What is AGB in Germany? General terms and conditions explained

Get a better understanding of general terms and conditions in Germany with our comprehensive guide. Navigate critical clauses and legal compliance with ease.

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Summary

General Terms and Conditions 💬AGB in Germany are pre-defined contractual rules that standardise agreements between businesses and their customers. They simplify contract management and ensure clarity, especially for online shops. Although not legally mandatory, AGB help protect both sides by defining payment terms, cancellation rights, liability clauses, and other core conditions. To be valid, customers must be clearly referred to the AGB and confirm their acceptance during the contract process.

Definition
Mandatory use
Contents
Key points
Common issues
Templates
Invalid clauses
Mistakes to avoid
Takeaways

Understanding GT&Cs in Germany

General terms and conditions (GT&Cs) 💬Allgemeine Geschäftsbedingungen or AGB are ready-made clauses for mass contracts.

Officially, they are pre-formulated contractual terms and conditions in accordance with §§305 of the German civil code. They serve to simplify and standardise mass contracts, as the clauses of the general terms and conditions are not negotiated individually and per person but apply equally to all contracting parties. The general terms and conditions of an online shop, therefore, apply to all sales contracts unless the provider negotiates a different contract with the contracting party. Drafting your AGB is just one the usual tasks to get your e-commerce business started after you’ve completed the necessary registrations.

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Are terms and conditions mandatory in Germany?

Companies in Germany are not legally required to create terms and conditions. If you choose not to use them, general contract law applies instead, including the civil code and commercial regulations.

Still, many businesses decide to draft their own terms and conditions because they offer practical advantages:

Consistent rules: All customer contracts follow the same structure.
Legal clarity: They help prevent misunderstandings and provide a reliable fallback in case of disputes.
Customer expectations: Many buyers, especially online, expect clear terms.
Balance of interests: You can ensure your terms apply instead of defaulting to those of the other party.

Why terms and conditions matter for online shops

If you run an online shop in Germany, having terms and conditions can make everyday operations much easier. They allow you to clearly define essential information your customers rely on, such as:

When a purchase contract is concluded
Accepted payment methods
Delivery costs
Shipping responsibilities
Who covers return shipping in case of cancellation

Make sure your terms and conditions are easy to find on your website so customers can review them before placing an order. This improves transparency and reduces the risk of disputes later on.

Contents of AGB

German law does not prescribe a fixed structure for terms and conditions. However, businesses must ensure that customers understand which contractual rules apply when a purchase is made. In practice, many GT&Cs include elements such as:

Cancellation policy: Especially for distance sales, customers must be informed about how and when they can cancel a contract.
Pricing transparency: State clearly whether your prices include VAT and other charges.
Reservation of title: It is common to retain ownership of goods until full payment has been received.

Depending on your business model, additional clauses may also be appropriate, for example:

Rules on liability
Instructions for product disposal
Required company details
Time limits for reporting defects

These elements help ensure clarity for both parties and reduce the likelihood of misunderstandings during the transaction.

AGB: What to watch out for when creating GT&Cs

When crafting terms and conditions, thinking about your customers is essential. The law gives more leeway to B2B contracts than B2C ones. That’s because the law assumes that typical consumers may need help understanding complex contract terms, so it aims to protect them more.

📌 Avoid legal jargon and remember the rule of clarity. Your GT&Cs should be easy to understand without needing extra tools to read the small print.

Troubleshooting for GT&Cs

If you run an online shop in Germany, well-written terms and conditions can prevent many everyday headaches. Here are common real-world problems and how GT&Cs can solve them:

Common problem	Solution
Two sets of rules collide. For example: You send an offer, but the customer secretly adds their own terms in the fine print.	A clause stating that your terms automatically apply prevents customers from replacing them with their own.
Customers expect unrealistically fast delivery. For example: A buyer assumes “shipping in 2 days” even though you depend on a wholesaler.	Set delivery times that start only after payment is received or stock is confirmed.
Your supplier raises prices. For example: Material costs increase and your margin disappears overnight.	A price adjustment clause lets you update prices when external costs change.
Unclear expectations about payment. For example: Customers assume they can pay weeks later or expect a discount.	Specify due dates, accepted payment methods, and whether discounts or instalments are allowed.
A customer simply does not pay For example: The invoice is ignored for months and you cannot move forward.	Set payment deadlines and define what happens if someone falls behind.
A customer sends goods back without warning. For example: Someone cancels their order after shipping and you have no process for returns.	Cancellation and return rules define who pays for shipping, how refunds work, and what must be returned.
One clause turns out to be invalid. For example: A single line violates consumer protection rules.	A severability clause keeps the rest of the contract valid even if one part fails.

AGB templates & generators

Many websites offer generators that produce ready-made terms and conditions in just a few clicks. These templates can be a helpful starting point, but they are not automatically legally reliable.

The main risks are easy to overlook, especially for non-experts:

⚠️ Templates may not match your business model.
For example, a clause designed for digital products may not fit a shop selling physical goods.

⚠️ Important details may be missing.
If a clause is too general, customers or competitors may challenge it.

⚠️Copied text can lead to copyright issues.
Terms and conditions are protected by intellectual property law, so taking them from another shop can cause legal trouble.

Because of these risks, many businesses ask a lawyer to review their draft terms or create a customised version. This ensures that the clauses match the specific way you sell, deliver and communicate — and reduces the likelihood of disputes or formal warnings from competitors.

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When are GT&Cs not valid?

For terms and conditions to apply, it is not enough to simply place a link somewhere on your website. They must be properly integrated into the contract. In practice, this means:

Customers must be clearly informed that terms and conditions exist.
They must be able to read them easily before completing a purchase.
They must actively agree, usually by ticking a checkbox during checkout.

In online shops, this is typically solved by a simple checkbox such as:
‘I confirm that I have read and accept the terms and conditions.’

After the purchase, it’s common to email the order confirmation along with the terms and conditions and cancellation information so the buyer has a copy.

Common mistakes

German contract law includes several rules that protect consumers and restrict what businesses may include in their terms and conditions. The most important points for entrepreneurs are:

Surprise clauses do not count

If a clause is so unusual that a typical customer would not expect it, it is automatically invalid.

Unclear wording works against you

If a clause can be interpreted in more than one way, the interpretation that is less favourable to the business owner applies.

Only the faulty clause is removed

The rest of the terms remain valid even if one clause is thrown out. This is often supported by a severability clause.

Additionally, any clause that unfairly disadvantages customers (§ 307 BGB) is invalid. What counts as ‘unfair’ is ultimately decided by a court. Judges may look at older cases for guidance, but they are not required to follow them. This is why terms and conditions can never be 100% legally foolproof.

Takeaways

Well-drafted AGB provide legal certainty and prevent disputes, but they must comply with the fairness rules of the German civil code. Avoid copying templates or using unclear language, as invalid clauses can render terms unenforceable. For full protection, have your AGB reviewed by a qualified lawyer and ensure they are properly integrated into every contract. This approach keeps your business compliant and builds trust with customers.