Individual Agreement

An individual agreement is a contractual provision negotiated between the contracting parties on a case-by-case basis that does not qualify as a standard form contract (SFC) and is therefore not subject to the stricter scrutiny applied to SFCs. In real estate law, the distinction between individual agreements and GTCs plays a central role, as many standard clauses in lease and purchase agreements are only valid if they have actually been individually negotiated. Simply putting a verbally negotiated agreement in writing does not automatically make it an individual agreement.

General Terms and Conditions vs. Individual Agreement: The Crucial Distinction

General Terms and Conditions (GTC) are pre-formulated contractual terms that are provided by one party for a large number of contracts (Section 305 BGB). They are subject to the strict content review under Sections 307-309 of the German Civil Code (BGB) and may be invalid if they unreasonably disadvantage the contracting party. An individual agreement, on the other hand, arises when the clause is agreed upon following genuine negotiations between both parties-meaning the other side had a real influence on the content. Merely accepting a pre-formulated text is not sufficient.

Proving that a genuine individual agreement exists depends on the process: Was the clause actively discussed? Did the other party have the opportunity to influence the content? In case of doubt, the party invoking the validity of the individual agreement bears the burden of proof. Courts are strict in their assessment-a subsequent claim that the matter was “discussed” is generally insufficient.

Individual Agreements in Tenancy Law

In tenancy law, individual agreements may deviate from statutory tenant protection provisions that are discretionary (i.e., subject to derogation). Typical subjects of individual agreements in tenancy law include: individual provisions regarding the lease term and notice periods, special termination rights for certain events, specific rights of use (e.g., conducting business in the apartment, keeping pets of a certain type and size), renovation obligations and their schedule, deviating provisions regarding the settlement of operating costs, and agreements regarding cosmetic repairs.

Particularly regarding cosmetic repairs, case law has significantly tightened the limits of standard contract terms: Many standard formulations previously used in form rental agreements are now invalid under current Federal Court of Justice (BGH) case law. However, as individual agreements-involving genuine negotiation-provisions can be established that would fail as standard contract terms. Important: The individual agreement must be documented; in the event of a dispute, the burden of proof lies with the party using the agreement.

Individual Agreements in the Purchase Contract

In a notarized real estate purchase contract, almost all provisions are to be regarded as individual agreements, as the notary tailors the contract to the specific parties. The notary is obligated to explain the significance of all provisions to both parties and to incorporate changes upon request. Nevertheless, we recommend that all verbal agreements (inventory sold with the property, date of transfer of possession, special warranty provisions, conditions for the transfer of tenant accounts) be fully included in the draft contract.

What is not included in the notarized contract is, in case of doubt, not valid-in real estate transactions, this is not only a practical problem but also, in many cases, a legal one: For real estate transactions, Section 311b of the German Civil Code (BGB) requires the notarized form. Verbal side agreements that do not appear in the contract are therefore not legally enforceable, even if both parties intended them.

Practical Documentation of Individual Agreements

To ensure that an agreement is recognized as an individual agreement, we recommend the following practice: Conduct negotiations in writing (via email or minutes) so that the negotiation process is documented. Explicitly state in the contract that the clause was “individually negotiated” and which alternatives were discussed. If possible, have meeting minutes or email threads attached to the contract. For important clauses-such as those regarding the obligation to perform cosmetic repairs or deviations from tenant protection regulations-it is advisable to consult a specialist attorney for tenancy law.

Practical Tip for Property Owners in Nuremberg and Franconia

Landlords who wish to agree on special terms with a tenant-such as an unusual permission for use, a special agreement regarding pet ownership, or a deviating maintenance provision-should always document these in writing and, ideally, with the involvement of a tenancy law attorney. We recommend that our clients have lease agreements and purchase contracts reviewed for critical clauses before signing. In Nuremberg, the Nuremberg Tenants’ Association and Haus & Grund Bayern are available as competent advisory bodies; for more complex questions, we are happy to refer you to specialized rental law attorneys in the region.

Frequently Asked Questions

How do I distinguish an individual agreement from standard terms and conditions?

The key factor is whether the clause was actually negotiated and the other party had a real influence on its content. Merely signing a form without discussion does not constitute an individual agreement. In case of doubt, courts decide whether a clause should be classified as standard terms and conditions or an individual agreement.

Can an individual agreement be retroactively classified as a standard term?

If it turns out that a clause was in fact pre-formulated and the contracting party was not offered a genuine opportunity to negotiate, a court may classify it as a standard term and subject it to content review-with the consequence of possible invalidity. Landlords who use standard-form lease agreements and describe individual clauses as “negotiated” without having conducted a genuine negotiation process risk having the entire clause invalidated.

Are handwritten additions to a standard-form contract individual agreements?

Handwritten additions suggest individual negotiation but are not automatically individual agreements. The decisive factor remains whether the content was negotiated. An addition inserted by only one party without the other party’s involvement is not an individual agreement.

What applies if an individual agreement and the standard terms and conditions conflict?

According to Section 305b of the German Civil Code (BGB), the individual agreement generally takes precedence over the general terms and conditions. This means that anything agreed upon verbally or individually in writing supersedes a conflicting standard clause in the contract form. The prerequisite is that the individual agreement was actually validly concluded and can be proven.

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