Definition and Significance of the Reference Declaration
A reference declaration is a legal term mainly used in the context of contracts, declarations of intent, and in the field of securities law. It involves the express or implicit reference to already existing documents, regulations, conditions, or statements within a new legal document or declaration of intent. Through the reference, these contents become an integral part of the new legal transaction. The reference declaration serves to ensure comprehensibility and legal certainty, as well as to avoid repetition in the text, thereby improving the manageability of legal documents.
Types of Reference Declarations
Express Reference Declaration
In the case of an express reference declaration, a contract or document text clearly points to another document, law, or regulation. This is done through formulations such as “the General Terms and Conditions as amended on… shall apply” or “as stipulated in the purchase contract dated …”.
Implied Reference Declaration
A declaration refers to another matter or document by implication, without this having to be stated explicitly in the wording. In such cases, the reference results from the circumstances of the individual case or general business custom.
Legal Effects of the Reference Declaration
Incorporation of Third-Party Provisions
By means of a reference declaration, third-party provisions, contract components, or documents become part of the new legal transaction. This means that not only the actual text but also the referenced contents are binding on the contracting parties. In particular, in civil law, these only become part of the contract if the reference is made effectively and the referenced contents are identifiable and accessible to both parties.
Example – General Terms and Conditions (GTC)
GTC are regularly incorporated into a contract by means of a reference declaration. The user of the GTC typically has to inform the contractual partner of the validity of the conditions and provide a reasonable opportunity to review them (§ 305 para. 2 BGB). If this is lacking, the clauses do not become part of the contract.
Content Review and Interpretation
In cases of disagreement over the scope of a reference declaration, interpretation under §§ 133, 157 BGB applies. The decisive factor is how a reasonable party in the respective position, taking customary practice into account, should have understood the reference declaration.
Reference Declaration in Securities Law and Company Law
Reference Declaration for Securities
In securities law, a reference declaration primarily relates to the issuance of securities. An example is the subscription of shares in the context of a capital increase. The reference declaration by a shareholder constitutes the offer to subscribe to new shares. The legal basis for the subscription is generally the resolution of the general meeting of the respective company, to which the reference declaration refers.
Subscription Right and Reference Declaration
Regarding the subscription right under §§ 186 et seq. AktG, the reference declaration constitutes the exercise of the subscription right vis-à-vis the company or the executing entity. It is generally subject to deadlines and specific content requirements, with the reference declaration being submitted in written form or via electronic systems.
Reference Declaration in Other Areas of Law
Obligations Law
In the law of obligations, the reference declaration is mainly used for the assumption of payment obligations, for example in promises to pay or acknowledgements of debt which explicitly refer to a certain underlying claim.
Property Law
In property law, a reference declaration may be made within the context of land register statements, for example, when a registration expressly refers to an already existing entry or a previous enablement deed.
Formal Requirements and Validity
Written Form
In certain cases, the law requires that the reference declaration be in written form (e.g., § 311b BGB in the case of real estate purchase). A reference to another document only fulfils the requirement for written form if the referenced document is clearly designated, signed, and itself meets the requirements of the written form.
Transparency and Clarity
A key requirement for the validity of reference declarations is the identifiability of the referenced content. Unclear, imprecise, or unidentifiable references are not legally binding. This is especially true for contracts involving consumers, where there is an increased duty of care regarding comprehensibility and accessibility.
Case Law Concerning Reference Declarations
The courts have repeatedly commented on the validity and interpretation of reference declarations. In particular, the Federal Court of Justice (BGH) has clarified that references are only binding if they can be interpreted according to the principles of good faith and taking both parties’ interests into account (see, e.g., BGH, judgment of 10.10.1997, case no.: V ZR 29/96). The BGH has also emphasized the importance of the possibility to know and access the referenced GTC (BGH, judgment of 21.9.2005, VIII ZR 284/04).
Distinction from Related Terms
A reference declaration must be distinguished from other forms of statements such as annex agreements or references within a document. Reference declarations serve to integrate external content, while a simple reference merely provides orientation and lacks an integrative function.
Summary
The reference declaration is a widely used legal instrument that serves clarity, legal certainty, and efficiency in contract practice. Its effectiveness depends on precise formal, substantive, and accessibility requirements. It plays a significant practical role in contract law, securities law, obligations, and in combining multiple documents. For interpretation and enforcement, attention must always be paid to transparency, the link to the incorporated content, and the interests of the parties involved.
