CHAPTER III The Law of Obligations

Author:E. J. Cohn
Profession:Sir
Pages:57
 
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SECTION I - INTRODUCTORY, TERMINOLOGY, ARRANGEMENT

  1. The second book of the Civil Code, entitled Recht der Schuldverhiltnisse (law of obligations) contains much, if not most, of the material which an English lawyer is accustomed to find in books on the law of contracts, the law of torts, and in books on special types of legal relations such as sale of goods, landlord and tenant, etc. Contracts (Schuldvertrige) are, however, merely one type of the wider species of Vertrige (agreements) on which the first book of the Code contains many rules. Consequently the rules relating to the formation of agreements are to be found in the first book of the BGB (see above Chapter II, Section XIII) where also the doctrine of nullity and voidability (form, mistake, fraud) is dealt with (see Chapter II, Sections IX-XI). The same applies to the rules relating to ability to conclude legal transactions, to conditions and to the institution of agency (see Chapter II, Sections VIII, XIV and XV). The interpretation of contracts is partly dealt with in the first book (Chapter II, Section XIII) and partly in the second. To obtain a complete picture of the German law relating to contracts it is therefore necessary to remember that the second book must be read in conjunction with the first, which as a 'general' part of the Code is applicable to all legal relations in regard to which ' special' rules are not provided.

  2. What the English lawyer calls a contract is in German law styled 'Schuldvertrag '. The relation which arises from a contract or a tort is called Schuldverhiltnis: the title of the second,book itself hints therefore at the fact that this part of the code deals not so much with the contract, its validity and formation as with the relation which arises from a contract or from a tort. The contractual or tort relation itself forms the basis for the relative rights which each party has against the other.

    EXAMPLES: The purchaser can demand transfer of the property in Redacre which he has bought from the vendor. The vendor can demand payment of the price.

    Such rights, arising out of Schuldverhaltnisse, are called Forderungen, while the corresponding liability on the part of the debtor is called Schuld. Because the Schuld is the most important aspect of this part of the civil law, this 63844 F 2

    branch of German law is often,briefly referred to as Schuldrecht. A debtor is, of course, as a rule, responsible for his debts to the extent of his entire property. There are, however, in German law a number of cases where he is responsible only to the extent of certain parts of his property. These cases are relatively more important than the corresponding cases in English law.

    They are referred to as cases of limited responsibility (beschriinkte Haftung).

    EXAMPLES: In a limited liability partnership (Kommanditgesellschaft) the responsibility of some of the partners is limited. The responsibility of the heir may be restricted to what he has acquired by way of succession. The Gesellschaft mit beschrdnkter Haftung on the other hand constitutes-like the English limited liability company-a misnomer, because the company is a separate legal entity and as such responsible to the extent of its entire property, though, of course, the individual member of the company is not responsible.

  3. In the preceding paragraphs the term 'tort' has been used in place of the German expression ' unerlaubte Handlung' or as German legal terminology, following the precedent of Roman law, frequently calls it 'delict '. This rendering is inaccurate and will not be used hereafter.

    German law, following in this respect the example of Roman law, allots to the conception of ' delict' a much less important function than does English law.

    It understands by ' delict' certain unlawful actions, which as a rule must be either intentional or negligent. The owner of a corporeal thing (see Chapter II, Section VI) can, however, assert his ownership without resorting to the law of delicts. He can make use of other remedies. These are provided for him by the third book of the BGB. These remedies do not require that the defendant has committed a delict. They are additional to those dealt with in the second book and will be described in Chapter IV hereafter.

    In English law, on the other hand, the owner is confined to asserting his ownership through the law of torts, a fact which partly-though by no means wholly-explains why German law can comprise most of the law of unerlaubte Handlungen within not more than 30 sections of the Code.

    EXAMPLE: A detains a purse belonging to B. In English law B asserts his right by bringing an action for the tort of detention. In German law on the other hand, B will in the first instance bring an action for the recovery of his property under Section 985 (3rd book of the Civil Code).

