General terms and conditions provisions on "loan fees" in building society contracts invalid

The XI Civil Senate of the Federal Court of Justice has ruled that a pre-formulated provision on a "loan fee" of 2 per cent of the loan amount in building society contracts between consumers and entrepreneurs is invalid.


Of the originally scheduled three proceedings on the admissibility of loan fees in building society contracts, the case XI ZR 552/15 was still to be decided after the withdrawal of two appeals. In this case, a consumer protection association, which is registered as a qualified institution pursuant to Section 4 UKlaG, is suing. With the action for injunction pursuant to § 1 UKlaG, it contests a clause contained in the General Terms and Conditions for Bauspar Contracts (Allgemeine Bedingungen für Bausparverträge, ABB) of the defendant Bausparkasse, according to which a "loan fee" in the amount of 2 percent of the building society loan is due and added to the building society loan at the beginning of the disbursement of the building society loan (§ 10 ABB).

The plaintiff is of the opinion that the challenged clause violates section 307 of the German Civil Code and claims that the defendant should refrain from using the clause vis-à-vis consumers.

Course of the process:

The action was dismissed in both lower courts. The plaintiff's appeal, which was allowed by the Higher Regional Court, was successful.

Decision of the Federal Supreme Court:

The "loan fee" is a so-called ancillary price agreement subject to judicial review. The clause is to be understood to the effect that the fee is not a concrete contractual consideration. Rather, the fee serves to compensate for administrative expenses incurred for the defendant's activities in connection with the building society loans.

The clause thus deviates from the fundamental ideas of the statutory regulation. On the one hand, this fee is a charge which, contrary to the legal model for loan agreements, which provides for a term-dependent interest rate according to § 488 par. 1 sentence 2 BGB, is not term-dependent. Contrary to the opinion of the Higher Regional Court, this model is also decisive for building society loan agreements. Secondly, according to the established case law of the Federal Court of Justice (Bundesgerichtshof), fee clauses in general terms and conditions are incompatible with fundamental principles of the legal system if expenses for activities are passed on to the customer which the user is obliged to perform by law or under an ancillary contract or which he performs predominantly in his own interest. This is what the challenged clause provides for.

These deviations of the clause from essential basic ideas of the statutory regulation unreasonably disadvantage the contractual partners of the bausparkasse. In particular, the fee is not levied in the collective overall interest of the bauspar community, as it does not contribute to ensuring the functioning of the bauspar system. The loan fee is also not compensated by individual advantages for bauspar customers, such as favourable loan interest rates, since these are already offset by not insignificant disadvantages, such as a closing fee.

Judgment of the Federal Supreme Court of 8 November 2016 - XI ZR 552/15

Source: Press release of the BGH


Goldberg Attorneys at Law 2016

Attorney at Law Michael Ullrich, LL.M. (Information Law)

Specialist lawyer for information technology law