a declaration of intent is not affected if the person declaring dies or loses capacity to contract after making a declaration.
(3) These provisions apply even if the declaration of intent is to be made to a public authority.
Section 131
Effectiveness in relation to persons without full capacity to contract
(1) If a declaration of intent is made to a person incapable of contracting, it does not become effective until it has reached his legal representative.
(2) The same applies if the declaration of intent is made to a person with limited capacity to contract. If, however, the declaration merely provides a legal advantage to the person with limited capacity to contract, or if the legal representative has given his consent, the declaration becomes effective at the time when it reaches the person with limited capacity.
Section 132
Substitution of service for receipt
(1) A declaration of intent is also deemed to have been received if it is served through a bailiff as intermediary. The service is effected in accordance with the provisions of the Code of Civil Procedure [Zivilprozessordnung].
(2) If the person declaring is unaware, through no negligence on his part, of the identity of the person to whom the declaration is to be made, or if the whereabouts of this person are unknown, service may be effected in accordance with the provisions of the Code of Civil Procedure [Zivilprozessordnung] relating to service by publication. In the former case, the local court [Amtsgericht] competent for the approval is the one in whose district the person declaring has his residence, or in the absence of a residence within the country, his abode; in the latter case, the local court [Amtsgericht] competent for the approval is the one in the district of which the person to whom service is required to be effected had his last residence, or, in the absence of a residence within the country, his last abode.
Section 133
Interpretation of a declaration of intent
When a declaration of intent is interpreted, it is necessary to ascertain the true intention rather than adhering to the literal meaning of the declaration.
Section 134
Statutory prohibition
A legal transaction that violates a statutory prohibition is void, unless the statute leads to a different conclusion.
Section 135
Statutory prohibition of disposal
(1) If the disposition of a thing violates a statutory prohibition against disposal intended solely for the protection of particular persons, the disposition is ineffective only in relation to these persons. A disposition by legal transaction is equivalent to a disposition which is effected by means of execution or attachment.
(2) The provisions in favour of those who derive rights from an unauthorised person apply with the necessary modifications.
Section 136
Official prohibition of disposal
A prohibition of disposal which is issued by a court or by any other public authority within the limits of its competence is equivalent to a statutory prohibition of disposal of the kind described in section 135.
Section 137
Prohibition of dispositions in a legal transaction
The power to dispose of an alienable right may not be excluded or restricted by a legal transaction. This effectiveness of an obligation not to dispose of such a right is not affected by this provision.
Section 138
Legal transaction contrary to public policy; usury
(1) A legal transaction which is contrary to public policy is void.
(2) In particular, a legal transaction is void by which a person, by exploiting the predicament, inexperience, lack of sound judgement or considerable weakness of will of another, causes himself or a third party, in exchange for an act of performance, to be promised or granted pecuniary advantages which are clearly disproportionate to the performance.
Section 139
Partial invalidity
If a part of a legal transaction is void, then the entire legal transaction is void, unless it is to be assumed that it would have been undertaken even without the void part.
Section 140
Re-interpretation
If a void legal transaction fulfils the requirements of another legal transaction, then the latter is deemed to have been entered into, if it may be assumed that its validity would be intended if there were knowledge of the invalidity.
Section 141
Confirmation of a void legal transaction
(1) If a void legal transaction is confirmed by the person who undertook it, the confirmation is to be seen as a renewed undertaking.
(2) If a void contract is confirmed by the parties, then in case of doubt they are obliged to grant to each other what they would have granted if the contract had been valid from the beginning.
Section 142
Effect of avoidance
(1) If a voidable legal transaction is avoided, it is to be regarded as having been void from the outset.
(2) A person who knew or ought to have known of the possibility of avoidance is treated, in case of avoidance, as if he had known or ought to have known of the invalidity of the legal transaction.
Section 143
Declaration of avoidance
(1) Avoidance is effected by declaration to the opponent.
(2) The opponent is, in the case of a contract, the other party to the contract and, in the case of section 123 (2) sentence 2, the person who has acquired a right directly under the contract.
(3) In the case of a unilateral legal transaction which was to be undertaken in relation to another person, the other person is the opponent. The same applies to a legal transaction that is required to be undertaken in relation to another person or to a public authority, even if the legal transaction has already been undertaken in relation to the authority.
(4) In the case of any other kind of unilateral legal transaction, the person who has received a legal advantage directly on the basis of the legal transaction is the opponent. The avoidance may, however, if the declaration of intent was to be made to a public authority, be made by declaration to the authority; the authority should inform the person who was directly affected by the legal transaction of the avoidance.
Section 144
Confirmation of a voidable legal transaction
(1) Avoidance is excluded, if the voidable legal transaction is confirmed by the person entitled to avoid.
(2) The confirmation does not require the form prescribed for the legal transaction.
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