law – understand-culture

Contingency Planning: Family, Business

In the middle of an active, busy (working) life, many families and business owners are reluctant to even consider the possibility of an accident or illness. As a result, contingency planning tends to be neglected. When something does happen, it often turns out there is no general power of attorney or enduring power of attorney for care or healthcare in place, and nobody thought of a living will or final will.

Proactive contingency planning helps to ensure that your family or family-owned business has legal capacity at all times. Our Private Clients experts help you draw up an emergency planning checklist that covers all the key legal and financial aspects.

If a partner or shareholder is incapacitated for an extended period, it could paralyse the entire company, depending on the provisions in the articles of association. Accordingly, (managing) partners or shareholders should draw up a contingency plan that addresses the following questions, in addition to their personal affairs.

Contingency Planning with proxies

In Germany, proxies are used for contingency planning, especially general proxies (Generalvollmachten) and precautionary proxies (Vorsorgevollmachten).

The general proxy entitles the authorised representative to take decisions for the principal in a large number of cases. The precautionary proxy focuses on decisions which have to be taken if the principal is no longer able to take care of his financial or personal matters, e.g. due to an illness.

6 surprising things forbidden in Germany

It’s no secret that Germans love rules. But some surprising things can get you into trouble here. Don’t worry – Rachel is here to keep you on the right side of the law!

YouTube comments:

“An important German law that most countries don’t have is Unterlassene Hilfeleistung or duty to rescue. If you see someone in trouble who needs help, you must, by law, try to help them. Example: If you see an accident on the roadside where someone is injured. You must stop, call an ambulance and apply first aid till help arrives. Just driving by is an offence.”

“That’s really true about the insults. A friend of mine had a rather aggressive elderly neighbor who lived below him. My buddy was only allowed to move around the apartment as quietly as possible or he would receive a hail of complaints. One day his parents were visiting and the neighbor rang the doorbell and complained about “noise”, yelled abusive words and made insulting gestures. His father filed a complaint (there were enough witnesses) and the neighbor ended up in court – as it turned out later, not for the first time. He had to pay €900. Since then, the neighbor never yelled again against him.”

“Most of these laws are actually quite useful even if they sound petty. Anyone who has tried calling the police in the UK complaining about noise and has been told you will have to contact the council will agree. There is a little known minor breach of the law (Ordungswidrigkeit) in Germany titled “Unnützes Hin- und Herfahren” (unnecessary driving around). You can be fined up to €100 if you are caught driving around for no apparent reason in a built-up area if this is disturbing people. It sounds ridiculous but it stops all those eejits who drive up and down the road with music blasting out of their cars.”

verbal vs. written

In Germany, a verbal agreement can indeed be legally binding. German contract law, as outlined in the Bürgerliches Gesetzbuch (BGB), recognizes both written and oral agreements as legally enforceable under certain conditions. According to Sections 145 to 157 of the BGB, a contract can be formed through a verbal agreement as long as it meets the essential elements of a contract. These elements include a clear offer and acceptance, an intention to create legal relations, and consideration in the form of a service, product, or payment.

However, not all agreements can be concluded verbally. Certain types of contracts must be in writing to be legally binding. For instance, contracts involving the sale or transfer of real property must be notarized in writing according to Section 311b of the BGB. Similarly, a guarantee agreement must be in written form to be valid, as stipulated in Section 766 of the BGB. Consumer loan agreements also require a written format under Section 492 of the BGB.

While verbal agreements are binding, they can present significant challenges when it comes to enforcement. The burden of proof rests on the party claiming that a contract was formed, and without written evidence, it may be difficult to establish the exact terms of the agreement. Disputes often arise over differing interpretations of what was said, complicating the enforcement of verbal agreements.

Culturally, Germans tend to prefer written documentation even when a verbal agreement is legally valid. This preference is rooted in a desire to maintain clarity and avoid misunderstandings, particularly in business contexts where detailed and precise agreements are the norm. While the law may uphold verbal agreements, in practice, written contracts remain the standard for most transactions, ensuring that all terms are clearly defined and easily enforceable.

verbal vs. written

In the United States, a verbal agreement can be legally binding under certain circumstances. Contract law in the U.S. is governed by state laws as well as the principles outlined in the Uniform Commercial Code (UCC) and common law precedents. For a verbal agreement to be legally enforceable, it must meet specific criteria, including offer and acceptance, consideration, and mutual intent to enter into a binding agreement. However, the enforceability of verbal agreements can vary based on the nature and value of the agreement.

Certain types of agreements, however, must be in writing to be legally enforceable. This requirement is based on the Statute of Frauds, which mandates that certain contracts must be in writing to prevent fraud and misunderstandings. Examples of such agreements include contracts involving the sale of real estate, agreements that cannot be performed within one year, contracts for the sale of goods valued over a certain amount as specified by the UCC, and agreements to pay someone else’s debt.

