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General Terms and Conditions (AGB) allow companies to use standard contractual rules when entering into a large number of agreements. However, these provisions must be clear and transparent for the other party. If a clause does not allow the contractual consequences to be understood clearly, it may be invalid.
This issue was recently considered by the German Federal Court of Justice (Bundesgerichtshof, BGH) in its decision of 1 October 2026 (Case No. III ZR 205/25).
What was the case about?
The dispute concerned a provision in General Terms and Conditions that allowed a membership fee to be increased. The court had to determine whether the clause met the legal requirements of transparency and clarity.
It is not sufficient for a contractual provision to be understandable at the level of individual words. The contractual partner must also be able to understand what practical consequences the provision has for their obligations.
This is particularly important when a contract contains provisions concerning price changes. The customer should be able to determine under which circumstances their payments may increase and which criteria apply to such an increase.
What does this mean for businesses?
The decision is particularly relevant for companies that use standard contracts and pre-formulated General Terms and Conditions. This includes, for example, service agreements, subscription contracts, membership agreements and other standardised contractual arrangements.
An unclear clause does not provide a company with additional legal protection. On the contrary, if the provision is found to be insufficiently transparent and therefore invalid, it may fail to produce the intended legal effect.
Companies should therefore pay particular attention to provisions concerning price adjustments, fees, contract terms and termination rights. The AGB should make it clear under which circumstances and for what reasons the customer’s contractual obligations may change.
Why should AGB be reviewed regularly?
The BGH decision once again demonstrates that it is not only the substance of a contract that matters, but also how clearly its provisions are formulated.
Companies should regularly review their standard contracts and General Terms and Conditions rather than relying on the same wording for many years. Changes in legislation and developments in case law may make it necessary to amend individual provisions.
A legally sound contract starts with terms that are clear, transparent and easy to understand.
