Oxford University Comparative Law Forum
The German Act to Modernize the Law of Obligations in
the Context of Common Principles and Structures of the Law of
Obligations in Europe1
by Peter Schlechtriem2
(2002) Oxford U Comparative L Forum 2 at ouclf.iuscomp.org | How to cite this article
Table of content
I. Preliminary Remarks
On January 1st, 2002, the Act to Modernize the Law of Obligations of November 26, 20013 came into force, causing a general revision of the German Civil Code (Bürgerliches Gesetzbuch,
BGB), which in consequence was announced in its new version in the
Official Law Gazette of the Federal Republic of Germany on January 2nd, 2002.4
Most notable are the changes to the second book of the Civil Code (Law
of Obligations), which reached the foundations of this venerable codex
and altered its basic structures.
1. The First Phase: Preparations of Reform.
The revision of January 1st, 2002, generally referred to
as a reform, brought to an end endeavours which had begun as far back as
the late 1970ies, when the then Minister of Justice of the Federal
Republic, Dr. H. J. Vogel, in the wake of several reforms - in
particular in the field of family law - and new Acts – relating e.g. to
the control of standard form contracts - asked a number of obligations
law scholars to submit opinions on several topics ranging from the law
of limitation periods to the general rules on breach of contracts and
extra-contractual obligations, to specific types of contracts and the
need to (re)codify them, as well as to tort law, and in particular the
question whether the large number of specific Acts which had overgrown
the Civil Code in these areas could and should be consolidated. These
experts submitted their opinions in the early 1980ies.5
In 1984, the Minister of Justice established a Law Reform Commission
consisting of 16 experts - judges, civil servants representing the
ministries of justice of the Federal Republic and the German States,
scholars, one attorney and one notary - and entrusted it with the task
of elaborating draft provisions for the Civil Code which would revise
the law of limitation periods, of the general rules on breach of
obligations, and also of the specific contracts of sale and construction
and how these linked to the more abstract general rules. Indeed, the
incongruencies between general rules on the one hand and the rules on
specific contracts on the other were regarded as one of the congenital
defects of the old Code. The scope of the reform project was - in
comparison to the range of the above-mentioned expert opinions - scaled
down considerably, leaving aside, e.g., all matters of tort law and the
law of restitution except in regard to the respective rules on
The Law Reform Commission6 published its proposals - a draft of new code provisions and comments hereto - in 1992.7 The report found a mixed reception. The Deutsche Juristentag,
a traditional bi-annual meeting of all interested jurists, voted in
1994 with great majorities in favour of most proposals, while scholarly
articles criticized various details. Overall, the reform project was met
by rather reluctant interest in reform, and politicians and the
political parties in particular, ignored it, as they could not imagine
winning votes by backing such a project far from the mind of the general
2. The Second Phase: Drafts and the Modernization Act
The project of a reform seemed destined to pass away quietly, and its
only merit to have served as a quarry for doctoral theses, when, in
1999, the EC enacted several directives, among them the most important
directive 1999/44/EC on consumer sales,8
which had to be implemented by Dec. 31, 2001. This posed a dilemma for
the German legislator and the Ministry of Justice as the organ to
prepare legislation on the implementation. Should the Directive be
implemented just as an additional body of sales law, thereby increasing
the number of different sales law regulations to five? The law of sales
in the BGB, the law of commercial sales in the Commercial Code, the
UN-Convention on the International Sale of Goods, the special law for
the sale of animals and lastly the new consumer sales law would
differing not only in details, but also in basic structures. Or should
the need to implement the Directive be taken as a chance to overhaul the
sales law and the general rules on breach of contract altogether? And
since the Sales Directive required the introduction of a new period of
limitation for claims and rights arising from breach of warranties,
should this be implemented only in regard to consumer sales, or rather
be used as the final impetus to reform as a whole the law of periods of
limitation, which had for long been regarded and criticised as
fragmented, complicated and an inducement to bend the substantive
prerequisites of claims and rights? The Justice Ministry opted for the
second solution, took the reform proposal of 1992, elaborated under its
tutelage, as a model, supplemented and modified it slightly with the
rules of the Directives to be implemented, and published a "Discussion
Draft of a Law of Obligation Modernization Act" on August 4, 2000.9 This caused a veritable storm of criticism,10
because by now every jurist in Germany, academics and practitioners
alike, realized that this was no longer a theoretical playground for a
handful of experts, but that a fundamental change of the law was indeed
imminent. The motives of those groups which objected to the draft,
however, were quite different. Some critics, composed mostly of advisors
to commercial and industrial associations, protested against the
additional costs caused by certain rules, in particular the lengthening
of some periods of limitation, and what was perceived as a trend towards
stricter liability of sellers and contractors for the conformity of
their performance to the contract, but also by the need to revise
standard form contracts.11 Practicing lawyers complained that they had to devote too much of their valuable time to study and digest the new provisions.12
Academics pointed to this or that flaw in the draft, often
characterizing every deviation from the norms, concepts and structures
of the old BGB as being a fallacy in itself.13
What caused particularly vociferous protest was the suspected tendency
to forego parts of the Roman law heritage as interpreted by great
scholars of the 19th century such as Friedrich Carl von
Savigny, who had strongly influenced some of the foundations of the
German Civil Code in general and the sales law especially, and instead
to follow solutions of the UN-Convention on International Sales, which
was regarded as being a Trojan horse of common law thinking.
Occasionally, this protest would culminate in the assertion that the
German Civil Code was so perfect in itself that every change could only
impair and never improve it.14
The Ministry of Justice was quite open to critical proposals, partly
because of their merits, partly for tactical reasons, i.e. in order to
steer the project safely through the swirling waters of the legislative
process. Not only did the Ministry consider carefully the many proposals
submitted by individuals, groups, conferences etc, but it also revived
the old Law Reform Commission, which was split into several working
teams and enlarged by an Advisory Board, including scholars who had been
particularly critical of the reform project. The result was the
Official Draft ("Regierungsentwurf") of an Act to Modernize the Law of Obligations of May 9, 2001,15 which was approved by the German Parliament in July in its first reading. However, the Bundesrat,
the second legislative chamber which represents the German States,
submitted 150 proposals for alterations and amendments, although showing
a general willingness to let the project pass (and not to make it a
point of partisan conflict of the political parties, which could easily
have happened, as a left-wing coalition had the majority in Parliament,
whereas the conservative opposition dominated the Bundesrat).
Likewise, the Judicial Committee of the Parliament suggested a number of
amendments. Therefore, the Ministry revised the Draft of May 9, 2001,
advised and assisted by a joint commission of the Federation and the
States. The second and third readings of the result, i.e. the final
draft, by Parliament took place on November 11, 2001, so that the new
draft could become law in time, i.e. to meet the deadline set in the
consumer sales directive.
