A cease-and-desist declaration is a written undertaking to refrain from a specific course of conduct in future, coupled with a promise to pay a contractual penalty in the event of any breach. It is the key instrument used in competition, copyright and trade mark law to settle a dispute without going to court. As a rule, it is enclosed with a cease-and-desist letter as a pre-formulated template: anyone who signs and returns it acknowledges that there is no so-called risk of repetition, thereby rendering legal proceedings unnecessary.
For online retailers, the cease-and-desist declaration represents the actual financial risk of a warning letter – far more significant than the opposing party’s legal fees. This is because it is a permanent commitment, and any subsequent breach triggers a contractual penalty that can quickly run into four figures. Anyone who understands the declaration knows why one should never sign it on impulse.
Why the cease-and-desist declaration is necessary in the first place: the risk of repetition
Behind the cease-and-desist declaration lies a legal construct: the risk of repetition. According to established case law, it is presumed that anyone who has once breached an obligation under competition law or intellectual property law will do so again. This presumption forms the basis for the claim for an injunction. However, it is rebuttable – and practically the only sure way to dispel it is to submit a declaration of undertaking subject to a penalty clause. ‘Subject to a penalty clause’ means that the declaration contains a promise to pay a substantial contractual penalty in the event of a breach. It is only this promise that makes the undertaking credible enough to remove the risk of repetition.
A mere undertaking without a penalty clause (“I will not do this again”) is not sufficient. It does not rule out the risk of repetition because it lacks financial consequences. This is precisely why the standard forms in circulation are always linked to a contractual penalty.
Pre-formulated vs. modified: the crucial difference
The cease-and-desist declaration attached to a warning letter is drafted by the party issuing the warning – and in their own interests. It is therefore almost always broader in scope than the specific circumstances require. Typical pitfalls:
- Wording that is too broad. The form often prohibits more than the specific infringement complained of, thereby imposing obligations that go beyond the immediate cause.
- Admission of liability. Some forms contain an admission that the infringement has been committed. This may prove disadvantageous in any subsequent dispute.
- Excessive fixed contractual penalty. A high, fixed penalty remains binding even if the infringement was minor.
- Assumption of costs. Often, the assumption of the costs of the warning letter is declared at the same time – even in cases where Section 13(4) of the Unfair Competition Act (UWG) actually excludes reimbursement of costs.
The usual and generally advisable response to this is the modified cease-and-desist declaration: a version drafted by the party themselves (or by a solicitor) that covers only what is actually owed. It omits the acknowledgement of liability, narrows the scope of the cease-and-desist order and often leaves the amount of the contractual penalty, in accordance with the ‘Hamburg custom’, to the creditor’s reasonable discretion, subject to review by a court. Important: Even the modified declaration must be backed by a genuine threat of penalty; otherwise, it does not rule out the risk of a repeat offence.
The contractual penalty and the ‘Hamburg custom’
The cornerstone of any cease-and-desist declaration is the contractual penalty. It can be structured in two ways:
| Model | How it works | Assessment |
|---|---|---|
| Fixed amount | A specific amount (e.g. €5,100) is payable for each breach. | Predictable, but inflexible; may seem disproportionate in the case of minor breaches. |
| Hamburg practice | The amount is left to the creditor’s reasonable discretion and reviewed by the court in the event of a dispute. | Usually more favourable from the signatory’s perspective, as proportionality is maintained. |
Since the 2021 reform of the Unfair Commercial Practices Act (UWG), Section 13a UWG limits the contractual penalty in certain circumstances – for example, in the case of first-time breaches by small businesses and breaches that only insignificantly affect consumer interests. In such cases, a contractual penalty must not exceed a certain limit. The underlying risk remains unaffected: once agreed, a contractual penalty becomes payable in the event of any repeat offence.
The permanent commitment: the underestimated long-term risk
The most important and most frequently underestimated point: a cease-and-desist declaration is a standalone contract that is generally valid for an indefinite period. It is therefore binding not just for the next few weeks, but permanently – even years after the original warning letter. This shifts the risk into the future: if the alleged infringement reoccurs later – for example, because a shop update restores an old text module or a new employee reuses a phrase that was removed long ago – the contractual penalty is forfeited without the need for a new warning letter.
In practical terms, this means that anyone who submits a cease-and-desist declaration must ensure that the issue in question is permanently rectified, both technically and organisationally. In e-commerce, this involves correcting the relevant templates, managing text modules centrally and checking during every relaunch or system update that no content for which a warning has been issued reappears.
A specific example from e-commerce
An online shop receives a warning letter because it advertises a ‘14-day right of return’ as a special benefit – an advertisement that takes for granted something that is already a legal right under distance selling legislation. The warning letter is accompanied by a cease-and-desist declaration with a fixed contractual penalty of 5,100 euros per infringement and an acknowledgement of liability. Instead of signing the excessive original, the retailer submits a modified declaration: without an acknowledgement of liability, with a scope strictly limited to the advertising claim in question, and with a contractual penalty in accordance with Hamburg custom. He then removes the statement not only from the specific product page, but also from the central text module that had displayed it on all pages. This eliminates the risk of repetition and technically eliminates the long-term risk.
