370 precontractual liability in european private law

One might even think that A’s lack of loyalty amounts to fraud (dol). Although in relation to a contract between two professionals, the buyer has a duty to inform himself about what he is about to buy,20 it is arguable that A’s wrongful silence after he was told of the characteristics looked for by B is a fraudulent concealment.21 Secondly, we can assume that B’s view of the contract prevails (that the obligation was to deliver a machine which harvested one acre a day).22 In that case, A did not comply with his obligation to deliver the machine he had sold to B in conformity with the contractual terms. As discussed above, it seems that B has a choice between annulment for mistake or fraud and the remedies for breach of contract.

Germany

It is necessary to discuss A’s potential liability in contract, culpa in contrahendo, tort and restitution.

A’s liability in contract: the German law of sale was comprehensively reformed in 2001. The German legislature complied with the duty to transpose Directive 1999/44/EC23 by implementing most of the Directive’s rules into the general provisions of the BGB regulating the contract of sale.24 Simultaneously the law on warranties of quality (Sachma¨ngelgewa¨hrleistungsrecht) was for the most part synchronised with the general rules as to the impairment of the performance of an obligation (allgemeines Leistungssto¨rungsrecht). Therefore, the new law which entered into force on 1 January 200225 dispenses with special warranty rules for the contract of sale and thus avoids most of the intricate demarcation problems which characterised the old law. A purchaser’s contractual remedies for a defect of the thing sold are now set down in §437 (Rights of the buyer in case of defects):

§437 BGB: Subject to the following provisions and insofar as nothing else is laid down, the buyer of a defective thing may:

1.require the seller to remedy the lack of conformity according to §439,

2.terminate the contract according to §§440, 323, 326(5) or reduce the price according to §441, and

20P. Jourdain, ‘Le devoir de “se” renseigner’ D. 1983, C, 139.

21Re´ticence dolosive. See, e.g., Civ 3, 7 May 1974, Bull Civ III, no. 186.

22Article 1602 C.civ. states that, in case of ambiguity in a contract of sale, the clauses are to be interpreted in favour of the buyer; Civ. 1, 13 Apr. 1999, Bull Civ I, no. 139.

2325 May 1999, on certain aspects of the sale of consumer goods and associated guarantees.

24§433ff. BGB. 25 BGBl. I no. 61, 2001, 3138ff.

3.claim compensation according to §§440, 280, 281, 283, 311a or reimbursement of wasted expenditure according to §284.

A’s liability under §§437 No. 1, 439(1) BGB: the purchaser of a defective thing may require the seller either to repair the defect or deliver a thing free from defects.26 A thing is defective if it does not correspond to the standard laid down in §434 BGB (Defects in the thing sold):

(1) The thing is free from defects, if, at the time when the risk passes, it has the stipulated quality. Insofar as the quality has not been stipulated, the thing is free from defects,

1.if it is suitable for the use provided for in the contract, or else

2.if it is fit for its ordinary use and possesses the qualities which are usual in things of the same kind and which a buyer may expect in a thing of this kind.

Qualities within the meaning of sentence 2 No. 2 are also characteristics which the buyer, taking into account public statements made by the seller, by the producer,27 or by one of his employees, is entitled to expect especially in regard to advertisements and the description of certain qualities of the thing, unless the seller neither knew of the statement nor ought to have known about it, or if at the time of contracting it had already been rectified, or the decision to buy could not have been influenced by it. Moreover, the thing is defective if its assembly by the seller or by his employees which had been agreed upon was improper. Furthermore, a thing which has been put together is regarded as defective if the instructions for its assembly are defective, unless it has been assembled free from defects. It is also equivalent to a defect in the thing if the seller delivers a different thing or a smaller quantity.

Since A told B in the precontractual negotiations that the machine would be able to harvest one acre a day and did not correct this statement before the parties agreed on its sale, A’s statement became an implied term of the contract. Therefore, the actual quality of the machine delivered (Ist-Beschaffenheit) does not correspond to the quality the parties contractually agreed upon (Soll-Beschaffenheit), and so the machine is defective according to §434(1) sentence 1 BGB.28 It seems,

26§439(1) BGB (Nacherfu¨llung). Cf. Lorenz and Riehm, Lehrbuch zum neuen Schuldrecht, para. 504ff.

27Law relating to Product Liability, §4(1) and (2).

28It is beyond doubt now that the test whether a thing is defective is primarily governed by the contract of sale and not by objective criteria, i.e the new law confirms the

372 precontractual liability in european private law

however, impossible to transmute a harvesting machine capable of harvesting half an acre a day into one capable of harvesting one acre a day. But even if this were possible such an operation would produce excessive and unreasonable costs for the seller. Therefore, B’s claim under §439(1), 1st alternative BGB, to require A to repair the machine (Nachbesserung) is barred by §§275(1), 439(3) BGB.29

Nevertheless, A is, according to §439(1), 2nd alternative BGB, obliged to deliver a harvesting machine with a harvesting capacity of one acre a day (Nachlieferung). A and B did not agree on the sale of specific harvesting machine (Stu¨ckkauf) but on a purchase by description (Gattungskauf).30 As harvesting machines of this quality are still available on the market at ordinary prices, A must organise a second delivery.

