Contract for services: what it governs and how to terminate it

What is a service contract?

The law defines the service contract in one sentence: whoever promises services must perform the promised services, and the other party must pay the agreed remuneration (Sec. 611 (1) BGB). The person who performs the services is called the person obliged to perform services (Dienstverpflichteter), and the person who receives and pays for them the person entitled to the services (Dienstberechtigter). In everyday language, they are called the contractor and the client.

The subject matter can be services of any kind (Sec. 611 (2) BGB): teaching, consulting, care, programming by the hour, management, medical treatment. The service contract is therefore the basic type for almost every activity performed for money where no fixed result is promised.

For remuneration, otherwise no service contract. Anyone who manages a matter for another person free of charge acts under a mandate (Auftrag) (Sec. 662 BGB). If remuneration has not been expressly discussed, it is still deemed to have been agreed if, in the circumstances, the services can only be expected in return for payment (Sec. 612 (1) BGB). Where the contract concerns the management of another's affairs (Geschäftsbesorgung), for example representation by a lawyer, individual rules of the law on mandates also apply (Sec. 675 (1) BGB).

Form. A service contract can be concluded orally, by email or with a handshake. A written contract still makes sense as proof in a dispute. For an employment contract, the employer must document the essential terms in writing or, under certain conditions, in text form (Sec. 2 (1) NachwG).

Examples of service contracts

Whether a service contract exists depends on the content of the agreement. Typical examples:

Example	Type of contract	Special feature
Private tutoring, music or language lessons	service contract	lessons owed, no learning success
Management consulting, coaching, interim management	service contract	An expert report with a fixed result can be a contract for work
Lawyer, tax adviser	service contract for the management of affairs (Sec. 675 BGB)	remuneration often under a fee scale
Doctor, hospital, physiotherapy	treatment contract (Behandlungsvertrag) (Sec. 630a BGB)	The law on service contracts applies unless Sec. 630a et seq. BGB provide otherwise (Sec. 630b BGB)
Freelancer for ongoing support (social media, IT support by the hour)	service contract	If a finished result is owed, for example a logo, it is a contract for work
Gym	mixed contract	elements of lease (equipment, rooms) and service (classes, supervision)
Managing director of a GmbH	service agreement as a service contract	as a rule, not an employment contract
Salaried employees and workers	employment contract (Sec. 611a BGB)	special case with employee protection
Commercial agent (Handelsvertreter)	commercial agency contract (Sec. 84 et seq. HGB)	self-employed trader, special rules in the HGB

Many contracts mix elements of different types of contract. It then depends on which part predominates or which rule fits the specific point in dispute.

Service contract, services agreement, freelance service contract: the terms

Services agreement (Dienstleistungsvertrag) is not a term used in the law. In everyday language, it means any contract for a service, so often a service contract, but sometimes also a contract for work, for example when an agency delivers a finished website. Which rules apply therefore does not depend on the name, but on whether an activity or a result is promised.

Freelance or self-employed service contract (freier Dienstvertrag) means a service contract that is not an employment contract: the contractor essentially organises their activity freely and determines their own working hours. This is how many freelancers, consultants and liberal professionals work. This term is not in the BGB either; this guide only covers German law.

Consultancy agreement, fee agreement, freelancer agreement (Beratervertrag, Honorarvertrag, Freelancer-Vertrag) are also everyday names for service contracts or contracts for work.

Service contract or employment contract?

Every employment contract is a service contract, but not the other way round. An employee performs work bound by instructions and determined by others, in personal dependence; a person is bound by instructions if they cannot essentially determine their activity and working hours freely. What matters is an overall assessment of all circumstances (Sec. 611a (1) sentences 1, 3 and 5 BGB).