Form, service and conclusion of the cease-and-desist agreement
Legally speaking, the cease-and-desist declaration constitutes an offer to enter into a contract. The cease-and-desist agreement is only concluded once the party issuing the warning accepts the declaration – either expressly or through conclusive conduct. In the case of a pre-printed declaration signed without amendment, acceptance usually takes place tacitly. If, on the other hand, the party receiving the warning submits a modified declaration, this constitutes a modified offer which the party issuing the warning must first accept; if they do not accept it, the risk of repetition is not yet eliminated from their point of view, and they may take legal action. In practice, many parties issuing the warning accept a properly amended declaration because it achieves their actual objective – the cessation of the infringement.
The law does not strictly require the declaration to be in any specific form; text form is generally sufficient, and sending it by email or post with proof of receipt is standard practice. It is important to meet the set deadline: if the declaration is received late, the party issuing the warning may already have initiated legal proceedings. Anyone unable to meet the deadline should request an extension in good time – this, too, is standard practice.
Breach of the declaration and ways to escape the permanent obligation
If a further breach occurs after the declaration has been submitted, the agreed contractual penalty is forfeited. The creditor does not have to go to great lengths to prove the breach and fault, as would be required for a new competition law infringement; it is sufficient to prove that the agreed terms of the cease-and-desist order have been breached. This makes the declaration a powerful tool for the creditor and underlines why the disputed situation must be permanently remedied.
It is difficult to withdraw from this indefinite commitment, but not impossible. In particular, a solution is recognised where the legal situation changes subsequently and the conduct originally objected to is now permitted – in which case the basis of the cease-and-desist agreement may cease to exist. A practical example is the removal of the obligation to include a link to the EU online dispute resolution platform in the legal notice: anyone who had committed to such a notice – which was subsequently abolished – by means of a cease-and-desist declaration can invoke the changed legal situation. Such solutions are the exception; as a rule, a declaration once made remains in force. That is why careful scrutiny before signing is so much more important than attempting to extricate oneself later.
Three ways to respond to an attached cease-and-desist declaration
Anyone who receives a warning letter containing a pre-formulated cease-and-desist declaration is effectively faced with three options. Which is the correct one depends on whether the allegation is justified and whether the warning letter is valid in both form and substance.
- Sign the form as it stands. Quick, but risky: you commit yourself to terms that are often too broad, a potential admission of liability and a high, fixed contractual penalty. This course of action is rarely recommended.
- Submit a modified declaration. The standard approach where the allegation is justified: you acknowledge the risk of repetition but limit your obligation to what is actually owed. This requires careful wording, ideally drafted by a solicitor.
- Reject the statement. In the event of an unfounded allegation, a lack of standing to sue or an abusive warning letter, you may choose not to submit a statement at all. In that case, however, you must expect legal proceedings and should be able to substantiate your position robustly.
In all three cases, the following applies: it is almost always advisable to remedy the alleged infringement immediately, regardless of the legal assessment – if only to prevent a further infringement from occurring whilst the dispute is ongoing. And the deadline set must be met in all cases, or an explicit extension obtained; inaction is the most costly option.
Frequently asked questions about the cease-and-desist declaration
Do I have to sign the attached cease-and-desist declaration?
Not in the form provided. If the allegation is justified, a modified cease-and-desist declaration should be submitted in place of the standard form, covering only what is actually owed. If the allegation is unfounded or the warning letter constitutes an abuse of law, there is no need to submit a declaration at all – though this should be reviewed by a solicitor.
How long am I bound by the declaration?
Generally permanently, i.e. for an indefinite period. A cease-and-desist declaration is a standalone contract and remains valid for years. Any subsequent breach may trigger the contractual penalty without the need for a new warning letter.
What is a modified cease-and-desist declaration?
A version drafted by the party concerned, which limits the scope of the cease-and-desist order to the specific incident, omits any admission of liability and often keeps the contractual penalty flexible in accordance with Hamburg practice. It addresses the risk of repetition just as effectively as the standard form, without the latter’s overly restrictive nature.
How high is the contractual penalty usually?
Where fixed amounts apply, it is often in the four-figure range per infringement. Under the Hamburg practice, the amount is left to the creditor’s reasonable discretion and is reviewed by the court. Section 13a of the Unfair Competition Act (UWG) limits the penalty in certain cases, such as first-time infringements by small businesses.
What happens if I do not submit the declaration?
If the risk of a repeat infringement remains, the party issuing the warning may apply for an interim injunction or bring an action for an injunction. This is significantly more expensive and takes effect more quickly than the warning letter itself. Therefore, a timely and considered response – submitting an amended declaration or a reasoned rejection – is almost always advisable.
The legal basis for the right to an injunction can be found in Section 8 of the UWG on gesetze-im-internet.de; a general overview is provided by the Wikipedia article on the cease-and-desist declaration.