362 t h e c o m p a r a t i v e e v i d e n c e : c a s e r e s p o n s e s

Case 12: double sale

Case

Antonio sold his flat to Betty, and then to Cinzia who (1) knew or (2) did not know about the prior sale. Immediately afterwards, Antonio left the country with the money. Cinzia was able to complete the formalities relative to the sale of the property more rapidly than Betty. Will Betty be able to obtain compensation from Cinzia for the economic damage she has incurred?

Would the answer be the same in the case of a computer that was first sold to Betty but then resold and delivered to Cinzia?

France

I. If Cinzia did not know that the flat or computer had been previously sold to Betty, Betty has no action in tort against her under article 1382 CC. However, where Cinzia knew of the prior sales and intentionally interfered, Betty has a good action in tort, not to recover her economic loss but rather to rescind the second sale (either of flat or computer) and have her ownership in the property recognized.

II. The sale of the flat: the principle observed in French sales law is consensualism. When property is sold, the right of ownership is transferred even before delivery has been made, as soon as there is a meeting of the minds. However, the consensualism principle encounters certain limits, especially when immovable property is to be transferred. In that instance, the new owner must properly register the property so as to be able to assert good title against third parties. If a seller sells the same property twice, the ‘second’ buyer will be considered to be the real owner if she was the first to register, unless she was aware of the prior sale.546

So, in our case:

(1) Cinzia knew about the prior sale of the flat. Betty can sue Cinzia in tort under article 1382 CC. If she shows that Cinzia was aware of the prior sale, i.e. that Cinzia was acting in bad faith, Betty will be able to have, as a matter of tort law, the remedy of réparation en nature. The contract of sale between Cinzia and Antonio will be rescinded since she

546G. Cornu, Droit civil, Introduction: les personnes et les biens (7th edn, Montchrestien, 1994) p. 366.

must be considered as the real owner of the flat.547 Indeed, this is what French law calls the tort of intentional interference with contractual relations, an action which French judges recognize as wrongful under article 1382.548 In this case, however, there would be no recovery of economic loss but instead direct recognition of Betty’s right of ownership.

Cinzia did not know about the prior sale of the flat: assuming Cinzia acted in good faith, Betty will not be able to recover against her in tort, nor have the sale rescinded. Rather, and very theoretically, she would have only the right to be compensated by Antonio because of his breach of contract, but since Antonio left the country with her money, she suffers an economic loss for which she has no practical remedy.

The sale of the computer: where movables (meubles corporels) such as a computer are concerned, there must be delivery for the sale to be effective against third parties. The buyer who gains possession of the good is considered to be the real owner. Article 1141 CC solves the conflict that may arise between two successive buyers by giving the preference to the one who first obtained possession, unless this party knew about the prior sale.

Article 1141 is confirmed by article 2279 which states: ‘In matters affecting movables, possession is equivalent to title’ (En fait de meubles, la possession vaut titre).

Cinzia knew about the prior sale of the computer: Betty can sue Cinzia under article 1382 CC and have the sale rescinded as in the case of the flat. This again is the tort of intentional interference with contractual relations. There will be, however, no economic loss to recover in this case since Betty can claim the thing itself.

Cinzia did not know about the prior sale: if Cinzia acted in good faith, she is protected by articles 1141 and 2279. Betty cannot have the sale rescinded, and as in the case of the flat, she suffers an economic loss for which she has no practical remedy.

Belgium

I. If Cinzia knew about the prior sale, Betty can recover her damages from Cinzia. If Cinzia did not know about the sale, Betty has no claim

547Civ. 3, 22 mars 1968, D. 1968, 412, note Mazeaud. See G. Viney, ‘Introduction à la responsabilité’, in J. Ghestin (ed.), Traité de droit civil (1995), no. 205.

548See V. Palmer, ‘A Comparative Study (From a Common Law Perspective) of the French Action for Wrongful Interference with Contract’, (1992) 40 American Journal of Comparative Law 297.

364 t h e c o m p a r a t i v e e v i d e n c e : c a s e r e s p o n s e s

against her. This is true whether the object of the sale is a flat or a computer. The answer is clear and undisputed.

II. Since there is no contract between Betty and Cinzia, the claim for damages against Cinzia will be based on article 1382 CC:

Any act whatever of man which causes damage to another obliges him by whose fault it occurred to make reparation.

In the present case, article 1382 CC will be the basis of a specific action. According to a theory, la tierce complicité, a third party to a contract (Cinzia) can be held liable for the breach of a contract (the sale agreement between Antonio and Betty) if he participates in the breach of that contract.

However, the third party will be liable only if the plaintiff can prove not simply that the defendant knew of the existence of the contract (and the obligations resulting from it), but also knew that in acting as he did, he participated in the breach of the contract.549

This theory does not make any distinction between movable and immovable assets.

The answer is therefore identical whether the object of the sale is a flat or a computer.

Italy

I. Betty can successfully sue Cinzia only if the latter is proved to have been in bad faith at the time when the contract (between Cinzia and Antonio) was made.

