Practicalities

Closing Contracts

You want to engage in business and want to have the right to demand something. You need to close a contract in Germany. This page will introduce you to the basics of closing contracts. It is very different from common law countries!

I have heard that oral promises to do this or that are really binding. Is this true?

Yes. In Germany, contracts usually only require two concurring opinions – a consensus. Following German law no “consideration” or certain financial limits for the oral form is required. The other side of the coin is that you might not be able to prove to a court that you have concluded a contract. The main exceptions are contracts considering transfer of land property, liens or encumbrances on real estate (§311b BGB), company agreements or articles of corporations (§2 GmbHG, §23 AktG), marriage contracts (§1410 BGB), and wills (which according to §2231 BGB are ruled by German law). To comply with German law, your last will must be in handwriting, or a public notary must attest your signature on your typed will.
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What is meant by “action implying to a certain legal transaction (schlüssiges Verhalten)”?

When agreeing to do something you can either say that you will do it or just do it. If you just did it, then the law understands that you wanted to perform this legal action. A typical example: After shopping you put your items on the conveyer belt and the cashier sums up all the single prices to a total. The only things said were just polite greetings. Legally seen, you told the shop owner that you wanted to buy the items on the conveyer belt. [Following German law this is not yet binding, but instead an invitation of the shop owner to make you an offer – invitatio ad offerendum]. The cashier agreed that she would be selling you these items for the sum of € x. [She made you the offer to buy these items for € x.] You paid her. [Now you accepted her offer and the contract is closed with the shop owner.] Why the contract is closed with the shop owner? Because he is the contracting party and the cashier is only his representative.
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Coincidences abound! My partner to be happens to have the same citizenship as I do. May we sign the contract to rent an apartment subject to our national law?

By law, it is basically no problem, but watch out for details. You may not contravene mandatory provisions. Such provisions are e.g. grounds for termination, rent increases, and the security deposit. In addition, any stipulations you add that are not know in German law will be hard to enforce in a German court. German courts can have international jurisdiction, and the judge is bound to apply foreign law if necessary. However, most German judges are not competent in this respect, which means that you will have to bring in experts, your costs will explode, and the case will drag on forever. Think twice if you really want to use foreign laws. Will you really be willing to handle the hassle?
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Having only a negligible knowledge of German, I signed a contract in German. I understood, that the service provider instructed me on all important details of the contract by encircling the chosen services to be rendered. Wanting to terminate it, the other side’s attorney instructed me that the contract provides a half-year notice period. The service agent never told me such. I believe they want to cheat me!! Can that be?

My dear reader, you are pretty naive! Every law in the world considers it your personal risk to understand the contract you sign. If you do have sufficient command of German then ask to have a copy to take back home and have somebody help you understand. If the company is reluctant to do so, they may be viewed as dubious. After signing a written contract, it is binding.
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My gal put a fine electric shaver in my Christmas stocking. The thing is that I prefer a different model. The apparatus I got is not broken however, I just don’t like it. Can I demand that the vendor will exchange it?

No. You cannot demand it exchanged, but you could ask to trade it in for a different model and you usually should have the possibility to do this. There is no legal right to demand a contract be changed once it has been correctly fulfilled from both sides! Your gal bought an item and the vendor gave her exactly what she wanted. So, legally you have absolutely no chance. However, it is usually considered as bad marketing for a company to refuse the understandable and easily fulfillable request of a customer. Therefore, almost all businesses allow exchanging goods after they have been bought. Do pay attention to a few rules to successfully exchange items:

 

  1. The item must not have been used. This does not mean that it is forbidden to open the box and look at it. You may try on a piece of clothing but not wear or wash it.
  2. Exchanging for something with the same price is the easiest. If the price is higher, you will have to pay the difference and that will take care of that. If the price is lower than the other price, you will surely receive the difference.
  3. Do not expect your money back if you just want to return it and not exchange it for something. Expect to receive a voucher (Gutschein). §

 

I just got a sharp and snappy call from a provider accusing me of being the biggest stooge on earth. All I asked for was an acknowledgement that he received the payment I transferred from my account to his account. Um, what went wrong? I feel absolutely misunderstood. At home this is normal practice.

I understand you both well! In Germany, your wish is everything else but “standard”. Unfortunately, you really did hint to the German provider that you were a “stooge”. Nobody expects and wants you to follow your payment and/or bank transferal. You are only expected to pay by transferal and afterwards check your account if the money has really left your account. Everything else is considered as annoying and doing so really shows that you have no knowledge of how Germany works. In the case your payment does not reach the provider, you will receive a reminder. When a reminder comes in after you have really paid, double check that the bank details were correct and supposing they were correct, then forward the provider a copy of the bank statement showing when you paid. The rest will be the provider’s problem because you fulfilled your obligation!
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Private Health Insurance Coverage in Germany

Statutory insurance is considered as the insurance for the poor, supplying only standard treatment. The legislation for statutory insurance tends to limit the payment of the doctor’s performance. Are you thinking about applying for private insurance? Be sure to list every serious illness you have had.

 

What is meant by “statutory health insurance”?

“Statutory” implies that your insurance is compulsory via certain public (but not state owned) insurance companies. Most statutory health insurance companies offer mostly the same services, but the premiums have now become uniform 15%.
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How can I get private health insurance?

Having a yearly income above a certain amount or being self-employed, you can choose between both types of insurances. There is virtually no way to switch between the systems, so you are locked in once you have made your choice. By the way, forget about dispensing health insurance. In Germany, it is mandatory. Even though you are entitled to choose, you can remain privately insured or sign up for a statutory health insurance as a so-called “freiwillig Versicherter” (voluntary insured person).
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I heard from a health insurance company back home that I do not need to close an insurance policy here in Germany as my home coverage for students is also valid for Germany. Is this true?

