Definition and Legal Nature of Service
The term “service” refers to the provision of services in the German-speaking world and is of considerable significance in various areas of law. Service appears as a central element in economic transactions in a wide range of forms and may be subject to both civil and public law requirements. In a legal context, service includes both freelance and commercial services in which intangible performance is paramount.
Legally, service is generally considered an obligation to perform (service or work), with various statutory bases applying. The categorization of the respective service is decisive for the applicable legal provisions, in particular in civil law, commercial law, competition law, tax law, and data protection law.
Civil Law Principles of Service Performance
Service Contract (§§ 611 ff. BGB)
Service is often provided under a service contract. According to § 611 BGB, the service provider is obligated to perform certain services, but is not required to achieve a specific result. Typical examples include consulting, cleaning, or maintenance services. For services provided under a service contract, rules regarding the allocation of obligations and liability, termination, and remuneration apply. The service provider owes only the activity itself, not a particular outcome.
Contract for Work and Services (§§ 631 ff. BGB)
If the service achieves a specific agreed result, it is regularly considered a contract for work and services. The service provider undertakes the production of a work, i.e., an outcome-based service such as repair of an item or performance of a technical installation. The legal duties include the production and delivery of the agreed work as well as liability for defects and warranties.
Types of Contracts and Hybrid Contract Forms
In practice, there are mixed forms between service and work contracts. Many service contracts contain elements of both types of contract (so-called mixed contracts), such as in maintenance agreements, facility management services, or IT services. The legal classification is determined by the main focus of the agreed service.
Aspects of Commercial and Competition Law
Service in Commercial Law
Services drive the trade in goods and services significantly. Commercial law provisions (HGB) regulate in particular service contracts between merchants, for example through commercial customs, inspection and notification obligations, and limitation periods. In international situations, the UN Convention on Contracts for the International Sale of Goods (CISG) and bilateral agreements must also be taken into account.
Law Against Unfair Competition and Service Advertising
Service is of particular importance in connection with the Act Against Unfair Competition (UWG). The advertising and provision of services must comply with the requirements of commercial diligence, transparency, and safeguarding consumer interests. Misleading information about the service offering can lead to claims for injunction and damages.
Consumer Protection and Service
Information Obligations and Initiation of Contracts
In the area of consumer law, services are subject to comprehensive information obligations. According to §§ 312 ff. BGB and the Price Indication Ordinance, businesses must provide clear and understandable information about the nature, scope, prices, and essential features of the service even before the conclusion of the contract. In the case of distance contracts, there are also special rights of withdrawal.
Warranty Rights
If the service is defective or not provided properly, the consumer has various warranty rights. These include rectification, reduction, withdrawal, as well as, under certain conditions, claims for damages.
Tax Treatment of Services
Services are subject to value-added tax according to § 1 (1) no. 1 UStG, provided they are exchanged for payment and are not tax-exempt. The exact tax treatment depends, among other things, on the type and place of performance of the service as well as the respectively applicable VAT regulations, especially in the case of cross-border services. Services may also be subject to trade tax, provided a commercial activity as defined in the Trade Tax Act exists.
Data Protection Requirements for Services
Services involving the collection, processing, or use of personal data are also subject to the provisions of the General Data Protection Regulation (GDPR) and the Federal Data Protection Act (BDSG). This particularly concerns IT, telecommunications, or marketing services. Contracts for services must include data protection agreements on commissioned processing and confidentiality.
Special Features of Individual Service Areas
IT Services and Digital Services
Special legal frameworks apply to IT services and digital services, for example, with regard to software licenses, data protection, and IT security requirements. Contractual regulations on service delivery, service level agreements (SLA), support, and warranty are particularly important here.
Technical Services
In the area of technical services, such as maintenance, repair, or servicing, in addition to the rules for contracts for work and services and service contracts, product safety regulations or duties under the Equipment and Product Safety Act often apply.
Facility Management and Infrastructure Services
For services in the infrastructure sector (cleaning, janitorial services, building management), in addition to the regulations for contracts for work and services and service contracts, industry-specific standards and safety regulations often apply, such as those regarding occupational safety or health protection.
International Regulation and Cross-Border Services
For services provided across national borders, private international law (PIL), European service directives, and bilateral agreements must be considered. The European Services Directive (Directive 2006/123/EC) facilitates the cross-border provision of services in the internal market and sets minimum standards for transparency and consumer protection.