II. The flat: the first purchaser not registering her contract in the immovable assets records cannot sue the second purchaser in bad faith using the contractual action under art. 1483 cc. The immovable assets records (trascrizione immobiliare), arts. 2643 ff. cc, and especially art. 2644(2), reads: Effects of transcription: ‘‘After first transcription, any successive transcription or registration of: titles against the author cannot be enforced, even if the title had been acquired at a prior date.”

549Cass., 22 avril 1983, RW, 1983–1984, p. 427; RCJB, 1984, p. 359; Liège, 13 mai 1991, JT, 1992, p. 38; Bxl., 21 février 1996, JLMB, 1996, p. 1214; Mons 11 janvier 1995, RDC, 1996, p. 732; J. L. Fagnart, ‘La tierce complicité et les usages honnˆetes en matière commerciale’, RDC, 1989, p. 469; C. Parmentier, ‘Un nouveau cas de tierce complicité’, RDC, 1993, p. 284.

Article 1483: Total eviction from thing

If the buyer suffers total eviction from the thing as a result of rights enforced in it by a third person, the seller is bound to compensate him for damage according to Article 1479 but using the general tort action provided by art. 2043.550

The solution enforced by courts until 1982 was that the second purchaser who completed the formalities before the first purchaser is not liable – even if he had notice of the first sale.551

In Magli v. Vetrugno,552 the Supreme Court changed its mind and stated that the second purchaser is bound to pay damages in tort (art. 2043 cc), but specific performance is not allowed, so the second can retain the immovable property. Thus, as Cinzia knows about the sale, Betty can recover damages in tort against Cinzia.

Computer: if a movable, the computer, has been sold to a person and then delivered to another, article 1153 cc applies:

Article 1153: Effect of acquisition of possession:

He to whom movable property is conveyed by one who is not the owner, acquires full ownership by means of possession, provided that he be in good faith at the moment of consignment and there be an instrument or transaction capable of transferring ownership.

Ownership is acquired free of rights of others in the thing, if they do not appear in the instrument of transaction and the acquirer is in good faith.

If Cinzia was in bad faith and knew about the prior sale to Betty, she will be obliged to return the computer and compensate Betty’s losses. Otherwise, if she was in good faith the computer is hers and no claim can be made by Betty.

III. The Supreme Court in Magli v. Vetrugno553 reached a solution sponsored by Sacco554 in the early 1960s.

Spain

I. If Cinzia acted in good faith, she would keep the flat (or the computer) and Betty could not obtain compensation from her. If Betty can

550An example is offered by Gazzoni, Manuale di diritto privato, VI (6th edn, Napoli, 1996),

p.676.

551Cass. 1.6.1976, no. 1983, GC 1976, I, 167.

552Cass. 8.1.1982, no. 76, FI 1982, I, 1, 1548 note by Pardolesi; GI, 1982, I, 1,1548, noted by Cirillo; GC, 1982, I, 607; RCP, 1982, 174, noted by Benacchio.

553But see also Troebinger v. Urthaler: Cass., 22.11.1984, no. 6006, MGC 1984.

554R. Sacco, ‘L’ingiustizia del danno di cui all’art. 2043 cc, FP, 1960, 1, XV, 1420 ff, at

p.98.

366 t h e c o m p a r a t i v e e v i d e n c e : c a s e r e s p o n s e s

prove that Cinzia acted in bad faith, Betty would have a right to gain possession of the flat (or the computer) so she would have no claim for compensation against Cinzia.

II. In theory, the problems presented in Case 12 would never arise in Spain due to the infrastructure of our legal system. The conveyancing system currently existing in Spanish law requires both a valid contract in order to transfer ownership and the delivery of the thing (art. 609 CC). The thing in question may be delivered, basically, both by material means as well as by executing a certain type of document (public deed).

In the event that neither of the two sales executed by Antonio was completely performed (i.e. neither Betty nor Cinzia obtained possession of the flat), article 1473 CC, which regulates what is known as a double sale, would apply. This provision determines which of the two purchasers is given preference and therefore ownership of the flat.

Article 1473 establishes several preferential criteria (registration at the Land Registry, date of the contract), but in every case the existence of good faith is essential:555 unless there is good faith (unawareness at the time of agreement that the property had already been sold),556 Cinzia may not acquire ownership of the flat. This good faith requirement is justified on the basis that the party who co-operates with the seller (by carrying out the second sale) in order to deceive the first purchaser, deserves no protection. There is abundant case law and expert legal opinion supporting this premise.557

Therefore, if by applying article 1473 CC Cinzia turns out to be preferred, that would imply that she would have acted in good faith (or at least that Betty could not prove Cinzia’s bad faith), and thus, Betty would have no claim against her. Betty would have to fall back upon her contractual claims against Antonio.558

Let us imagine for a moment that Antonio sells the flat to Betty and delivers it. From that moment onwards Betty would be the owner of

555Article 1473 does not require the existence of good faith literally in all its norms; nevertheless, both the case law and the scholars have introduced this good faith element in all the art. 1473 preferential criteria.