Feature	Self-employed service contract	Employment contract
Legal basis	Sec. 611 et seq. BGB	Sec. 611a BGB and employment law
Instructions	no personal dependence, content and time essentially free	instructions on content, performance, time and place possible (Sec. 611a (1) sentence 2 BGB)
Statutory notice period	according to the payment intervals (Sec. 621 BGB)	4 weeks with effect from the 15th or the end of the month, longer for the employer depending on length of service (Sec. 622 BGB)
Form of notice	none by law	in writing, electronic form excluded (Sec. 623 BGB)
Termination at any time for services based on trust	possible for services of a higher nature without fixed remuneration (Sec. 627 BGB)	excluded
Protection against dismissal	none	under the Protection Against Dismissal Act (KSchG), if its requirements are met
Pay during illness	only for a short period of absence (Sec. 616 BGB), often excluded by contract	continued payment of remuneration for up to 6 weeks (Sec. 3 EntgFG)
Holiday	in principle no statutory entitlement, except for employee-like persons (Sec. 2 sentence 2 BUrlG)	at least 24 working days a year (Sec. 3 BUrlG)
Social insurance	in principle own provision, exceptions in Sec. 2 SGB VI	employment (Sec. 7 (1) SGB IV), the employer registers and pays the contributions

Employees can find the periods in the guide Notice periods for employees and pay during illness under Continued pay during illness. If you have an employment contract in front of you to sign, a lawyer will review it for a €259 fixed price.

Managing director: The service agreement of a GmbH managing director is, as a rule, a service contract. What it should contain is explained in the glossary entry Managing director's service agreement.

Service contract or contract for work?

Under a contract for work, the contractor promises a result, for example a repaired heating system or a finished website (Sec. 631 BGB). Under a service contract, they only owe the activity. Three questions help with the classification:

1. Has a specific, verifiable result been agreed? Then much points to a contract for work.
2. Is payment based on time, i.e. by the hour, day or month, without a fixed end product? Then much points to a service contract.
3. Is the result to be accepted at the end? Acceptance only exists under a contract for work.

What the parties really want and how they perform the contract carries more weight than the heading. With software development, it depends: a finished app at a fixed price points to a contract for work, developer hours in an agile team billed by effort rather to a service contract. A comparison table with acceptance, rights for defects and time limits can be found in the guide Contract for work.

Which is "better" depends on the side you are on: with a contract for work, the client gets a result and rights for defects, and in return the contractor bears the risk of success. With a service contract, it is the other way round.

Obligations of the parties

The person obliged to perform services must perform the promised services with due care and, in case of doubt, in person; in case of doubt, the client cannot assign their claim (Sec. 613 BGB).

The person entitled to the services must pay the agreed remuneration. If its amount has not been determined, an official scale of fees (Taxe) applies where one exists, otherwise the usual remuneration (Sec. 612 (2) BGB). Further obligations:

• Due date: The remuneration only has to be paid after the services have been performed, and where it is measured by time periods, after the end of each period (Sec. 614 BGB). The contractor therefore performs in advance.
• Default: At the latest 30 days after the due date and receipt of the invoice, the debtor is in default, in the case of consumers only if the invoice points this out (Sec. 286 (3) BGB). Default interest: 5 percentage points above the base interest rate, between businesses 9 percentage points plus a €40 lump sum (Sec. 288 (1), (2) and (5) BGB).
• Default of acceptance: If the client does not accept services offered, for example because they cancel booked consultant days at short notice, the contractor can claim the agreed remuneration without having to perform later. However, they must offset what they save or earn elsewhere (Sec. 615 sentences 1 and 2 BGB).
• Short absence: If the person obliged to perform services is unable to work for a relatively insignificant period for personal reasons through no fault of their own, they keep their claim to remuneration (Sec. 616 BGB).
• Protection and reference: Rooms and equipment provided by the client must protect life and health (Sec. 618, 619 BGB). When a permanent service relationship ends, the person obliged to perform services can request a reference (Sec. 630 BGB).

Unpaid fees usually become time-barred after 3 years from the end of the year in which they arose (Sec. 195, 199 BGB). More on this in the guide Limitation.

Poor performance: what rights do you have under a service contract?

