Circular

Definition and legal classification of “Circular”

Definition of the term Circular in a legal context

The term “Circular” (from the English ‘circular letter’, German: Rundschreiben) refers in legal terms to a written communication addressed simultaneously to a large number of recipients to convey information, instructions, regulations, or notices. In a broader sense, Circulars include both public and internal company memoranda that carry legally binding or administrative content. In legislative practice and legal literature, the term is particularly significant in connection with administrative procedures, regulatory requirements, and the relationship between authorities and recipients.

Forms of Circulars

Circulars appear in various forms, which differ in terms of legal effect, binding nature, and target audience:

• Public Circulars: Notifications issued by government bodies (e.g., ministries, authorities) that explain or specify laws, regulations, or administrative instructions.
• Private Circulars: Communications within companies, associations, or organizations used for internal structuring or for communicating legally relevant changes.
• Joint Circulars: Joint circulars issued by several institutions on industry-specific or cross-sector legal topics.

Legal basis and statutory anchoring

Public Circulars and administrative law

In public law, circulars are particularly used as administrative memoranda. Statutory provisions can be found, for example, in the Administrative Procedure Act (VwVfG) and specialized legal regulations (e.g., AO for tax administration instructions). These circulars are central instruments for standardizing administrative practice by providing interpretations, directions, and recommendations for the application of existing legal norms.

As administrative instructions, circulars generally have no direct external effect on citizens; they are primarily directed at subordinate authorities. They serve the internal commitment of the administration to ensure uniform application of the law. Adherence to circulars by the administration is mandatory, but third parties (such as citizens or companies) cannot derive direct rights or claims from a circular.

Private Circulars in company and contract law

In private law, circulars are used particularly in company law (e.g., invitations to shareholders’ meetings, information letters to shareholders pursuant to AktG and GmbHG). Such communications are legally relevant if they fulfill statutory information obligations or serve to prepare critical decision-making processes. If companies fail to prepare and send the necessary circulars, this can lead to the nullity of resolutions or allow them to be challenged.

Circulars between contractual partners (e.g., within associations or franchise networks) may also meet requirements under contract law, especially with regard to obligations for information and disclosure.

Legal binding effect of circulars

The legal binding effect of a circular depends on its content and target audience. While administrative circulars are binding internally on public authorities, private circulars between companies or contracting parties regularly have direct effect, provided this is stipulated in underlying regulations (e.g., articles of association, contracts).

Practical examples and special areas of application

Circulars in tax law

In tax law, federal ministries of finance and tax offices regularly publish circulars in the form of BMF letters or similarly worded decrees. These letters clarify the implementation and interpretation of tax regulations. They provide binding instructions for tax offices, but for taxpayers, they only have indirect binding effect; nonetheless, officials are expected to implement the guidelines from circulars.

Circulars in company law and capital market law

In capital market law, circulars are used by stock exchanges or supervisory authorities (e.g., BaFin, Deutsche Börse AG) to inform issuers, intermediaries, and market participants about new developments, obligations, or technical changes. Statutory requirements for transparency and compliance (for example, under MAR, WpHG) are often specified by means of circulars.

International legal comparison: Circular in common law countries

Particularly in the Anglo-American legal sphere, circulars are widespread as binding communications from authorities, regulatory agencies, and companies. Their legal recognition and effects are governed by national law and may differ significantly from continental European standards.

Limits, challenge, and review of circulars

Legal protection against circulars

Circulars, particularly in the field of public administration, are not administrative acts within the meaning of § 35 VwVfG and do not have direct external effect for citizens. Therefore, a challenge is only possible indirectly, for example, if an authority relies on a circular and individual rights are thereby adversely affected. Legal protection can be obtained in such cases by challenging the relevant administrative act or through judicial review of administrative practice.

Review and examination of circulars

The courts can review the conformity of circulars with higher-ranking law. In particular, it must be determined whether circulars appropriately specify statutory regulations or impermissibly create new provisions. In the event of legal violations, circulars may be revoked or amended.

Conclusion and summary

A “Circular” is a legal term of considerable significance in both public and private law. Its legal importance lies chiefly in inter- and intra-organizational communication, upholding administrative and contractual compliance, and ensuring uniform application of the law. The binding effect of a circular depends on its scope of application, with generally internal binding force in public law and immediate legal effect in private law. Circulars are not equivalent to legal norms or administrative acts, but they can have substantial practical and legal relevance.

See also:

• Administrative instructions
• Company law notifications
• BMF letters
• Compliance Circulars
• Circulars in stock corporation law

Frequently Asked Questions

What legal frameworks apply to circular models in Germany?