556Supreme Court decisions delivered by the First Chamber, of 30.1.60 and 3.10.63.

557See Supreme Court decisions delivered by the First Chamber of 31.12.61, 17.12.84 and 30.6.86; amongst the legal experts, e.g. L. Díez-Picazo and A. Gullón, Sistema de Derecho Civil, II (7th edn, 1995), p. 313, García Cantero, ‘Comentario al artículo 1473’, in

Comentario del Código Civil, II (1991), p. 932, J. Lacruz, Elementos de derecho civil (3rd edn, 1994), p. 45 and A. Molina García, La doble venta a través de la jurisprudencia (1975),

p. 285.

558García Cantero, ‘Comentario’, p. 933.

the flat and Antonio’s subsequent sale to Cinzia would not be a ‘double sale’, but a ‘sale of another person’s property’ (therefore art. 1473 would not be applicable). Under these circumstances, theoretically it would be possible for Cinzia to make recourse to the law regulating acquisition a non domino. However, since the norms regulating acquisition a non domino in Spanish law require the purchaser’s good faith, the solution would be the same.

These conclusions do not vary in the case of the double sale of a movable. There, good faith is also an essential requisite to be fulfilled by the purchaser who is eventually protected (art. 1473). In our case (a computer sold and delivered to Cinzia), the solution would consist in Cinzia asserting her ownership if she acted in good faith (and Betty would have no claim against her); if Cinzia acted in bad faith, Betty would be given preference and could demand that the computer be returned.

Greece

I. Betty has in principle no rights against Cinzia, because of privity of contract between Betty and Antonio.

II. By the contract of sale the purchaser, i.e. Betty, acquires from the vendor, i.e. Antonio, only the right to seek the transfer of the flat or the computer to her; she does not acquire ownership of the flat or the computer. The ownership of the computer or the flat may be transferred by another agreement between the parties (possibly made at the same time as the sale). Nevertheless, the legal effects of this last agreement take place only after the transcription of the immovable, i.e. registration of the flat’s transfer in the public records (according to art. 1033 CC) or after the delivery of the movable, i.e. placing Betty, the new owner, in possession (art. 1034 CC). Thus we must divide the legal solution to this case into two parts.

As to the sale of the flat: (1) the principle. If Cinzia registered that the flat was transferred to her before Betty registered her own agreement, then Cinzia (not Betty) would acquire ownership of the flat. At that point the fulfilment of Antonio’s performance to Betty is already legally impossible, owing to his wilful misconduct. Antonio is no longer the owner of the flat, so that he can no longer transfer the flat to Betty (nemo plus juris ad alium transferre potest quam ipse habet; art. 239 CC e contrario). As article 335 CC provides in such a case, the creditor of the obligation, i.e. Betty, would have the right to be compensated by Antonio for the value of his flat. Betty has in principle no rights against Cinzia,

II. Sale of the flat: the case is, unfortunately, not very hard to imagine as likely to occur,563 in the light of current conveyancing rules and practices in England and Wales. We should assume that ‘completing the formalities’ means that Cinzia has exchanged contracts, completed the transfer of possession and registered title in her name, before Betty was able to do any of these things. There is, indeed, no ‘sale’ of real property in English law before these formalities are completed; an agreement to sell is not binding on the parties (it is always understood as made ‘subject to contract’, meaning ‘subject to the completion of formalities’). That being the case, Cinzia is the only rightful owner/possessor of the flat. The facts disclose no evidence of any other kind of possessory right (e.g. tenancy) vested in Betty by virtue of her prior ‘agreement’ with Antonio. Therefore, Betty has no rights whatsoever as far as the flat itself is concerned, against its new rightful owner/possessor, Cinzia. Of course, she might have an action against Antonio, for deceit.564 However, such an action is not available to her against Cinzia for the economic damage, even if Cinzia knew of the prior ‘sale’, as there is no evidence that Cinzia herself did or said anything to deceive Betty into acting in a way financially detrimental to herself. Cinzia’s knowledge of the prior ‘sale’ is, alone, not able to amount to deceitful conduct. To quote a leading English tort lawyer: ‘England has not yet quite evolved a general principle comparable to that of § 826 BGB, but it may be . . . that it is actionable to cause intentional harm to another by wrongful means’.565 The facts in the present case disclose neither intention to harm nor use of wrongful means.

Sale of the computer: the rule of English law is that a buyer of goods can sue a third party for conversion if he has ownership of the goods, even though he has not yet possession of them.566 However, here Cinzia may be entitled to keep the computer since she has obtained possession of it by a disposition of a seller (Antonio) who, although no longer owner (ownership having passed to Betty), remained in possession of it. This

563The practice of completing with a person other than the one to whom the seller originally agreed to sell is known as ‘gazumping’; the new British administration has announced a review of the law of property to eliminate it from England and Wales (Scotland has different rules that do not allow such a practice to occur).

