Save the ‘Mittelstand’ : How German Courts Protect Small and Medium-Sized Enterprises from Unfair Terms

This article discusses the appropriateness of controlling standard terms in business-to-business (B2B) contracts. Using the example of Germany, where the Civil Code explicitly allows the control of B2B standard terms, it finds evidence that courts tend to use this control to favour small and medium-sized enterprises (the Mittelstand) in relation to bigger companies. This approach is questionable. It is suggested here that the rationale of standard terms control is not to compensate for power imbalances, which is the task of other legal institutions, such as competition law. Rather, the goal of such control should be to prevent and correct failing contractual and market mechanisms. It is further argued that clear criteria are required for assessing the fairness of standard terms in B2B relations, which are currently lacking both in German statutory provisions and in case law. Therefore, the article finds that it is not recommendable to emulate the German model on the European level. Before any clear criteria are found, the EU should not engage in the harmonization of B2B standard terms control