B’s right to terminate the contract or to reduce the purchase price and to reclaim the purchase price or the surplus already paid under §§437 No. 2, 323, 346(1), 441(4) BGB: a buyer with a claim under §439(1) BGB may grant the seller a reasonable period within which to perform this obligation, that is, to remedy his first performance. If the seller does not perform, or only partly performs, within this period, the buyer is entitled either to terminate the contract if the seller’s neglect of duty is significant, or reduce the purchase price.31 B may, therefore, fix a reasonable period within which A must deliver a machine with a harvesting capacity of one acre a day. Given that the defect of the machine already delivered is significant, if A does not then perform in time B may either cancel the contract or reduce the purchase price under §§323(1), 441(1) BGB. Both rights are at the disposal of B, no matter whether A is responsible or not for his non-(conforming) performance. If B has already paid the purchase price he may also, if he decides to cancel the contract, reclaim the full price32 or, if he prefers to reduce the purchase price, reclaim the surplus.33

so-called subjektiver Fehlerbegriff already prevailing under the old law, cf. StaudingerHonsell, §459 para. 18ff.

29Cf Lorenz and Riehm, Lehrbuch zum neuen Schuldrecht, paras. 297ff., 511.

30If A and B had agreed on the sale of a specific harvesting machine, A would not be liable under §439(1) BGB, the delivery of a machine with a harvesting capacity of half an acre as a machine with a capacity of one acre being impossible (so-called qualitative Unmo¨glichkeit; cf. Lorenz and Riehm, Lehrbuch zum neuen Schuldrecht, paras. 302, 327). B could, however, immediately terminate the contract according to §326(5) BGB. Furthermore, he would be entitled to claim compensation instead of (full) performance according to §311a(2) BGB and damages resulting from the ruined asparagus crop according to §§280(1), 311a(2) BGB.

31§§323, 441 BGB. 32 §346(1) BGB. 33 §441(4) BGB.

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resulting from the lack of the warranted quality. The courts and legal writers, however, in view of the effects of strict liability, set a rather high standard to ascertain a promised quality. In case of doubt, this is a question of the construction of the contract.35 The decisive factor, therefore, is neither the seller’s true intention nor his use of specific vocabulary (such as the terms ‘express warranty’ or ‘guarantee’) but whether, according to the requirements of good faith, the purchaser, in the specific circumstances of the case, was entitled to take the seller as promising a certain quality.36 Hence, mere puffs as well as pure product specifications do not amount to a contractual warranty. Particularly in relation to newly manufactured things, the Bundesgerichtshof takes a very cautious point of view. Until recently, the court has stressed that a pure product specification may be characterised as an agreement as to quality as defined by §434(1) sentence 1 BGB but, as a rule, does not represent a guarantee according to §276(1) sentence 1, 3rd alternative BGB.37 As a result (it would seem), B did not contractually warrant the harvesting capacity of the machine sold.

(2)A is responsible for the defect of the machine delivered if he assumed the risk of procuring a defective machine under §276(1) sentence 1, 4th alternative BGB. Commentators disagree upon this question. It would seem that, in view of the effects of strict liability, it is inequitable to make the seller in the case of a purchase by description

answerable for all the consequences of the defect of the object selected by him for fulfilment.38 The problem may, however, be left undecided

here, in the light of (3) below.

(3)A is responsible for the machine’s defect under §276(1) sentence 1,

1st and 2nd alternative BGB. If A fraudulently concealed the defect of the delivered machine he is, of course, responsible for it.39 If this is not

the case, A negligently failed to know the machine’s actual harvesting capacity.40 A seller exercising ordinary care would have been aware of

35 §§133, 157 BGB. 36 BGH, decision of 5 July 1972, BGHZ 59, 158, 160.

37BGH, decision of 4 June 1997, BGHZ 135, 393; BGH, decision of 23 Mar. 1996, NJW-RR 1996, 951; BGH, decision of 14 Feb. 1996, NJW 1996, 1465; BGH, decision of 13 Dec. 1995, NJW 1996, 836; BGH, decision of 28 Nov. 1994, BGHZ 128, 11.

38Cf. Canaris, DB 2001, 1815ff. and ZRP 2001, 329, 335 with further references. The seller is therefore strictly liable according to §276(1) sent. 1, 4th alt. BGB for his inability, for whatever reasons, to secure the thing sold by description but not for the procurement of a defective item.

