Term and Basics: Contract at the Expense of Third Parties
Ein Contract at the Expense of Third Parties is a term from the law of obligations which describes a particular constellation of contractual commitments. It refers to a contract concluded between two parties (creditor and debtor) in which an obligation is agreed that directly imposes a duty or burden on a third person not involved in the contract (the third party), without that person having consented to or participated in the contract. The legal issue with a contract at the expense of a third party lies particularly in the fact that contractual freedom and personal autonomy generally do not entitle the parties to obligate third parties without their consent.
Concept of Contract at the Expense of Third Parties and Distinctions
The principle that contracts cannot create direct obligations for third parties is established in Germany in Section 311 (1) BGB, for instance. Contracts at the expense of third parties therefore differ fundamentally from so-called contracts for the benefit of third parties (Section 328 BGB), where third parties acquire rights but not obligations or burdens.
Legal Classification
Principle of Relativity of Obligations
Under German law, the Principle of Relativity of Obligationsapplies. This states that only the parties involved in the contract (contractual partners) are bound by the agreed obligations (so-called “inter partes effect”). Contracts at the expense of third parties that seek to impose obligations without their consent contravene this principle and are, as such, legally inadmissible in this form.
Distinction from Related Types of Contracts
Contract for the Benefit of Third Parties
In the case of a Contract for the Benefit of Third Parties according to Section 328 BGB, the third party acquires a legal position (usually a claim to a performance) but no obligation. The essential difference is that in the contract at the expense of a third party a burden would be imposed on the third party without their involvement.
Assumption of Debt and Accession to Debt
Forms such as assumption of debt (Sections 414 ff. BGB) or acceding to a contract must also be distinguished. Here, the third party only becomes a party to the contract through their own declaration and thus consciously assumes obligations under the legal relationship.
Joint and Several Liability
Joint and several liability (Section 421 BGB) also only arises if the third party expressly consents or is contractually included, but not merely by the conclusion of a contract between two other persons.
Invalidity of Contracts at the Expense of Third Parties
Contracts that seek to impose a direct burden on a third party without their participation are legally invalid with regard to this effect. The binding effect arises exclusively between the contracting parties. Including a third party in an obligation against their will is excluded.
An exception exists only where the law expressly provides for an obligation or burden on third parties. Examples of this can be found in civil law, for instance in the protection of minors or certain public law provisions.
Legal Consequences
An attempt to burden a third party by contract without their approval is therefore treated in such a way that the burden on the third party has no legal effect. However, the contracting parties remain bound to each other; any settlement is only between them and not at the expense of the third party.
Assessment in Jurisprudence and Literature
Die Case Law confirms the principle that contracts cannot have effects at the expense of third parties. This is regularly justified by the principle of personal autonomy and contractual freedom. A third party can only ever be obliged to perform or to undertake an obligation if they have themselves explicitly joined the contractual relationship or if a law expressly orders this.
In the literature it is occasionally discussed whether exceptions are conceivable and in which areas. However, the prevailing view affirms that the need to protect third parties prevents such burdens without consent and thus preserves their legal position.
Practical Examples and Typical Applications
In practice, contracts at the expense of third parties often become relevant in situations where one contracting party attempts to shift their obligations by means of a unilateral agreement onto a third person, for example in the case of forwarding contractual penalties, transfer of return obligations or arrangement of collateral, which are meant to directly impose obligations on third parties. Where third parties are not properly included, they remain unaffected by the obligation.Example: A and B agree that C has to perform a certain action for A or prevent a disadvantage for B, without involving C in the contract. C is not bound by this obligation.
Summary and Evaluation
Der Contract at the Expense of Third Parties is, under German law of obligations, generally considered inadmissible unless there is an explicit statutory basis or a separate, fully valid legal act by the third party (e.g. accession or approval). The aim of the regulation is to protect personal autonomy and prevent unintended obligations for third parties. In practice, this means that the validity of agreements intended to obligate others always requires the explicit consent of the respective person.
Further Reading
- Palandt, Bürgerliches Gesetzbuch
- MüKoBGB, Münchener Kommentar zum BGB
- Medicus/Petersen, Law of Obligations I
- Bamberger/Roth, BGB Commentary
Further Related Terms
- Contract for the Benefit of Third Parties (Section 328 BGB)
- Assumption of Debt (Sections 414 ff. BGB)
- Relativity of Obligations
- Joint and Several Obligation (§ 421 BGB)
Note: The above explanations provide a comprehensive overview of the legal term and particularities of a contract at the expense of third parties under German law. The overall legal view shows that the principle of personal autonomy and the relativity of obligations are central, and that third parties are protected from unwanted liabilities without explicit involvement.
