In 2002 Germany enabled a new law of obligations, mainly known as the contract law. The German Contract Law was incorporated in the new Civil Code (Bürgerliches Gesetzbuch, BGB) and it is made up of books 1 and 2. Books 1 and 2 in the German Civil Law contain provisions about the conclusion, the form and content of a contract and also define the types of contracts.
According to the contract law, a German contract is concluded when intent declarations are made. The first intention is to offer and the second one is to accept. Through the offer and acceptance intents, parties agree that the conclusion of the contract will give rise to legal obligations and consequences, which is why according to the German law the conclusion of a contract must be made upon two or more declarations of intent with the same result. In order for the contract to be valid, the German Civil Law requires that both parties have legal capacity to conclude a contract.
According to the basic law the principle of freedom applies whenever concluding a contract. This principle refers to the fact that each party can decide who to sign a contract with, as long as it does not affect third parties. Freedom of contract first appeared in the German Constitution that guarantees freedom of action (Allgemeine Handlungsfreiheit). According to the Civil Code, a contract is valid even without specific rules. However, a contract must contain relevant details in order to be signed. The German Contract Law is based on two principles when concluding a contract:
The contract law defines three types of German contracts:
The German contract law does not have exhaustive provisions about the breach of contracts, but a contract is considered to be breached under these circumstances:
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