II. Basic Features
The long-winded development from the first proposals to the final
version of the Modernization Act, sketched out in the preceding section,
and the many, often divergent, influences that shaped its structure and
details, must be kept in mind when trying to understand and to evaluate
the result, i.e. the new law of obligations and limitation periods.
Four main areas can be distinguished as follows.
1. Limitation Periods
From the very beginning, an overhaul of limitation periods was at the
heart of the reform project. As mentioned above the respective
provisions contained a great variety of limitation periods ranging from 6
weeks (for warranty claims of the buyer of a "defective" animal in §
490 (1) BGB), 6 months (e.g. for warranty claims of the buyer of
movables, § 477(1)) up to 30 years as the general (fall back) provision
on limitation of actions (§ 195 BGB). The norms on periods of limitation
were referring to specific actions and their prerequisites, thereby not
only presenting a great variety of limitation provisions and long
catalogues of respective claims, often regulated outside the BGB in
obscure by-laws, but also inducing lawyers and courts, who found a
particular short period of limitation, e.g. in case of a buyer's
warranty claims, untenable, to escape its application by characterizing
the plaintiffs claim differently, e.g. as a tort claim, falling under a
regime of three or, depending on the victim's knowledge of the existence
of its claim and the defendant/tortfeasor, up to 30 years. Thus, an
action based on the defect of a tyre of a purchased car, which would be
barred after 6 months if presented as a contractual claim, could be
framed as a tort claim if the defective tyre had caused an accident
which had destroyed the whole car.16
Although almost everyone agreed on the need to revise this part of
the law, as the EC Consumer Sales Directive required at any rate at
least a partial revision, the best solution for a law of limitation was
nevertheless highly contested. Up to the "Discussion Draft" of 2000, the
opinion prevailed that in order to overcome the variety of limitation
periods, its inconsistencies and the inherent temptation to escape the
consequences of certain norms by way of changing the characterization of
actions, i.e. twisting the substantive law, a largely uniform period of
limitation (of 3 years, in exceptional cases 5 or 10 years) should
govern all claims based on contract. This solution, however, could not
be maintained. Critics were successful in pointing out that this would
not only leave the old escape route into tort law open, but that in many
situations it would cause hardship on the obligee if its claims were
barred after 3 years before the claim and/or the obligor had become
known to the claimant to a degree which enabled the claimant to pursue
his or her claim.17
Therefore, the period of limitation regime was completely changed at
the last minute by opting for the so-called two-tier (or better:
three-tier) system. This is based on a rather short general period of
limitation of 3 years for all claims (now § 195 BGB),
which, however, commences only at the end of the year in which the
obligee had or could have had knowledge of the existence of the claim
and the respective obligor (now § 199 (1)). This is combined with
long-stop periods of 10 years (§ 199 (2)) and - in case of claims for
certain damages, including those arising from death or injury, of 30
years (§ 199 (3)). These long-stop periods commence on accrual of the
claim or (in case of the 30 year period for damages claims) the
occurrence of the event that caused the claim to accrue.18 In addition, however, special periods of limitation were regarded as necessary, in particular for warranty claims,19
or kept to be merged into the general system later, notably the special
provisions for certain professionals such as attorneys, auditors and
tax consultants, who still enjoy the benefit of rather short periods of
2. Integration of Special Regulations into the BGB
One of the initial motives for reforming the BGB was the desire to
(re-)integrate into the BGB regulations enacted as separate statutes or
by-laws, thus not only facilitating their application, but also
harmonizing their basic structures and concepts with those of the main
codification. The Law Reform Commission had no longer pursued this goal,
for at that time - i.e. in the 1980ies - this seemed impossible to
achieve because of the sheer abundance of the exploding mass of such
regulations. The Modernization Act partly reversed this resigned
restraint and merged a number of special regulations into the new law of
obligations, in particular consumer protection laws, but also laws
reaching beyond consumer transactions such as the Act on (the Control
of) Standard Form Contracts, enacted in 1976 and now to be found - with
certain changes - in §§ 305-310 BGB
3. Codification of Case Law.
A Code is bound to be partially outdated and to be supplemented and
amended by judge made rules of law almost as soon as it is enacted. Gaps
and inconsistencies might be discovered, but more often alterations in
the legal environment - economic and technical developments as well as
gradually changing policies and common convictions - necessitate
adjustments of the rules laid down by the historical legislator. The
older a Code becomes, the more it is overgrown by case law, the rules of
which are very often the result of a constant discussion between courts
and academic scholars and pundits of the Code. This was also the
inevitable fate of the BGB, and it was therefore one of the most
important tasks for the experts and commissions entrusted by the
Ministry of Justice with the preparation of proposals for a reform to
provide an analysis of whether and which rules of case law could be
codified in the context of a new Law of Obligations. Letting aside those
rulings which merely clarified the meaning of certain concepts in the
provisions of the Code, many judge made rules had indeed probed the
foundations of the BGB's Law of Obligations and had deviated from
solutions which the authors of the BGB had intended. For this reason,
the relevant parts of the Modernization Act will be dealt with below
(sub III) in the context of reporting the changes in basic structures
and concepts and comparing them with European and international
4. Overhaul of the Law of Sales and Construction Contracts.
The colloquial term "overhaul" masks three different aspects of the revision of provisions regulating these contracts.
- First and foremost, the Consumer Sales Directive had to be
implemented. A basic decision which was taken in this regard was to
adjust the entire sales law to reflect the approach taken by the
Directive, rather than limiting these changes to special provisions for
consumer sales. (There are nevertheless some new provisions which apply
only in case of a consumer sale at the end of a distribution chain, §§ 475-479).
This decision, however, was facilitated by the fact that the various
reform proposals, in particular the draft prepared by the Law Reform
Commission (above I.), were already heavily influenced by the
UN-Convention on the International Sale of Goods, and in particular by
the provisions which define nonconformity of goods as a prerequisite of
warranty claims. In turn, the same Convention was also used as a model
by those who drafted the EC Consumer Sales Directive. Thus, the ground
was already prepared by the draft proposals, and the adoption of the key
concepts of the Directive was relatively easy. Of course, there
remained genuine consumer protection issues which had to be implemented,
and it is in this context that one might miss consistency and elegance
in the new provisions (see below IV.2.d).
