A Long-Term Commitment of Partners in a Partnership (GbR) May Be Inappropriate - Germany
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An overly long commitment of partners in a partnership organised under the German Civil Law (GbR) that arises out of the memorandum of partnership of the GbR, can be inappropriate in some circumstances.
The Federal Court of Justice (BGH) ruled in the court decision dated 6 November 2012 (Ref. no.: II ZR 176/12) that a commitment of partners by a memorandum of partnership of a GbR binding the partners to the partnership for a longer period of time may be inappropriate in some circumstances.
A long-term commitment of the partners to the partnership could lead to a limitation of the partner’s options for termination, which would hence be invalid. Should the memorandum of partnership determine the commitment of the partners to the company, this should be manageable time-wise and should not inappropriately restrict the personal and economic freedom of the partner.
The question of how the timeframes of a commitment of the partners within a company are defined has to be decided on a case-by-case basis. For the assessment process, in addition to the legitimate interests of the individual partner, the structure of the company, the nature and extent of the obligations arising from the participation in the company, as well as the interest in the long-term existence of the company deriving from its purposes shall also be considered.
The partnership organised under the German Civil Law, also known as BGB-Gesellschaft, is the most basic form of a partnership. There are therefore only a few mandatory legal requirements for the BGB-Gesellschaft, and it is up to the partners to shape the company through its memorandum of partnership.
Thus, the memorandum of partnership, for example, is not bound to any specific form and many GbR provisions are not obligatory. It is in this flexibility that, on the one hand, there is an incentive, but on the other hand also the risk when establishing a partnership organised under the German Civil Law, since many opportunities also pose many risks. That is why it is so important to place the interests of a company even before its establishment in the hands of experienced lawyers.
ABOUT THE AUTHOR: GRP Rainer LLP
GRP Rainer LLP is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices in Cologne, Berlin, Bonn, Dusseldorf, Essen, Frankfurt, Hamburg, Hannover, Munich, Stuttgart, Bremen, Nuremberg and London UK.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
A long-term commitment of the partners to the partnership could lead to a limitation of the partner’s options for termination, which would hence be invalid. Should the memorandum of partnership determine the commitment of the partners to the company, this should be manageable time-wise and should not inappropriately restrict the personal and economic freedom of the partner.
The question of how the timeframes of a commitment of the partners within a company are defined has to be decided on a case-by-case basis. For the assessment process, in addition to the legitimate interests of the individual partner, the structure of the company, the nature and extent of the obligations arising from the participation in the company, as well as the interest in the long-term existence of the company deriving from its purposes shall also be considered.
The partnership organised under the German Civil Law, also known as BGB-Gesellschaft, is the most basic form of a partnership. There are therefore only a few mandatory legal requirements for the BGB-Gesellschaft, and it is up to the partners to shape the company through its memorandum of partnership.
Thus, the memorandum of partnership, for example, is not bound to any specific form and many GbR provisions are not obligatory. It is in this flexibility that, on the one hand, there is an incentive, but on the other hand also the risk when establishing a partnership organised under the German Civil Law, since many opportunities also pose many risks. That is why it is so important to place the interests of a company even before its establishment in the hands of experienced lawyers.
ABOUT THE AUTHOR: GRP Rainer LLP
GRP Rainer LLP is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices in Cologne, Berlin, Bonn, Dusseldorf, Essen, Frankfurt, Hamburg, Hannover, Munich, Stuttgart, Bremen, Nuremberg and London UK.
Copyright GRP Rainer LLP
More information about GRP Rainer LLP
View all articles published by GRP Rainer LLP
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
