Definition and legal classification of the term ‘Flat’
General definition of the term
The term ‘Flat’ – often used as a short form for ‘Flatrate’ – refers in legal and economic contexts to a contractually agreed lump-sum remuneration for a specific service or performance that can be used within a defined period and scope. The structure of a flat contract, also known as a lump-sum contract or flatrate contract, is subject to numerous legal regulations found both in civil law and in special statutory provisions.
Typical areas of application for the flat
Flatrates are usually used for telecommunications services (e.g., telephone, internet), in the field of digital media (streaming services, software usage), but also for mobility services (car sharing, public transport), and other subscription models. The legal norms applicable in these cases vary according to the type of contract, the scope of services, and the user group (B2B/B2C).
Legal basis of flatrate models
Contractual framework conditions
At the core of the legal classification of flat contracts is contract law. The principle of freedom of contract applies (§ 311 BGB), so the parties are largely free to determine the conditions and scope of a flatrate. Flatrate contracts are usually structured as continuing obligations (§ 314 BGB), often supplemented by general terms and conditions (AGB).
Conclusion of contract and contract content
- Conclusion of contract: The contract is typically formed by offer and acceptance (§§ 145 et seq. BGB). For digital contracts, § 312i BGB (conclusion of contract in electronic commerce) is often relevant.
- Description of services: The exact definition of the scope of services is legally significant, especially with regard to fair use and throttling clauses.
- Remuneration: The structure of remuneration is a key element. The flatrate fee represents a fixed payment for services that would otherwise have to be paid for individually.
General terms and conditions (AGB)
As flatrate contracts are often based on mass business models, the terms are usually governed by AGB. The content control is based on §§ 305 et seq. BGB, focusing particularly on transparency and fairness of contract terms, throttling and disruption clauses.
Consumer protection law aspects
Information requirements and rights of withdrawal
Flatrate offers in the B2C sector are regularly subject to the consumer protection provisions of the BGB and distance selling law (§§ 312 et seq. BGB). This includes, in particular:
- Information requirements: Providers must fully inform consumers about the terms of the contract, durations, termination options, and any restrictions (such as a “fair use policy”).
- Right of withdrawal: In the case of contracts concluded via distance selling, there is generally a right of withdrawal of 14 days (§ 355 BGB).
Term, termination, and automatic contract renewal
Consumer contracts for flatrates are subject to specific requirements regarding term and notice periods. According to § 309 No. 9 BGB, excessively long initial terms and renewals are prohibited. Since 1 March 2022, contracts for ongoing services must be terminable on a monthly basis once they are tacitly renewed.
Specific regulations for flatrates in certain industries
Telecommunications law
In the telecommunications sector, additional regulations are found in the Telecommunications Act (TKG):
- Description of services: Providers are obliged to make the scope of services and any restrictions (e.g., “fair use policy”) transparent.
- Net neutrality: Restrictions or throttling must not be discriminatory (§ 41 TKG).
- Termination right: § 56 TKG regulates the special right of termination in cases of price changes and reductions in quality.
Digital content and services
For digital services (such as music and video flats), both the BGB and the Act on Digital Content and Digital Services (§§ 327 et seq. BGB) apply:
- Service disruptions: If the service is defective or not provided, consumers are entitled to warranty rights.
- Data as consideration: Contracts can also be concluded by providing personal data; in this case, the requirements of the General Data Protection Regulation (GDPR) must be observed.
Other industries and applications
Flatrates are also used in the fields of mobility, gym contracts, shared economy, and similar business models. The relevant specifics are derived from industry-specific regulations (e.g., tenancy law according to § 535 BGB in the case of shared cars, special regulations for advance payments in gym contracts).
Tax treatment of flatrate contracts
Flatrate revenues are considered taxable payments within the meaning of the VAT Act (§ 1, § 3 para. 9 UStG). The decisive factors are the amount of the flat rate and the period covered. For income tax purposes, it should be noted that advance payments are generally to be allocated over the term of the contract.
Competition law particularities
Providers of flatrate services must comply with the requirements of the Act Against Unfair Competition (UWG). Particularly relevant are:
- Misleading advertising: Advertising with ‘unlimited use’ is not permitted if there are actually restrictive conditions hidden in the small print (§ 5 UWG).
- Adequate price transparency: The total price and all additional costs must be clearly communicated (§ 3a, § 5a UWG).
Summary
The legal assessment of flatrate contracts is a complex field that encompasses numerous aspects of civil, consumer protection, tax, and competition law. Key issues include contract drafting, AGB control, transparency and information obligations, the deliberate differentiation of industry-specific framework conditions, and compliance with consumer protection requirements. Providers and users should therefore carefully observe the relevant legal and contractual provisions when concluding, handling, and terminating a flatrate contract.
Frequently Asked Questions
What legal pitfalls exist when subletting a flat?
