Germany’s Federal Court of Justice has handed down judgment in case concerning the requirements under German law for incorporating standard terms and conditions into district heating contracts concluded as a result of the conduct of the parties.
District heating agreements
The defendant in the case was a company that let property in the German city of Cottbus.
A tenant moved out of the property. Before doing so, the tenant terminated a contract with the district heating provider.
After the tenant had left the property, the company continued to use the energy provided by the heating supplier.
The district heating supplier, the claimant in the case, sent the defendant a “confirmation of contract” welcoming the company as a new customer. The claimant asserted that the contract had been concluded as a result of the defendant extracting heat from the network and the subsequent written confirmation (see § 2 Regulation on General Terms and Conditions in the Supply of District Heating, AVBFernwärmeV).
On 19th September 2008, the claimant sent the defendant a draft supply contract containing a term of three years plus extension of one year if the contract is not terminated with nine months’ notice.
Instead of signing the contract, the defendant informed the claimant in March 2009 that the contract was to be ‘terminated with immediate effect’. The claimant replied that the defendant was not yet entitled to terminate the contract.
Relying on the incorporation of its standard terms and conditions, the claimant argued that the contract had a minimum duration of one year and that the defendant was required to give at least six months’ notice to terminate the contract.
The claimant brought a claim for payment of the base price between 28th March 2009 and 29th October 2009, amounting to over 4,600 euros, plus interest and legal fees. During this period, the defendant had not used any heating.
The court of first instance granted the claim. On appeal by the defendant, the district court rejected the claim. The claimant then appealed, but was unsuccessful.
Incorporation of standard terms and conditions
The VIII civil chamber of Germany’s Federal Court of Justice (Bundesgerichtshof, BGH), responsible for the law on the sale of goods, held that the defendant was not bound by the minimum duration or the 6 month notice period contained in the standard terms and conditions; nor was the defendant bound by the 9 month notice period implied into the contract by § 32(1) AVBFernwärmeV.
The court ruled that the standard terms and conditions had not been incorporated into the contract, as there was no agreement to include them in the contract.
The court explained that the fact that it is customary business practice for standard terms and conditions to apply to district heating supply contracts is, given the relevance of such terms, insufficient for their incorporation. It also noted that the regulatory provisions of the AVBFernwärmeV (§ 1(1) and 2(3)) do not concern the incorporation of the supplier’s own standard terms and conditions.
In the court’s view, the defendant was not bound by the regulatory nine month notice period, as this provision only applied to fixed-term contracts.
You can read press release of the BGH’s judgment here.