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Table of Contents

Foreword by Lord Bingham

v

Foreword by President Hirsch

vii

Preface to the Second Edition

ix

Chapter 1

 

Introduction

1

1.

PRELIMINARY OBSERVATIONS

2

2.

THE GENESIS OF THE CODE

6

 

(a)

The Tortured Path to Unity

6

 

(b)

The Triumph of the Learned Man

12

 

(c)

European Contract Law?

14

3.

THE CONTRAST WITH THE FRENCH CIVIL CODE

16

4.

THE REGULATORY TECHNIQUE OF THE GERMAN CIVIL CODE

19

5.

CONTRACT AS PART OF THE LAW OF OBLIGATIONS

25

 

(a)

Preliminary Observations

25

 

(b)

The Different Meanings of ‘Contract’

25

 

(c)

The Principles of Separation and Abstraction

27

6.

THE CONSTITUTIONALISATION OF PRIVATE LAW

37

7.

FREEDOM OF CONTRACT

43

 

(a)

Preliminary Observations

44

 

(b)

The Initial Position

45

 

(c)

Modern Constraints

46

Chapter 2

 

The Formation of a Contract

55

1.

INTRODUCTORY REMARKS

55

2.

THE OFFER (Antrag, Angebot)

56

 

(a)

General Observations

57

 

(b)

Necessary Content of an Offer

59

 

(c)

Offer and Invitation to Treat

62

 

(d)

The Duration of the Offer

63

 

(e)

The Irrevocability of the Offer

64

 

(f)

The Rationale of the German Approach

65

 

(g)

Communication of the Offer

67

3.

THE ACCEPTANCE (Annahme)

70

 

(a)

Free

70

 

(b)

Unreserved Acceptance; Dissent

71

 

(c)

Communication of the Acceptance

73

 

(d)

Waiver of Notification of Acceptance; Silence and Letters of Confirmation

75

 

(e)

Pre-contracts; Option Contracts; and Letters of Intention

78

 

(f)

The Battle of the Forms

79

xiv TABLE OF CONTENTS

 

4. FORM AND EVIDENCE OF SERIOUSNESS

81

(a)

Formalities

81

(b)

Evidence of Seriousness

86

5. CULPA IN CONTRAHENDO: FAULT IN CONTRACTING

91

(a)

General Observations

92

(b)

Situations Covered

97

(c)

Failed Contracts

99

(d)

Negligent Misrepresentation

103

(e)

Liability of Intermediaries

103

6. AGENCY

109

(a)

General Observations

109

(b)

The Giving of Authority—Bevollmächtigung

112

(c)

The Extent of the Authority

113

(d)

Lack of Authority

114

 

(i) Ratification

115

 

(ii) The Liability of the Falsus Procurator

115

 

(iii) Exceptional Rules

116

(e)

Termination of Authority

116

(f)

The Commission Agent

117

Chapter 3

 

The Content of a Contract

119

1. INTRODUCTORY REMARKS

119

2. THE PRINCIPLE OF GOOD FAITH

119

(a)

Preliminary Observations

120

(b)

Abuse of Rights

123

(c)

Implying Collateral Obligations

125

(d)

Policing the Contract

130

3. THE SOURCES OF CONTRACTUAL TERMS: INTERPRETATION

 

AND BEYOND

133

(a)

General Observations

133

(b)

Comparative Observations

135

(c)

Express Terms, Terms implied in Fact and in Law

138

(d)

‘Completive’ Interpretation (ergänzende Vertragsauslegung)

140

(e)

Default Rules and Terms implied in Law

141

4. SPECIFIC TYPES OF CONTRACT

144

(a)

Preliminary Observations

144

(b)

Contract of Sale

147

(c)

Donation

148

(d)

Contract of Rent

149

(e)

Lending

151

(f)

Loan and other Forms of Credit

151

(g)

Contracts for Services

153

(h)

Contract for Work

155

(i)

Travel Contract

157

(j)

Mandate and the Management of Affairs for Others

158

(k)

Surety

160

(l)

Mixed and New Types of Contract

162

 

TABLE OF CONTENTS

xv

5.