Subletting a flat is generally permissible, but in most cases requires the prior consent of the landlord in accordance with § 540 BGB. Subletting without express permission may not only result in a formal warning, but under certain circumstances also in immediate termination of the tenancy. The landlord may only refuse consent to subletting for good cause; profitability concerns or mere discomfort are not valid reasons for refusal. However, the tenant must be able to credibly demonstrate a legitimate interest in subletting (e.g., financial difficulties or a longer stay abroad). If a sublease surcharge is demanded, it must remain within legally permissible limits and must not exceed the general rents. The primary tenant is also liable for damages caused by the subtenant, so it is recommended to include liability provisions in the subletting agreement. Furthermore, it should be noted that without proper approval and registration, the subtenant may also violate registration and housing regulations, which can result in fines.
What legal requirements apply to fixed-term rental agreements for a flat?
Fixed-term tenancy agreements require, under § 575 BGB, an objective reason to be expressly stated and clearly justified in the contract, such as personal use, planned renovation, or demolition. A fixed-term lease without such a reason, or with an insufficient justification, may be deemed an open-ended tenancy by the courts if the written form is not observed or the term is not clearly defined. The minimum requirements are the precise specification of the start and end of the tenancy as well as a clear, comprehensible justification for the fixed term in the contract text. After expiry of the fixed-term lease, it ends automatically; no separate termination is required. According to § 575 (2) BGB, the tenant is entitled to request information about the justification of the fixed term before the end of the agreement. The landlord is obliged to respond to such a request in writing within one month.
What is the legal situation regarding cosmetic repairs in a flat?
The question of cosmetic repairs is a frequent point of contention in tenancies involving flats. According to current case law of the Federal Court of Justice (BGH), clauses imposing rigid deadlines for cosmetic repairs on the tenant are generally invalid (§ 307 BGB). Clauses that require final renovation regardless of the condition of the apartment are also inadmissible. In general, the tenant is only obliged to carry out cosmetic repairs if this has been individually negotiated and reasonably regulated in the lease agreement and the apartment was handed over in a renovated condition at the start of the tenancy. If this is not the case or the clause is too far-reaching, the landlord remains responsible for the condition. However, the tenant must remedy any damage arising from improper use.
What are the tenancy law consequences of late rent payment for a flat?
In the event of late rent payment, tenancy law under §§ 543, 569 BGB provides for serious consequences. Already in the event of arrears of two consecutive months’ rent or substantial arrears over a longer period, the landlord can terminate the tenancy without notice. While a one-time late payment will generally first result in a warning, repeated tardiness may be considered a lasting disturbance of the contractual relationship and lead to ordinary termination. If the tenant regularly pays late, such ongoing delay can destroy the basis of trust. According to case law, a single catch-up payment does not heal the breach of duty if the conduct is repeated. In addition to the risk of termination, reminder fees and default interest (§ 288 BGB), as well as possibly entries in credit databases, may also be incurred.
What legal provisions apply regarding the security deposit in a flat rental agreement?
According to § 551 BGB, the security deposit in a residential tenancy agreement may not exceed three times the monthly basic rent (excluding ancillary costs). The landlord is obliged to keep the deposit separate from his own assets and to deposit it in an insolvency-proof account that earns interest for the tenant. The deposit must be refunded after the tenancy has ended, as soon as all claims such as outstanding rent or damages have been clarified. As a rule, settlement and refund must take place within three to six months after moving out, but in complex cases the period may be extended. Deductions from the deposit must be specifically justified, for example by proven claims for damages, and explained to the tenant in a comprehensible manner.
What must be legally observed in the case of rent increases for a flat?
Under German tenancy law, rent increases are basically governed by § 558 to § 559b BGB. An adjustment of the rent is permitted if the standard local comparative rent has not yet been exceeded. The rent may be increased at the earliest 15 months after commencement of tenancy and at most every 12 months. The so-called capping limit restricts an increase to a maximum of 20 percent within three years, and in some municipalities with a strained housing market, even to 15 percent (capping limit ordinance). In addition, a rent increase can only be demanded if it is declared in writing to the tenant, together with the basis of calculation. For modernization works, special provisions apply (§ 559 BGB), whereby the apportionable costs are limited to a maximum of 8 percent of the costs spent on the apartment.
What are the minimum legal requirements for the condition of a flat at handover?
Prior to moving into a flat, the law does not prescribe a certain standard of quality, but there are certain minimum requirements. According to § 535 para. 1 BGB, the apartment must be suitable for contractual use, that is, in particular, habitable, dry, heatable, and equipped with basic installations (electricity, water, heating, sanitary facilities). Mold, significant moisture or structural damage, as well as risks to health (e.g., asbestos, legionella contamination), constitute serious defects. Such defects entitle the tenant to reduce the rent or withhold rent. Any defects that arise must be reported to the landlord without delay; the landlord is obliged to remedy them within a reasonable period. In the event of serious violations, termination without notice by the tenant may be justified.
