Tue, Aug. 29, 2006

Termination of Contracts

TS - Washington.   On July 7, 2006, the Bundesgerichtshof, BGH, the German supreme court for civil matters, decided in the matter III ZR 145/05 how to interpret a contract without a termination provision.

The decision concerns an oral agreement between a physician and a hospital about the occupancy of hospital beds. The ruling applies, however, to all kinds of oral or written contracts which fail to provide for their termination.

In such cases, the court must construe the contract and establish a reasonable term for the notice. The parties' interests and the type of contract control the outcome. Considering the long-term business relationship in the contract at issue, the Supreme Court held that six months notice is reasonable.


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