564See Derry v. Peek (1889) 14 AC 337 (HL).

565T. Weir, A Casebook on Tort (9th edn, Sweet & Maxwell, 2000), p. 567 (emphasis in original text).

566See, e.g. North West Securities Ltd v. Alexander Breckon Ltd [1981] RTR 518. English law does not have a rule of traditio, as many other European legal systems do, that follow Roman law in this respect.

370 t h e c o m p a r a t i v e e v i d e n c e : c a s e r e s p o n s e s

exception to the principle nemo dat quod non habet is laid down in the Sale of Goods Act 1979, s. 24. But this is so only if Cinzia is in good faith. If she were aware of the prior contract, she will be liable in conversion and also for inducing breach of contract. Although conversion as a tort normally leads to an award of monetary damages, the court has power to order the restitution of the chattel (Torts (Interference with Goods) Act 1977, s. 3).

III. In the case of the double ‘sale’ of real property, English law finds it hard to provide at the moment a remedy to a person in Betty’s position as, in the absence of a legally binding agreement if contracts have not been exchanged, third parties who complete first can be liable neither for inducing breach of contract, nor for intentional harm using wrongful means. In the case of the double sale of goods, English law provides adequate protection to the first lawful buyer who acquires ownership, if the second buyer is not buying in good faith.567

Scotland

I. As to the flat, if Cinzia did not know of the prior sale, Betty would have no remedy against her. Even if she knew of the prior sale, although not impossible, it is highly unlikely that Betty will be able to obtain compensation from Cinzia in delict for the flat. Cinzia has not committed a fraud in her own right as she has not deceived Betty. One way is if she knew of the prior sale, and the court could be convinced that she was liable in delict for conspiracy to injure Betty in league with Antonio by unlawful means. However, this would be a novel use of the delict fraught with difficulties. Perhaps a more straightforward way, which may have success, would be the intentional economic delict of inducement of breach of contract. Under conveyancing law, however, if Cinzia knew of the prior sale, Betty could have her title reduced and her own substituted resulting in Cinzia incurring the loss instead of herself.

As to the computer, Betty will be able to recover the computer from Cinzia if property in the computer had passed to Betty at the time of the original sale, even though delivery of it to her had not occurred – but only if Cinzia did know about the previous sale. If Cinzia did not know, or if the property had not passed to Betty, then Betty could not

567Although the relevant tort rules are by no means clear and rational: see Weir, Casebook, pp. 491–6.

recover possession. If property had not passed to Betty at the time of the original sale, but Cinzia did know about it, then Betty would probably have a delictual action against Cinzia on general principles of culpa (i.e. loss caused by wrongous conduct). The most likely form of this would again be inducement of breach of contract. Betty would also have an action in restitution against Cinzia.

II. First, we shall consider the heritable property, the flat. This is an example of fraud and also involves Scots conveyancing law. The usual consequence of fraud is pure economic loss, as has occurred here. Where fraud is established, the courts in Scotland allow recovery of damages even though the loss is purely economic. This is in contrast to the situation with unintentional conduct. One obvious reason for this is that with intentional delicts ‘there is a built-in limitation on the range of potential pursuers’.568 The fraud has been perpetrated by Antonio, and against him Betty has both a contractual and a delictual remedy. Antonio has breached his contract since the title deed will contain a Clause of Warrandice, if not express then implied, which guarantees that Antonio will pass a good title – and he has not owing to his subsequent action. He has put himself into the position where the property is no longer registered in his name because he provided the means whereby Cinzia could (and did) win a race to the register (i.e. the Land Register of Scotland where it applies, or the Register of Sasines where it does not as yet). Until registration a right is personal (ius in personam), which gives one rights merely against the granter of the deed; upon registration it is real (ius ad rem), which gives one rights against the world at large. Betty could recover the price that she has paid as well as other expenditures, as the court would seek to return her to the position she was in before the contract was formed. Betty has no contract with Cinzia and therefore has no contractual remedy against her.

As to the delict of fraud in Scots law, Erskine has defined it as ‘a machination or contrivance to deceive’.569 The first thing to say is that if Cinzia knew nothing about the prior sale then she could not be liable in intentional delict in any shape or form. She may have been so reckless as to whether there was a prior sale in circumstances when she should have been put on notice and made inquiries, but it would be hard to establish such a thing and such speculation leads us nowhere. Let us assume that

568Stair Memorial Encyclopaedia, The Laws of Scotland (Law Society of Scotland, Edinburgh, 1996), vol. 15, p. 388, para. 586 (written by J. M. Thomson).

