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Part 3 of our 5-part series of articles

Contract and competition law issues are of immense importance in the metaverse. Which law governs contracts concluded in the metaverse? How do metaverse-internal and metaverse-external contracts differ? Can traders in the metaverse compete with traders of real goods? Many questions remain unanswered at present and it remains to be seen how they will be answered.

I. Contract law

Since the Metaverse is not bound by national borders, the question of the applicable law arises.

1. Contractual relationships with the platform

Contracts between users and the platform are subject to the conflict of laws rules of private international law, which are often specified by the platform operators in the terms of use. The choice of law is governed by Art. 3 I Rome I Regulation and, in contrast to entrepreneurs, is restricted for consumers by the most-favoured-nation principle under Art. 6 Rome I Regulation. This states that the consumer protection law of the consumer’s place of residence applies.

2. Contractual relationships between users

Contracts between users can also be concluded in the Metaverse. Here too, a distinction is made between consumer and trader status. If the trader carries out a professional or commercial activity in relation to the consumer’s place of residence, Art. 6 Rome I Regulation applies. A distinction is made between metaverse-internal contracts, where the service is performed in the metaverse, and metaverse-external contracts, where the service is performed in the real world. Particularly in the case of metaverse-internal contracts, the location of the contracting parties is difficult to determine, so that in case of doubt, the terms of use of the platform are implicitly included in the contract as an alternative.

3. Conclusion of contract through avatars

The conclusion of a contract always requires two declarations of intent with the same content and the same legal consequence. In the metaverse, avatars are the objects of attribution of the real person. Problems only arise if the names of the avatars are pseudonyms, as this violates the terms and conditions of the platform in the user-user relationship (Section 19 II TTDSG). In the platform-user relationship, anonymous use is not reasonable, as the platform would otherwise not be able to disclose any data to claimants, meaning that it would not be possible to conclude a contract. If a third party without power of representation uses the avatar of another user, any declarations of intent made cannot be attributed to the account holder.

4. Consumer protection

The contracts concluded in the Metaverse are distance contracts (§ 312c BGB) and contracts in electronic commerce (§ 312i BGB), so that the Metaverse is to be regarded as an online marketplace. The consumer is therefore entitled to a right of cancellation in accordance with Section 312g BGB. In addition, Sections 327 et seq. of the German Civil Code apply insofar as the contract relates to digital content (Section 327 II of the German Civil Code).

II. Competition law

The provisions of the UWG apply to the metaverse. Several providers can be competitors in metaverse-internal contracts. The question of whether traders in the metaverse can be competitors of traders in the real world is more difficult. According to Section 2 I No. 4 UWG, competitors can only be entrepreneurs who are in a concrete competitive relationship with each other. To this end, the products offered must be interchangeable in terms of subject matter, geography and time. A product is factually interchangeable if it has the same characteristics and the intended use and price are similar. Spatial interchangeability exists if advertising measures have an impact on the entrepreneur’s customer base. The extent to which virtual and real goods are interchangeable from the end customer’s perspective remains to be seen.


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Part 1 in issue 16-17/2023: Overview

Part 2 in issue 18/2023: Copyright law

Part 4 in issue 20/2023: Trade mark law

Part 5 in issue 21/2023: Data protection