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AI Generated Exam Case

Case - Carpenter’s Costly Typo

Facts

Karl (K) runs a small custom furniture workshop in Munich, specializing in bespoke pieces. On 1st of June, Marta (M) visits Karl’s showroom and commissions a quote for a large custom bookshelf system made from rare reclaimed oak wood, which Karl had specially sourced from a historical barn demolition. This specific wood is unique and irreplaceable.

On 3rd of June, Karl sends Marta an email with a detailed quote. Due to a typing error, the email states: “Total price for the custom reclaimed oak bookshelf system: EUR 5,000.” Karl had intended to type EUR 50,000.

Marta is surprised by the low price, as she knows such custom work usually costs significantly more. On 4th of June, she sends a signed letter by post: “I hereby accept your offer of 3rd of June for the bookshelf system at EUR 5,000. Please begin production at your earliest convenience.”

On 5th of June, before Marta’s letter arrives, Karl realizes his typo. He immediately sends Marta an email: “Dear Marta, I made a terrible mistake in my quote – the correct price is EUR 50,000, not EUR 5,000. My offer is hereby withdrawn.”

Marta’s acceptance letter arrives at Karl’s workshop on the morning of 6th of June. Karl refuses to build the bookshelf for EUR 5,000. Marta insists on the deal. She reveals that, in reliance on Karl’s attractive offer, she had already called another carpenter and cancelled a competing quote of EUR 45,000 she had been considering.

Variant for question c: Assume the contract was validly concluded and Karl had begun work. On 15th of June, a catastrophic flood destroys Karl’s entire workshop, all his tools, the rare reclaimed oak wood, and the half-finished bookshelf. The same reclaimed oak wood cannot be sourced again anywhere. Marta had already paid a deposit of EUR 2,000.

Questions:
a. Was a valid contract concluded between K and M for EUR 5,000? Consider in particular the timing and effectiveness of the parties’ declarations. (7 P)
b. Can Karl avoid the contract due to his typo, and what are the legal consequences for both parties? (8 P)
c. Assuming a valid contract existed and Karl had begun work: Is Karl still obligated to deliver the bookshelf after the flood? Can Marta reclaim her EUR 2,000 deposit? (10 P)

Solution

Solution Summary

Part a: Contract Formation

• Issue: Was a contract concluded for EUR 5,000 pursuant to § 433 BGB?
• Rule:
  • Contract formation: Matching offer (§ 145 BGB) and acceptance (§ 147 BGB).
  • Offer must contain essentialia negotii (parties, goods, price).
  • Bodied declarations become effective upon receipt (§ 130 I 1 BGB).
  • Interpretation follows the objective bystander standard (§§ 133, 157 BGB).
  • Withdrawal of a declaration is only possible if it arrives before or simultaneously with the declaration itself (§ 130 I 2 BGB).
  • The offeror is bound by the offer (§ 145 BGB) unless being bound was excluded.
• Application:
  • Offer: Karl’s email of 3rd of June is an offer (§ 145 BGB) with essentialia negotii (parties, bookshelf, EUR 5,000). As a bodied declaration, it became effective upon receipt by Marta on 3rd of June (§ 130 I 1 BGB).
  • Interpretation: Under the objective bystander standard (§§ 133, 157 BGB), the offer objectively states EUR 5,000. Karl’s subjective intention of EUR 50,000 is irrelevant for interpretation.
  • Withdrawal attempt: Karl’s email of 5th of June cannot withdraw the offer, as it was already received on 3rd of June (§ 130 I 2 BGB). Karl also cannot unilaterally revoke, as he did not exclude being bound (§ 145 BGB).
  • Acceptance: Marta’s signed letter of 4th of June constitutes acceptance (§ 147 BGB). It arrives on 6th of June — within the expected timeframe for postal mail (§ 147 II BGB) → timely.
  • At the moment of receipt of Marta’s acceptance, Karl’s offer was still effective.
• Conclusion: Yes, a valid contract was concluded for EUR 5,000.

