The rulings included in Article 11 on the continued validity of the assurances given by the seller and buyer and the rulings on the agreed compensation claims are also permissible under German law. Use is frequently made in Germany of the admissible possibility of agreeing contract penalties or liquidated damages which apply along with existing compensation claims of the parties arising from the agreement and/or the law. The amount of the contract penalties or liquidated damages to be agreed is left to the discretion of the parties. The rulings on compensation claims accruing to third parties or the contracting parties are superfluous to a very large extent under German law as the form and relevant periods for enforcing compensation claims is specified in the German Civil Code (BGB).

The further agreements reached in Article 11 are also valid under German law.

Concerning the agreement on a contract penalty or liquidated damages, attention is drawn to the fact that the amount can be agreed at will. If the contract penalty or liquidated damages are caused by one of the two contracting parties and if the liable party regards the amount of the contract penalty or liquidated damages to be unacceptable, this party is entitled to convened the competent court in this respect. The court may rule on a reduction of the amount of the agreed contract penalty or liquidated damages if it also considers the aforesaid to be unreasonably high.

For further information please contact Dr Erich Michel, Wessing Berenberg-Gossler Zimmermann Lange, Freiherr-Vom-Stein-Strasse 24-26, Frankfurt am Maim 60323, Frankfurt, Germany- Tel: +496 997 1300, Fax: +496 997 130100.

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