General terms and conditions (GTCs) are standardized contractual terms and conditions used by a company to define the rules and conditions governing business relationships with its customers. They may contain, for example, regulations on delivery terms, payment terms, warranties, limitations of liability and rights of return. General terms and conditions must be transparent and understandable and must not violate applicable law. In the case of loans, one often speaks of general loan conditions, ... General conditions of the loanThe main focus is on the set of rules that regulate the basic rights and obligations between the borrower and the lender.
Everything you need to know about General Terms and Conditions (GTC) in a nutshell - 6 facts
What you can learn here
- General terms and conditions, or GTC for short, are pre-formulated contractual conditions of a company that regulate how a contract is concluded. The GTC specify which Rights and duties both the company as well as the customer have. Thus, general terms and conditions serve to create a legal safeguard for both parties. The GTC are also intended to achieve standardization in various economic sectors.
- GTC also include certain obligations for companies. For example, GTCs must be worded clearly and comprehensibly so that consumers can easily understand them. Nor may they violate applicable law. If a company violates these obligations, the consumer can challenge the GTC and thus have them invalidated. For this reason, companies are subject to very strict limits when it comes to formulating their GTCs.
- In practice, it is often seen that GTCs are very long and complex and contain many legal terms. This can be difficult for consumers to understand and make it difficult for them to filter out the important information from the GTC. In addition, GTCs can be adapted on an ongoing basis. However, as a customer, you must be informed about this and a violation of applicable law is not permissible.
- In Germany, the AGB were adopted by the AGB Act in 1977 and have been included in the Federal Code since 2002. Their purpose is to protect the consumer legally and economically. For consumers, it is often not that important to read the GTC carefully before concluding a contract. This is because most GTCs are very similar and any deviation would not be permissible anyway.
- Credit institutions can formulate their own GTCs, but in practice they often adopt the proposals of the various banking groups such as savings banks, cooperative banks and private banks. Depending on the business area, the GTC are then extended by special conditions.
- The general terms and conditions do not regulate the exact conditions of a purchase or Credits. In the case of a loan, these can be found in the loan conditions and not in the general terms and conditions.
What are General Terms and Conditions?
General terms and conditions (GTCs) are standardized contractual terms and conditions that a company uses to define the rules and conditions governing business relationships with its customers. They may contain, for example, regulations on delivery terms, payment terms, warranties, limitations of liability and rights of return. GTCs must be transparent and understandable and must not violate applicable law.
Inclusion of GTC in consumer contracts
General terms and conditions (GTC) must be offered by a company when a contract is concluded in order for them to be effectively included in the contract. The customer must have the opportunity to read the GTC before concluding the contract and they must be available in a transparent, comprehensible and clear form.
General terms and conditions cannot be inserted subsequently and the customer does not have to have actual knowledge of them. Clauses that are unusual or surprising are not permitted. In summary, the following points must be observed in the case of general terms and conditions with consumers
- Consent of the customer: The customer must be expressly informed of the inclusion of the GTC in the contract.
- Legality: The GTC must not violate applicable law.
- Clearly visible: The reference to the GTC must be clearly visible and easily accessible.
- ReasonabilityThe customer must be able to reasonably be expected to take note of the GTC.
- No overriding clauses: There must be no disproportionate clauses that catch customers off guard
- Adjustment to the contractor: The store must make appropriate adjustments in the event of recognizable physical or mental limitations of the contracting party.
Effectiveness of GTC
The effectiveness of General Terms and Conditions (GTC) depends on whether they have been included correctly and lawfully and whether they comply with the applicable legal provisions.
To be effective, GTC must be included in the contract before it is concluded. The customer must be informed about the GTC and have the opportunity to read them before concluding the contract. GTC must not violate applicable law and must be formulated in a transparent, understandable and clear manner.
If GTCs have not been included correctly or violate applicable law, they are invalid. In this case, they can be challenged by the customer and have no legal effect.So are GTC clauses according to § 307 BGB invalid if they unreasonably disadvantage the contractual partner (Section 307 BGB).
It is also important to note that GTC are not always applicable in every contract. In certain cases, statutory provisions or individual agreements between the contracting parties may take precedence.
The case law on the effectiveness of GTCs is complicated and has many subtleties. Therefore, you are well advised to seek legal advice for the drafting of GTCs and not to make any formulations yourself.
Legal consequences of violations of general terms and conditions
If the General Terms and Conditions (GTC) were not properly included in a contract or if the content of a GTC clause violates statutory regulations, it is deemed invalid. As a rule, the rest of the contract remains effective (Section 306 (1) of the German Civil Code (BGB)) and the invalid GTC is replaced by statutory provisions (Section 306 (2) of the German Civil Code (BGB)).
In addition, GTC clauses may not be defined in such a way that they are just permissible ("geltungserhaltende Reduktion"). Therefore, particularly sharp GTC clauses already have an additional legal risk before the border to the gray area.
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