Circular models – i.e., business models based on circular economy and reuse – are subject to a wide range of legal frameworks in Germany. Key laws include the Circular Economy Act (KrWG), which governs waste prevention, reuse, and recycling. In addition, product-specific regulations such as the Electrical and Electronic Equipment Act (ElektroG) or the Packaging Act (VerpackG) are relevant, prescribing how products must be taken back and handled after use. Product liability requirements (§§ 823 et seq. BGB, Product Liability Act) are also important, especially regarding obligations for the safety of refurbished products. At the European level, the European Green Deal and the Circular Economy Action Plan are of particular importance, with their requirements being implemented by national laws. Companies must always determine how material flows (secondary materials, waste, by-products) are legally classified, as related obligations such as record-keeping, documentation, and reporting depend on these classifications. Licensing requirements, especially for placing refurbished goods on the market, must also be observed.

What obligations do companies face when placing refurbished products on the market?

Companies that professionally refurbish products and place them back on the market face extensive legal obligations. Legally, a refurbished product is often considered a new product if substantial modifications to assembly or function have been made. As such, the obligations of the Product Safety Act (ProdSG) apply; these include CE marking, safety checks, a declaration of conformity, and provision of operating instructions. Liability for potential product defects also continues to apply in full (§§ 434, 437 BGB in conjunction with § 823 BGB). Besides product-specific requirements, regulations regarding hazardous substances and environmental law must also be observed. Additionally, obligations for registration and take-back under ElektroG or the Battery Act (BattG) may arise for certain products. Companies must also fulfill documentation, verification, and information requirements, for example, regarding spare parts or recycling materials used.

What special rules apply to warranty law for circular (used or refurbished) products?

Special warranty law provisions apply to refurbished products or used goods. As a rule, used or refurbished products are subject to a warranty period of at least one year (§ 476 (2) BGB). Broader liability, however, cannot be excluded if the product is marketed as “like new” or “fully reconditioned”, since in this case, a specification agreement (§ 434 BGB) for a condition equivalent to a new product has been made. Companies must therefore very precisely and transparently document the characteristics of the refurbished product, as otherwise they may be held liable for defects arising from prior use. Contractual limitations on warranties (e.g., in GTCs) are only permitted to a very limited extent in consumer transactions. In B2B contexts, however, other arrangements are possible. These special rules also apply to spare parts or accessories sold as refurbished.

What data protection requirements must be observed when reusing devices?

When reusing devices, especially those that store personal data (e.g., laptops, smartphones), data protection requirements apply under the General Data Protection Regulation (GDPR). Companies that reuse or resell devices must ensure that all personal data have been securely erased (Art. 17 GDPR “right to erasure”). This applies both to their own corporate data and to data from previous owners or customers. If devices are transferred without adequate data erasure, severe fines may result. Companies are obliged to use effective deletion procedures (certified tools, documented processes) and to document the erasure. When engaging service providers for refurbishing, a data processing agreement in accordance with Art. 28 GDPR must be concluded.

What environmental law record-keeping obligations apply to circular business models?

Environmental record-keeping obligations are among the central requirements for circular companies. Under the Circular Economy Act as well as under VerpackG, BattG, or ElektroG, companies are required to document the fate and proper recycling or disposal of products, materials, and packaging. Supporting documents such as consignment notes, disposal certificates, or register notifications serve this purpose. There is an obligation to document and retain records for several years. Take-back systems and transfer to certified waste management companies must also be transparently evidenced. Errors or omissions can lead to fines or official measures. For certain types of waste, there is also a requirement to notify the authorities (§ 53, 54 KrWG), for example, when hazardous waste is processed as part of a circular model.

What antitrust aspects must be considered in circular value networks?

Circular models are often based on cooperation or joint platforms of multiple companies (e.g., joint collection systems, cooperative rentals, exchange of spare parts). Here, antitrust restrictions under the German Act against Restraints of Competition (GWB) and relevant EU regulations must be considered. Prohibited are, among others, agreements restricting competition on prices, market sharing, or purchasing conditions. The exchange of sensitive market data in the context of circular platforms may also constitute an inadmissible restraint of competition. Cooperations must be structured so that there is no abuse of market power and free competition is maintained. Exceptions are only permitted within narrow limits (e.g., certain industry initiatives exempted under Art. 101 (3) TFEU) and must be thoroughly examined and documented. Notification with competition authorities may be required.

What legal requirements apply to the labeling and marking of circular products?

Circular products must be labeled and marked in accordance with the Product Safety Act (ProdSG) as well as under EU regulations (e.g., REACH, CLP Regulation). Labeling obligations concern not only important safety and warning instructions, but also information requirements regarding materials, recycled content, or modifications to the product. It is especially important to state clearly whether a product is refurbished and what features may differ from the original product. Incorrect or missing labeling can be penalized as misleading (UWG) or as a violation of product labeling obligations. For imported circular products, customs law requirements and any specific labeling obligations for the European market must also be observed.