Source:
- German Civil Code (BGB)
- German Stock Corporation Act (AktG)
- Case law of the Federal Court of Justice
- Palandt, BGB Commentary, current edition
- Jauernig, BGB Commentary, current edition
Frequently Asked Questions
What is the legal purpose of a reference declaration in contracts?
In a legal context, a reference declaration serves to make the content of one document, expressly or implicitly, part of another document. This ensures that certain provisions, conditions, or agreements set out in a separate document are legally incorporated into a new contract. The legal purpose is, in particular, to ensure the transparency and traceability of the incorporated contents as well as their effectiveness between the contracting parties. A properly drafted reference declaration avoids interpretative ambiguities, protects against the inadvertent exclusion of relevant clauses, and can also serve as evidence in the event of a dispute that the parties genuinely intended to agree upon the referenced provisions.
What formal requirements apply to a valid reference declaration?
The validity of a reference declaration depends materially on compliance with certain formal requirements. As a rule, a reference declaration should be clear and unequivocal so that it is obvious which specific document and which version are being referred to. If contracts are subject to a particular form—such as written form or even notarisation (e.g., in property purchase contracts)—the reference declaration must also comply with these requirements. This means that the documents to be incorporated must usually be attached in full or, at the very least, clearly identified, designated, and attached to the contract. In case of doubt, an imprecise or absent reference may render the incorporation ineffective. In electronic contracts, the requirements of § 126a BGB (electronic form) apply accordingly, where relevant.
What legal risks are involved with unclear or incorrectly drafted reference declarations?
Unclear or incorrectly drafted reference declarations entail significant legal risks. If the content, scope, or area of application of the reference cannot be clearly determined, there is a risk that the intended contents do not become part of the contract, either fully or in part. This can result in important provisions—such as those regarding usage rights, liability, or payment terms—not applying in case of a dispute and, in extreme cases, may jeopardize the entire contract’s validity. Furthermore, a deficient reference declaration in the context of consumer contracts may violate the transparency requirement under § 307(1) sentence 2 BGB and thus be void. Special considerations also apply in an international context, as different jurisdictions may have specific requirements for the incorporation of foreign-language or foreign documents.
Can reference declarations also be made by implication, i.e., through conduct?
Under German law, it is generally possible for reference declarations to be made by implication, i.e., through conduct. However, this requires that the parties’ conduct makes it unmistakably clear to an objective third party that external documents are to be incorporated into the contract. Classic examples can be found in general business practice, such as the joint use of general terms and conditions. However, in individual cases, an implied reference always requires interpretation and carries the risk of ambiguity and later non-recognition by courts. In formally required legal transactions, an implied reference is generally excluded, as compliance with the form is only satisfied through an express and corresponding written declaration.
What role do reference declarations play in the incorporation of General Terms and Conditions (GTC)?
Reference declarations are a key instrument for the effective incorporation of General Terms and Conditions (GTC) into contractual relationships. According to § 305 para. 2 BGB, GTC must either be expressly incorporated into the contract or, at least, clearly referenced so as to be recognizable to the contractual partner. The reference declaration serves as notice of the GTC’s applicability and legally substitutes the full text in the main document. The prerequisite is that the contractual partner is given the opportunity to take note of the GTC. Inadequate or ambiguous references may result in the GTC not becoming part of the contract, with statutory provisions applying instead. Especially in consumer protection, the requirements for the transparency and clarity of references are high.
To what extent is a reference declaration relevant in international contract law?
Reference declarations acquire particular significance in international contract law, as they clarify the applicability of certain contractual components and possibly the applicable legal systems. For example, if INCOTERMS, arbitration clauses, or foreign language contracts are incorporated by means of a reference declaration, it is essential to pay attention to the exact version, language, and scope. Defective or overly general references may result in different interpretations between parties in case of a dispute, making judicial clarification necessary. In the context of freedom of contract, attention must always be paid to compatibility of the reference declaration with the conflict-of-law framework, for example, concerning the CISG or whether the reference is recognized in the respective foreign law.
Can a reference declaration, once made, be changed or revoked later?
In principle, reference declarations may be changed or revoked later, but this requires the consent of all affected contracting parties, as the contractual content is thereby modified. The amendment or revocation should always take place in the same form as the original declaration and—if required by form—must again comply with the prevailing formal requirements. Referred documents that are to be changed later should be clearly identified in the amendment agreement, and the temporal scope should be defined, to avoid disputes over interpretation. Unilateral amendment or revocation is generally not possible unless expressly provided for in the contract. In cases of doubt, the general rules of contract law and the principles concerning the removal or adjustment of contractual provisions apply.