STANDARD TERMS AND EXCLUSION CLAUSES

163

 

(a) Preliminary Observations

164

 

(b) Structure and Scope of Application

170

 

(c) Standard Terms, their Incorporation and Construction

171

 

(d) Assessing the Fairness of Standard Terms

175

 

(e) Consequences of Invalidity

179

Chapter 4

 

Relaxations to Contractual Privity

181

1.

INTRODUCTORY REMARKS

181

2.

CONTRACTS IN FAVOUR OF THIRD PARTIES (Verträge zugunsten

 

 

Dritter)

186

 

(a) Typical Factual Situations where such Contracts are Discovered

 

 

by the Courts

187

(i)Retirement Benefits and Widows’ Pensions under Private Law

 

 

Agreements

188

 

(ii) Parents Contracting with Physicians for the Treatment of their

 

 

 

Child

189

 

(iii) Savings Accounts: Third Parties as Account Holders

190

 

(iv) Carriage of Persons in Connection with the Services of Travel

 

 

 

Agencies

193

 

(v)

Insurance Contracts Stipulating Performance to a Third Party

194

 

(vi)

Carriage of Goods where the Consignee is Treated as a Third Party

 

 

 

Beneficiary

196

(b) How is the Right Acquired?

197

(c) When does the Third Party’s Right Vest?

199

(d) Defences against the Beneficiary

201

(e) Unjust Enrichment of the Beneficiary

203

3. CONTRACTS WITH PROTECTIVE EFFECTS TOWARDS THIRD

 

PARTIES

204

(a)

Preliminary Observations

204

(b) Cases involving Personal Injury or Physical Damage

204

(c)

Economic Loss Cases

208

(d) Summary and Comparative Epilogue

214

4. SCHADENSVERLAGERUNG AND TRANSFERRED LOSS

216

(a)

Preliminary Observations

217

(b)

Theoretical Basis

218

(c)

Risk Cases

220

(c)

Indirect Representation

223

(d) Taking Care of Another’s Goods

224

Chapter 5

 

 

Validity

 

227

1. INTRODUCTORY REMARKS

227

2. CAPACITY

229

(a)

Preliminary Observations

229

(b)

Age-related distinctions–Minors

230

(c) Individual Lack of Capacity

238

xvi

TABLE OF CONTENTS

 

3.

ILLEGALITY

240

 

(a)

Preliminary Observations

240

 

(b)

Statutory Prohibition–General Principles

242

 

(c) Statutory Prohibition–Fields of Application

245

4.

PUBLIC POLICY (Sittenwidrigkeit)

247

 

(a)

Preliminary Observations

248

 

(b) Usury (Wucher)

250

 

(c) Contracts Contrary to bonos mores

253

(i)Contracts Violating the Interest of One of the Parties to the Contract 254

 

(ii) Contracts Violating the Interests of the Community at Large

260

 

(iii) Contracts Violating the Interests of a Third Party

261

Chapter 6

 

 

Setting the Contract Aside

263

1. INTRODUCTORY REMARKS

263

2. CONSUMER RIGHTS

264

(a)

Preliminary Observations

265

(b)

Right of Cancellation (Widerrufsrecht)

270

(c)

Scope of Application

273

3. MISTAKE

276

(a)

Preliminary Observations

277

(b)

The Distinction between Declaration Mistakes and Errors in the Motivation

282

(c)

Right to Rescind

286

(d)

Declaration Mistakes

291

 

(i)

‘Expression’ and ‘Meaning’ Mistake

291

 

(ii)

Transmission Mistake

292

 

(iii) Causality

292

 

(iv)

Intention to Create Legal Relations?