Part b: Avoidance for Error

• Issue: Can Karl avoid the contract under § 119 I BGB, and what are the consequences?
• Rule:
  • Expression error (Erklärungsirrtum): § 119 I Alt. 1 BGB — objective content of the declaration does not match subjective intention.
  • Avoidance must be declared (§ 143 I BGB) without undue delay (§ 121 I BGB).
  • Effect: Contract is void ex tunc (§ 142 I BGB).
  • Compensation: Avoiding party owes reliance damages (negative interest) to the other party (§ 122 I BGB), limited to the amount of the positive interest.
• Application:
  • Error: Karl typed EUR 5,000 instead of EUR 50,000 → classic expression error (§ 119 I Alt. 1 BGB).
  • Declaration of avoidance: Karl’s email of 5th of June used “withdrawn,” but under §§ 133, 157 BGB a reasonable recipient would understand it as a declaration that Karl does not wish to be bound due to the pricing error → reinterpretable as avoidance (§ 143 I BGB).
  • Timeliness: Karl discovered the error on 5th of June and immediately emailed → without undue delay (§ 121 I BGB).
  • Effect: Contract is void ex tunc (§ 142 I BGB).
  • Reliance damages: Marta cancelled a competing quote of EUR 45,000 in reliance on Karl’s offer. The cost of obtaining a comparable bookshelf elsewhere constitutes reliance damage (§ 122 I BGB), capped at the positive interest.
• Conclusion: Yes, Karl can avoid the contract. The contract is void. Karl owes Marta reliance damages under § 122 I BGB.

Part c: Impossibility and Deposit

• Issue: Is Karl obligated to deliver after the flood? Can Marta reclaim her EUR 2,000 deposit?
• Rule:
  • Impossibility: If performance is objectively impossible, the debtor is released (§ 275 I BGB).
  • Counter-performance: If the debtor is released, the creditor’s counter-performance obligation is also extinguished (§ 326 I 1 BGB).
  • Reclaiming payments: § 326 IV BGB in conjunction with § 346 I BGB.
  • Damages for impossibility: §§ 280 I, III, 283 BGB require fault (§ 280 I 2 BGB).
• Application:
  • Impossibility: The unique reclaimed oak wood and the half-finished bookshelf are destroyed. The wood cannot be sourced again → specific obligation (Stückschuld) is physically impossible (§ 275 I BGB). Karl is released from his delivery obligation.
  • Counter-performance: Marta’s payment obligation is extinguished (§ 326 I 1 BGB).
  • Deposit: Marta can reclaim her EUR 2,000 under § 326 IV BGB in conjunction with § 346 I BGB.
  • Damages: The flood is force majeure and not attributable to Karl’s fault. Karl can rebut the fault presumption (§ 280 I 2 BGB) → no damages claim under §§ 280 I, III, 283 BGB.
• Conclusion: Karl is not obligated to deliver. Marta can reclaim her EUR 2,000 deposit. No additional damages are owed.

Advanced Legal Analysis

Topic 1: Withdrawal vs. Revocation of Declarations of Intent

• Students often confuse these concepts. Withdrawal (§ 130 I 2 BGB) means preventing a declaration of intent from ever becoming effective — the withdrawal must arrive before or simultaneously with the original declaration itself. Revocation, by contrast, is an attempt to undo a binding offer after it has already become effective. Under § 145 BGB, the offeror is bound by the offer, meaning unilateral revocation is generally impossible unless the offeror expressly excluded being bound. In Karl’s case, his offer was already received by Marta on 3rd of June (i.e. effective), so withdrawal under § 130 I 2 BGB was no longer possible. His email of 5th of June was legally a futile attempt at revocation. However, applying the objective interpretation standard (§§ 133, 157 BGB), the email could be recharacterized as a declaration of avoidance under § 143 I BGB, because a reasonable recipient would understand Karl’s intent to escape the contract due to a pricing mistake.

Topic 2: Initial Impossibility (§ 311a BGB)

• What if the flood had occurred before the contract was concluded on 6th of June, but neither party knew? Under § 311a I BGB, the contract would still be valid — impossibility at the time of contracting does not prevent contract formation. This is a deliberate legislative choice to protect the creditor’s reliance interest. Under § 311a II BGB, Marta could claim damages or reimbursement of expenses if Karl knew or was responsible for not knowing about the impossibility at the time of contracting. This provision mirrors the fault-based structure of §§ 280 I, III, 283 BGB for subsequent impossibility but applies it to the moment of contract conclusion. In the case at hand, the flood arose after the contract was concluded, making §§ 275 I, 326 I 1 BGB the applicable provisions rather than § 311a BGB.

Write-Up

Question a: Contract Formation

Issue: Was a valid contract concluded between Karl and Marta for the custom reclaimed oak bookshelf system at a price of EUR 5,000?