While verbal agreements are generally enforceable, proving the existence and specific terms of such agreements can be challenging. Courts may require clear and convincing evidence to substantiate a verbal contract. Testimonies, witness statements, and other forms of corroborative evidence can be considered, but the lack of written documentation often complicates enforcement.

Culturally, Americans may be more open to negotiating and entering into verbal agreements than in some other countries. However, in business and legal contexts, written contracts are typically preferred to minimize ambiguities and provide a tangible record of the agreed terms. While the law may recognize verbal agreements as binding, written agreements remain the standard practice, particularly in high-value transactions or complex contractual arrangements.

“fair and reasonable”

German law is characterized by its structure, precision, and comprehensive nature, emphasizing the protection of both parties in commercial transactions. The German Civil Code codifies principles of fairness, transparency, and contractual integrity. The principle of good faith under Section 242 of the BGB requires that prices be fair and reasonable, reflecting actual value rather than speculative market conditions. Consumer protection laws further reinforce the notion that prices should be objectively justified, not arbitrarily set based on market demand or negotiation skills.

right to negotiate

American law, particularly contract law, emphasizes the freedom to negotiate and bargain without state interference. The principle of caveat emptor, or let the buyer beware, underscores the expectation that both parties in a transaction are responsible for establishing a fair price. Unlike German law, which may emphasize fairness and transparency, American law prioritizes individual autonomy and the right to negotiate based on perceived value.

Employment law: Basic information

In Germany, all laws and regulations concerning work are summarised in labour law. The protection of workers plays a key role in this. For example, labour law gives you comprehensive rights in relation to your employment contract, wages and holidays.

Termination of the employment relationship

You or your employer may terminate your seasonal employment relationship early. The notice periods to be observed are stated in your employment contract. Your employment may only be terminated without notice in specific cases.

A notice of termination is only valid if it can be proven to have been handed over. This is the case when a notice of termination exists as a written document and has been signed by both parties. A notice of termination is also valid if a witness was present when notice was given or handed over as a written document. Notice of termination by email is not deemed to be written notice of termination and is therefore invalid.

Working hours

The average working hours in Germany is 8 hours per day. This can be extended to up to 10 hours per day for a short period. A rest period of 11 hours is normally prescribed between 2 shifts.

Breaks

If you work between 6 to 9 hours a day, you are entitled to a 30-minute break after no later than 6 hours. If you work more than 9 hours a day, the break is extended to 45 minutes. Labour law prohibits taking the break at the end of the day’s work in order to leave earlier.

Breaks are not considered working time and are therefore not paid.

Holidays

Even as a seasonal worker, you are entitled to paid leave. This is at least 2 days for each month in which you work full time. The holiday pay may also be paid to you at the end of your period of employment if you have agreed this with your employer in advance.

If you work on Sundays or public holidays, your employer must offer you a corresponding number of days off in lieu within 8 weeks.

Wages

A minimum wage is mandatory for all employees in Germany. This means no employer may pay less than this hourly wage. Since 1 January 2022, the minimum wage has been EUR 9.82 per hour gross. This means before taxes and other charges are deducted from this amount.

Even if you have agreed a piecework rate with your employer, you may not earn less than the statutory minimum wage.

Your employer must also give you a pay slip. This lists the tax amounts that will be deducted from your gross wage. If your employer provides accommodation, the cost for this may also be deducted from your wages. The corresponding amount must also be shown on the pay slip.

Holschuld. Bringschuld. German law.

Holschuld: get obligation. Bringschuld: deliver obligation.

What is the difference between a debt to collect, a debt to bring and a debt to send?
In the case of a debt to be collected, the place of performance is with the debtor – the owed item must be picked up there by the creditor.

In the case of an obligation to deliver, the place of performance or fulfillment is with the creditor. The debtor must therefore pay at the domicile of the creditor. If there is a debt to be sent, the debtor must also send it.

The distinction is particularly important when it comes to the question of transport or shipment costs and the question of the transfer of the risk of the loss of the goods (e.g. if a package is lost in the post).

Surviving the Germans’ extreme online privacy

Moving from Israel to Germany, DW’s Dana Regev was surprised to learn just how seriously Germans take their privacy. Here’s how she survived.

Before scolding me for this headline alone, allow me to stress that I fully support people’s efforts to protect their own data, and gain control over how their personal information is being used by organizations, businesses or governments.

Apple, for example, is currently facing harsh criticism by European privacy activists who say the company uses software that tracks the behavior of iPhone users.

A Vienna-based group called NOYB has even asked data protection authorities in Germany to examine the legality of unique codes that they say amount to tracking without users’ knowledge or consent, a practice banned under strict European Union privacy rules.

But if you’re used to less strict privacy rules, you might be in for a surprise around Germans.