Standard Contracts: Customer Protection Clauses must be Drafted Correctly

Model contracts may constitute general terms and conditions since the provisions contained therein often cannot be changed and negotiated separately. However, in such cases the model contracts may not put the contractual partner at an unreasonable disadvantage and must also be drafted sufficiently clear, understandable and unambiguous. The German Federal Court of Justice (Bundesgerichtshof – “BGH”) (judgment of 03/12/2015, docket number: VII ZR 100/15) has decided that a provision in a standard commercial agency agreement obligating the commercial agent to refrain from “canvassing other customers” for the duration of two years after the termination of the contract does not meet these requirements. The BGH held that it was unclear who the term “customer” referred to in the clause. E.g. the clause did not clarify whether it referred to all entities that had already signed contracts with the company or rather only to the entities whose contracts the commercial agents had brokered. The decision illustrates that general terms and conditions are not only the typical “small print” but also unilaterally pre-formulated contracts (e.g. model contracts) which require a design that pays particular attention to clear and sufficiently unambiguous wording. The consultation of a specialist lawyer is recommended especially in conflict-prone provisions such as non-compete clauses.