293

 

(v)

‘Calculation Error’

294

 

(vi)

Mistakes of Law

295

 

(vii) Electronic Declarations of Will

297

(e)

Mistake as to the Quality of the Subject-matter or the Person

297

(f)

Common Error

301

4. DECEPTION AND OTHER FORMS OF ‘MISREPRESENTATION’

302

(a)

Preliminary Observations

302

(b)

Deception

303

(c)

Duties to Inform (Aufklärungspflichten)

306

(d)

Other Forms of ‘Misrepresentation’

311

5. COERCION

314

(a)

Preliminary Observations

314

(b)

Elements of Coercion

315

(c)

Illegitimacy of Threats in Particular

316

Chapter 7

 

 

The Doctrine of the Foundation of the Transaction

319

1. INTRODUCTORY REMARKS

319

2. THEORETICAL EXPLANATIONS

320

 

 

TABLE OF CONTENTS

xvii

3.

THE INITIAL APPROACH AND THE PRESENT POSITION OF

 

 

THE BGB

323

4.

THE CAUSE OF THE REVOLUTION

326

5.

ADJUSTING PERFORMANCE AND COUNTERPERFORMANCE:

 

 

A CLOSER LOOK

336

6.

FRUSTRATION OF PURPOSE

342

7.

COMMON MISTAKE

346

Chapter 8

 

The Performance of a Contract

349

1.

INTRODUCTORY REMARKS

349

2.

PLEA OF UNPERFORMED CONTRACT (Einrede des nichterfüllten

 

 

Vertrages)

349

 

(a)

Classification of Contracts

349

 

(b) Plea of Unperformed Contract (Einrede des nicht erfüllten Vertrages)

351

 

(c) General Right of Retention (allgemeines Zurückbehaltungsrecht)

354

3.

TIME AND PLACE OF PERFORMANCE

355

 

(a)

Time of Performance

355

 

(b)

Place of Performance

357

4.

PERFORMANCE THROUGH THIRD PARTIES

361

 

(a)

Preliminary Observations

362

 

(b) Vicarious Performance: Sub-contracting and Substitution

362

 

(c) Sub-contracting in the Building Industry

364

 

(d) Payment of Another’s Debt

366

5.

SET-OFF (Aufrechnung)

373

 

(a)

Preliminary Observations

374

 

(b)

Mutuality of Claims

375

 

(c) Claims of the Same Kind

376

 

(d) Validity, Maturity and Enforceability of the Claim Set Off

376

 

(e) Existence of the Claim of the Other Party

377

Chapter 9

 

Breach of Contract: General Principles

 

1.

INTRODUCTORY REMARKS

379

2.

THE REFORMED SYSTEM OF REMEDIES FOR BREACH OF

 

 

CONTRACT

381

 

(a) History of the Reform and Main Objectives

382

 

(b) Outline of the Reform

386

3.

ENFORCED PERFORMANCE

392

 

(a)

Preliminary Observations

392

 

(b) The Primary Duty of Performance

399

 

(c) Requesting Performance—Relation to Secondary Rights

400

 

(d)

Methods of Enforcement

403

 

(e) Limits of Enforced Performance: Impossibility

406

 

 

(i) Impossibility in the Sense of § 275 I BGB

408

 

 

(ii) Consequences of Impossibility for the Counter-performance

409

 

 

(iii) Excursus: Delay of the Creditor

411

xviii

TABLE OF CONTENTS

 

 

(iv)

Impossibility in the Sense of § 275 II BGB

413

 

(v)

Impossibility in the Sense of § 275 III BGB

418

4. TERMINATION

419

(a)

Preliminary Observations

419

(b)

Duties of Performance (Leistungspflichten)

421

 

(i)

Late Performance

426

 

(ii)

Non-conforming Performance

427

 

(iii)

Partial Failure of Performance

428

 

(iv)

Performance being impossible

429

 

(v)

Anticipatory Breach

430

 

(vi)

