German High Court rules against deemed consent in general T&Cs

On 27 April 2021, the German Federal Court of Justice (BGH) ruled that new or amended clauses in banks' general terms and conditions (AGB Banken) are void if the Bank fails to obtain the customer's consent to the change.

The BGH's decision is the result of a court case against the German Postbank initiated by the German consumer protection association. The association argued that, ultimately, the customer has no real choice when presented with amendments to the AGB Banken - the options are to either accept the change or to terminate the agreement. Basically, the association's intention was to increase transparency to the customer.

The AGB Banken currently state that clients who do not respond to a customer information regarding an upcoming change to the AGB Banken are deemed to have consented to the change. The BGH has, however, now decided that the current interpretation of deemed consent goes too far and places the bank's customers at an unreasonable disadvantage in that such clauses go against the essential rational of contract formation in the German Civil Code (BGB), which generally requires explicit consent to be given by both parties to an agreement. In such cases, explicit agreement to an amendment is required under the provisions of the BGB.

The BGH has ruled that this also applies, in particular, to clauses that currently regard silence as giving consent when it comes to changes in fees. This allows banks to amend the most important aspect of its contract with the customer by means of an implicit consent, with no restrictions imposed. According to the BGH this gives the bank an unreasonably favourable position, to the detriment of its customers. The specific background is in this respect that many German banks are currently in the process of introducing or increasing fees for payment accounts and accordingly the topic is of particular importance. However, the decision equally applies to general terms and conditions used vis-à-vis consumers as well as vis-à-vis entities.

German Banking organisations regard the decision as extremely challenging since it might, in practical terms, become extremely difficult to obtain customer consent in respect of a change of the AGB Banken. The impact of the court's ruling could make it nearly impossible to agree on changes of the AGB Banken; alternatively, banks would end up with different versions of the AGB Banken for each of their customers.

The ruling will affect virtually all German banks as they all use broadly the same version of the AGB Banken. The challenge now facing them will be to find an alternative solution which takes the BGH's ruling into account