Students from countries with which Germany has signed a social security treaty, which includes an insurance clause, can continue to be covered by their home insurance company while they are in Germany. For further information, inquire at your institution's international office. But also in these cases, you still have to present proof of insurance coverage to the foreigners office (Ausländeramt) in Germany.
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Which in general is better, statutory or private insurance?

Depends on your monthly liquidity, monthly income, how specialized your coverage is to be, and other factors. Choose a private insurance company: if you do not mind paying all upfront and then getting reimbursed later (except for hospital bills), or if you need flexible coverage, alternative medicine, and a private hospital room. Go with statutory insurance if you need minimum coverage, have a long-term illness or a family or if you are older. The statutory insurance company must insure you if you are not entitled to choose. This is only a very rough differentiation. Please contact an insurance agent for more competent information before signing a contract.
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I’m applying for private insurance. Can you give me some hints what to pay attention to?

Be sure to list every serious illness you have had! Do not listen to any sales agent, who might play down your medical history to get you the lowest possible rate. If you had a severe illness reckon with a surplus on the premium, if they take you at all. If you have a minor orthopedic problem, this will cause a minor jump in your premium. But if you hide your medical history, and then get a giant bill shortly after signing the contract (which the company is then to refund), the company will claim you cheated them. They will cancel your contract and refuse to pay for treatments and hospital stays. On top of that, you may be barred from getting insured by any other private company or even by a statutory insurer. They will not even refund any premiums. All this is legal! So keep your common sense when any insurance broker or other people tell you that private coverage is only advantageous at a low cost!
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What are the most typical advantages of private health insurance?

It is true that

  • on a whole the private health insurance offers better coverage. However, this goes hand in hand that you have to “suffer” more “useless” tests and that there is a tendency you will be “overtreated”.
  • the scope of medical services is much greater.
  • you get preferred treatment. Hospitals and physicians will serve you on a preferred basis – simply because private insurance companies pay higher fees than the statutory companies.
  • coverage is according to your personal need. You can exactly determine the tariff in relation to coverage you want and / or need. When you prefer treatment by a head physician, then book it! (Statutorily insured are not entitled to such.) You can also cover for a one- or two-bed room in the hospital.
  • premiums are based on age, pre-existing illnesses or disabilities and your personal co-payments (disregarding any employers co-payments). A higher co-payment significantly reduces the monthly premium.
  • when you do not request the refund of a medical bill for one full year, you can receive up to three monthly premiums reimbursed.
  • you are pensioned and want to save costs? You can switch to the basics tariff, which is comparable to the service range of statutory insurance or just cancel some “components” like head physician treatment or single room.
I just saw an interesting ad for insurance online? Will they be able to communicate with me in English?

Do not expect it. Most companies are reluctant to insure aliens with either no residency permit or one only recently obtained. Honestly, your health is much too important to neglect! Consider once privately insured, there is virtually no way back to statutory insurance! It is best that you seek the advice of one of the brokers in the LG2G business directory!
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How do I find the correct private insurance for me?

Good question – next question, please! In contrast to property insurance and other personal insurances, there is no ready comparison site and therefore no serious way to calculate what the differences in policies mean in coverage or cost. Your personal needs and preferences are too individual for a programmer to consider any and all possibilities.
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I´ve heard that it´s now easier to move from the government health system to private health insurance. What has changed?

In the past you needed to earn more than the annual threshold for three calendar years in a row to move from the statutory scheme (GKV) to private health insurance (PKV). As of January 2011 you can change immediately if your salary is over the annual threshold - this has been fixed at € 49,500 for the year 2011.
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How is the salary calculated?

Take your December gross salary, multiply by 12, add in any regular additional contractual payments such as your Christmas payment or holiday bonus. Most irregular payments such as performance-related bonuses don´t count for this purpose.
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It looks like I can make the change. How do I it?

You could contact the health insurance companies directly, but there are a large number of different companies, they have many different and confusing combinations of coverage on offer, their English is seldom usable. Besides, some companies are reluctant to insure foreigners without a permanent residence permit. All this could be time consuming. Or try an independent insurance broker.
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How does this work if I´m not working in Germany yet?

If you plan to start working in Germany and already earn more than €49,500 or equivalent - and will earn more than this in Germany - you should be able to join the private health insurance.
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Which system is better - government or private?

That really depends on your personal situation. Private is cheaper if you´re young and healthy. You pay a contribution per person. So if you have several children, the government scheme will probably be cheaper, since you make only one earnings related contribution for your family. If your spouse works, it gets more complicated...
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Do not listen to any sales agent, who might play down your medical history to get you the lowest possible rate. If you had a severe illness reckon with a surplus on the premium, if they take you at all. If you have a minor orthopedic problem, this will cause a minor surplus to your premium. And if you hide your medical history, only to get a giant bill shortly after signing the contract on to be refunded, the company will claim you cheated them. They will cancel your contract and refuse to pay for treatments and hospital stays. On top of that, you may be barred from getting insured by another private company or even by a statutory insurer. They will not even refund any premiums. All this is legal!

Will my health insurance cover my spouse?

Depends on whether you have statutory or private insurance. Being on statutory health insurance, she can be covered in so far as she has no income. Being on private insurance, she is not just because you have an insurance with a certain company. The reason for this is easy to explain because of the nature of the two different insurance systems. Statutory insurance finances itself by the solidarity of all payers. Married couples, both working, will both have to pay their premiums. The private insurance only covers the risk for the person insured.
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Contents for the update kindly provided by Keith Tanner. Thank you!

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