- Second, the system of remedies of the buyer in case of defective
goods under the Civil Code of 1900 had centred around the old Roman
remedies of actio negotioria, i.e. termination of the contract, and actio quanti minoris, i.e. price reduction, and allowed for damages only in case of fraud or breach of dicta et promissa,
i.e. some kind of express warranties. This was commonly judged to be
outdated and in need of legislative reform. The courts had, by inventing
a general claim for damages in case of breach of contract (the
so-called positive Vertragsverletzung), partially remedied these
deficiencies, but at the price of creating new problems of concurring
actions and delineating the respective areas of codified remedies and
the practical issue very often being one of extremely diverging periods
of limitation. For example, in the field of construction contracts, a
damage claim under the special provision of the Code would be barred in
six months, one year or five years depending on the kind of object to be
produced by the contractor (see § 638 of the old Code), while the
general claim for breach of contract could be pursued for 30 years! The
courts attempted to distinguish between consequential and not quite as
consequential damages (Mangelschaden and Mangelfolgeschaden),
the first one falling under the special statutory provisions, the
latter under the rules of general breach of contract, but never
succeeded in creating a clear and unambiguous formula for drawing the
- Third, as mentioned above (at I), the provisions on remedies in the
general part of the law of obligations and those in the context of the
regulation of special types of contracts were not fully consistent, if
not contradictory in some respects, reflecting the historical fact that
different drafting commissions had been in charge for these areas.
Moreover, the general provisions were limited to two specific types of
contract breach, namely impossibility causing non-performance, thereby
distinguishing between initial and subsequent, imputable and excusable
impossibility, and imputable delay.23
On the other hand, the sales law - and, to a lesser extent, the
construction law remedies - centred around cases of malperformance, i.e.
non-conforming goods or works, regardless of whether conformity was
possible or not, imputable or not. In addition, while in general a claim
for specific performance was regarded as the "backbone" of every
obligation, a purchaser had no action for the cure of defects of
specific goods (unless granted under the terms of the contract), while
the client in a construction contract could claim repair (§ 634). The
relationship between the general and the special provisions presented
many dogmatic riddles, made even more fascinating by the courts'
invention of the concept of a general breach of contract (above II.2.).
Attempts to solve these riddles, being regarded as an intellectual
challenge worthy of the time and efforts of the best, filled many a
library shelf. For practitioners and students, though, this was a maze.
Therefore, one prime goal of the reform and reformers was to streamline
the system of remedies, harmonize the respective provisions of the
general and the special part of the law of obligations, and to bring it
in line with modern, i.e. international and European developments. The
question whether they succeeded in this will be dealt with below (at
III. Organization of Basic Structures and Concepts of the New Law of Obligations.
As mentioned above (at II. 4. c), the system of remedies available to
an obligee, who was aggrieved by the obligor's failure to conform with
his or her obligations, whether they were created by a contract or arose
by virtue of the law, was based not so much on the deviation from this
obligation but on the causes and phenotypes of certain breaches. These
included impossibility as an initial or a subsequent, (i.e. arising
after creation of the obligation) impediment, and the distinction
between imputable (zu vertretende) and non-imputable (nicht zu vertretende)
impossibility, imputability in most cases being understood as fault,
i.e. wilful or negligent action or omission causing impossibility. A
further distinction was made between subjective impossibility, affecting
only the respective obligor, and objective impossibility, which
affected everyone. As a second type of breach, i.e. imputable delay, was
regulated as to both prerequisites and consequences. These most general
rules - §§ 275 et seq. - were supplemented by norms for non-performance, impossibility or delay in synallagmatic contracts, §§ 320 et seq.24
Although impossibility and delay were meant to play the central roles
in this system, even within this limited field – which had proved not to
be relevant in practice very often - untilled parts could be detected.
Three questions which never received a final answer were: (1) whether
impossibility could include "economic impossibility", i.e. cases of
extreme economic hardship;25;
2) what should be the consequences of initial subjective impossibility
(which was not expressly regulated in the Code) and 3) whether initial
objective impossibility always vitiated a contract (as § 306 stated).26Also,
as has been mentioned above (at II.4.b), there was no general provision
for malperformance, which could neither be subsumed under the
provisions of impossibility, nor be regarded as a delay. A famous
scholarly contribution had pointed out this gap as early as in 1902,27
which necessitated the invention of the concept of claims for
"positive" breach of an obligation, functioning mainly as an equivalent
to the common law notion of breach of contract. However, within the
existing system, this created new problems, as those claims collided
with special rules on non-conformity of goods and works.
All this has meanwhile been abolished – or almost all of it. During
the last phase of redrafting the Discussion Draft to become the Official
Government Draft of May 9, 2002 (above I. 2.), scholars who had been
invited to join the revived Law Reform Commission made successful
attempts to reintroduce some of the keynotes of the old system.28
The Ministry of Justice complied in order to counter the growing
resistance amongst the conservative community of lawyers. But the core
of new structures and concepts were saved.
1. The Basic Concept of Breach.
The new system is based on a general concept of breach of
(an)obligation, regardless of whether this obligation is created by
contract or arises by virtue of the law (such as in the case of negotiorum gestio)
or under the newly introduced pre-contractual duties of care to protect
the prospective partner's real and personal rights and interests under §§ 311 (2), 241 (2).29
The content of the obligation is determined by law and - in the case
of contractual obligations - by the agreement between the parties,
unless party autonomy is restricted by legal norms which prohibit
certain terms - in particular standard terms - or which exceptionally
impose certain terms on the contracting parties. In regard to features
of goods sold or works to be constructed, rules stating "implied" terms
of qualities supplement the parties' agreement as if it were "accurately
If a party deviates from the content of an obligation, this constitutes a breach, or, in the terminology of the new law, a Pflichtverletzung.
This is equivalent to the general concept of non-performance which can
be found in the Principles of International Contract Law as promulgated
by UNIDROIT,31 in the European Principles of Contract Law (hereinafter: PECL)32
and the breach of contract concept in the UN-Convention on the
International Sale of Goods (CISG). At this stage of legal analysis it
does not matter what caused the deviation, or what form it took. Whether
the deviation was caused by an impediment or a change of the obligor's
mind, or whether it caused complete non-performance, malperformance, or
delay, will become relevant only in regard to specific remedies. In
particular - and deviating from the old Code and the Roman maxim impossibilium nulla est obligatio - neither a contract as such nor a single obligation is void because of impossibility. The new § 311a (1) states this deviation from the old law expressly, although the new § 275 (1)
can give rise to misunderstandings (see below at 2. a). And it equally
does not matter at this stage whether the obligor was at fault or
otherwise responsible for not overcoming the respective impediment -
again, this is relevant only in the context of certain remedies.