569Erskine, Institute III.1.16

372 t h e c o m p a r a t i v e e v i d e n c e : c a s e r e s p o n s e s

she either knew about the contract or she did not. Lord Herschell LC in Derry v. Peek describes fraud as ‘a false representation made by the defendant knowingly, or without belief in its truth, or recklessly, careless whether it be true or false, with the intention that the plaintiff should act in reliance upon the representation, which causes damage to the plaintiff in consequence of his reliance upon it’.570 By inducing Betty to contract with him for the sale of the flat, accepting the price, and then intentionally disposing of the subject matter of the contract in direct contravention of one of the undertakings that he made in contracting with the result that Betty incurs a loss, Antonio will be liable for fraud in delict.

The practical problem is his absence, and hence Betty looks to Cinzia. With respect to Cinzia, the delict of fraud could not be established since the central requirement of the delict, i.e. a misrepresentation, is missing. Betty has not been deceived in any way by Cinzia because Cinzia has made no representation to Betty. Betty has been deceived by Antonio. The reality of this is not affected in any way by Cinzia either knowing or not knowing of the prior sale. Cinzia would not be liable in delict for fraud to Betty. It is assumed that there is no delict of conspiracy to commit fraud in Scots law because there is one other alternative, the conspiracy to injure, which would seem to encompass such a thing. Again, as with fraud, as we are dealing with intentional conduct we do not have the problem of the general rule against allowing damages where the loss is only economic. Though there are no cases, it is possible that if Cinzia knew of the prior sale then she could be found liable in delict for conspiracy to injure Betty. Walker states:

Conspiracy has been defined as consisting of an agreement of two or more to do an unlawful act or to do a lawful act by unlawful means; to be actionable actual damage must have resulted. Most of the cases have dealt with trade rivalry, but the principle is not limited thereto . . . The wrong consists in the agreement or combination of two or more persons to use unlawful means or to do an unlawful act, calculated to, and actually causing, damage to the pursuer’s interests. Bare agreement is not civilly actionable and the wrong is committed only if the combination is put into effect and damage to the pursuer results.571

The House of Lords in the case of Quinn v. Leatham had held that ‘if A and B combine together with the intention to harm C, then A and B are liable in delict for harm caused to C as a result of their combination or

570(1889) 14 AC 337 at p. 374.

571D. M. Walker, The Law of Delict in Scotland (2nd edn, 1981), pp. 927–8 (footnote omitted).

conspiracy against him’.572 The problem would be in establishing that there was actual agreement between Antonio and Cinzia. Also, although in the case of an unlawful means conspiracy the pursuer need only establish that the conspirators had an intention to harm the pursuer,573 this may be difficult to establish. It is unlikely that Betty would take this route as it is fraught with complications.

A more fruitful alternative, if Cinzia knew of the prior sale, would be the delict of inducement of breach of contract. Again, as this is an intentional delict we do not have a problem with the fact that the loss is purely economic. In British Motor Trade Association v. Gray, Lord Russell approved the following description of the delict:

[B]y the law of Scotland an actionable wrong is committed by one who intentionally and without lawful justification induces or procures someone to break a contract made by him with another, if damage has resulted to that other, provided the contract creates contractual relations recognised by law.574

According to Walker, the ‘justification for this is that a violation of a legal right (including a contractual right) committed knowingly is a cause of action’.575 This principle, first applied in contracts of service, has been applied subsequently in other contractual situations. It is probable that it would be applied in a contractual situation such as in the present case. Thomson focuses upon the necessity for the party inducing the breach to intend harm to the party suffering loss.576 Arguably, Cinzia’s intention is not to harm Betty but to obtain the flat for herself. At the same time, it is apparent that she is not concerned that she harms Betty in the process. Is this an intention to harm? Walker, looking to the requisite intention, writes:

It does not, however, matter whether the defender had a malicious motive, i.e. acted from ill-will or malevolence. Nor need the intention have been to cause any damage by the breach, still less to have caused the precise kind or extent of harm which in fact ensued. It may even be that a defender is liable if, in the knowledge of the existence of a contract, he does something, which has as its direct consequence the breach of that contract.577

Upon this interpretation of the delict it would appear that Cinzia would find herself liable.

572[1901] AC 495 (HL). J. M. Thomson, Delictual Liability (Butterworths, Edinburgh, 1999), p. 41.

374 t h e c o m p a r a t i v e e v i d e n c e : c a s e r e s p o n s e s

Betty has a more straightforward alternative. If she is able to establish that Cinzia knew about the prior sale, then under Scots conveyancing law she would be able to bring an action to obtain a decree of reduction of Cinzia’s contract with Antonio on the ground that Cinzia was not in the circumstances in bona fide, being aware of the prior contract.578 Once the decree had been registered in the Register of Sasines, then the title would revert to Antonio and she would be able to register her own title. The situation is slightly complicated if the title is registered in the Land Register, since that is intended to provide a guarantee of title rather than just a record of title as is the case with the Register of Sasines. A decree of reduction cannot be recorded in the Land Register. Under s. 9 of the Land Registration (Scotland) Act 1979, rectification of the register by the Keeper is permitted where ‘the inaccuracy has been caused wholly or substantially by the fraud or carelessness of the proprietor in possession’.579 Thus Betty must establish fraud on the part of Cinzia in her argument to obtain an order for rectification of the register. It is possible that for this particular purpose the courts may accept a rather broad definition of fraud, allowing her to satisfy the requirements of the 1979 Act. Once rectified, Betty’s own title would be registered. If Cinzia were in ignorance of the prior sale and thus acting in bona fide then, having won the race to the register, she would have a good title and Betty would be unable to obtain a reduction of her title having no grounds upon which to seek it.