Exclusion of the Right of Termination

431

(c)

Duties of Protection (Schutzpflichten)

432

(d)

Consequences of Termination (Rücktritt)

432

(e)

Continuing Contracts (Dauerschuldverhältnisse)

436

5. DAMAGES

437

(a)

Preliminary Observations

438

(b)

The‘Fault Principle’

444

 

(i)

Elements of Fault

446

 

(ii)

Raising the Standard of Care

447

 

(iii)

Alleviating the Standard of Care

450

(c)

Damages instead of Performance – Late Performance (§ 281 BGB)

451

 

(i)

The ‘ultimate’ Failure of Performance

452

 

(ii)

Damages instead of the ‘Whole’ Performance

454

 

(iii)

Effect on Counter-performance

454

(d)

Damages instead of Performance–Impossibility (§ 283 and § 311a II

 

 

BGB)

455

 

(i)

Subsequent Impossibility

456

 

(ii)

Initial Impossibility

456

(e)

Damages instead of Performance–Protective Duties (§ 282 BGB)

459

(f)

Recovery of Wasted Expenditure (§ 284 BGB)

460

 

(i)

Reliance or Expectation?

461

 

(ii)

Conditions of Recovery

463

(g)

Damages for Delay (§ 280 II BGB)

464

 

(i)

Delay of Performance (Verzug)

464

 

(ii)

Consequences of Delay

466

(h)

Damages alongside Performance, ‘Simple’ Damages (§ 280 I 1 BGB)

469

 

(i)

Theoretical Explanations

469

 

(ii)

Expectation Interest (Erfüllungsinteresse)

470

 

(iii)

Interest in the Integrity (Integritätsinteresse)

471

(i)

Limiting Damages

471

(j)

Mitigation and Contributory Negligence

475

(k)

Assessment of Damages

479

 

(i)

Expectation Interest

479

 

(ii)

Personal Injury

482

 

(iii)

Damage to Property

483

6. PRESCRIPTION

486

(a)

Preliminary Observation

487

 

 

 

TABLE OF CONTENTS

xix

 

(b)

Periods of Limitation

 

489

 

(c)

Suspension, Restart and Effects of Prescription

490

Chapter 10

 

 

Breach of Contract-Specific Contracts

 

493

1. INTRODUCTORY REMARKS

 

493

2. SALE OF GOODS

 

494

 

(a)

Preliminary Observations

 

495

 

(b)

Application of General Contract Principles to Breach of a Contract of Sale 496

 

(c)

Defining Conformity

 

499

 

(d)

Enforced Performance

 

502

 

(e)

Termination

 

508

 

(f)

Price Reduction

 

509

 

(g)

Damages

 

510

 

(h)

Relationship between Primary and Secondary Rights

513

 

(i)

Consumer Sales

 

515

3. CONTRACT FOR WORK

 

520

 

(a)

Preliminary Observations

 

521

 

(b)

Application of General Contract Principles to Breach of a

 

 

 

Contract for Work

 

522

 

(c)

Defining Conformity

 

524

 

(d)

Enforced Performance

 

524

 

(e)

Recovery of Cost of Reinstatement

526

 

(f)

Termination and Price Reduction

526

 

(g)

Damages

 

527

4. CONTRACT OF SERVICES

 

528

 

(a)

Preliminary Observations

 

528

 

(b)

Enforced Performance

 

529

 

(c)

Termination

 

530

 

(d)

Damages

 

531

5. CONTRACT OF RENT

 

533

 

(a)

Preliminary Observations

 

533

 

(b)

Application of General Principles to Breach of a Contract of Rent

534

 

(c)

Enforced Performance

 

538

 

(d)

Termination by Notice and Price Reduction

539

 

(e)

Damages for Non-conforming Performance

539

Appendix I Cases

 

541

Chapter 2

 

 

