As far as legally permissible? Not a good idea!

Initial Situation

Jurisdiction clauses (but also other contractual clauses) frequently include an addition that reads along the lines of: "…to the extent permitted by law." The drafter may have copied the clause without thinking (which is always a bad idea) or did not know what is legally permissible. The fact is, such a contractual clause can become problematic.

Case Law

The Bavarian Supreme Court (BayObLG) dealt with the validity of the following jurisdiction clause included in general terms and conditions in a contract between two entrepreneurs (BayObLG, Decision of 10/26/2021 – 101 AR 148/21):

"The exclusive jurisdiction for all disputes arising from this contract is Stuttgart, to the extent permitted by law."

The BayObLG considers this clause to be invalid. Unlike the two lower courts, it did not address the relevant provisions of the ZPO (in particular, § 38 ZPO) but already found the clause to be invalid due to a violation of the transparency requirement in general terms and conditions (§ 307 para. 1 sentence 2 BGB).

Initially, the court points out that the contract text, in which the jurisdiction clause is embedded, has the character of a form used by the plaintiff based on its external appearance and content, and thus constitutes a general term and condition.

The court considers the jurisdiction clause – even in commercial transactions – to be opaque because of the addition "to the extent permitted by law," which leads to the invalidity of this clause.

It is true that it has not yet been decided by the highest court whether a severability clause in general terms and conditions can exceptionally be considered valid if the legal situation is doubtful or if the user is to be spared the effort of formulating exceptions for extraordinary circumstances in the interest of keeping the clause clear. However, if the legal situation is clear, and a regulation in general terms and conditions is intended, and the issue of clarity is not relevant for this regulation, severability clauses in general terms and conditions – even in commercial business transactions – cannot be validly agreed upon. The user is instead required to provide a clear version of their general terms and conditions. They cannot leave it to the courts to limit a broadly and carelessly drafted clause to what is legally permissible and thereby give it a specific content; that is precisely where the use of a severability clause leads.

The court's view is correct and not surprising. The Federal Court of Justice (BGH) had already ruled in 1995 (BGH, Judgment of 10/12/1995 - I ZR 172/93) and again in 2012 (BGH, Decision of 11/20/2012 - VIII ZR 137/12) that severability clauses of the kind "to the extent permitted by law" in general terms and conditions cannot be validly agreed upon, at least when the legal situation is not seriously doubtful. In this context, the prohibition of limiting to what is legally acceptable must also be observed, whereby it is within the risk area of the user of the general terms and conditions if the clause is not clear and comprehensible. It is not the task of the courts to restrict the clause to what is just legally permissible.

Practical Tip from the User's Perspective

Avoid the addition "to the extent permitted by law" in your pre-formulated contractual clauses, especially in the jurisdiction clause. This addition does not provide security but instead leads to the invalidity of the clause. This also applies to similar additions such as "to the extent no mandatory provisions oppose it," "to the extent the law does not mandate otherwise," etc.

Practical Tip from the Contractual Partner's Perspective

You have a compelling argument for the invalidity of the clause and can tactically use this knowledge in a dispute.