Contracting on the internet

Contract formation

Is it possible to form and conclude contracts electronically? If so, how are contracts formed on the internet? Explain whether ‘click wrap’ contracts are enforceable, and if so, what requirements need to be met?

The validity of electronic contracts is based on the same principles as the validity of contracts in general. A contract is formed where one party makes an offer and another party accepts this offer. Actual activity is needed to express a declaration of will to contract. Click wrap contracts are a common standard. Crucial elements to consider regarding consumer contracts are special formal requirements for due formation – the button solution from the EU Consumer Rights Directive – and that general terms and conditions can duly be taken note of prior to the contracting process and are duly agreed to apply.

Applicable laws

Are there any particular laws that govern contracting on the internet? Do these distinguish between business-to-consumer and business-to-business contracts?

Section 145 et seq of the German Civil Code (BGB) applies to offer and acceptance, and the general civil law applies also for termination, rescission and voiding contracts. B2C additional formal requirements apply (section 312 et seq, BGB). Standard terms and conditions for both B2C and B2B are subject to the laws on unfair consumer and commercial terms from section 305 et seq, BGB.

Electronic signatures

How does the law recognise or define digital or e-signatures?

The law generally allows free form of contracting, including digital or e-signatures. However, certain types of contracts per statute require a specific form. Typically, these requirements are tied to specific types of transactions with a high impact, such as acquiring shares in companies or purchasing property. If the form requirement is not met, the contract is invalid.

Where statutory law requires a specific form such as written or notarial form, electronic contracts are typically not sufficient to form a valid contract. However, a required statutory written form can be replaced by certain electronic means as well (the qualified electronic signature, according to section 126a, BGB), unless not explicitly prohibited by statutory law. The technical requirements for a qualified electronic signature are set out in Regulation (EU) 910/2014 of 23 July 2014 (the eIDAS Regulation) and the Trust Service Provider Act.

Data retention

Are there any data retention or software legacy requirements in relation to the formation of electronic contracts?

The data retention rules and principles for due bookkeeping, merchant due diligence and from tax regulations applicable to commercial transactions generally apply to the formation of contracts as well. Specific technical requirements for storing and access to electronic contracts may have to be fulfilled, set by the German tax authorities and applicable to business establishments in Germany, which can in some circumstances cover online business-related activities.

Breach

Are any special remedies available for the breach of electronic contracts?

No such special remedies are available.

Law stated date

Correct on

Give the date on which the information above is accurate.

6 July 2020.