Ending a Contract: Challenge, Withdrawal, Termination – the Differences
Ways to End a Contract
German law offers several ways to end a contract. The terms sound similar, mean very different things legally, and using the wrong one can backfire. Here is a plain-language guide.
“I never wanted this”
Challenge (Anfechtung)
A challenge attacks the contract at its root: a defect in consent at the time of formation, usually a mistake. German law distinguishes many types of mistake – wrong recipient, not realising a declaration was being made, a mistake about essential characteristics of the performance, and more. Not all mistakes justify a challenge; a mistake about your reasons for contracting does not.
The effect: you can declare the contract void and must do so promptly (unverzüglich) after discovering the mistake.
Challenges are also possible if the mistake was deliberately induced, or if there was duress. In practice these are rare due to the burden of proof. An insolvency administrator can also challenge transactions that improperly diminished the estate.
“I changed my mind”
Right of Withdrawal (Widerruf)
Consumers have a right of withdrawal for many contracts – but not all. Going into a shop and buying something gives you no statutory right of withdrawal. Sometimes there is a voluntary one, sometimes with conditions such as store credit only. There is also no statutory withdrawal right for certain distance purchases such as confirmed concert tickets.
The withdrawal period is usually 14 days. It does not start running, however, until the required notice has been given correctly and the goods delivered. This is why lawyers always look at the withdrawal notice first: even a minor drafting error means the period does not start for over a year.
Businesses have no statutory right of withdrawal – unless their supplier inadvertently creates one by including it in their GTC.
A withdrawal right can expire early, but the limits on this are narrow and should always be reviewed by a lawyer.
“Now, I don’t want it anymore either.”
Rescission (Rücktritt)
After a defect, if the other party has been notified and subsequent performance has not been properly delivered, you can rescind the contract. Other grounds for rescission include default. Rescission unwinds the contract: both performances are reversed.
That means: if you paid money, you get money back – not a voucher. Note: if you paid with a voucher, that is different. And with a withdrawal in a shop (“changed my mind”), a voucher may be all you get even if you paid cash.
“I want out, permanently”
Termination (Kündigung)
Termination ends a contract for the future. With good cause, it takes effect immediately. Otherwise notice applies, running to the end of the contract period. For certain contract types, termination is available at any time – for example under a work contract or a service contract involving special trust.
A common misunderstanding: the Kündigungsfrist (notice period) is the period by which you must give notice before the end of the term – not a period you must wait before you are allowed to give notice. You can always give notice to end the contract at the next available termination date, and in many situations doing so promptly is advisable.
Court Rulings on Contract Exits
The following Federal Court of Justice (BGH) rulings deal with contract exits (this list is still very incomplete):
(pls. scroll aside)
- Does your provider have to offer a short-term phone contract?
- Paid off your loan in Germany – can you still cancel it? Auto Loan Agreement Contract Exit
How to Actually End the Contract
What to Say
Legal terms trip people up. A consumer writing five days after signing:
WRONG:hiermit kündige ich fristgerecht zum nächstmöglichen Termin
…has given notice of termination, not a withdrawal. A court will probably interpret it as a withdrawal if it was sent within the withdrawal period (as I successfully argued: AG Hamburg Az. 49 C 38/20, 23 April 2020). The same logic applies to someone declaring “rescission” or “objection” when they mean “withdrawal.”
The safe approach: skip the legal label and say what you want. Then the burden falls on the recipient to characterise it correctly:
correct:ich möchte den Vertrag schnellstmöglich beenden und mein Geld zurück. Hierfür setze ich Ihnen eine Frist bis zum [date – calculate 14 days from now].
Form Requirements
Some contracts require a specific form. First check whether the form requirement is itself valid. If it is, a WhatsApp message does not satisfy written form – you need a printed, signed letter.
Proving Delivery
For documents, proof of delivery means a Einwurfeinschreiben (delivery confirmation letter) – not a Einschreiben mit Rückschein (recorded delivery with return receipt). The latter is more expensive but no better as evidence. Use the Einwurf version, note the tracking number, and follow the delivery online.
For emails, request a technical read receipt and delivery status confirmation. If no reply comes within three days, follow up by letter.
Doing Nothing Is the Worst Choice
Hoping an unwanted contract will sort itself out usually does not work. Deadlines run. Claims become enforceable. Rights expire. The sooner you act, the better.
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