    Only if he wants to demand damages in addition to recovering possession need he resort to the law of delict, in which case he has as a rule to prove that the possessor acted intentionally or negligently in acquiring or retaining possession.

    The German term ' unerlaubte Handlungen' will in the following pages always be translated as ' delicts '.

  4. As has already been stated in Chapter II, Section II, par. 102, above, the German legislator has distinguished between general and special rules not only in the arrangement of the first book of the BGB. but also of the second book.

    While the first book contains all the rules which the legislator considered to be of general application throughout the entire sphere of private law, other rules which were intended to be of general application within the entire sphere of the law of obligations-but not further-are separated from the rest of the law of obligations and contained in Sections 241-432 BGB.

    This first part, though not officially described as such, is usually referred to by German lawyers as the general part of the law of obligations. Unfortunately the arrangement is logically not as sound as it could be. Though many of the rules contained in sections 241-432 really do apply to both contractual and delictual obligations, a great number of them apply to the

    former only. Furthermore, some of the rules apply in rather 'special' situations only and might just as well have formed part of the special part, e.g., the rules on penalties.

  5. The categories of contract and tort are as little able to exhaust the whole field of obligations in German law, as they would be in English law.

    There are a considerable number of obligations which arise neither from contract nor from delict-one more reason why the German legislator was right in heading the second book 'Law of Obligations' instead of Law of Contracts and Delicts. There are a number of obligations which arise directly from a one-sided declaration by one party. Public promises of rewards form the most significant example of these. Others arise directly from a legal provision. The best known example of the latter are the obligations arising out of unjust enrichment, which play a most important part within the structure of the German legal system-much more so than their equivalents in English law. The terms ' quasi-contract' and 'quasidelict' for obligations of this kind, have for some time past become unfashionable in Germany, the fiction that such obligations can in any way either be based on a supposed intention of the party or parties or be considered as possessing some similarity to delicts having been discarded. It is usual to refer to such obligations as to ' obligations ex lege ' (gesetzliche Schuldverhiiltnisse).

  6. It is not intended to give here a complete summary of the special part of the law of obligations. A number of those chapters which have not been summarised here will be referred to in connection with certain other topics with which they are economically more intimately related, as e.g., the law of societies with the law of commercial partnerships.

    SECTION II - SECTION 242 OF THE CIVIL CODE AND ITS IMPORTANCE FOR THE MODERN PRACTICE OF PRIVATE LAW

  7. Section 242 of the BGB reads as follows:

    Der Schuldner ist verpflichtet, die Leistung so zu bewirken, wie Treu und Glauben mit Riicksicht auf die Verkehrssitte es erfordern.

    The debtor is bound to effect performance according to the requirements of good faith, common habits being duly taken into consideration.

    By the process of interpretation by courts and legal writers this rule has been turned into a principle of the greatest importance for the entire field of private law. During the last two decades, it has led to the creation of a number of legal conceptions and institutions of particular interest for times like the present when rapidly changing conditions require the constant adaptation of codified law to unprecedented situations. Its importance is now such that it must be considered as a factor modifying-for better or for worse-the application to individual cases of any other rule of German private law.

  8. In Roman law the exceptio doli generalis prevented the use of formal rights in a manner which violates the requirements of good faith. Similarly in modem German law section 242-taking the place of the unsatisfactory rule of section 226 BGB (on which see Chapter II, Section XVIII, para. 182)limits the exercise of rights by the parties and defines the manner in which legal duties generally-not only in the sphere of the law of obligations-have to be performed.

    EXAMPLES: (a) A had insured a building against fire with B. The building was destroyed by fire. A claimed 9600 RM from B. B was not willing

    to pay more than 7000 RM. While the dispute lasted B refused any payment. The Reichsgericht held that this attitude on B's part constituted a violation of the duty to act in good faith, that B was consequently committing a breach of contract and that A could claim damages for this breach from B. See Reichsgericht. Official Collection of Decisions in Civil...

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