Definition and Legal Basis (Section 138 BGB)
In civil law, immorality refers to a violation of a legal transaction against the sense of decency of all fair and just thinkers. According to Section 138 (1) of the German Civil Code (BGB), a legal transaction is void if it is contrary to public decency. This legal standard serves to ensure basic ethical standards in legal transactions and protects parties from contracts that run counter to fundamental moral and social values. The general views of society at the time the contract is concluded, and the specific circumstances of the individual case, are decisive in assessing whether a contract is immoral.
Usury (Section 138 (2) BGB) as a Special Case of Immorality
A specific special case of immorality is usury, regulated in Section 138 (2) BGB. Usury occurs when one contracting party takes advantage of another party's predicament, inexperience, lack of judgment, or considerable weakness of will. This exploitation aims to obtain a promise of performance that is conspicuously disproportionate to the consideration.
Such a contract is void. Courts typically assume a conspicuous disproportion if the value of the consideration is approximately twice as high as the performance received. This regulation prevents contracts from exploiting individuals who are particularly worthy of protection.
Typical Examples of Immoral Contracts
Beyond usury, other types of contracts are also considered immoral. So-called "gagging contracts" disproportionately restrict one party's economic or personal freedom. Another example is overcollateralization in credit security law.
Here, a lender demands significantly more collateral than necessary to cover its risk, placing an excessive burden on the guarantor. In employment law, immorality can arise if employees are paid extremely low wages, less than half of the usual local or industry wage. Such contracts are invalid and must be adjusted accordingly.
Judicial Examination of Immorality
Courts always conduct an open-minded examination of immorality. This means there is no blanket classification; instead, all circumstances of the respective case must be carefully assessed. The court considers objective contract terms, the subjective intentions of the contracting parties, and general social notions of decency and fairness at the time the transaction was concluded.
Therefore, applying Section 138 BGB always requires a differentiated, case-by-case assessment.
Immorality under Tort Law (Section 826 BGB)
In addition to the contract law provision of Section 138 BGB, tort law contains a separate provision on immorality. According to Section 826 BGB, anyone who intentionally causes damage to another person in a way contrary to public decency is liable for damages. This provision specifically targets cases where intentional and particularly immoral behavior, such as fraud or deliberate deception for purely selfish motives, causes harm.
Examples of such tortious cases of immorality include systematic investment fraud or deliberate damage to reputation for economic gain.
Legal Consequences and Practical Significance of Immorality
The legal consequence of immorality is typically the nullity of the legal transaction in question. This means the parties cannot derive any contractual claims from it. Any payments already received may have to be reversed in accordance with the provisions on unjust enrichment (Sections 812 et seq. BGB).
In cases under Section 826 BGB, the injured party also has a claim for damages. The prohibition of immoral legal transactions and actions therefore holds considerable practical significance for legal certainty and fairness in business life, establishing clear ethical boundaries.
Summary and Purpose of the Prohibition of Immorality
Overall, the prohibition of immorality prevents or reverses legal transactions that, while not formally violating specific legal provisions, are morally reprehensible and socially unacceptable. This prohibition significantly contributes to enforcing fundamental ethical standards in legal transactions. It serves as a flexible instrument for appropriately reacting to unfair and indecent business practices.