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To the extent permitted by law? Not a good idea.

The rider “to the extent permitted by law” makes clauses in German standard terms invalid where the legal position is clear. In forum-selection clauses, this becomes a serious problem.

Peter Poleacov (updated )6 min

A red road sign reading WRONG WAY at the roadside

Starting point

Forum-selection clauses (and other contract clauses) often contain a rider along the lines of “...to the extent permitted by law”. Either the drafter copied the clause without thinking (which is always a bad idea), or the drafter did not know what is permitted by law in the first place. Either way, such a clause can become a problem. Under German law on standard terms, where the legal position is clear, it fails on the transparency requirement, the third of four review stages. The overview is in the entry article “Standard terms in B2B: freedom of contract is the exception”.

Case law

The Bavarian Supreme Regional Court (BayObLG) addressed the validity of the following forum-selection clause in standard terms in a contract between two businesses:1

The BayObLG held this clause to be invalid. Unlike the two regional courts before it, it did not turn to the relevant rules of the German Code of Civil Procedure (Zivilprozessordnung, ZPO), in particular Section 38 ZPO. It struck the clause down for breach of the transparency requirement under the rules on standard terms (Section 307(1) sentence 2 of the German Civil Code, Bürgerliches Gesetzbuch, BGB).

The court first notes that the contract text in which the forum-selection clause is embedded has, both in its outward appearance and in its content, the character of a form used by the claimant, and therefore qualifies as standard terms.

The court considers the forum-selection clause non-transparent even in B2B because of the “to the extent permitted by law” rider, with the consequence that it is invalid.

Lawyers call riders such as “to the extent permitted by law” savings clauses. Where the legal position is clear and the readability of the clause plays no part, savings clauses in standard terms cannot be validly agreed, including in B2B, the court reasons. The user is then required, in the court’s view, to draft its terms clearly. For forum-selection clauses, the legal position is clear, the court says, because the law sets out when they are permitted.

The user cannot leave it to the courts, the court continues, to cut back a broadly and carelessly drafted clause to what is permitted by law and thereby give it substantive content in the first place. That is, however, what a savings clause amounts to. What remains open, on the court’s account, is only whether a savings clause can exceptionally be valid where the legal position is uncertain, or where the user should be spared from drafting exceptions for unusual situations; the Federal Court of Justice (BGH) had not yet ruled on that.

The court’s view is correct and not surprising. The BGH had already held in 19952 and in 2012 and 20133 that savings clauses of the “to the extent permitted by law” type in standard terms cannot be validly agreed, at least where the legal position is not in doubt. In this context, the prohibition on validity-preserving reduction also applies. Under it, the user of standard terms bears the risk if the clause is not clear and intelligible. It is not for the courts to cut the clause back to the maximum still permitted by law.

That prohibition has a limit, however, and it helps the user. Where a clause is severable both in wording and in substance, it is not struck down as a whole. Review is then carried out separately for the provisions that are only formally combined in one clause, and the permissible part survives. Whether a clause is severable is determined by deleting the invalid part, the so-called blue pencil test. That is not a validity-preserving reduction, because the separation is already built into the terms the user itself drafted.4 Draft your provisions so they separate cleanly, rather than trying to rescue them with a savings clause, and you lose only the invalid part when it matters.

What applies instead?

The question that matters most in practice only arises once the clause is gone. Where a clause falls away, the statutory rules take its place under Section 306(2) BGB, and the rest of the contract stays valid under Section 306(1) BGB. For a forum-selection clause between two German businesses, that means the statutory rules on jurisdiction in the ZPO apply. The user who wanted Stuttgart must then sue at the other party’s seat or at a special venue such as the place of performance. That is precisely what the clause was meant to prevent. The rider therefore costs the clause and the home-court advantage. In cross-border trade within the EU, by contrast, the court reviews the forum-selection clause under Article 25 of Regulation (EU) No 1215/2012 (Brussels Ia Regulation). It judges whether the clause is too imprecise by European standards, not by German law on standard terms.5

Practice tip from the user’s perspective

Avoid the “to the extent permitted by law” rider in your pre-formulated clauses, in particular in forum-selection clauses. The rider does not make the clause any safer. Under German law on standard terms, it makes the clause invalid where the legal position is clear. The same goes for similar riders such as “unless mandatory provisions provide otherwise” or “to the extent the law does not mandatorily provide otherwise”.6 What the loss of such a clause means commercially is put in context by the article “Contract management decides your margin”. The rider is usually in the contract because the text was copied; where terms should come from is covered in the article “Standard terms: template, generator, or lawyer?”.

Practice tip from the other party’s perspective

Under German law on standard terms, where the legal position is clear, you have a strong argument for the invalidity of the clause. For a forum-selection clause, this holds at least between two German businesses that have chosen a court in Germany. You can use that knowledge tactically in a dispute.

Notes

  1. BayObLG, order of 26 October 2021 – 101 AR 148/21. ↩

  2. BGH, judgment of 12 October 1995 – I ZR 172/93, as reported in BGH, judgment of 5 May 2015 – XI ZR 214/14, para. 16. ↩

  3. BGH, order of 20 November 2012 – VIII ZR 137/12, para. 3; order of 5 March 2013 – VIII ZR 137/12, para. 3. ↩

  4. BAG, judgment of 3 December 2019 – 9 AZR 44/19. ↩

  5. CJEU, judgment of 27 February 2025 – C-537/23, operative part, point 1. ↩

  6. On the first rider, BGH, judgment of 5 May 2015 – XI ZR 214/14, paras. 15 f. (clause used against consumers); on the second, BGH, judgment of 26 November 1984 – VIII ZR 214/83, as reported in BayObLG, order of 26 October 2021 – 101 AR 148/21, para. 32. ↩

Reference: Poleacov, P. (2026). To the extent permitted by law? Not a good idea.. INN.LAW. https://inn.law/en/perspectives/as-far-as-legally-permissible/