Unlike the purchase contract and the contract for work, the service contract has no rights for defects of its own. There is no claim to rectification, and the law does not provide for a reduction of the remuneration. However, anyone who works poorly breaches their obligations under the contract. This opens up two routes:

• Damages: If the contractor breaches a duty, they must compensate for the resulting damage, unless they are not responsible for the breach of duty (Sec. 280 (1) BGB). The damage can also consist in the services being worthless to you.
• Termination: In the case of serious breaches of duty, you can terminate without notice (Sec. 626 BGB), and for services based on trust often even without a reason (Sec. 627 BGB). You may then not have to pay for services already performed in which you no longer have any interest as a result of the termination (Sec. 628 (1) sentence 2 BGB).

Example: A company pays a marketing consultant €2,000 a month to manage its online advertising. After three months, the hoped-for enquiries fail to materialise. That alone gives rise to no claim, because success was not owed. But if the consultant has not set up agreed campaigns, she has breached her obligations: the company can claim damages and, depending on the severity, terminate. As a rule, the client must prove the breach of duty. Record agreements in writing for this reason.

Terminating a service contract: periods and special rights

Fixed-term or open-ended?

A fixed-term service contract ends when the agreed period expires (Sec. 620 (1) BGB); before then, ordinary notice is only possible if the contract provides for it. If work continues after expiry with the client's knowledge and the client does not object without delay, the contract continues for an indefinite period (Sec. 625 BGB). If the duration has not been determined, either side can give ordinary notice (Sec. 620 (2) BGB). Agreed periods take precedence. There is no statutory form for a self-employed service contract; still give notice in a way you can prove.

Notice periods under Sec. 621 BGB

Without an agreement, the period depends on the time periods by which the remuneration is measured (Sec. 621 nos. 1 to 5 BGB). What counts is receipt by the other party.

Remuneration measured by	Notice at the latest	With effect from	Example
days	on any day	end of the following day	receipt on Thursday, end on Friday
weeks	on the first working day of a week	following Saturday	receipt on Monday, 16 November 2026, end on Saturday, 21 November 2026
months	on the 15th of a month	end of the calendar month	receipt on Tuesday, 15 December 2026, end on 31 December 2026; receipt on 16 December 2026, end only on 31 January 2027
quarters or longer periods	6 weeks beforehand	end of a calendar quarter	receipt by Wednesday, 17 February 2027, end on 31 March 2027
not by time periods (flat fee, fee per project)	at any time	immediately	if the contract takes up all or most of the contractor's working activity: 2 weeks' notice

If the last day falls on a weekend or a public holiday, make sure the notice is received beforehand. For employment relationships, Sec. 622 BGB applies. If a service relationship has been concluded for more than 5 years or for life, the person obliged to perform services can give notice after 5 years with a period of 6 months (Sec. 624 BGB).

Termination without notice for good cause

Either side can terminate without notice if, weighing up all circumstances, continuing the contract cannot reasonably be expected of them (Sec. 626 (1) BGB), within 2 weeks of learning of the relevant facts (Sec. 626 (2) BGB). This right cannot be excluded by contract. Details in the guide extraordinary dismissal.

Termination at any time for services based on trust (Sec. 627 BGB)

If the contractor performs services of a higher nature that are usually entrusted on the basis of particular trust, notice may be given without good cause. This does not apply to employment relationships, nor if the contractor is in a permanent service relationship with fixed remuneration (Sec. 627 (1) BGB). Typical examples are contracts with lawyers, tax advisers or doctors. The contractor themselves may only give notice without good cause in such a way that you can obtain the services elsewhere; otherwise they owe damages (Sec. 627 (2) BGB).

Remuneration after termination without notice: The contractor receives the part that corresponds to their services so far. If they gave notice themselves without being prompted to do so by the client's conduct in breach of contract, or if they caused the termination through their own conduct in breach of contract, this only applies to services that are still of interest to the client. Advance payments for the period afterwards must be repaid (Sec. 628 (1) BGB). Anyone who causes the termination through conduct in breach of contract owes damages (Sec. 628 (2) BGB).