Summary
The concept of service is legally highly multifaceted and encompasses a multitude of statutory regulations from different areas of law. The classification of the respective service determines which legal frameworks must be observed, particularly regarding contract formation, liability, tax and data protection duties, as well as competition and consumer protection. Careful legal review is therefore imperative for providers and consumers of services to ensure compliance with all relevant legal requirements and to minimize legal risks.
Frequently Asked Questions
What rights do I have in the case of defective service according to the German Civil Code (BGB)?
If a service is provided defectively, customers have various rights against the service provider in accordance with §§ 611 ff. BGB. The service provider must first be given the opportunity for subsequent performance, meaning the customer must basically allow the provider the chance to remedy the defect. Only if this subsequent performance is refused or fails can the customer, under § 634 BGB, insist on a reduction of the fee, withdrawal from the service contract, or claim damages. The specific configuration of the rights depends on the agreed service and the contract content. In the case of repeated or serious defects, a special right of termination may even arise. For claims for damages, it is necessary that the provider acted culpably. The burden of proof for the defect lies with the customer.
To what extent is the service provider liable for damages arising in the context of service provision?
The liability of the service provider is essentially governed by §§ 280 ff. BGB. If the provider causes damage in the course of their work (for example, through improper execution), they are liable for damages if they can be blamed (intent or negligence). Contract clauses that generally exclude liability are invalid under § 309 no. 7 BGB in standard terms and conditions when it comes to injury to life, body, health, or gross negligence. In the case of simple negligence, liability limitations are permissible but should be communicated clearly and understandably. The provider is also liable for vicarious agents unless explicit limitations of liability have been individually agreed.
What are the statutory requirements for an invoice for services rendered?
The invoice for a service rendered must contain certain mandatory information according to § 14 UStG. This includes the name and address of both the service provider and the service recipient, the date the service was performed, a clear description of the service, the invoice number, date of issue, net amount, VAT rate, and the specified tax amount. For smaller amounts (up to €250 gross), simplified rules apply (§ 33 UStDV). Businesses are also required to keep invoices (§ 147 AO) to enable traceability for the tax office in the event of an audit.
What deadlines apply for notifying defects in services?
According to § 634a BGB, the limitation period for defect claims in contracts for work is generally two years from the acceptance of the work. For buildings or contractual work on buildings, a five-year period applies. In service contracts, which many services fall under, there is no statutory right to give notice of defects, but once the defect and contract termination are known, the standard limitation period of three years (§ 195 BGB) generally begins. It is advisable to report defects promptly and, if possible, provably, as shorter deadlines or exclusion periods may also be agreed depending on the contract.
When can a service contract for a service be terminated extraordinarily?
An extraordinary right of termination according to § 626 BGB exists when, taking all circumstances and the interests of both parties into account, it is unreasonable for the terminating party to continue the contract until its regular end. Reasons can include serious breaches of duty, persistent defects, gross misconduct, or a breakdown of trust. Termination must usually be declared without undue delay after becoming aware of the reason; otherwise, the extraordinary right may be forfeited.
What data protection obligations exist for services?
If a service provider performs services involving the processing of personal data, they are obliged to exercise special care under the General Data Protection Regulation (GDPR). The party responsible for compliance with the GDPR is principally the client (“controller”), but the provider (“processor”) must comply with the requirements of Art. 28 GDPR. This includes, among other things, concluding data processing agreements, implementing technical and organizational data protection measures, and fulfilling notification obligations in the event of data breaches. Violations can result in significant fines and compensation claims from affected persons.
How can warranty claims be effectively excluded or limited in a service contract?
Exclusions of warranty in service contracts are only permitted to a limited extent under § 309 BGB in general terms and conditions. A complete exclusion is usually ineffective, especially in cases of injury to life, body, health, and gross negligence. In individually negotiated contracts, more far-reaching provisions may be allowed, provided they do not violate statutory prohibitions or public policy (§ 138 BGB). A precise contractual wording and an express reference to the exclusion or limitation of the warranty are recommended to ensure effectiveness. Particularities apply in consumer contracts, where clauses are often subject to stricter scrutiny and are more frequently invalid for consumer protection reasons.