1

RGZ 124, 81

Tony Weir

541

2 OLG Hamm NJW 1976, 1212

Tony Weir

542

3

BGHZ 41, 271

Tony Weir

544

4 BGH NJW 2002, 363

Raymond Youngs

547

5

RGZ 105, 256

Tony Weir

550

6

RGZ 144, 289

Tony Weir

553

7 BAG NJW 1963, 554

Tony Weir

555

8

RGZ 125, 68

Tony Weir

557

xx

TABLE OF CONTENTS

 

 

9

BGHZ 67, 275

Tony Weir

558

10

RGZ 50, 191

Tony Weir

561

11

BGH NJW 1976, 801

Irene Snook

563

12

RGZ 104, 265

Carola Pfau

565

13

BGH NJW 1957, 1105

Tony Weir

567

14

BGH NJW 1965, 387

Tony Weir

570

15

BGH NJW 1965, 965

Tony Weir

571

16

OLG Köln RBRK 1980, 270

Tony Weir

574

17

BGHZ 54, 236

Tony Weir

579

18

BGH NJW 1974, 991

Tony Weir

581

19

BGH NJW 1985, 1838

Irene Snook

583

20

BGH NJW 1996, 1467

Raymond Youngs

587

21

RGZ 117, 121

Kurt Lipstein

591

22

BGHZ 48, 396

Kurt Lipstein

593

23

BGH NJW 1972, 1189

Irene Snook

595

24

BGHZ 21, 102

Raymond Youngs

597

25

RGZ 78, 239

Raymond Youngs

600

26

BGHZ 66, 51

Kurt Lipstein

601

27

BGH NJW 1987, 639

Raymond Youngs

605

28

BGHZ 6, 330

Irene Snook

607

29

BGH NJW 1975, 1774

Kurt Lipstein

609

30

BGH NJW 1996, 1884

Raymond Youngs

610

31

BGHZ 56, 81

Raymond Youngs

613

32

BGH NJW-RR 1991, 1241

Raymond Youngs

615

33

BGHZ 36, 30

Tony Weir

617

34

BGHZ 5, 111

Irene Snook

620

35

BGH NJW 1999, 2883

Raymond Youngs

623

Chapter 3

 

 

36

RGZ 131, 274

Kurt Lipstein

625

37

BGHZ 21, 66

Kurt Lipstein

627

38

BGHZ 43, 289

Kurt Lipstein

629

39

BGHZ 90, 198

Raymond Youngs

631

40

RGZ 101, 47

Irene Snook

632

41

RGZ 108, 1

Kurt Lipstein

635

42

BAG NZA 1994, 1080

Raymond Youngs

639

43

BGHZ 91, 324

Raymond Youngs

642

44

RGZ 99, 147

Raymond Youngs

647

45

BGH NJW 1999, 3704

Raymond Youngs

648

46

RGZ 117, 176

Kurt Lipstein

649

47

RGZ 161, 330

Kurt Lipstein

651

48

BGHZ 23, 282

Kurt Lipstein

656

49

BGH NJW-RR 1987, 144

Raymond Youngs

658

50

BGHZ 130, 19

Raymond Youngs

659

Chapter 4

 

 

51

BAG NJW 1967, 173

Irene Snook

664

 

 

