Concept and Subject Matter of Business Private Law
Das Business Private Law is an independent subfield of private law that regulates private legal relationships in the realm of business. It encompasses the entirety of private law norms that are essential for the organization, exchange, and promotion of economic activities. Business private law forms the legal foundation for the actions of companies and private individuals in commercial life and establishes the framework conditions under which markets and economic relationships, particularly in commercial transactions, function.
Distinction and Classification in the Legal System
Business private law is primarily part of civil law because it regulates legal relationships between legal entities acting non-sovereignly. In contrast, commercial administrative law concerns government intervention and regulation of economic activities. Although there are overlaps with other legal areas, such as public economic law, tax law, or labor law, the main focus of business private law is on private legal relationships and their structuring options.
Systematic Structure and Fundamental Regulatory Areas
Business private law is divided into various main areas that are closely intertwined. The most important are:
General Contract Law
The general contract law, mainly regulated in the German Civil Code (BGB), provides the framework for the formation, validity, performance, and liability in business contracts. This includes regulations on declarations of intent, conclusion of transactions, general terms and conditions (AGB), as well as contract interpretation and adjustment.
Law of Obligations and Property Law
Law of obligations and property law also play a central role in business private law:
- Law of Obligations: Regulates the performance relationships between creditors and debtors; this includes contracts such as purchase, lease, service, and work contracts that form the basis for exchange relationships in the economy.
- Property Law: Determines the legal relationships to things (e.g., ownership, possession, security interests), which are central to the movement of goods, collateralization, and transfer of assets.
Commercial Law
A significant area of business private law is commercial law, codified in the German Commercial Code (HGB). In particular, commercial law contains:
- Special regulations for merchants and commercial partnerships
- Commercial transactions and practices
- Provisions on the commercial register, company name, and commercial power of attorney (Prokura)
- Regulations on commercial agency agreements and accounting books
Company Law
Company law regulates the formation, ongoing organization, and dissolution of private business forms, including:
- Partnerships: such as civil law partnerships (GbR), general commercial partnerships (OHG), limited partnerships (KG)
- Corporations: such as stock corporations (AG), limited liability companies (GmbH)
- Participation rights, organs, representation, and liability of companies
Securities Law and Capital Market Law
Securities law deals with the legal relationships concerning securities such as shares, bonds, or checks. Capital market law, on the other hand, comprises the regulations for issuing and trading securities, as well as their regulatory oversight.
Industrial Property Protection and Intellectual Property Law
Also relevant in business private law are protective rights for intellectual property, such as trademark, patent, copyright, design, or utility model law, as well as competition law. They serve to protect innovation and fair market conditions.
International Business Private Law
Especially in light of globalized economic relations, standards of private international law (PIL) and international civil procedure law are gaining in importance. They govern, among other things:
- Applicable law in cross-border transactions
- Recognition and enforcement of foreign judgments
- International contract drafting
Basic Principles and Functional Significance
Business private law is shaped by several fundamental principles:
- Private autonomy: Parties can generally structure their legal relationships freely, for example through individual contract design.
- Legal transaction security: Protection of legal transactions through registers, principles of publicity, and protection of trust.
- Liability and Risk Allocation: Through detailed regulations, liability and risk in commercial transactions are distributed and made calculable.
Business private law therefore forms the central legal infrastructure for a functioning market economy. It guarantees legal certainty, protects legitimate expectations, and provides the necessary flexibility and efficiency for economic activities through corresponding instruments (such as general terms and conditions, security interests, and corporate law frameworks).
Sources of Business Private Law
The most important legal sources of business private law are:
- German Civil Code (BGB)
- German Commercial Code (HGB)
- Stock Corporation Act (AktG), Limited Liability Companies Act (GmbHG)
- Partnership Company Act (PartGG)
- Securities Trading Act (WpHG), Safe Custody Act, Bills of Exchange Act, Checks Act
- Trademark Act (MarkenG), Patent Act (PatG), Copyright Act (UrhG)
- Act Against Unfair Competition (UWG)
- Introductory Act to the Civil Code (EGBGB)
- European regulations and directives (e.g., Rome I Regulation, Rome II Regulation)
Development and Importance in Practice and Case Law
Business private law is subject to constant change, driven by economic innovation, international interconnections, and legislative amendments. The courts, in particular the civil courts up to the Federal Court of Justice, decisively shape the application and further development of business private law through their rulings.
At the same time, European and international legal acts increasingly influence the substantive development of business private law, with EC regulations (e.g., in company law and capital market law) gaining in importance.
Summary
Business private law encompasses all private law regulations that organize, promote, and secure economic activity. It consists of numerous subfields, such as contract, commercial, company, securities, intellectual property, and competition law, and is characterized by fundamental principles such as private autonomy and legal transaction security. Business private law forms the central legal basis for companies and economic actors and is of outstanding importance due to its influence on all forms of business activity.
Frequently Asked Questions
When is a contract validly concluded under business private law?
