Extraordinary termination without notice of contractually non-cancellable insurance and other contracts

– How to immediately terminate long-term occupational and personal pension contracts -.

 

It is not only in private banks that it is common for employees to have to earn up to more than three times their gross salary. For bank customers, this means that up to more than 1% of their assets can go to fees and charges – kickbacks and other hidden costs can more than double this. If, on the other hand, a customer still has an attractive interest rate, as in the case of older building society contracts, it is obvious that the building society will cancel them.

 

Mass termination at attractive interest rates

One way to deprive customers of good long-term returns is to terminate thousands of building society contracts without notice. By unilateral declaration the interest payment ends –
maybe the money will be held as a check for collection. Whether this was effective without a contractual right of termination may be decided later by the courts on the basis of a few individual cases.
clarify.

 

In contrast to contracts with fixed terms agreed from the outset with guaranteed interest and the possibility of paying in instalments, the term of a building society contract is not foreseeable. In the case of building society contracts, the interest rate was fixed only for the duration of the contract until the loan or credit was drawn down, theoretically with a completely open end. Here it can be difficult for the
This could become unreasonable for a building society if the risk of interest rate changes had been incalculable because building society contracts which were ready for allocation had not been called up for many years.

 

Cancellation in the event of excessive interest on loans

In contrast, loan customers – such as consumers and former business founders – often have a way to legally terminate their loan early without an early repayment penalty.
This is appropriate if the declaration of revocation was missing or incorrectly formulated. It may also be a loan in conjunction with life or credit insurance,
because in this respect, too, the customer may not have been informed of his right of objection, or may not have been informed of it correctly.

 

Withdrawal by contradiction with occupational disability and life insurance

In the case of life insurance policies, customers often notice too late that the promised increase in value may in fact be negative or that the model calculation when selling the policy
is more likely to be the wishful thinking of the intermediary. In the view of the European Court of Justice, the consumer right of objection lasts forever if it has not been explained or has been explained inadequately. It can be exercised even after termination.

 

Contracts with guarantees that cannot be terminated by ordinary agreement can also be terminated.

The so-called extraordinary right of termination cannot be excluded by contract, § 314 BGB. It depends in whose sphere of risk the changes fall that could justify extraordinary termination and whether this risk is to be assessed as having been (more or less consciously) assumed when the contract was concluded.

 

For example, in the case of life insurance with lifetime calculation of an annuity policy, it must be assumed that the insurer has carefully considered which guaranteed interest rate should be used.
he works and with which mortality table, and that he has consciously taken into account changes in the interest rate situation and life expectancy as a risk, and can therefore not invoke changes here for extraordinary termination. It might be different if customers have found a cheap means of immortality, or if there are no more interest rates at all because the ECB has
gives everyone as much credit as they want for free. This is called by the jurist then the omission of the business basis, § 313 BGB.

 

Normally, what matters is that one did not know about the changes at the time and, had one known about them, would not have concluded the contract under the changed conditions in any case. In the case of life insurance, on the other hand, it is known and taken into account by means of safety margins that there may be changes – there is even a safety margin for as yet completely unknown changes explicitly in the calculation of the mortality table. Therefore, more must change for the insurer to be able to give extraordinary notice of termination.

 

Imminent distress and insolvency as grounds for termination

If the insurer is threatened with insolvency, the supervisory authority will in any case reduce the benefits already guaranteed, and in the event of insolvency the contracts will simply be terminated. Even if the protector fallback solution takes effect, the already guaranteed benefits can also be reduced by 5 %. However, extraordinary termination can also be used in appropriate cases. However, before an insurer becomes insolvent, i.e. when it is already apparent, the customer could still give extraordinary notice of termination, because it is unreasonable to merely watch the economic decline.

 

Terminating non-cancellable Riester, Rürup and basic pensions

The statutory extraordinary termination according to § 314 BGB is also possible if the policyholder is in an emergency situation. At the latest, the insolvency administrator or trustee will gladly try to increase the insolvency estate with these savings. This is not entirely altruistic, because it regularly increases his compensation.

 

It is therefore conceivable that the capital from the basic pension is urgently needed to avert an impending insolvency or to reach an agreement with creditors. Also a hardship –
the customer would have to starve to death, so to speak, or suffer severe damage for lack of money for medical treatment if he does not have the capital from the basic pension available – would be conceivable, as would divorce or that he sits in the cold and rain because he cannot renovate his house roof and cannot afford either a new heating system or the heating oil for it. Maybe it’s enough,
when an ex-manager needs the money for his criminal bail, or a dentist as a ransom, so that his head is not sawn off in Sumatra by money-hungry impatient pirates.

 

It can be agreed with the insolvency administrator or in the case of private insolvency that the capital of the basic pension should also be used, because otherwise the economic existence would be terminated. The insolvency administrator could at least press for this and a letter to this effect from the insolvency administrator could help to justify the extraordinary right of termination. On the other hand, courts have already ruled that dissatisfaction with the surplus development is not sufficient for an extraordinary right of termination, but that embellished sample calculations are sufficient for a reversal.

 

Terminating a non-cancellable occupational pension

It is even less well known that the extraordinary right of termination also exists in occupational pension schemes. For example, the Bremen Regional Labor Court (LAG Bremen,
Judgment of 22.06.2011, Az. 2 Sa 76/10) that even in the case of deferred compensation there may be a duty of care and consideration on the part of the employer (Sec. 241 BGB), and thus the obligation to agree to a reversal of the occupational pension scheme – in the event of economic hardship on the part of the employee – by giving notice as policyholder or employer. Compared with a lump-sum settlement at the start of the pension, this can even result in considerable savings on taxes and social security.

 

How founders are expropriated without notice

Every year, a number of founders who had relied on foreign foundation boards or foundation trustees for their total assets also spontaneously fall into poverty. Since in the meantime very many foundations have been withdrawn from Liechtenstein, for example, those living there from corresponding functions have an interest in making better use of the remaining foundations, as an alternative
to return to work as mountain farmers. To this end, unpopular foundation boards are dismissed, as a hostile takeover, so to speak, which is also warned against in Liechtenstein in the meantime. A meeting is simply called, with the agenda item of the dismissal of the foundation board X. The president is also allowed to chair the meeting. This person, as president, is also allowed to chair the meeting and is then recalled with the votes of the other two foundation board members and subsequently put out on the street. The foundation supervisory authority at the Office of Justice then implements this in the public register without further examination – whether good cause exists as required – without submitting it to a court for this purpose – as is intended – and without giving X any further opportunity to comment. An appeal to the Office of Justice, created in 2012, as a foundation supervisor is pointless because the now only third party may complain, but cannot receive a decision other than to be referred to the ordinary court. The articles of association – which, although now mandatory for new foundations, do not contain any provision for dismissal – then often provide for a court of arbitration, which exacerbates the spontaneous need for money.

 

by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala
PhD, MBA, MM

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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