As to the computer, in Scotland under the common law it used to be the case that a contract to sell goods had no effect on the transfer of ownership of the goods and the real right in them remained with the seller until delivery to the buyer had occurred. All the buyer had was a jus in personam. This has been changed by statute. Under the Sale of Goods Act 1979, where the goods are specific or ascertained, the property passes in them to the buyer at such time as the parties intend it to pass.580 This is determined by the terms of the contract, the conduct of the parties and the circumstances. If no different intention appears then a number of rules are set out for ascertaining the intention.581 So, even though the computer has not been delivered, it is possible that property in it has passed to Betty. In Scotland, the general rule is that the purchaser of goods obtains no better title to them than the seller possessed.582 It is immaterial in Scots law that the sale may have taken place in a market overt.583 So, if property has passed to Betty then Cinzia will only

376t h e c o m p a r a t i v e e v i d e n c e : c a s e r e s p o n s e s

II. According to Dutch law, the sale of real estate does not coincide with transfer of legal ownership. The sale of a flat will almost always be concluded prior to transfer of ownership. A deed, drafted by a notary public, and public registration of this deed are compulsory for successful transfer of ownership (art. 3:89 CC). So, it must be assumed that Cinzia has acquired legal ownership and Betty has not. Betty can sue debtor Antonio for damages (art. 6:74 CC also art. 7:22 CC).

Suing Cinzia for damages is not possible if Cinzia had no knowledge of the prior sale. According to Dutch law, Cinzia could not have known of the prior sale by checking the public registries. A mere sales agreement cannot be registered;586 therefore, Cinzia cannot be blamed for not checking the public registries.

If Cinzia actually knew of the prior sale, Betty’s claim in tort might be more successful. Actual knowledge of the prior sale per se does not render Cinzia’s behaviour unlawful.587 More than just having knowledge of the sale, Cinzia must consciously have taken advantage of Antonio’s breach of contract. The Dutch Supreme Court has chosen, on the basis of art. 6: 162 CC, a case-by-case approach in this area: the circumstances of the case at hand decide the unlawfulness.588 Among the circumstances mentioned in case law are knowledge of the severe damage that the prior buyer would suffer, the special position of trust that the second buyer enjoys with the seller and the resulting influence on the seller.

If Cinzia acted unlawfully vis-à-vis Betty, she could be forced to transfer ownership to Betty. This would indemnify Betty by other means than payment of damages.589

The answer would be the same if a computer had been sold instead of a flat. The only difference might be that ownership had already passed on to Betty, since no formalities but the transfer of (constructive) possession of the computer would have to be fulfilled (art. 3:90, also 3: 114, 115 CC). In that case, the question would not be whether Cinzia was liable for damages, but whether Betty or Cinzia had acquired legal ownership. In general, the buyer who has acquired real rather than

586HR 17.5.1985, NJ 1986, no. 760. A bill presently pending before the Dutch Parliament (Bill no. 23 095) will, eventually, introduce the possibility of registration of sales agreements, prior to legal transfer of ownership.

587See HR 3.1.1964, NJ 1965, no. 16, HR 17.11.1967, NJ 1968, no. 42, HR 18.6.1971, NJ 1971, no. 408, HR 27.1.1989, NJ 1990, no. 89.

588See A. S. Hartkamp, Verbintenissenrecht; deel III – De Verbintenis uit de wet (Mr. C. Asser’s handleiding tot de beoefening van het Nederlands Burgerlijk recht) (10th edn, Zwolle, 1998), no. 51b.

589See HR 17.11.1967, NJ 1968, no. 42.

constructive possession, in good faith and for value, is considered to have acquired legal ownership. If the computer has indeed been delivered to Cinzia, the question is whether the computer was delivered (i.e. constituto possessorio) to Betty first. If so, then Cinzia acquires ownership if she acquired it in good faith and for value. Otherwise, she will have to give the computer to Betty. If the computer had not been delivered to Betty first, then Cinzia might have acquired legal ownership. But if she had knowingly taken advantage of Antonio’s breach of contract (see above), she might be forced to transfer ownership to Betty. Legal cause for this compulsory transfer would be the tort committed by Cinzia vis-à-vis Betty.590

Germany

I. Betty has no claim against Cinzia. This is true regardless of Cinzia’s knowledge, and for flats and computers alike.

II. Sale of the flat: Betty has no contractual relationship with Cinzia, so a claim for damages would have to rest in tort. Cinzia has not violated any of Betty’s absolute rights, thus no claim under § 823 (1) BGB arises. A contractual right, such as Betty’s against Antonio, is merely a ‘relative’ one not protected under this provision.