2. The System of Remedies.
If there is a breach, the obligee has an arsenal of several general
remedies, which may depend on additional prerequisites, and, if the
obligee is also under an obligation towards the obligor, he or she may
have the right to retain or withhold his or her own performance.33 The main remedies are:
- a claim for specific performance (§ 241), which in case of
non-conformity is aimed at curing the non-performance, (e.g. §§ 437, 439
for sales and §§ 634, 635 for construction contracts);
- termination of contract which is effective ab initio, i.e. retroactively (Rücktritt,
notably under § 323 for synallagmatic contracts); in case of recurring
obligations, this is replaced by a termination which is effective only
for the future (Kündigung,in particular under § 314);
- a claim for damages (§ 280);
- in case of hardship created by circumstances which have either
changed, or which had been erroneously assumed at the time of
contracting, a claim for adjustment of the contract may lie under § 313
for the aggrieved party. If this is not feasible, termination may be
granted in this situation as a remedy of last resort;
- in certain types of contracts, the aggrieved obligee may also
exercise a right of price reduction or of self-help, the latter with the
consequence that the necessary cost can be charged to the party in
breach and a corresponding advance be claimed (see § 637 for
(a) Specific performance
Under German law, an obligee can generally always claim - and sue for
- specific performance. This seemingly fundamental difference to common
law systems is, however, narrowed down considerably if the procedural
rules on enforcement of claims are taken into account.34
Aside from variations and additional requirements regulated in the
context of particular contracts and the claim for cure of
non-conformities, an obligor can now always raise the defence that
insurmountable impediments hinder specific performance, § 275.
It is here, however, that the old concepts, thought to be buried by the
initial Law Reform Commission, ruled from their graves the imagination
and deliberations of the second Law Reform Commission and influenced the
resulting details of § 275. In particular, they caused the old notion
of a liberating impossibility to creep back into the regulation of this
defence. The first Law Reform Commission had characterized
insurmountable impediments generally as a defence, which did not affect
the obligor's obligation and which had to be raised in court in order to
be effective. In the end, i.e. on account of the proposals of some
members of the second Commission, § 275 (1) "excludes" the obligor's
obligation to perform in case of objective or subjective impossibility,
thereby suggesting the obligation to be void in case of impossibility.
Subsections (2) and (3) of § 275, on the other hand, state defences
(only) against the claim for performance, which become effective when
raised in court and which leave the underlying obligation intact. The
last minute solution adopted in § 275 (1) is a step back, which had
obviously been influenced by traditional conceptions of "no obligation
in case of impossibility", which, however, have been given up expressly
in § 311a (1). First of all, the borderline between subsections (1) and
(2) might be difficult to draw. Subsection (2) gives the obligor a
defence in cases where performance would require unreasonable efforts,
the term" unreasonable efforts" used here as shorthand for the necessary
balancing in a given case of the expenditures required of the obligor
and his or her responsibility for the impediment on the one hand,
against the obligee's special interest in specific performance on the
other. It may prove to be difficult to distinguish this from subjective
impossibility under subsection (1). Take the frequent case of a luxury
car which is stolen after the conclusion of the sales contract and
shipped to Russia. Experience shows that these cars can be retrieved
through special agencies, but at a very high price. Is this subjective
impossibility under subsection (1) or "merely" unreasonable expenditure
under subsection (2)? Probably - and hopefully - these are theoretical
concerns, because the seller, once sued for delivery, will defend
himself by reporting the unhappy course of events as such, thus leaving
it to the courts and academic commentators to qualify whether this
defence should be subsumed under subsections (1) or (2). More troubling
are the dogmatic warps caused by the idea that impossibility, as under
the old Code, may render an obligation void.35
Since the obligor remains obliged to surrender any surrogate under §
285, one has to revert to the old notion of a secondary obligation
behind the primary obligation to perform, whereby the secondary
obligation is directed towards the surrogate. Even less reconcilable
with the notion of an obligation vitiated by impossibility is the rule
in § 275 (4), namely that the obligee may claim damages or terminate the
contract for breach of this very obligation, which is regarded as
vitiated by impossibility by those authors who understand the new rule
in the light of old concepts. Finally, in cases where the impediment
amounting to impossibility later lapses (e.g., an export ban is lifted
unexpectedly), the retrospective notion of an obligation which initially
was void must be corrected by some form of resurrection of the
The interpretation favoured by the present author is that the defence
of impossibility simply ends with the cessation of any impediment. This
is not the place to fight a battle over the correct interpretation and
dogmatic characterization of § 275 (1). It is to be hoped that this will
be no more than the proverbial tempest in a teapot, and the
qualification of the obligor's defences a façon de parler. What
matters is the rule in subsection (4) mentioned above, which states
that, regardless of the obligor's defence(s) against the obligee's claim
for specific performance, and also regardless of the qualification of
the defence, the other remedies of the obligee are not affected, and
also the rule in § 311a (1), which clearly states, that even in case of
initial objective impossibility, a contract is valid.
(b) Termination of contract
In most legal systems, termination of a contract is generally allowed only if the breach is serious.37 The problem is to determine and define the threshold of seriousness which allows to abandon the contractual bond of pacta sunt servanda
and to terminate the contract. Aside from legal systems which
essentially allow termination only by judgement of a court and which
leave it to the court to determine the prerequisites of termination, two
models can be found. The first model states the basic rule that
termination (or avoidance) of a contract is allowed only in case of a
fundamental breach as a general principle, thus leaving it to courts and
commentators, or to additional provisions, to elaborate on cases of
fundamental breach. This first model also provides a fallback line for
cases where the seriousness of breach might be uncertain, by the
instrument of a request which makes time of the essence by setting a
period of grace (Nachfrist). If this lapses without the obligor
having provided performance, this constitutes a fundamental breach. The
second model is based on a general requirement that the obligee first
has to set an additional period of time to allow the obligor a second
chance, but that such an additional period of time is considered
unnecessary in cases of an obviously fundamental or incurable breach.
The first model is followed by CISG, the UNIDROIT Principles and the
European Principles,38 while the latter is to be found, e.g., in the Swiss Code of Obligations, and also in the new German law in § 323.39
This provision requires in general an additional period of time to be
set by the obligee before the contract can be terminated. However,
subsection (2) dispenses from this requirement if the obligor refuses to
perform, if time was of the essence or in other "special
circumstances", which, having due regard to the parties' interests,
justify immediate termination. § 326 (5) also dispenses from the same
requirements in cases were the obligor could invoke the defence of
insurmountable impediments against the obligee's claim for specific
The reform proposal of the first Law Reform Commission (above I.1) had
favoured the first model, i.e. that a fundamental breach of a
contractual obligation should always grant the right to terminate the
contract. A residue of this approach can be found in § 324 BGB, although
this has been somewhat amputated by the restriction of this provision
to the violation of protective duties of care41
and the replacement of the term "fundamental breach" by the requirement
that the obligor "can no longer reasonably be expected to abide by the
As mentioned above, in case of recurring obligations, termination has
generally no retroactive effect because of the difficulties of
unwinding recurrent performances such as the use of a thing or services,
and instead dissolves the contractual bond only - but immediately -
from the time the notice of termination is received by the party in
breach, § 314.
Here, too, the aggrieved obligor in general must first set an
additional period of time for performance, or reprimand the obligor, but
might be dispensed of these requirements in situations analogous to
those in § 323 (2).
If a contract is terminated, special rules govern the restitution in
kind of performances made and, where this is not possible, the monetary
allowance which replaces restitution in kind, §§ 346-348 BGB. These
rules are seen as some kind of reversed contractual obligations and not
as an instance of unjust enrichment.