Rule: A valid contract requires two corresponding declarations of intent: an offer (§ 145 BGB) and an acceptance (§ 147 BGB). The offer must contain the essentialia negotii, namely the contracting parties, the subject matter, and the price. Declarations of intent that are bodied — such as emails or letters — become effective upon receipt by the other party (§ 130 I 1 BGB). A declaration is received when it enters the recipient’s sphere of control and the recipient can be reasonably expected to take notice. Once a declaration has become effective, it can no longer be withdrawn; withdrawal is only possible if it arrives before or simultaneously with the original declaration (§ 130 I 2 BGB). Furthermore, under § 145 BGB, the offeror is bound by the offer unless they have expressly excluded being bound. Interpretation of declarations of intent follows the objective bystander standard (§§ 133, 157 BGB): what matters is how a reasonable person in the position of the recipient would understand the declaration, not the subjective intention of the declaring party. Acceptance among absent persons must arrive within the period in which the offeror may expect to receive a response under ordinary circumstances (§ 147 II BGB).

Application:
First, Karl’s email of 3rd of June must be examined. It contains all essentialia negotii: the parties (Karl and Marta), the subject matter (a custom reclaimed oak bookshelf system), and the price (EUR 5,000). It therefore constitutes a valid offer under § 145 BGB. As an email, it is a bodied declaration of intent. It became effective upon receipt by Marta on 3rd of June (§ 130 I 1 BGB).

The question of interpretation arises because Karl subjectively intended to write EUR 50,000. However, under the objective bystander standard (§§ 133, 157 BGB), the meaning of the declaration is determined by how a reasonable person in Marta’s position would understand it. A reasonable recipient reading the email would understand the quoted price to be EUR 5,000 as expressly stated. Karl’s internal intention to state a different price is irrelevant for the objective meaning of the declaration.

Next, Karl’s email of 5th of June must be assessed. Karl attempts to withdraw his offer. However, under § 130 I 2 BGB, a withdrawal is only effective if it arrives before or simultaneously with the original declaration. Karl’s offer had already been received by Marta on 3rd of June — two days prior. Withdrawal is therefore impossible. Furthermore, under § 145 BGB, the offeror is bound by the offer. Karl did not include any reservation or exclusion of being bound in his original email. He therefore cannot unilaterally revoke his binding offer. Karl’s email of 5th of June has no legal effect on the validity of the offer.

Marta’s signed letter of 4th of June constitutes an acceptance (§ 147 BGB). It matches Karl’s offer without modification, agreeing to the bookshelf at EUR 5,000. As a posted letter, it is likewise a bodied declaration that becomes effective upon receipt (§ 130 I 1 BGB). It arrives at Karl’s workshop on the morning of 6th of June. A postal letter arriving within three days of an email offer is within the ordinary timeframe under § 147 II BGB and is therefore timely. At the moment of receipt of Marta’s acceptance, Karl’s offer was still effective and had not been validly withdrawn.

Conclusion: Yes, a valid contract was concluded between Karl and Marta for the custom reclaimed oak bookshelf system at EUR 5,000. The contract came into existence on 6th of June upon receipt of Marta’s acceptance.

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Question b: Avoidance for Error and Legal Consequences

Issue: Can Karl avoid the contract due to his typing error under § 119 I BGB, and what are the legal consequences for both parties?

Rule: Under § 119 I Alt. 1 BGB, a person who, when making a declaration of intent, was mistaken about its content or did not intend to make a declaration with that content at all, may avoid the declaration if it can be assumed that they would not have made the declaration with knowledge of the facts and with a reasonable appreciation of the situation. This provision covers the so-called expression error (Erklärungsirrtum), where the objective content of the declaration does not correspond to the subjective intention of the declaring party — for example, due to misspeaking or mistyping. The avoidance must be declared (§ 143 I BGB) without undue delay after the person discovers the ground for avoidance (§ 121 I BGB). The effect of a successful avoidance is that the declaration — and with it the contract — is deemed void ex tunc, i.e. retroactively from the outset, as if it had never existed (§ 142 I BGB). However, as a counterbalance, the avoiding party must compensate the other party for the damage suffered by reason of reliance on the validity of the declaration (§ 122 I BGB). This reliance damage (negative interest) places the injured party in the position they would have been in had the erroneous declaration never been made. Importantly, § 122 I BGB limits the reliance damages: they may not exceed the amount of the interest that the other party has in the validity of the declaration (the positive interest).

Application:
Karl typed EUR 5,000 when he intended to type EUR 50,000. The objective content of his declaration (EUR 5,000) does not match his subjective intention (EUR 50,000). This constitutes a classic expression error (Erklärungsirrtum) under § 119 I Alt. 1 BGB. It can be assumed that Karl, had he been aware of the typing error, would not have made an offer at EUR 5,000 for a bespoke bookshelf made from rare reclaimed oak — a reasonable appreciation of the situation supports this conclusion.