A contract is concluded under the principles of business private law by offer and acceptance (§§ 145 ff. BGB). The offer is a declaration of intent that needs to be received, and it must be so definite that the recipient can accept it with a simple “Yes.” Acceptance, in turn, is the express or implied consent to the offer. Both declarations of intent must be in substantive agreement (so-called consensus principle). Moreover, no statutory form requirements (such as written form, e.g., for real estate transactions under § 311b BGB) may be violated. Another prerequisite for validity is the legal capacity of the contracting parties (§§ 104 ff. BGB). Rules on representation (§§ 164 ff. BGB), rules on mistake and rescission (§§ 119 ff. BGB), as well as prohibitions and immorality (§§ 134, 138 BGB) must also be strictly observed, as a violation can lead to nullity. If all these requirements are met, the contract is legally binding and gives rise to the intended obligations.
What is the significance of the review of general terms and conditions (AGB) in business contracts?
In the context of commercial transactions between companies, the review of general terms and conditions (AGB) as per §§ 305 ff. BGB plays a central role. General terms and conditions are pre-formulated clauses used by one party in many contracts at the conclusion of an agreement. In the B2B sector, the AGB review is generally applicable, with special commercial practices and customs (§§ 346 HGB) to be considered. Although the content control under § 307 BGB for entrepreneurs and merchants is relaxed compared to consumer contracts (for example, § 310 para. 1 BGB should be observed), the use of AGB must nevertheless not lead to the exclusion of essential contract content or to unreasonable disadvantages. Particular attention must be paid to the inclusion of AGB in the contract, the so-called ‘battle of forms’ (collision of mutual AGB). If no agreement is reached, the statutory provisions apply.
When is a managing director personally liable under business private law?
As a rule, managing directors of legal entities, such as a GmbH or AG, are only liable with the company’s assets according to § 43 GmbHG or § 93 AktG. Exceptions apply in the case of breaches of duty. Personal liability arises if the managing director breaches his or her duties of care. This includes incorrect business decisions outside the scope of managerial discretion (Business Judgement Rule), violations of legal obligations (e.g., payment of taxes, social security contributions, delay in filing for insolvency under § 15a InsO), or the commission of unlawful acts (§ 823 BGB). Internal liability towards the company, or external liability towards third parties in case of tortious conduct, can also apply. In the event of insolvency liability, stricter liability, which is governed by insolvency law, applies.
What should be considered regarding liability for defects in purchase law between businesses?
For purchase contracts between businesses (‘B2B’, § 14 BGB, especially § 377 HGB), there is a strict duty of inspection and notification. The buyer must examine the goods immediately upon delivery and report any defects without delay (duty of notification). Failure to provide this immediate notification in accordance with § 377 paras. 2 and 3 HGB results in the loss of defect rights (subsequent performance, withdrawal, reduction, damages). Unlike consumer transactions, the parties can largely limit or exclude liability for defects within the rules of dispositive law. Further warranty rights are governed by §§ 434 ff. BGB, special commercial provisions, and any contractual agreements.
What legal regulations apply to retention of title in supply contracts?
Retention of title is a security right that is especially important in business private law regarding the sale of goods. According to § 449 BGB, the seller remains the owner of the delivered goods until full payment is made. Simple retention of title secures the purchase price claim, while extended retention of title (including further processed or resold goods) and expanded retention of title (securing additional claims) are frequently found in general terms and conditions. A prerequisite is always that retention of title is effectively agreed upon and the purchaser receives the goods as ‘delivered only under retention of title.’ In the case of combination, mixing, or processing (§§ 946 ff. BGB), retention of title may lapse, so contractual arrangements on this (processing clauses, advance assignment clauses) are advisable. In case of insolvency, retention of title protects the seller by allowing them to claim a right of separation under § 47 InsO.
What rights and obligations arise for merchants from the entry in the commercial register?
According to § 1 HGB, the merchant is obliged to register with the commercial register. This entry creates, in particular, what is known as the publicity effect (§ 15 HGB), exclusivity of the company name, the right to grant commercial power of attorney (Prokura, § 48 HGB), and acquisition of special commercial rights and obligations. These include the duty to keep books (§§ 238 ff. HGB), the mandatory application of commercial law provisions when concluding business transactions (such as fixed business transaction clauses, duties of inspection and notification), and the possibility of making certain legal acts public by entry in the commercial register. The company name and the limitation of liability in the case of corporations are also linked to the entry in the commercial register. Any changes or loss of merchant status must also be registered.
How is competition law anchored in business private law?
Competition law is an independent component of business private law and is primarily regulated by the Act Against Unfair Competition (UWG), the Act Against Restraints of Competition (GWB), and European regulations (e.g., Arts. 101, 102 TFEU). Its focus is on the protection of fair competition and the prohibition of unfair practices such as misleading advertising, aggressive business practices, or the deliberate obstruction of competitors. Violations of competition law can be prosecuted by competitors, consumer associations, and, under certain conditions, by means of actions for injunctions and damages. In business transactions between companies, the principles of competition law are strictly to be observed, as violations can have significant civil and, if applicable, regulatory consequences.