Frequently Asked Questions
What legal requirements must be met for a contract at the expense of third parties?
The formation of a contract at the expense of a third party requires certain legal prerequisites. Essentially, it is a contract between two parties – the promisor and the promisee – making agreements to the detriment of a third person not involved in the contract. According to German civil law, such a contract is legally inadmissible unless there is explicit statutory authorization or the third party expressly consents. The main principle is contractual freedom, but this is limited by the principle of personal autonomy. Accordingly, no one can be obligated (or burdened with disadvantages) without their own consent. Therefore, only cases in which the third party is not immediately legally obligated, or in which binding effect is enabled by the third party’s explicit consent or by statutory provision, can be effective. A contract at the expense of a third party generally does not come into being unless the prerequisites of a contract for the benefit of third parties (Section 328 BGB), an assumption of debt, or a special statutory provision are met.
How does a contract at the expense of a third party differ from a contract for the benefit of a third party?
The classic difference between a contract at the expense of a third party and a contract for the benefit of a third party is that in the latter, the third party receives only benefits or rights from the contract, whereas in the contract at the expense of a third party the third party is to be legally obligated or burdened with disadvantages without their own consent. A contract for the benefit of a third party is regulated in Section 328 BGB and allows a third party to directly acquire claims under a contract, but to their advantage and not to their disadvantage. By contrast, a contract at the expense of a third party is essentially inadmissible because it violates the principle of personal autonomy: it contradicts fundamental principles of civil law to bind or burden someone legally against their will. Therefore, contracts at the expense of third parties are generally void unless the third party expressly consents or there is a statutory basis for an exception.
What are practical examples of contracts at the expense of third parties?
In practice, contracts at the expense of third parties are rare, since they regularly violate fundamental legal principles. Fictional examples include agreements in which two people stipulate that a third person must make a payment, without including or involving that third person. Another example would be if two neighbors agree that a third neighbor must remove a fence, without that person’s will or contribution. In both cases, an obligation or burden would be imposed on the third party without them having had an opportunity to consent. Such contracts are usually legally invalid. Cases in which the third party is actually included or expressly consents no longer fall under the prohibition, as in such instances there is either an acknowledgment of debt or an assumption of debt by the third party.
What are the legal consequences of a void contract at the expense of a third party?
If parties conclude a contract at the expense of a third party without that person’s consent or without statutory authorization, this part of the contract is usually void under Section 134 BGB in conjunction with the principle of personal autonomy. This means that the third party is never legally bound or obligated. Claims derived from such a contract against the third party are therefore unenforceable. As a result, the contract may still have legal effects between the original contracting parties, provided these exist independently of the obligation of the third party (partial invalidity according to Section 139 BGB). However, the third party remains entirely unbound and cannot be held legally liable under such a contract.
Are there exceptions in which a contract at the expense of a third party is permissible?
In a few special exceptional cases, the law actually provides for rules under which a contractual arrangement can take effect to the detriment of a third party. Examples include the assumption of debt under Sections 414 ff. BGB or surrender claims under specific statutory provisions, such as in compulsory enforcement. In these (narrow) cases, however, the consent of the third party is usually a prerequisite, or the third party is granted a right to object. Without some form of participation or at least information given to the third party, even here contractual recourse against their legal position remains excluded. Another exception is found in company law, for example in certain articles of association, if statutory order or a special group-internal mechanism permits this.
How does a contract at the expense of a third party relate to private international law?
In private international law too, the principle is recognized that contracts can only create binding effects between those involved. Also according to international and European legal principles, a contract at the expense of an uninvolved third party is generally deemed immoral or incompatible with fundamental legal principles. Countries with rules similar to German civil law also regularly consider such contracts void, unless special international rules or conflict of law provisions suggest a different assessment. In particular, the principle of protecting the third party – who would otherwise be unintentionally affected by legal consequences – is respected across borders.
What role does the consent of the third party play in such a contract?
The consent of the third party is central to the legal effectiveness of an obligation or burden arising from a contract. Only when the third party expressly consents – for example within the framework of an assumption of debt or agreement to a contractual clause – does a legally effective (i.e. obligation-creating) transaction emerge out of a contract at the expense of a third party. Depending on the situation, the consent may be given beforehand, upon contract conclusion, or subsequently (either implied or explicit). Without such participation, however, the third party remains unbound and cannot be obligated or impaired in their legal position by the contract. Furthermore, consent must always be voluntary and informed, in order to protect the interests and legal position of the third party.