As in the previous case, the only conceivable basis for a tort claim is § 826 BGB which does allow recovery for pure economic loss, but requires that Cinzia acted wilfully and against public policy. If Cinzia did not know of the previous sale to Betty, she did not act wilfully to begin with. But even if she did know, she would not be liable because intentional interference with someone else’s contractual rights does not, in and of itself, violate public policy. There is no obligation to surrender one’s own interest to the contractual rights of another.591

In order to hold Cinzia liable under § 826 BGB, Betty would thus have to show special circumstances which made the interference with her contractual rights particularly reprehensible, such as a conspiracy between Antonio and Cinzia or the employment of improper means.592 The violation of public policy is a question to be answered in light of the totality of circumstances in the individual case, and the requirements are rather strict. In the present scenario, there is no indication that

590See HR 17.11.1967, NJ 1968, no. 42.

591See BGHZ 12, 308, at 317–18 (1954); BGH NJW 1979, 1704, at 1705.

592See BGH NJW 1981, 2184, at 2185.

378 t h e c o m p a r a t i v e e v i d e n c e : c a s e r e s p o n s e s

Cinzia did anything but to pursue her own, legitimate interest and beat Betty to the finish. This is clearly not enough to violate public policy.

Sale of a computer: the result would be exactly the same. This result will surprise lawyers from many, if not most, other countries. They will reckon that Betty has acquired a property interest in the computer through the contract of sale so that she can claim violation of an absolute right under § 823 (1) BGB. Under German law, however, this is not the case. A contract of sale has no effect whatsoever on the parties’ property rights. Instead, with immovable as with movable property, transfer of title requires additional action by the parties. Without such action (i.e. without transfer of possession and an agreement that title shall pass, §§ 929–931 BGB), Betty had no property right in the computer and thus no tort claim under § 823 (1) BGB.

III. Liability under § 826 BGB is an exception which is by and large narrowly construed. To hold someone in Cinzia’s position liable would essentially elevate merely contractual claims to the status of an absolute right and protect it generally in tort, i.e. even in the absence of special circumstances. This would violate the very principles on which German tort law rests.

Austria

I. Whether Cinzia knew or did not know about the sale basically makes no difference: in both cases Betty does not have a claim against Cinzia. The same is true in the case of the sale of a computer first to Betty and then to Cinzia. However, an action by Betty against Cinzia either in the case of the flat or the computer sale is available if Betty in fact occupied the flat (the computer) and Cinzia knew or should have known about this occupation.

II. Cinzia knew or should have known about the prior sale of the flat to Betty.

In either case there is generally no action for Betty against Cinzia. Under Austrian law, Betty only owns a right in personam (a claim based on obligation) against Antonio and no property right (claim in rem) against any tortfeasor.

Rights in personam are generally not protected against infringements by third parties, even when this party was aware of the prior sale. Article 1295(2) ABGB demands wilful action against good faith in order to compensate such losses. In Betty’s case she would have to prove, for example, a conspiracy between Antonio and Cinzia or the use of improper means.

However, Betty’s legal position changes when she had already moved into the flat and Antonio afterwards sold it for a second time to Cinzia, who knew or negligently failed to learn of Betty’s occupation. Then Betty might sue for restitution of her property on the ground of article 1323 ABGB, irrespective of Cinzia’s ownership.593 The infringement of an occupier’s right, under the Austrian case law in tort, leads to equal treatment with cases of real property rights. Courts and scholars expressively speak of a ‘right in personam manifested by occupation’.

If restitution is impossible or impractical, or if Betty does not want the restitution of the flat, she is entitled to receive compensation for her pure economic loss. This result complies with the rule that even pure financial losses are recoverable in tort law if the protected right is tangible and evident.594

Betty’s claim against Cinzia when Betty did not move into the flat: if a right in personam is not manifested by possession, the only basis of a tort claim – as stated above – is article 1295(2) ABGB. Betty has to prove a conspiracy between Antonio and Cinzia or the use of improper means.595 Sale of a computer: the results are exactly the same for the reasons indicated above. If Betty had taken possession of the computer and Cinzia had only been granted ‘constructive possession’ based on agreement with Antonio,596 Betty would have been entitled to sue under the provi-

sion of articles 1295(1) and 1323 ABGB if Cinzia had been negligent. There is no claim for Betty against Cinzia if she had not obtained

possession of the computer, except the specific case of article 1295(2) ABGB.

III. The fact that a discernible right in personam should be granted the same protection as an absolute right appears to be an advance in legal protection. The same is true with discernible financial losses. Whether simple knowledge of a right in personam forms sufficient ground for granting the same protection is open to dispute. After all, one has to

593See B. Schilcher and W. Holzer, ‘Der schadenersatzrechtliche Schutz des Traditionserwerbers bei Doppelveräußerung von Liegenschaften’, JBl 1974, 445, 512; and in compliance therewith OGH EvBl 1976/176; JBl 1977/257; JBl 1981/535; most recently the Supreme Court granted a claim based on tort to a tenant: OGH JBl 1990, 648.

