German legal system
The German legal system is ranked among world leaders for judicial independence and efficiency. Businesses can quickly enforce their rights.
The German legal system is underpinned by the constitution (Grundgesetz). For businesses, many of the most important regulations are contained in the German Civil Code (Bürgerliches Gesetzbuch, BGB) and the German Commercial Code (Handelsgesetzbuch, HGB).
German contract law
Under the principle of freedom of contract, businesses registered in Germany are generally free to enter into legal relations with whomever they please. They are also largely free to determine the content of the underlying contract.
However, there are rules to ensure that businesses do not exploit their market position. For example, rules on anti-trust, unfair contract terms and employment can all play a role in shaping a business’ interaction on the market.
The European Union plays a major role in harmonising many aspects of contract and commercial law.
International law also plays a role in shaping Germany’s legal framework. The United Nation’s Convention on Contracts for the International Sale of Goods, as well as the International Commercial Terms are recognised in Germany and can be adopted in commercial transactions.
Judges in Germany are not bound by the judgments of other courts.
The rulings of Germany’s Federal Court of Justice (Bundesgerichtshof, BGH), mainly responsible for civil and criminal matters, are binding only on the parties involved but are considered to be guidance for other courts. However, where cases are similar, it is unlikely that the lower courts will divulge from the direction set by the BGH.
Claims are managed and processed by the courts, which ensures swift processing.
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