The lack of a general claim for damages in cases of breach of an
obligation under the old Code, which courts and scholars had addressed
by creating the concept of a positive violation of a contractual duty (positive Vertragsverletzung) 43, has now been remedied in §§ 280 et seq. It should be noted, though, that these provisions are not merely a codification of the positive Vertragsverletzung,
but comprise all instances of deviation from an obligation, regardless
of whether these should be qualified as non-performance, late
performance or malperformance, and also regardless of their causes such
as impossibility or unwillingness of the obligor to perform. The
phenomenological form of the breach and its causes are relevant,
however, in regard to the kind and extent of damages which the obligee
can claim (below (aa)), for the obligor's responsibility (the Vertretenmüssen) , and the obligor's possible defences (below (bb)).
Under CISG Art. 79 I, II, PECL Art. 8:108, 9:501 (1), and UNIDROIT
Principles Art. 7.1.7, 7.4.1, the obligor is excused if - in brief - the
deviation from the obligation was caused by impediments beyond the
obligor's control which could not reasonably be expected to be taken
into account at the time of contracting, and which could not have been
avoided or overcome by the obligor. This "imputability" of events, in
German law language encoded in the term Vertretenmüssen, is an
additional prerequisite for a claim for damages, § 280 (1) sent. 2 BGB.
However, imputability is presumed, so that the burden of proof falls on
the obligor. Imputability is defined in §§ 276 and 311a (2) BGB, and it
is here that the concepts of initial or subsequent impossibility remain
important because of the different focus of the obligor's liability.
§ 276 BGB, often regarded as the shrine of the fault principle,44
regulates responsibility for negligent or wilful breach as a fallback
line, but allows for strict liability in cases of, e.g., a guarantee or
an assumption of risk by the obligor, which can be derived from the
content of the contract. An assumption of risk is always supposed for
the financial capacity of the obligor and his or her ability (thereby)
to procure goods, which are to be delivered as part of his or her
obligation.45 The present author is convinced that, despite different starting points, liability under the cited uniform rules and Vertretenmüssen under § 276 BGB will be based on similar standards and criteria.
§ 311a (2)
, however, reflecting a last minute amendment, is entirely new. It
provides that in case of an "initial impediment", in particular in case
of initial impossibility, the obligor is responsible to pay (full)
damages, unless he or she was not aware of the impediment and this
ignorance cannot be "imputed", § 311a (2) sent. 2. In deciding whether
the obligor is liable, the focus of the analysis is therefore not on the
obligor's behaviour after the creation of the obligation, such as an
imputable lack of control, of money (to procure) or foresight (of an
impending impediment), but rather on the obligor's imputable lack of
making sure before incurring an obligation, notably before contracting,
that he or she is capable of performing it. If, as in McRae v The Commonwealth Disposals Commission,46
a non-existing wreck is sold to a salvage company, the purchaser can
claim damages including lost profits (and not only reliance interest) if
the seller had knowledge of the non-existence of the wreck or his or
her ignorance was "imputable", i.e., that the seller could have made
sure whether the wreck existed.
§ 280 (1) BGB
is the basis for damage claims based on breach of obligation. It
applies without further prerequisites if the obligee claims damages in
addition to performance for, e.g., consequential loss caused by defects
of goods delivered. If the obligor claims for damages caused by delay,
however, the additional requirements of Verzug, i.e. imputable delay, under § 286 BGB must be met, as required by § 280 (2) BGB.
If the obligor asks for the full performance interest including lost
profits as damages, i.e. damages in lieu of performance, he or she can
proceed by terminating the contract under § 323 BGB;
termination and damages can be combined (as in the uniform law
projects) under § 325 BGB. To do so, the obligor must, however,
generally set an additional period of time, § 323 (1) BGB, unless this
is dispensable under §§ 323 (2), 326 (5) BGB.47
As mentioned before, termination, amounting to a liquidation of the
contract, should not take place without a second chance for the obligor
to perform and thereby avoid this liquidation, unless a second chance is
superfluous in the situations falling under § 323 (2), 326 (5). Since a
claim for damages in lieu of performance amounts to a liquidation of
the contract even without termination, the same prerequisites as for a
termination must be met. This notion is at the core of the seemingly
complicated regulation in §§ 281, 283.
This establishes requirements for a claim for damages in lieu of
performance, i.e. instead of proceeding with the contract, without
actually resorting to termination.48
§ 284 BGB
allows the obligee to claim for useless expenditures instead of
damages, e.g., where an obligee in expecting delivery of goods has
rented storage space, or where the buyer of animals has bought food,
etc. Since these expenditures are not exactly caused by the following
breach, but were incurred in mere reliance on the contract, and since
respective damages might sometimes be hard to prove, the legislator
sought it necessary to deal with this special situation (which prior to
the reform was coped with by judge-made rules on presumption of
damages). A claim for expenditures must meet the same prerequisites as a
claim for damages in lieu of performance (above III.3.).
(e) Adjustment of Contracts in Cases of Hardship and Changed Circumstances
PECL and the UNIDROIT Principles have both introduced the concept of
adjustment of contracts in case of a fundamental alteration of their
equilibrium by events which occur (or become known) after conclusion of
the contract, which could have been neither foreseen nor controlled by
the disadvantaged party, and which were not part of the risk assumed by
On the other hand, CISG does not address this problem, because at the
time when its basic features were drafted, the aversion by
representatives of those legal systems, which then still rejected the
idea of any tampering with contracts because of unforeseen developments,
was too strong to be overcome. In order to cope with hardship
situations under CISG, one has to revert to Art. 79 (1) CISG50 (reminiscent of early attempts in Germany to cope with these situations as "economic impossibility").51 In German law, the concept of what might in shorthand be called a clausula rebus sic stantibus, which the legislators of the 19th
century had expressly rejected, became an established legal institution
after the First World War in order to cope with its consequences,
notably the devastating effects of hyperinflation.52 A rule to this effect has now been codified in § 313 BGB,
which, however, shows some interesting differences to the uniform law
projects. While PECL requires a change of circumstances after conclusion
of the contract, § 313 (2) BGB allows adjustment also in case of a
mutual error of the parties as to the factual foundations of the
contract. While the uniform law projects see as an initial step a
request by the disadvantaged party for renegotiations, § 313 BGB has no
such requirement but allows an aggrieved party to claim adjustment of
the contract without preliminary negotiations.53
Most important, while the uniform law projects allows the courts to
adjust the contract affected by changed circumstances at their
discretion, § 313 BGB (1) requires that the party asking for adjustment
must claim for a specific alteration of the contract, which the court
can either grant or deny. And while § 313 (3) BGB envisages termination
of the contract in these cases only as a remedy of last resort, the
uniform law projects leave it to the discretion of the courts whether
they terminate the contract or alter its terms.
