Contract types: the various contracts at a glance

Many contracts are concluded in everyday life - sometimes without this being obvious every time. One example is the retail sector, where purchase contracts are concluded every day at the supermarket checkout. While consumers hardly worry about such contracts, companies must always be clear about what the conclusion of the contract means. Otherwise, the legal consequences in particular can boomerang.
What are the different types of contracts? In operational practice, it is not just about aspects such as the sales contract. In particular, the rights and obligations towards employees, which are derived from the employment contract, are an essential point. However, companies are also regularly confronted with loan or leasing agreements. What characterizes the different contracts?

Figure 1: Contracts play an important role in everyday work - but what types of contracts exist and what should be considered?

employment contract

Employment contracts are an important part of corporate processes. Sections 611 ff. BGB are decisive for the legal framework. According to general opinion, the employment contract is considered a service contract. This classification is important insofar as it concretizes the character of the obligation. Background: In the case of a contract for work and services, the employee would not only have his work performance, but also a defined work success.

As part of the employment contract, the employee undertakes to work in accordance with instructions. In practice this means that both ...

  • contents
  • Time
  • location
  • execution

... the activities can be determined by the employer. This external control is an essential feature of the employment contract.
In the legal literature, employment contracts are generally considered to be continuing obligations. The contract remains unaffected by this assessment, even by time limits or probationary periods. What matters does an employment contract regulate?

Among other things, it contains regulations on ...

  • Special payments
  • Vacation time entitlement
  • overtime

…met. A job description is also regularly included. In addition to the BGB, the employment contract is also affected by other legal systems - such as the Vacation Time Act or regulations on protection against dismissal.

Purchase contract

Purchase contracts are one of the most important types of contract in everyday life. Basically, sales contracts are about the delivery of a thing or a right for which the buyer pays the purchase price in return. In practice, purchase contracts can be concluded either verbally or in writing.

In everyday life, the sales contract exists in various forms. This includes the purchase of consumer goods. But cash purchases or credit purchases are also purchase contracts.

Various aspects are regulated in sales contract law. These concern, among other things, the seller's obligations with regard to the quality of the object of purchase. The contract law defines, among other things, the handling of material defects according to § 434 BGB.

If a purchased item is not free of defects in its quality, this results in various legal consequences - from supplementary performance to a reduction in the purchase price to withdrawal from the purchase contract. Special rules apply to sales contracts in connection with distance sales - i.e. mail order business. The subject of revocation in particular is becoming a particularly strong focus for some industries.

Loan agreement

Loan agreements are of particular importance in a business context. This arises from the fact that companies can find themselves in both the position of debtor and creditor. In general, the loan agreement is based on the mutual exchange of services (credit agreements are equivalent to the loan agreement). The lender undertakes to offer his counterpart a fixed sum of money.

This main performance obligation is offset by obligations of the borrower arising from the contract. The latter must pay the interest agreed in the contract and manage the repayment. In practice - especially in the area of consumer loans - the installment loan is widespread.

In business operations, other types of loans may come to the fore. This includes, for example, the bullet loan. The latter is based on the repayment of the loan debt at the end of the agreed term. Mortgage loans are contracts that are backed by mortgage liens. The latter are mortgages or land charges. In practice very often in use is the land charge. Background: Unlike mortgages, a land charge is not tied to the substantiating claim.

So-called loans in kind also play a role in day-to-day operations. Here, the borrower is not provided with any financial means, but with things as a loan object. In addition, there is also the so-called Swiss loan, which is often granted without SCHUFA relevance. For this, the consideration of the remaining creditworthiness plays a major role.

Social contract

Articles of association only play a role almost exclusively in a business context. While many types of contract in Germany are aimed at mutual rights and obligations - that is, they establish synallagmatic relationships, this characteristic is absent in the social contract. Rather, it is a matter of defining a common objective and subordinating the services from the contract to this.

A articles of association can be justified according to the Commercial Code or the BGB. In principle, the contract is the framework under which a company can take part in business dealings with the outside world.

In the design of the articles of association and its content, the legislature allows a relatively large amount of freedom - for example in the way in which the individual partners work together. The individual signatories are also very free with regard to the time factor, i.e. the duration of the contract. A social contract can only be temporary. Articles of association generally regulate how a company does is organized internally. In addition, the contract can also have external effects. However, this is regularly restricted by applicable law - for example towards consumers or business partners.

What other contracts are there?

The types of contract mentioned so far are often found in everyday business management. However, companies are faced with a range of other contracts in everyday life. These include, among others:

  • Rental and lease agreement
  • Leasing contract
  • Guarantee contract, etc.
Figure 2: When it comes to contracts, it depends on the design.

Conclusion: Business economists need to know their contracts

In business dealings, it is common to conclude contracts. The written form is preferred - due to the better verifiability - for the conclusion. But: Many contracts can also be concluded verbally. Regardless of which variant business economists ultimately choose - it must be clear what the contract includes before signing the contract. Otherwise there is a risk of making mistakes. And these become expensive very quickly in operational practice.

Not only the duties of the counterpart need to be known. It is also important to deal with your own duties - in order to make the right decisions based on this knowledge.

Image sources:
Figure 1: @ Free-Photos (CC0 license) /
Figure 2: @ rawpixel (CC0 license) /