Term, renewal and withdrawal for consumers

For regular services to consumers, for example lessons or fitness, the following are invalid in standard terms and conditions (AGB): a binding initial term of more than 2 years, a tacit renewal (except for an indefinite period with a notice period of no more than one month) and a notice period of more than one month before expiry (Sec. 309 no. 9 BGB). Between businesses, Sec. 309 BGB does not apply directly (Sec. 310 (1) BGB). If the contract can be concluded on a website, there must be a cancellation button there (Sec. 312k (1) and (2) BGB). More in the guide What belongs in terms and conditions?.

If you concluded the contract as a consumer online, by telephone or away from business premises, you can usually withdraw within 14 days (Sec. 312g (1), Sec. 355 (2) BGB). The right expires on full performance if you expressly agreed to the early start and confirmed the loss of the right of withdrawal (Sec. 356 (5) no. 2 BGB). Compensation for value may be payable for services already performed (Sec. 357a (2) BGB).

Bogus self-employment: when the service contract is an employment contract

A contract is called a "freelance service contract", but the contractor has fixed working hours, receives instructions and works like an employee in the team? Then the reality as lived counts: if the actual performance shows an employment relationship, the label in the contract does not matter (Sec. 611a (1) sentence 6 BGB). A similar standard applies to social insurance: indicators of employment are working according to instructions and integration into the client's work organisation (Sec. 7 (1) SGB IV).

For the client, this can above all mean social insurance contributions that have to be paid in arrears, for the contractor employee rights such as holiday. Irrespective of this, self-employed persons who work permanently and essentially for only one client and do not employ an employee subject to compulsory insurance can themselves be subject to compulsory pension insurance (Sec. 2 sentence 1 no. 9 SGB VI).

Clarity in advance: The client and the contractor can have the German Pension Insurance Federation (Deutsche Rentenversicherung Bund) determine whether employment or a self-employed activity exists (Sec. 7a (1) SGB IV). On application, it decides even before the activity starts (Sec. 7a (4a) SGB IV); under Sec. 7a (7) SGB IV, this rule applies until the end of 30 June 2027.

What belongs in a service contract: checklist

A good service contract describes how the cooperation is actually meant to work. You should cover these points:

1. Description of services: Which activity, to what extent? The clearer it is, the easier it is to prove a breach of duty. Words such as "guaranteed", "complete" or "accept" point to a contract for work.
2. Remuneration: hourly, daily or monthly rate, VAT, travel expenses. Without another agreement, the billing interval also determines the notice period (Sec. 621 BGB).
3. Due date: Without a provision, payment is only made after the services have been performed (Sec. 614 BGB). You must agree advance payments and payment terms.
4. Term and termination: fixed-term or open-ended, periods, form.
5. Personal performance: May employees or subcontractors be used (Sec. 613 BGB)?
6. Self-employment: free scheduling of working time, own work equipment, no integration, and all of this as it is actually lived (Sec. 611a (1) sentence 6 BGB).
7. Liability: Limitations are possible, but not in standard terms for personal injury and gross fault (Sec. 309 no. 7 BGB).
8. Confidentiality, data protection and rights of use: What remains secret, and who owns concepts, texts or code from the cooperation?

Clauses that cause trouble:

Clause	Problem	Provision
"Fixed attendance Monday to Friday, 9 am to 5 pm, instructions from the team leader"	features of an employment relationship	Sec. 611a BGB, Sec. 7 SGB IV
"Term 36 months, renewed for 12 months each time" (consumer standard terms)	initial term and renewal too long	Sec. 309 no. 9 BGB
"Notice is excluded during the term"	does not cover termination for good cause	Sec. 626 BGB
"Liability is excluded" (standard terms)	invalid for personal injury and gross fault	Sec. 309 no. 7 BGB
No provision on the payment date	contractor must perform in advance until the end of each period	Sec. 614 BGB

We deliberately do not offer a template to copy here: a service contract must fit the actual cooperation.