594For greater details, see B. Schilcher and W. Posch, ‘Civil Liability for Pure Economic Loss: An Austrian Perspective’, in E. K. Banakas (ed.), Civil Liability for Pure Economic Loss (London, 1996), pp. 149, 176.

595See OGH JBl 1981, 535 – ‘inducement of breach of contract’ (‘Verleitung zum Vertragsbruch’).

596Cf. art. 428 ABGB.

If Cinzia did not know of the earlier sale (there is good faith) or at any rate, if it is not proved that she did,600 she would become the owner of the apartment, and we cannot discover any grounds for Betty to receive compensation from Cinzia.

Nevertheless, it is not impossible that, in the light of the circumstances of the case, the conclusion of the second contract would be contrary to boni mores, which implies its invalidity (art. 281) and upholding the right of the first purchaser.

Inasmuch as the damage is not wholly recoverable by this route, there could still be claim based on abuse of law.

Double sale of a computer: in the event of the double sale of a movable that is not subject to registration, it does not matter if the second buyer knew about the first contract or not (good faith), since in either case, the property always belongs to the first buyer, with or without delivery (traditio) of the thing (unless there is acquisition by usucapio).

Betty could thus exercise her inherent rights of ownership to reclaim the property (art. 1311).

II. To understand the explanation given in section I above, it is worth considering some ideas.

In Portuguese law, the princípio da consensualidade operates, by which the constitution or transfer of rights in rem over a determined thing takes place simply on the basis of the agreement (solus consensus), independently of the delivery (traditio) of the thing or other formalities (article 408, no. 1, cf. also art. 879, sub-para. a).

On the other hand, the principle ‘possession is equivalent to title’ established, for example, in article 2279 of the French Civil Code (en fait de meubles, la possession vaut titre) does not operate in Portuguese law.

However, the law does give special protection to the buyer in good faith in the case of a purchase from a seller who deals in a good of the same or similar type. The party seeking the return of the thing is then ‘obliged to reimburse the price that the acquirer has given for it, but has the right of recourse against whoever negligently caused the harm’ (art. 1301).601

600Cf. art. 7° of the Código do Registo Predial (Code of Land Registration). We are grateful to Paulo Videira Henriques for allowing us to read part of an as yet unpublished study on land registration, which we found very useful.

601Concerning real estate and movables requiring registration, third parties acting in good faith who acquire by onerous title are protected insofar as the avoidance or annulment of a previous transmissible contract cannot be opposed against them if

382t h e c o m p a r a t i v e e v i d e n c e : c a s e r e s p o n s e s

III. In accordance with what has been said, one of the conclusions drawn by Rodolfo Sacco in his comparative study on the transfer of the ownership of goods does not apply in Portugal. The learned author states that ‘if a person, after selling a good to a first buyer, sells it to a second and delivers this good to the latter, the second buyer, if he has purchased in good faith, becomes the owner of the good . . .’.602 This regime does not operate in Portuguese law.603

The principle of transfer of property merely on the basis of a contract was already enshrined in the Civil Code in 1867 under the influence of the Code Napoléon.

Sweden and Finland

I. Betty has no claim against Cinzia unless she proves that the participation of the latter in the transaction was a crime (from this perspective, Cinzia’s knowledge would thus be a relevant element).

II. This case involves ‘pure economic loss’ in the Swedish/Finnish meaning of the term, i.e. an economic loss arising without connection to anybody suffering personal injury or damage to things. According to the statutory rule in SkadestL 4:2 (Sweden) and SkadestL 5:1 (Finland) it can be compensated when it is consequent upon a criminal behaviour, although the text and the preparatory works of the Tort Liability Acts 1972 and 1974 do not completely bar compensation if the courts find strong reasons for it. Courts have been very restrictive in making exceptions to the general principle.

However, a pure torts law perspective must be integrated here with the property rights aspect. It must indeed be taken into consideration that a second acquirer in bad faith could not get ownership to the real estate or the movables. That is to say, Betty does not incur any loss if Cinzia knew about Betty being the first buyer. If Cinzia is in good faith, that is to say she was unaware of Betty being the first buyer, she may become the owner of the property if she gets possession of the property or is registered as the owner of the real estate before Betty can register. In such a case Betty has no claim against Cinzia, but only towards Antonio.

the registration of the acquisition was prior to the registration of the claim of voiding or annulment and took place three years after that contract (art. 291; for annulment of registration, see art. 17, no. 2 of the Land Registration Code).

602‘Le transfert de la propriété des choses mobilières déterminées par acte entre vifs en droit comparé’, Rivista di Diritto Civile, 1979, Parte Prima, 442 f., 447.

603J. M. V. Gomes, O Conceito de Enriquecimento O Enriquecimento Forçado e Os Vários Paradigmas do Enriquecimento Sem Causa (1998), 24.