TABLE OF CONTENTS

xxi

52

BGHZ 2, 94

Tony Weir

665

53

BGHZ 46, 198

Irene Snook

667

54

RGZ 106, 1

Irene Snook

669

55

BGHZ 41, 95

Tony Weir

672

56

BGHZ 52, 194

Irene Snook

673

57

BGHZ 93, 271

Irene Snook

678

58

RGZ 51, 403

Irene Snook

682

59

BGHZ 61, 227

Tony Weir

683

60

BGHZ 70, 327

Tony Weir

687

61

RGZ 102, 65

Tony Weir

689

62

BGHZ 58, 184

Tony Weir

691

63

BGHZ 33, 247

Tony Weir

694

64

RGZ 91, 21

Tony Weir

696

65

OLG Düsseldorf NJW 1975, 596

Tony Weir

699

66

BGHZ 1, 383

Tony Weir

700

67

BGH NJW 1977, 2073

Tony Weir

702

68

BGH NJW 1964, 33

Tony Weir

704

69

RGZ 102, 232

Tony Weir

708

70

BGH NJW 1968, 1929

Tony Weir

710

71

BGHZ 40, 91

Tony Weir

714

72

BGH NJW 1977, 2208

Tony Weir

719

73

BGHZ 49, 357

Tony Weir

722

74

BGH NJW 1969, 789

Tony Weir

723

Chapter 5

 

 

75

BGHZ 78, 28

Raymond Youngs

726

76

BGHZ 111, 308

Raymond Youngs

728

77

BGHZ 88, 240 = NJW 1984, 230

Raymond Youngs

731

78

BVerfG NJW 2004, 2008

Raymond Youngs

734

79

BGH NJW 2003, 1860

Raymond Youngs

739

80

BGHZ 111, 336

Raymond Youngs

742

81

BVerfG NJW 1994, 36

Raymond Youngs

744

82

BGH NJW 2002, 2228

Raymond Youngs

751

83

BGH NJW 2004, 930

Raymond Youngs

755

Chapter 6

 

 

84

BAG NZA 2004, 597

Raymond Youngs

764

85

LG Hanau NJW 1979, 721

Raymond Youngs

770

86

BGH NJW 1995, 190

Raymond Youngs

771

87

BGH NJW 2002, 2312

Raymond Youngs

774

88

OLG Hamm NJW 1993, 2321

Raymond Youngs

776

89

BGH NJW 1988, 2597

Raymond Youngs

777

90

BAG NZA 2003, 848

Raymond Youngs

780

91

BGH NJW-RR 1996, 429

Raymond Youngs

782

92

BGH LM § 123 BGB Nr. 52

Raymond Youngs

784

93

BGHZ 69, 53

Irene Snook

786

94

BAG NJW 1999, 2059

Raymond Youngs

788

xxii

TABLE OF CONTENTS

 

 

Chapter 7

 

 

95

RGZ 86, 397

Kurt Lipstein

792

96

RGZ 100, 129

Kurt Lipstein

793

97

RGZ 103, 328

Kurt Lipstein

797

98

RGZ 105, 406

Kurt Lipstein

800

99

RGZ 107, 78

Kurt Lipstein

801

100

OLG Bremen NJW 1953, 1393

Kurt Lipstein

804

101

BGH MDR 1953, 282

Kurt Lipstein

805

102

BGH NJW 1959, 2203

Kurt Lipstein

808

103

BGHZ 37, 44

Kurt Lipstein

812

104

BGHZ 61, 31

Kurt Lipstein

814

105

BGH NJW 1976, 565

Kurt Lipstein

818

106

BGH NJW 1984, 1746

Kurt Lipstein

821

107

BGH NJW 1993, 259

Kurt Lipstein

824

Chapters 8–10

 

 

108

BGH NJW 1982, 2494

Irene Snook

827

109

BGH NJW 2003, 3341

Raymond Youngs

829

110

RGZ 87, 64

Tony Weir

832

111

BGHZ 75, 221

Irene Snook

832

112

BGHZ 113, 62

Irene Snook

837

113

BGHZ 24, 97

Tony Weir

839

114

BGH NJW 1971, 421

Tony Weir

841

115

BGH NJW 1972, 1045

Tony Weir

842

116

BGH NJW 1968, 2238

Carola Pfau

844

117

BGHZ 8, 239

Carola Pfau

848

118

BGHZ 49, 56

Tony Weir

850

119

BGHZ 30, 29

Irene Snook

854

120

BGH NJW 2004, 2299

Raymond Youngs

857

121

BGH NJW 1963, 804

Tony Weir

861

Appendix II German Civil Code—Extracts

865