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26 Cards in this Set

  • Front
  • Back
General principles of German contracts
Unwritten principle: Freedom of contract
Contracts: Good faith
A obligor needs to be in good faith when he enters into a contract
Requirements for a contract to be valid
Offer: (in bgb)
- declaration of intent
- offer is binding
- offer expires if not accepted, otherwise due time

- acceptance of the whole offer, if not seen as new offer
Legal capacity
Needs legal capacity to enter a contract (BGB)
Form requirement
None, according to German Law
Agency: Three preconditions (§164)
-own declaration of intent
- in the name of a third party
- with power of attorney
Agency: statement
The agent has to state that he works on behalf of someone else, if not the agency is not valid (§164, 2)
Power vs Authority (IMPORTANT)
Power: (frame) abstract legal ability to act on behalf of another person

Authority: (content) principal consent to tak a spesific action
Power of attorney: two situations where proxy can bind principal, even if he doesn't have the necessary POA
1. POA by tolerance
- original POA revoked
- Agent continues
- Principal knows it, doesn't do anything with it

2. POA by appearance
- Principal would, using ordinary care, could have discovered and prevented the Agent from acting, given that the third party trusted that the A acted on behalf of the P
The self contract rule
A may not enter into a contract with himself §181
POA by operation of law
Created for persons who can not make own POA (for instance legal person etc, because the trustee and trustor would be the same
General business conditions
Mainly three functions:
-Rationalisation and efficiency
- Filling the gaps the statutory law doesn't cover
- Divertion of risks

But: risk of the stronger party dictating the weaker one.
Hence §§ 305-310 limitations
Rights in rem

- a right competent or available against all persons
- physical objects or rights
Rights in rem under german law
Pre-emption right
Land charge
Most powerful right in rem
Ownership: absolute and generally unlimited right of dominion

The owner can dispose the thing in whole(transfer of ownership) or grant a limited right
GP: Principle of absoluteness
ownership brings absolute and generally unlimited right of dominion over a thing. Under G law, ALL rights in rem are considered absolute rights.
GP: Principle of public disclosure (IMP!)
requires that a transaction of a rights in rem is recognisable by a third party, either by posession (movables) or registration (immovables)
GP: Principle of speciality
a transfer of a right in rem must be specified as regards to what is transfered
GP: Principle of abstraction
Two levels of legal transfer of rights in rem:

1. Obligation: refers to the creation of the contractual obligation, e.g. those duties the parties have to fullfill vis-a-vis each other

2. Transfer: of a right is a separate contract this time a contract about rights in rem

The two contacts must be STRICTLY distinguished!

Hence, a transfer of a right in rem can be valid irrespectively of an valid underlying obligation.
Unjustified enrichment § 812
Gaining something without legal cause for doing so:
1. someone must have obtained something
2. by virtue of performance
3. without legal cause

1. Subject can be:
- any rights in rem
- claims
- contractual rights
- posession or,
- legal appearance in a public register

2. Virtue of performance:
-act of will

3. Without legal cause
- absense of any objective justification for the shifting of the asset in question
Difference between Pledge and Security assignement
Pledge: only hold, do not own. MUST HOLD

Security assignment: becomes OWNER, must not hold
Types of securities: Security in rem
- security with an underlying real value
- safer than security in personam
Types of securities: Security in personam
- linked to a person (N/L)
- only effect against the party granting the security
Types of securities: Atypical
- letter of credit
- letter of comfort
- close out netting (set off)
- negative pledge
Security over movables
1. Retention of title § 449
- secure payment by withholding the title to the object until payment

2. Security transfer
- transfer ownership from a security grantor to a security trustee
- legally it gives the ST right to:
a. realize the object upon default
b. obligation to re-transfer the right when the debtor has paid in full
Pledge over movables: § 1206
- delivery of the thing to the creditor
- agreement
- authority of pledge
- secure "claim"