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2018-11-13

Debtors in Germany

The civil law has always sought to protect the creditor in the matter of making written contracts. The general rule is that their contracts are voidable at their option. They may treat them as a nullity if they so wish, but may notify them upon attaining majority.
There are, however, three exceptions to the general rule that debtors cannot be bound by their contracts. First, where under any contract a client receives 'necessaries', he is bound to pay a reasonable price for them. Necessaries include anything required by the client, not in order to keep body and soul together, but to keep him suitably provided according to his particular standard of living at the relevant time; a question to be decided upon the facts of each case. In the second place, there are certain types of contracts in Germany, such as a covenant to pay rent under a lease or the purchase of shares in a company, which require continuous mutual relations between the lawyer and his client (click for more information).
Contracts
Contracts of this type are binding upon the debtor unless he repudiates them during insolvency or within a reasonable time of awaiting the payment. In the third place, contracts of apprenticeship and service which appear to the court beneficial to a German customer are generally enforceable both by and against him. But this does not mean that a client in Germany will always be liable upon a contract just because it is likely to be beneficial to him: the general rule is that he is not liable. For instance, if he engages in trade he cannot be sued upon contracts relating to his business.
A German lawyer Exceptions apart, German contractors are therefore the pampered favourites of the law. So far is this true that the courts have refused to permit their immunity to be circumvented by allowing actions against them, which ought properly to be framed in contract, to be framed in tort: thus where a German debtor is guilty of fraud in inducing a person to contract with him by misrepresenting his solvency, he cannot be sued in the tort of deceit; for if this were permitted the contract would be indirectly enforced.
The debt collection agency This tenderness of the law towards German contractors is subject to certain restrictions which justice demands. Thus where, under a contract, a customer has transferred property to the other party, he will not be allowed to recover the debts in the way of debt collection unless he can show a total failure of consideration; that is, unless he can show that he has received nothing in return for the property.
Moreover there are two ways in which the rules of equity mitigate the inequitable lot of those who contract with Germans in a foreign language. In the first place, the one-sided remedy of specific performance will not be granted at the suit of a client. In the second place, the court may sometimes force the defendant, at least where he has acted fraudulently, to restore any gains which he has acquired under the delivery contract.
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