Interviewer: Mr. Högel, thank you for taking the time for this interview. Can you first explain to us what exactly is meant by a “related transaction”?
RA Högel: With pleasure. A related transaction occurs when two or more legally independent contracts are so closely linked economically that they form a single unit. Typically, this involves a purchase agreement in conjunction with a loan agreement to finance the purchase. The classic example is the financed purchase of a car.
Interviewer: What legal consequences could this have for companies?
RA Högel: The legal consequences can be significant. The main risk is that defects or problems in one contract can ‘catch up’ in the other contract. This means that a company could potentially be held liable for problems that are not directly within its area of responsibility.
Interviewer: Can you explain this with an example?
RA Högel: Let’s assume that a car dealer sells a car and at the same time arranges a financing agreement with a bank. If it later turns out that the car has significant defects, the buyer could not only withdraw from the purchase agreement but also revoke the financing agreement. This could lead to the bank asserting recourse claims against the car dealer.
Interviewer: That sounds like a significant risk. How can companies protect themselves against it?
RA Högel: There are several starting points:
- Thorough testing and quality assurance: Companies should carefully test their products or services to avoid defects.
- Clear contractual regulations: It is important to clearly define in the contracts who is responsible for which aspects and how possible problems will be dealt with.
- Transparency towards the customer: Customers should be informed about the nature of the related business to avoid later misunderstandings.
- Insurance coverage: In some cases it may be useful to take out special insurance policies that cover the risk from related transactions.
Interviewer: Are there certain industries that are particularly affected by this problem?
RA Högel: Yes, definitely. In addition to the car trade already mentioned, the following industries in particular are often confronted with related transactions:
- Real estate industry (purchase and financing of real estate)
- Travel industry (package tours with various service providers)
- E-commerce (online purchases with various payment options)
- Telecommunications industry (devices in connection with contracts)
Special caution is required in these areas.
Interviewer: Which legal bases are relevant for related transactions?
RA Högel: The most important legal regulations can be found in the German Civil Code (BGB). In particular, sections 358 to 360 BGB regulate the legal consequences of linked contracts. In addition, depending on the industry, special laws must be observed, such as the Consumer Credit Act or travel law.
Interviewer: Finally, what advice do you give to companies when dealing with related businesses?
RA Högel: My most important advice is: take the issue seriously and do not underestimate the potential consequences. Get advice from an experienced lawyer to review your contracts and business processes. Train your employees regularly on this topic and implement clear guidelines for dealing with related transactions. This is the only way to minimize the risks while reaping the benefits of these business models.
Interviewer: Mr. Högel, thank you very much for these insightful insights into the topic of “connected business.”
RA Högel: Thank you for the interview.
