References without law book default to BGB.

Case - Authorized Brother

Facts

Tony (T) wants to buy a new laptop. As he has to study for his BL I class, he has no time to visit the local electronic store “Elex OHG” (E). To make matters worse, his internet connection has broken down. He writes a letter to the store manager (S) in which he authorizes his brother Curt (C) to buy a notebook.

A few days later, C buys an appropriate laptop in the name of T. C and S agree that T will pay the purchase price within the next 10 days. S hands over the computer.

a) Is there a valid contract between T and E?
b) Since T does not pay, E demands payment from C. Will he be successful?

Solution

Slides Solution

Part A: Valid Contract

• Issue: Is there a valid contract between T and E?
• Rule: For a valid sale of goods contract (§ 433 BGB), there needs to be an offer (§ 145 BGB) and an acceptance (§ 147 BGB), both with the intention to be legally binding.
• Application:
  • Can an OHG enter into contracts? → (+), legal capacity according to § 105 II HGB.
  • Did T and E exchange DoIs directly? → (-), there was no direct interaction.
  • Do the DoIs of C and S take effect directly in favor of and against T and E?
    • DoI of C for T according to § 164 BGB?
      1. Own DoI by C → (+)
      2. In the name of T → (+)
      3. With T’s authority (§ 167 BGB) → (+), by sending a letter to E (§ 167 BGB).
         → (+), DoI of C within the scope of the power conferred by T.
    • DoI of S for E according to § 164 BGB?
      1. Own DoI by S → (+)
      2. In the name of E → (+), obviously acting for E due to circumstances (§ 164 I 2 BGB).
      3. With E’s authority (§ 167 BGB) → (+), store manager is an agent (§ 56 HGB).
         → (+), DoI of S within the scope of the power conferred by E.
  • → (+), two matching DoIs taking effect directly in favor of and against T and E.
• Conclusion: There is a valid sale of goods contract between T and E.

Part B: Payment from C

• Issue I: Can E demand payment of the purchase price from C in line with § 433 II BGB?
  • Application: Contract between E and C? → (-), C acted as an agent for T. His DoI takes effect in favor of and against the principal T. There is no contract between E and C.
  • Conclusion: E cannot demand payment from C under § 433 II BGB.
• Issue II: Can E demand payment from C in line with § 179 I BGB?
  • Application: For such a claim, C must have acted as an unauthorized agent. Did C act as an authorized agent (§ 164 BGB)?
  1. DoI by C (+)
  2. In the name of principal (+)
  3. With authority (+), T authorized C by sending a letter to E. → No liability as an unauthorized agent.
  • Conclusion: E cannot demand payment from C under § 179 I BGB.

Write-Up

Issue: Has a valid contract been formed between T and E, and can E demand payment of the purchase price from C?

Part A: Valid Contract between T and E

Issue: Have T and the OHG E entered into a valid sales contract under § 433 BGB?

Rule: A valid sales contract requires two matching declarations of intent (offer and acceptance). Entities like an OHG can acquire rights and incur liabilities (§ 105 II HGB). For a declaration of intent to act directly for and against a principal, the agent must (1) make their own declaration of intent, (2) act in the name of the principal, and (3) act with the necessary authority (§ 164 I BGB).

Application: E is an OHG (general commercial partnership). Since T and E did not communicate directly, they must have been validly represented by C and S under the law of agency (§§ 164 et seq. BGB).

Representation of T by C: C decided which laptop to buy, making his own declaration of intent. He explicitly acted in the name of T. Finally, C had the required authority, as T had expressly granted him power of agency via a letter to the store manager (§ 167 I Alt. 2 BGB). Thus, C validly represented T.

Representation of E by S: S, the store manager, made his own declaration of intent by agreeing to sell the laptop. While he may not have explicitly stated he was acting for E, it was obvious from the circumstances (negotiating inside the store as the manager) that the transaction was meant for the business owner, E (§ 164 I 2 BGB). As store manager, S possessed statutory commercial authority to conduct such everyday business transactions under § 56 HGB. Thus, S validly represented E. Because the declarations made by C and S act directly for and against T and E, two matching declarations of intent were formed.

Conclusion: A valid sales contract was formed between T and E under § 433 BGB.

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Part B: Claims against C

Issue I: Does E have a contractual claim against C under § 433 II BGB?

Rule: Under § 433 II BGB, the seller has a claim against the buyer for the payment of the purchase price.

Application: As established in Part A, C acted as a valid agent for T. Consequently, the legal effects of the contract bind T, not C. No contract exists between E and C.

Conclusion I: E cannot demand payment from C under § 433 II BGB.

Issue II: Does E have a claim against C as an unauthorized agent under § 179 I BGB?

Rule: Liability under § 179 I BGB only arises if a person acts as an agent without having the power of agency.

Application: Since T had expressly granted C the necessary authority via the letter, C acted with full authority.

Conclusion II: C is not liable under § 179 I BGB. Therefore, E has no claim against C.