IV. Breach of Specific Contracts, in Particular Sales Contracts
As mentioned above (I and II.4.c), one of the main motives for the
reform was from the very beginning the integration and harmonization of
the systems of remedies in the general part of the Law of Obligations on
the one hand with the remedies for breach of specific contracts, in
particular sales, on the other. This was achieved on two levels.
1. Content of the Obligations of the Parties.
Whether a breach has been committed depends on the obligations of the
parties, and whether there was any deviation from these obligations. As
mentioned before, contractual obligations and their contents are
created and determined by the parties, unless party autonomy is
restricted by the law. Where express and clear contents are lacking, the
law fills this gap in a contract by providing subsidiary rules for the
contents. Thus, in case of sales contracts, § 433 (1) sent. 1 BGB
obliges the seller to transfer title and possession, and § 433 (1)
sent. 2 obliges the seller to deliver goods free from defects and third
party rights. § 433 (1) sent. 2 is then fleshed out in §§ 434 and 435,
which define what is meant by "free from defects and third party
rights". Likewise, for construction contracts, § 633 (1)
obliges the contractor to achieve a result as agreed upon by the
parties and free from defects or third party rights, and defines this in
§ 633 (2) BGB mostly in parallel to the sales provisions.
"Defect" is just a shorthand for any deviation from the obligation in
regard to the features and qualities of the goods, or, in the terms of
CISG, "non-conformity". In order to establish conformity, consequently,
one needs to know which features and qualities the goods should have
under the contract. There is no abstract notion of non-conformity.
§ 434 (1) sent. 1 BGB, therefore, states - as does Art. 35 CISG -
that the agreement between the parties is decisive, and that thus the
parties determine what features and qualities the object of the sales
contract should have. The fact that Art. 35 CISG corresponds to § 434
(1) sent. 1 BGB is not accidental. Not only was Art. 35 CISG influential
for the draft proposal of the first Law Reform Commission (above I.1.),
but it also served as a model for Art. 2 of the Consumer Sales
Directive and thereby became the blueprint for § 434 BGB.
If and insofar as the parties have not clearly determined the
features and qualities, the law provides fallback lines by "implying"
respective agreements. A first fallback line is based on the particular
intended use presumed under the contract, § 434 (1) sent. 2 No. 1 and
Art. 35 (2) lit.b CISG.54
A second fallback line is the "fit for normal use" provision in § 434
(1) sent. 2 No. 2, which compares to Art. 35 (2) lit a) CISG. In
addition, however, § 434 (1) sent. 3 implements a requirement
established by the Consumer Sales Directive (Art. 2 (2) (d)), i.e. that
"public announcements" about the goods, in particular in advertising, by
the manufacturer, wholesale dealers and their helpers such as
advertising agencies, should be regarded as basis for implied promises
of the seller.55
In addition - and in conformity with Art. 35 (1) CISG - a so-called aliud,
i.e. goods of another kind, and also a lack in quantity, are treated as
non-conformity, § 434 (3) BGB, thereby abolishing with the legislator's
proverbial stroke of the pen the old problem of drawing the line
between malperformance through delivery of defective goods and
non-performance through delivery of goods of another kind.56 The same grid of fallback provisions and clarifications can be found in § 633 (2) BGB for construction contracts.
The Consumer Sales Directive also regulates that "non-conformity"
extends to defects caused in the process of assembling the object sold,
which covers both the seller assembling the object incorrectly, and the
buyer's failure to assemble correctly on account of an insufficient
instruction sheet (so-called "IKEA clause"). § 434 (3) BGB implements
2. Buyer's Remedies.
The linchpin that attaches the buyer's remedies in case of non-conformity to the general system of remedies is § 437 BGB. Likewise, § 634
is based on a reference to the general remedies in case of breach of a
contractor's obligation to achieve a result conforming to the standards
set in the contract. § 437 BGB - and likewise § 634 BGB - expressly
refer to the remedies of:
(a) specific performance - in case of defects, this takes the form of Nacherfüllung,
i.e. supplementary performance. That is to be achieved either by cure
or replacement (§§ 437 No. 1, 439 - §§ 634 No.1, 635 BGB);
(b) termination and/or damages (§§ 437 No 2. and 3, 440 - §§ 634 No. 3, 4, 636 BGB)
and also add (c) price reduction as a special remedy,57 §§ 441, 638 BGB.
In regard to the general remedies of (supplementary) performance,
termination and damages, some additional prerequisites were introduced,
partially - such as the right of the buyer to choose between cure and
replacement and its restrictions, § 439 (3) - on account of the Consumer
Sales Directive, partially in order to facilitate the obligor's right
of termination or claim for damages in regard to the additional period
of time required under general principles. It must be noted, however,
that an additional period for cure or replacement is generally necessary
unless this is useless according to §§ 323 (2), 281 (2) , or because the seller relies on the defences in § 275 BGB.
(d) In addition to these claims and rights of a general character,
two remedies specific to sales or construction contracts only have to be
In case of non-conforming constructions, the obligor has - after
having set an additional period of time in vain - a right of self-help, a
claim for the expenditures necessitated thereby, and a claim for
corresponding advances, §§ 634 No. 2, 637 BGB.
An interesting addition is to be found in § 478 (2) BGB.
Art. 4 Consumer Sales Directive requires that a seller who has
contracted with a consumer and who has become liable because of the
non-conformity of the goods sold, must have an effective recourse
against his or her supplier, who in turn must have recourse against his
or her own supplier, so that in the end the recourse can be traced back
to the manufacturer as the source of the trouble.58
This possibility to ultimately hold the manufacturer liable by way of
recourse was the price which had to be paid for the rejection of early
proposals to impose legal warranties on manufacturers for the benefit of
consumer buyers. The exact meaning of Art. 4, however, is
controversial, since it leaves it to the domestic legislator and
domestic legal systems what shape the recourse should take. The main
concern in regard to the effectiveness of recourse are periods of
limitation, for the last seller might sell - and become liable towards
its customer - only after his or her own claims against his or her
supplier have already become barred by a short limitation period. Some
national laws (including those of Austria and Germany) therefore provide
for a suspension of the running of the limitation period of the
respective seller's claims against his or her supplier; for German law,
this is codified in § 479 (2) BGB. But the German legislator went a step
further. Not only can the seller in the role of a buyer employ all the
normal remedies of a buyer, § 478 (1), § 437, but, in case the seller
has performed his or her obligations towards the buyer by curing the
non-conformity of goods bought by a consumer or by replacing them, the
seller also has a special claim for recovery of all his or her
expenditures, § 478 (2).59
These special remedies and claims do not really endanger the concept
of a system of remedies, in which non-conformity is just one instance of
breach among others, and where the remedies for non-conformity,
therefore, are basically the same as in cases of non-performance or
delay and are fully integrated into the general provisions.