Karl must declare the avoidance under § 143 I BGB. His email of 5th of June used the word “withdrawn” rather than “avoidance” (Anfechtung). However, legal declarations are to be interpreted by their objective meaning under §§ 133, 157 BGB, not by the precise terminology used. A reasonable recipient would understand Karl’s email — in which he explains the pricing mistake and states that he does not wish to be bound — as expressing the substance of a declaration of avoidance. It can therefore be reinterpreted as a valid declaration of avoidance under § 143 I BGB.

As to timeliness, Karl discovered his error on 5th of June and immediately sent the email on the same day. This satisfies the requirement of “without undue delay” under § 121 I BGB.

The avoidance is therefore effective. Under § 142 I BGB, the contract is void ex tunc — retroactively, as if it had never existed. Karl is not obligated to build the bookshelf for EUR 5,000.

However, the consequences under § 122 I BGB must be considered. Marta cancelled a competing quote of EUR 45,000 from another carpenter in reliance on Karl’s offer. This was a disposition she would not have made had Karl’s erroneous declaration never existed. If Marta must now procure a comparable bookshelf from another source at a higher price, the additional cost represents reliance damage (negative interest) compensable under § 122 I BGB. It is important to note the distinction between reliance damages (negative interest) and expectation damages (positive interest). The negative interest places Marta in the position as if Karl’s declaration had never been made. The positive interest would place her in the position as if the contract had been properly performed. Under § 122 I BGB, reliance damages are capped at the amount of the positive interest.

Conclusion: Yes, Karl can successfully avoid the contract under § 119 I Alt. 1 BGB. The contract is void ex tunc pursuant to § 142 I BGB. Karl is obligated to compensate Marta for her reliance damages under § 122 I BGB, limited to the amount of the positive interest.

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Question c: Impossibility and Reclaiming the Deposit

Issue: Is Karl still obligated to deliver the custom bookshelf after the flood, and can Marta reclaim her EUR 2,000 deposit?

Rule: Under § 275 I BGB, the obligation to perform is excluded to the extent that performance is impossible for the debtor or for any person. This applies where the specific subject matter of the obligation has been destroyed and cannot be replaced — a so-called specific obligation (Stückschuld). Where the debtor is released from the obligation to perform under § 275 I BGB, the creditor’s obligation to render the counter-performance is also extinguished pursuant to § 326 I 1 BGB. If the creditor has already rendered the counter-performance (or part of it), they can reclaim it under § 326 IV BGB in conjunction with § 346 I BGB, which applies the rules on unwinding (Rücktritt) to the return of payments already made. Additionally, the creditor may seek damages for impossibility under §§ 280 I, III, 283 BGB, but only if the debtor is at fault for the impossibility. Under § 280 I 2 BGB, fault is presumed, but the debtor may rebut this presumption.

Application:
The catastrophic flood of 15th of June destroyed Karl’s entire workshop, all his tools, the rare reclaimed oak wood, and the half-finished bookshelf. The case specifies that the reclaimed oak was sourced from a historical barn demolition and is unique and irreplaceable — the same wood cannot be sourced again anywhere. The bookshelf was therefore a specific obligation (Stückschuld): it was to be crafted from this particular, identified material. Because the specific subject matter has been destroyed and cannot be reproduced or substituted, performance is physically impossible within the meaning of § 275 I BGB. Karl is consequently released from his obligation to deliver the bookshelf.

Since Karl is released from his delivery obligation under § 275 I BGB, Marta’s corresponding obligation to pay the purchase price is extinguished pursuant to § 326 I 1 BGB. Marta is no longer required to render any further payment.

Marta had already paid a deposit of EUR 2,000. Because her counter-performance obligation has been extinguished, the legal basis for retaining the deposit has fallen away. Marta can reclaim the EUR 2,000 under § 326 IV BGB in conjunction with § 346 I BGB, which provides for the return of payments already rendered by applying the rules on contractual unwinding.

Finally, the question of damages must be addressed. Under §§ 280 I, III, 283 BGB, Marta could claim damages for impossibility if Karl were at fault. Under § 280 I 2 BGB, fault is presumed, and the debtor must rebut this presumption. In the present case, the destruction of the workshop and materials was caused by a catastrophic flood — an event of force majeure — which is entirely beyond Karl’s control and not attributable to any intent or negligence on his part. Karl can successfully rebut the presumption of fault under § 280 I 2 BGB. Therefore, no additional damages claim arises under §§ 280 I, III, 283 BGB.

Conclusion: Karl is not obligated to deliver the bookshelf, as his performance obligation is excluded under § 275 I BGB. Marta can reclaim her EUR 2,000 deposit under § 326 IV BGB in conjunction with § 346 I BGB. No additional damages are owed by Karl, as the impossibility was caused by force majeure and Karl is not at fault.