39§276(1) sent. 1, 1st alternative BGB. 40 §276(1) sent. 1, 2nd alternative BGB.

the harvesting capacity of the machine delivered, that is, he would have avoided the delivery of a defective machine.

As a result, B may claim the value of the ruined crop as well as the profits lost by its ruin.

A’s liability on the ground of culpa in contrahendo: it is accepted beyond doubt that the seller is not liable for negligently misrepresenting a fact referring to the thing sold if this fact may be incorporated into the contract as a quality agreed upon as defined by §434(1) BGB (Beschaffenheitsvereinbarung).41 The specific sales law regulations must not be circumvented by establishing liability on the ground of culpa in contrahendo. The requirements set up by §437 No. 3 BGB as to a seller’s liability for damages would be rendered ineffective if, in addition to that provision, the purchaser was entitled to a claim on the ground of culpa in contrahendo. If, however, the misrepresentation refers to a fact that cannot be the subject of a Beschaffenheitsvereinbarung (§434 BGB) the specific provisions of the law of sale do not preclude the seller’s liability on the ground of culpa in contrahendo. This has occasionally given rise to the tendency to construe the ambit of the term ‘quality’ rather narrowly in order to expand the scope of liability based on culpa in contrahendo. It is, however, beyond doubt that the harvesting capacity of one acre a day of the machine can and, therefore, does in this case represent a ‘quality’ of the machine sold as required by §434 BGB.42

If, however, the seller has fraudulently misrepresented a quality of the thing sold, the Bundesgerichtshof takes the view that the provisions of the law of sale do not take precedence over liability on the ground of culpa in contrahendo.43 The special relationship (Sonderrechtsverha¨ltnis) created between the negotiating parties by virtue of the law (gesetzliches Schuldverha¨ltnis) definitely imposes on the seller the duty not to make wilfully false statements about the envisaged object of sale. Therefore, if A has fraudulently misrepresented the harvesting capacity of the

41Lorenz and Riehm, Lehrbuch zum neuen Schuldrecht, para. 575ff. with further references.

42The Bundesgerichtshof allows an exception to the rule that a seller negligently representing a quality of the thing sold cannot be held liable on the ground of culpa in contrahendo if the seller is under a special ‘precontractual duty to give information’: BGH, decision of 23 June 1999, NJW 1999, 3192; BGH, decision of 6 June 1984, NJW 1984, 2938; BGH, decision of 13 July 1983, BGHZ 88, 130, 135; BGH, decision of 31 Jan. 1962, NJW 1962, 1196. This liability is one of the most controversial issues of the German law of sales. In the present case, such a special duty to inform the purchaser cannot be assumed.

43BGH, decision of 10 July 1987, NJW-RR 1988, 10, 11; disagreeing. Soergel-Huber, §459 paras. 220, 228.

B is not liable on the ground of culpa in contrahendo, in tort or in restitution unless he has fraudulently represented the machine’s harvesting capacity.

In the variant situation, where A makes no statement, it would seem that A is not liable.

A is not liable in contract if the parties did not agree upon a certain harvesting capacity of the machine sold. As a rule, B’s unilateral expectations do not become part of the contract. The crucial question, therefore, is whether the parties provided for the machine’s use in the contract according to §434(1) sentence 2, No. 1 BGB. Although such an agreement may be implied,45 it would seem that for the reasons given below the contract should not be construed in this way. A, therefore, is not liable on the ground of §437 BGB.46 Liability on the ground of culpa in contrahendo for negligently not giving information to B is excluded by the same reasons mentioned in the main case, above. There being no duty of giving information, A is not liable in tort.

The courts and legal writers agree that, as a rule, a seller is under no duty to inform the buyer about the qualities of the object sold (caveat emptor). An exception to this rule is only conceded if the seller knows about qualities of the thing that are crucial for the buyer’s purpose. In this case, according to the standard of good faith, the buyer is entitled to information without asking for it.47 The details of this liability are, however, still debated.48 In the present case this exception does not apply. It is true that the machine’s harvesting capacity was crucial for B to enter into the contract. However, a buyer may only expect information about the qualities of the object sold if he is not in a position to gain the relevant information by asking the seller about it. B could easily have asked A about the machine’s harvesting capacity. Then the parties either would not have reached agreement or A would be liable according to the rules set out in relation to the main case, above. Therefore, although A knew of B’s purposes as to the machine, B’s unilateral expectations do not entitle him to avoid the contract.

45 §§133, 157 BGB. 46 Otherwise the same rules as in the main case, above, apply.

47BGH, decision of 8 Dec. 1988, NJW 1989, 1793; BGH, decision of 8 May 1980, NJW 1980, 2460; BGH, decision of 2 Mar. 1979, NJW 1979, 2243.

48For details see Lorenz, Der Schutz vor dem unerwu¨nschten Vertrag, p. 416ff; Breidenbach,

Die Voraussetzungen von Informationspflichten beim Vertragsschluß.