V. Final Remarks
The last phase of the reform was characterized by the need to
implement the Consumer Sales Directive, by time pressure, political
considerations, and the influence of new members amongst the group of
consultants and advisory boards. Small wonder it is that this lead to a
number of late changes which caused many a critical comment and
annotation. Here is not the place to deal with these problems, or to
spread out all the new provisions, which are now interpreted and
analysed by the academic community, and which will soon have to stand
the test of application by the courts.
Rather, what was to be shown here were the changes in basic
structures and principal concepts, which, to my mind, brought the German
Law of Obligation more in line with developments of the law in other
countries and on the international level. And the reform certainly
achieved the goal of integrating the consequences of breach of specific
contracts and different types of breaches with the general system of
remedies, thereby not only facilitating the understanding of the system
by German students, but by foreign lawyers and German practitioners as
This article is based on a lecture as a Heather Grierson Visiting
Professor in European and Comparative Law at the University of Oxford,
Institute of European and Comparative Law, in February 2001, on "The
Development of the Law of Obligations in Europe". The article was
substantially revised due to the numerous changes from what was then the
most recent draft (September 2000), to the enactment of the new law as
of January 1, 2002.
Prof. em. Albert-Ludwigs-University of Freiburg, Dr. jur (U. of
Freiburg) 1965, Dr. jur. h.c. (U. of Basel) 1992, M.C.L 1964 (U. of
Bundesgesetzblatt 2001 I 3138. A bilingual (German and English) edition
of those provisions of the BGB which were affected by this Act has been
prepared by Thomas and Dannemann, and is published in the German Law
Archive at http://www.iuscomp.org/gla/statutes/BGB.htm.
4 Bundesgesetzblatt 2002 I 42.
5 Published as Gutachten und Vorschläge zur Überarbeitung des Schuldrechts, ed. by the Bundesminister der Justiz in 3 vols. 1981-1983.
6 The present author was a member of this Commission.
7 Abschlußbericht der Kommission zur Überarbeitung des Schuldrechts, ed. by the Bundesjustizministerium, Köln 1992.
8 O.J. EC No. L 171 p. 12.
9 Diskussionsentwurf eines Schuldrechtsmodernisierungsgesetzes,
ed.by the Bundesminister der Justiz, Berlin 2000; this draft was the
basis for the Oxford lecture on which the present article is based, see
above note 1.
10 See, e.g., Ernst/Zimmermann, Zivilrechtswissenschaft und Schuldrechtsreform,
Mohr (Siebeck) Tübingen 2001 (publication of papers given at a
symposium at Regensburg, November 17/18, 2000, presenting an analysis of
the reform draft).
See Groß/Zwerenz, Die Schuldrechtsreform. Die wichtigsten Änderungen für
die Wirtschaft, Deutscher Industrie- und Handelstag, 2001; furthermore
Groß/Zwerenz, Die Schuldrechtsreform aus der Sicht des Handels,
Deutscher Industrie und Handelstag 2001.
12 The present author has frequently encountered this complaint when lecturing on the new law to legal practitioners.
See Altmeppen, Schadensersatz wegen Pflichtverletzung - Ein Besipiel für
die Überhastung der Schuldrechtsreform, Der Betrieb 2001, 1131;
Wilhelm, Schuldrechtsreform 2001, Juristenzeitung 2001, 861.
14 Flume, Vom Beruf unserer Zeit für Gesetzgebung, Zeitschrift für Wirtschaftsrecht 2000, 1427.
15 BT-Drucksache 14/6040, also reprinted in Canaris, Schuldrechtsmodernisierung, Beck München 2002, p. 429.
16 BGH NJW 1981, 2241; for an exhaustive survey of the case law see Katzenmeier, Vertragliche und deliktische Haftung in ihrem Zusammenspiel, dargestellt am Problem der "weiterfressenden Mängel", Berlin 1994, p. 25 et passim.
17 See Mansel/Budzikiewicz, Das neue Verjährungsrecht, DeutscherAnwaltVerlag 2002, p. 148.
The two-tier system followed a model to be found in the old version of §
852 of the BGB in regard to tort claims, but also in the EC-Directive
on Products Liability and in the - not yet published -Part 3 of the
Principles of European Contract Law, prepared by the Commission on
European Contract Law, Parts I and II ed. by Ole Lando and Hugh Beale,
Kluwer Law International 2000.
For non-conforming performance of sales contracts, § 438 BGB sets -
following the Consumer Sales Directive - a 2 year period for
non-conformity of movables, a 5 year-period for buildings, building
components and building materials, and a 30 year period for certain
third-party rights - mainly ownership -, under which the third party can
reclaim the object for 30 years; in case of fraudulently disguised
defects, the general provisions on periods of limitation apply. For
defects in construction, § 634 a BGB likewise sets a 2 year period for
warranty claims for non-conforming movables, and a period of 5 years for
buildings and all ancillary performances of planning and supervising
the construction, if the performance resulted in defects of the
building; in case of fraudulently disguised defects. In all other cases,
the general provisions apply.
Whether the postponement of the reform in regard to these special
regulations had its cause in the time pressure at the end of the
legislative process, or in the desire not to swell the ranks of
opponents to the reform with especially influential and vociferous
interest groups, is a matter of speculation.
21 See e.g. Markesinis, Lorenz and Dannemann, The German Law of Obligations, Vol. I: The Law of Contract and Restitution, OUP Oxford 1997, ch. 6.
22 See Jauernig/Schlechtriem, BGB-Kommentar, 9th ed. Beck München 1999, § 635 no 16, 17.
23 See e.g. Markesinis, Lorenz and Dannemann, ch. 6.
24 For a more detailed report in English language, see Jones and Schlechtriem, Breach of Contract, chapter 15, vol. VII of the International Encyclopedia of Comparative Law, ed. von Mehren, Mohr (Siebeck) Tübingen 1999, sec.157 et seq.
25 The majority view was critical of such an extension, see Münchener Kommentar zum Bürgerlichen Gesetzbuch, 4th
ed. 2001, § 275 no. 28 (Emmerich); but some judgments of the
Bundesgerichtshof have taken such an approach, e.g. BGH 12.1.1997, VersR
See e.g. OLG Hamburg 31.1.1910, Seuff. Arch. 65, 160; for an English
translation see Markesinis/Lorenz/Dannemann, above note 21, case no. 67
(sale of a non-existing consignment of potatoes held not to be void).
27 Staub, Die positiven Forderungsverletzungen und ihre Rechtsfolgen, FS 26. DJT, Berlin 1902, 29 et passim.
The author, a member of this second commission, could not attend the
crucial sessions because of his obligations in Oxford during the Hilary
Term 2001; at one of the later sessions in August 2001, his motions were
answered with the argument that one should not, merely in order to
close up with international and European developments, stray to far from
the foundations of the old BGB.
The concept of pre-contractual protective duties was, in itself, of
course not a new invention, but could already be found in the Prussian
General Law of the Land (Allgemeines Landrecht) of 1794 (Art. 284); it was then re-invented by Rudolf von Ihring, Culpa in contrahendo oder Schadensersatz bei nichtigen oder nicht zur Perfektion gelangten Verträgen, JherJb 4 (1861), 1-112; and became, as culpa in contrahendo,
a well established concept of law, used mainly to overcome shortcomings
of tort law in case of purely economic loss and because of the missing respondeat superior maxime. For details and further references see Schlechtriem, Schuldrecht Allgemeiner Teil, Mohr (Siebeck) Tübingen, 4th ed. 2000, p. 12 et passim.
30 In the words of L.J. Brett in Randall v Newson, 2 Q.B. 102 (C.A. 1878).
31 International Institute for the Unification of Private Law, Principles of International Commercial Contracts, Rome 1994
32 Above note 18.
33 The respective defences were modified only marginally and will not be dealt with here. See in particular § 321 BGB.
34 For an exhaustive analysis, see Neufang, Erfüllungszwang als „remedy" bei Nichterfüllung, Nomos Baden-Baden, 1998.
See e.g. Pfeiffer, Systemdenken im neuen Leistungsstörungs- und
Gewährleistungsrecht, Zeitschrift für das gesamte Schuldrecht 2002, at
p. 28; Canaris (above note 15) at XI ("Befreiung").
Compare this to the strained construction in the old version of § 308
BGB: in case of initial impossibility rendering a contract void under
(the old version of) § 306 BGB, the contract may, nevertheless be valid
if the parties when concluding the contract envisaged the situation that
the impossibility might lapse.
As to this basic notion, see the impressive analysis by Treitel in
chapter 16, Remedies for Breach of Contract, of vol. VII of the International Encyclopedia of Comparative Law, ed. by von Mehren, Mohr (Siebeck), Tübingen 1976, sec. 161.
See supra notes 18 and 31. The main difference between CISG and the
European Principles on the one hand and the UNIDROIT- Principles on the
other is that the CISG and the European Principles abstain from
providing examples of fundamental breach in the legal text, while Art.
7.3.1 (2) of the UNIDROIT-Principles does so.
Refusal to perform because of impossibility has always the same
consequence as a fundamental breach; § 326 (5); in addition, § 323 (2)
nos. 1 and 3 - in my view: superfluously - provide for termination
without additional period of time in such a case.
40 See preceding note.
Neglecting situations frequent in CISG cases where one party violated an
obligation - e.g. - not to re-import certain goods into the EU, or not
to use the buyers brand name in the marketing of shoes distributed
through the seller's/manufacturer's own chain of stores - the courts, in
applying the CISG, evaluated whether the respective breach was
fundamental. Under the new BGB, these cases cannot be solved under §
324, for the respective obligations were not mere protective duties; the
solution has to be found in applying § 323 (5) sent 1 (partial
The result will be the same, for the test whether a breach is
fundamental will very often come down to the question whether in can be
reasonably expected of the aggrieved party to be bound by the contract
despite its violation by the other party. But the change in terminology
is again evidence of a desire to purge the new rules from any terms and
concepts reminiscent of uniform law texts and projects.
43 See above at II. 4. b)
The fault principle, often emphasized as one of the pillars of the
German Law of Obligations, is more an ideological article of faith than a
real distinguishing feature of responsibility. Even where negligence is
required to "impute" a breach to the obligor, the objective standards
of care used as yardstick often amount to strict liability and allow
excuse only in case of impediments beyond control.
In particular, the obligor cannot be excused for his or her failure to
deliver generic goods, as long as they are available. This made it
possible to abolish the old version of § 279 BGB, for its content is now
covered by the formula "assumption of risk" in § 276.
46 84 C.L.R 377.
47 See above III. 2.
48 A similar parallel is to be found in §§ 282 and 324 BGB.
49 Art. 6.2.2,3 UNIDROIT-Principles, Art. 6:111 PECL.
50 See Schlechtriem/Stoll, CISG-Kommentar, 3rd ed. Beck München 2000, Art. 79 Nos. 39, 40.
51 See above note 25.
52 See, e.g., Markesinis, Lorenz and Dannemann (note 21) pp. 523ss.
It is submitted that a demand for negotiations should be a prerequisite
based on the good faith requirement in § 242 BGB before a claim for
adjustment can be raised in court.
Note that there is a slight difference between CISG and BGB: the
particular purpose is decisive under BGB even if the buyer did not or
could not reasonably rely on the sellers capacity. The deviation from
the common law based restriction in Art. 35 (2) b) CISG was necessitated
by the Consumer Sales Directive, where this restriction was dropped on
account of motions by the consumer protection wing of the European
The dogmatically correct characterization of the effects of these
relevant announcements is controversial. The phrasing of § 434 (1) 3 BGB
misleadingly suggests that these announcements create an objective
standard of quality to which the seller is held. In my opinion, they are
nothing but part of the seller's offer, imputed to him for policy
reasons, i.e. to police exaggerated advertising, even if this is issued
by certain third parties. The seller can avoid the consequences of, say,
a manufacturer's advertising campaign about the equipment of its newest
products not only by invoking the restrictions contained in the wording
of § 434 (1) 3 BGB, but also by an explicit agreement with the buyer
under § 434 (1) 1 BGB. If the manufacturer advertises that from now on
all his cars shall have 8 airbags, a new car in the dealer/ seller's
showroom with two airbags is not automatically rendered "defective", but
only if sold without mentioning that it does not conform to the
Both cases are not as easy as the new provision promises. If there is a
mistake of the seller in sending goods, it can well be doubted whether
this was performance, though malperformance, at all. And a lack in
quantity can also be part-nonperformance, if, e.g., instead of 10;000
tons wheat only 5,000 tons are delivered. This is, however, not the
place to pursue either one of these problems.
Motions presented by a minority within the first Law Reform Commission
to introduce price reduction as a general remedy in case of
malperformance failed, as the majority feared the resistance of unions
and associations of professionals. PECL, on the contrary, has
established price reduction as a general remedy in case of
nonconforming performance, see Art. 9:401.
58 It is uncertain, however, whether recourse may be had beyond the assembling manufacturer and against its suppliers.
This was severely criticised - and rightly so - by, among others,
Ernst/Gsell, Kritisches zum Stand der Schuldrechtsmodernisierung,
Zeitschrift für Wirtschaftsrecht 2001, 1389, 1395, for if the seller
takes recourse by terminating the contract with his or her supplier, the
seller looses its margin of profit, which, however, can be kept if
proceeding under § 478 II BGB. These consequences are not only often
unknown to the respective seller, but also depend on the rather
accidental reaction of the last buyer, ie. the consumer.
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